The euro was the best performer among the major currencies last week, appreciating almost 1% against the dollar, with the investors welcoming the EU-UK agreement to delay the Brext deadline and the positive signals from the Chinese economy, which have eased fears about a global economic slowdown.
Across the channel, The pound went also higher against the dollar, although its reaction to the Brexit agreement was more moderate. The US dollar has remained steady, trading within previous ranges, while the safe havens yen and Swiss franc have lost ground with the world’s major stock markets in green.
We have a shorter week ahead due to the Good Friday Bank holiday, yet with some interesting events like the Consumer Prices Indexes in the Eurozone and the UK, the US retail sales or the Eurozone preliminary PMI figures
Currencies last week
- EUR/USD rallies to three-week highs above 1.1300
- GBP/USD ticks up to the 1.3100 area
- EUR/GBP: moving sideways between 0.8600 and 0.8650
- USD/JPY surges to 5-week highs near 112.00
Main events this week:
In the US calendar, the only event worth mentioning this week will be the US retail sales, which are expected to have bounced up in March after having contracted in February. Consumption is a major contributor to the US economy and strong results on the retail sales tend to trigger positive reactions in the USD.
In the Eurozone, the calendar opens on Tuesday with the ZEW Economic Sentiment Survey, an analysis of the institutional investors’ optimism about the economic outlook that is expected to have deteriorated further in April, which might have a negative impact on the euro.
Later on Tuesday, the Eurozone Consumer Prices Index is expected to confirm the preliminary estimations of a 1.4% year on year inflation. The market has already priced in that reading, thus, we do not expect a relevant reaction from the euro.
On Thursday, the Markit Institute will release the preliminary Eurozone Manufacturing and services PMI. Business activity in the manufacturing sector is seen contracting for the third consecutive month, a trend suggesting a sharp economic deceleration in the second quarter, which might have a negative impact on the euro.
In the UK, on Tuesday we will be attentive to the ILO Unemployment rate and the average earnings data. With the unemployment rate at historic lows, the focus will be on the evolution of the salaries to assess the near-term trends on inflation.
On Wednesday, National Statistics will release UK Consumer Prices Index data from March, which is expected to show its weakest increase in more than a year. This might have a negative impact on the pound.
In the Japanese calendar, on Tuesday, the Ministry of Finance will release the Merchandise Trade Balance and the import and export figures for March. Japan is an exporter country and therefore, these readings might have some impact on the Yen.
On Wednesday, the focus will be on the Japanese Industrial Production which is expected to have expanded at a 1.4% pace, the same as in the previous month, yet significantly below last year’s levels. The impact on the yen is likely to be neutral to negative.