Week In Review March 4th to March 8th
by Dean Popplewell
Week in FX – EUR Weakness Not About the EURO
The EUR is simply not wanted and all because everyone covets the ‘big’ dollar after Friday’s stellar US jobs report. The single currency’s drop is threatening to seek new week lows, and it seems it would prefer to do so with some conviction. The currency’s decline looks even more dramatic since Draghi comments on Thursday were able to push the 17-member unit to take a peek above 1.3100 for a brief period. Previously, the EUR had rallied nicely from the ECB rate announcement intra-day lows mostly on the back of investor’s prior positions. A higher percentage of individuals were expecting for, at the “very least,” more dovish words from Draghi. Squeezing the weaker EUR shorts perhaps even further was the “no mention” of the single units value. The market handily caught a bid on the back of the ECB possibly feeling a bit more comfortable with the exchange rate. However, that has all now changed.
EUROPE Week in FX
Week in FX Americas – Is the Loonie and ‘Big’ Dollar Move for Real?
No one was close to reporting the North America jobs numbers. Canada and the US headlines blew all forecasts out of the water, and for the time being have convinced the market that they need to buy North America. Both countries’ released improved unemployment rates. The downtick to the US unemployment rate to +7.7% from +7.9% can partly be attributed to Americans dropping out of the workforce. Analysts note that the participation rate fell to +63.5% last month from +65.6%, which is now officially the lowest rate in 33-years. This is probably the only obvious knock against this months NFP release. On the surface, it’s not a very healthy way to achieve a jobless rate decline and it will be used as fodder for the pro-stimulus members at the Fed.
AMERICAS Week in FX
Week in FX Asia – Japan Indicators Help Yen Drop
The yen continues to devalue to new lows against the US dollar. The catalyst for this week’s slump were the national economic indicators such as Japanese Final GDP, which came in at a disappointing 0.0%, underscoring the lack of growth in the Japanese economy. This week was heavy with central bank statements and rate announcements but few surprises. All major economies held rates and Japan was no exception. This policy meeting was the final one presided by governor Masaaki Shirakawa, who will be replaced by incoming governor Haruhiko Kuroda. The new governor is a proponent of strong monetary measures to kick-start the economy as is on-side with PM Shinzo Abe’s brand of politics and economic policy.
ASIA Week in FX