Global Forex Market

THE dollar closed the week softer, down 0.25% to 90.13 but managed to recover some of its early week losses following Fed chair Powell’s upbeat speech during his two-day Congressional testimony as well as a slew of strong data release, which triggered a selling wave in the US Treasury market.

In summary, Powell said that the central bank was still far away from deciding when to taper its asset purchases and expected economic activity to improve later this year.

Key data release for the week includes initial jobless claims slowing down to 730,000 in the week ending Feb 20 from 841,000 in the week prior (consensus: 838,000), January durable goods order jumping 3.4% monthon-month (m-o-m) from 1.2% m-o-m in December (consensus: 1.1%); and February CB consumer confidence jumping higher to 91.3 from 88.9 in January (consensus: 90).

The crude oil market witnessed a continuous bull momentum with Brent surging 6.31% week-on-week to US$66.88 per barrel, hovering at the highest level since January 2020.

Higher prices were due to reports that the US shale producers are still not rushing to accelerate output at US$60 per barrel and estimation of oil prices likely to advance around US$70 per barrel in the coming months.

Additionally, the Opec+ is due to meet on March 4, scheduled to discuss a modest easing of oil supply curbs from April given a recovery in prices.

The euro appreciated by 0.46% to 1.22, the highest since Jan 12 garnering support from the early week dollar weakness as well as healthy economic data release. Data released during the week includes: EU February economic sentiment rising to 93.4 from 91.5 in January (consensus: 92), the highest reading since March 2020, and EU February consumer inflation expectations climbing to 15.7 from 15.4 in January.

The pound started the week on a strong footing as investors continue to price in a faster reopening of the UK economy following the rapid rollout of the Covid-19 vaccines as well as firmer oil prices.

However, the gains were quickly reversed, down 0.01% w-o-w to 1.40 after the selling in the US Treasury market intensified.

Nevertheless, jobs data were mixed with: January claimant count continuing to decline by 20,000 and December unemployment rate edging up to 5.1% from 5.0% in November.

Amid a short working week, the Japanese yen weakened by 0.72% to 106.2, the highest in four months due to the widening UST-JBG interest rate differential.

Meanwhile, economic data release for the week includes: January retail sales declining 0.5% m-o-m from -0.7% m-o-m in December; and January preliminary industrial production increasing 4.2% m-o-m from -1.0% m-o-m in December.

Asian ex-japan currencies’ performance was rather mixed against the dollar.

The Taiwanese dollar came in the outperformer, appreciating 0.44% to 27.82, followed by the rupee (0.31% to 72.4), and the yuan (0.04% to 6.46). Meanwhile, the baht came in as the underperformer under the week in review, down 1.06% to 30.30. The ringgit strengthened 0.05% to 4.04, supported by the rising crude oil prices as well as optimism over nationwide vaccine inoculation beginning Feb 24, 2021.

Economic data release for the week includes January inflation recording a smaller decline of 0.2% year-onyear (y-o-y) from -1.4% y-o-y in December, exports maintained its positive growth for the fifth month at 6.6% y-o-y in January from 10.8% y-o-y in December while imports expanded for the second month at 1.3% y-o-y in January from 1.6% y/y in December.