Financial know how during COVID-19
The US economy is heading for its strongest growth in nearly 40 years. At the conclusion of their two-day policy meeting, US Federal Reserve Chair Jerome Powell appeared confident that they will produce 6.5 per cent GDP growth this year.
Data released showed US manufacturing activity increased to a three-year high in February amid a surge in new orders.
Their treasury yields also rose with investors betting that extremely accommodative monetary and fiscal policy will boost inflation.
US core consumer prices rose 1.3 per cent year-on-year in February, a slight slowdown from a 1.4 per cent annual increase in the previous month.
Weekly employment data added to positive signals from the jobs market, as President Joe Biden signed his $1.9 trillion pandemic relief bill into law.
US Retail Sales and Industrial Production data came out weaker than expected.
Although it was not a cause of concern but may hint a bit of a drag on the US economy over the coming months.
US consumer confidence raced in March to its highest level since the start of the COVID-19 pandemic, supporting views that economic growth will accelerate in the coming months, driven by more fiscal stimulus and an improving public health situation.
The survey from the conference board also showed consumers were upbeat about the labor market, with a measure of household employment rebounding after declining in February.
Restrictions on non-essential businesses are being rolled back as more Americans get vaccinated against COVID-19.
That, along with the White House’s massive $1.9 trillion pandemic relief package, has led economists to predict the economy will this year experience its best performance in nearly four decades.
The survey showed more consumers intended to buy homes, cars, and household appliances over the next six months.
In a sign of further economic recovery, inflation expectations continued to rise- reaching 6.7 per cent, up from 6.5 per cent previouslyand will likely continue to advance amid inventory shortages. Federal policymakers and many private forecasters are expecting a surge in spending and economic growth in coming months as more Americans get vaccinated and venture out.
But the Federal kept interest rates near zero, where they have been for the past year, and most Fed policymakers continued to see them staying there through 2023.
Though Federal policymakers expect robust growth to help heal the labour market.
There is a big hole yet to fill, with the US economy still millions of jobs short of where it was before the crisis.
The Federal Reserve officials are facing a potential bout of inflation this spring, in an economy turbocharged by vaccines and government spending.
Nevertheless, the Fed held on to its easy money plans hoping to restore displaced Americans back to work.
New Zealand Dollar
Key releases kept traders busy with statistics coming out of New Zealand showing the country suffered a sizable drop in their GDP in the December quarter.
Sentiment for the antipodean currencies remains strong due to rising commodity prices and expectations for an acceleration in global trade.
Traders said the Australian and the New Zealand dollars are likely to continue rising.
Because both economies are rebounding strongly from the COVID-19 pandemic and they will both benefit from an acceleration in global trade.
The Australian and New Zealand dollars fell along with stocks as investor sentiment again turned sour.
While many analysts expect commodity-linked currencies to climb as economies reopen after the pandemic, they have been hurt by the negative sentiment.
New Zealand also got a boost of its own from the latest auction of dairy, the country’s biggest goods export, which saw prices soar 15 per cent.
Prices for whole milk powder jumped 21 per cent to the highest in seven years, promising a windfall for farmers.
The unexpected 1 per cent drop in the country’s GDP raised concerns of a looming second recession. However, New Zealand Finance Minister said the Kiwi economy was remaining resilient and was still among the best in the world. The New Zealand Dollar has been appealing for months, as coronavirus pandemic recovery hopes boosted market sentiment and speculation of tighter monetary policy from central banks.
New Zealand has taken action to cool their overheated housing market.
Analysts believe it will dampen the chances of more hawkish policy from the RBNZ any time soon.
Japanese Yen
The Japanese yen reached 106.88 against the US dollar, marking its weakest level since August 28, 2020.
Japan’s economy expanded at a slower-than-initially-reported pace in October-December, with firms tightening spending on plant and equipment and sharply cutting inventories as the coronavirus pandemic hit demand.
Separate data showed household spending was hit by a bigger annual drop in January than in the prior month.
A sign the COVID-19 pandemic was keeping consumers cautious about shopping.
Meanwhile Japan, being the world’s third-largest economy, is set to contract by an annualised 6.0 per cent in the current quarter. The 1.5 per cent drop in retail sales in February and weakening exports will be a cause for concern to the Japanese policymakers.
GBP and Euro
British consumers cut back heavily on spending as they spent a second month in a COVID-19 lockdown last month.
Consumer spending was 13.8 per cent lower than a year before with many businesses still closed.
The British pound sank 0.2 per cent after the Bank of England warned the outlook for Britain’s recovery remained unclear. The pound rose strongly against the dollar supported by strong U.K. retail sales data which rose 2.1 per cent last month.
Meanwhile, the Euro was in focus as European Central Bank left rates unchanged at 0 per cent as expected but did pledge to step up its pace of bond purchases to stem the rise in European bond yields and keep financial conditions steady. Outlook expectations for the Eurozone are still gloomy as well. Amid rising speculation and expectation of tighter coronavirus restrictions in major Eurozone economies, investors still have little reason to buy the Euro.
The Euro fell against the US dollar and could soon be staring down the barrel of a plunge below $1.18 as the third wave of COVID-19 threatens the outlook for the economic bloc.
An unexpected expansion of business activity did little to brighten the mood, with renewed COVID-19 lockdowns in many of the bloc’s member nations meaning the gains may not last through April. The outlook for the common European currency has soured due to renewed coronavirus lockdowns and the slow pace of vaccinations across the European Union.
The short-term economic outlook became gloomier as France and Germany introduced tougher restrictive measures to curb a third wave of COVID-19 cases on the continent.
Europe’s rising COVID-19 cases have contributed to the increased demand for the US Dollar, as concerns grow over the EU’s third wave of the virus.
Conclusion
It has been another busy week for the financial markets with potentially big moves in currencies and equities.
Over the course of the coming year, vaccination is expected to greatly reduce the number of new cases of COVID-19.
Pacific nations have mostly escaped the heavy death toll and hospital bed shortages faced by Western countries battling COVID-19. However, the pandemic has dealt a disproportionately severe blow to the region’s economic ambitions.
However, with the rollout of vaccines and economic recovery in sight in China and the West- the main trading partners of the Pacific- their recovery could have a positive impact on us.
With tourism stalled and reduction in trading activity, we are facing one of the worst economic crises in generations.
Containment measures have been efficient.
Roday, most of the last COVID-free nations on earth are in the Pacific. Now, a reconnection to the world relies on the widespread rollout of COVID-19 vaccines.
Farmers must view their role like any other business, in addition practice inter-cropping to be self-sufficient.
Those were the words of encouragement from the Provincial Administrator Nadroga Navosa, Ms Ruth Atu while officiating at an organized field day for farmers at Faizal Khan’s Orchard farm in Vatukarasa, Nadroga recently.
The field day was held to motivate farmers in the western division to establish fruit orchards on their farms. The exercise is also part of the five initiatives of the Ministry of Agriculture to increase the establishment of Fruit Tree Orchards to farmers. Fruit Trees contain high nutritional value.
“There is a need to develop Fiji's fruit industry to include more locally grown fruits in our diets so it is vital that you set up fruit orchards on your farms for food security and nutritional aspects and the western division has the potential for orchard cultivation,” she said Farmers were informed that under agriculture, they played a significant role in the process of economic development of a country.
“It sustains and drives the economy, the backbone of everything and apart from providing food and other raw materials, it also provides employment opportunities.”
She said aside from seasonal fruit, having fruit tree orchards assisted to reduce the import bill of fruits, improve farmer’s livelihoods and the health of Fiji’s general population, and adds to the supply of local fruit,” Ms Atu said
She said it was important to plant fruit orchards as a commercial crop and also think of developing value adding products from it.
With the current pandemic situation, farmers were encouraged to advance and develop farming as a business and for food security.
“We must no longer stay in the knowledge that it is a way of life but go beyond where you look at it as an important lucrative business,” she said.
Further, farmers were enlightened on record-keeping, creating linkages to market, introduced to dragon fruit and a new variety green pearl guava orchard farm.
Women farmer participant Ms Kelera Nasita said the field day was an introduction to new farming areas.
“Some of us are subsistence farmers with the interest to venture into newly introduced fruits for food and nutritional security,” she said.
“Meeting with other farmers enables us to share experiences and learn from them. There is available land with the potential to cultivate fruit orchards, apart from the traditional ones to feed the local market.”
The Faizal Khan Orchard farm is the first orchard farm in Fiji established under the initiative of the Ministry of Agriculture.