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Forex Major Currencies Outlook (Feb 24 – Feb 28)

PMI data from China showing the impact of the coronavirus on the economy, inflation data from US and EU, and Canada’s Q4 GDP, will highlight the week.


He housing market showed tremendous strength with both housing starts and building permits beating the expectations. Building permits came in highest since 2007 which in combination with overall strong data coming from US kept dollar bought throughout the week. FOMC minutes from the January meeting provided no new clues into Fed’s thinking. They find the current monetary policy appropriate and noted that surrounding risks are “somewhat more favourable” than at the previous meeting. They expect economic growth to continue at a “moderate pace” and will continue watching how the situation with the coronavirus unfolds. Regular open market operations are still needed to ensure ample reserves. 

This week we will have consumer confidence and housing data as well as a second estimate of Q4 GDP, durable goods orders, PCE inflation data and data on personal spending and income. 

Important news for USD: 


  • Consumer Confidence Index


  • New Home Sales


  • GDP
  • Durable Goods
  • Pending Home Sales


  • PCE
  • Personal Spending
  • Personal Income


ZEW survey in February for Germany showed a drop to -15.7 vs -10 as expected. Expectations dropped from the previous month for both Germany and the Eurozone, coming in at 8.7 and 10.4 respectively. Coronavirus threat reared its ugly head and caused concerns about a global slowdown which will particularly hurt export-oriented economies like Germany. Final January CPI came in at 1.4% y/y with core being at 1.1% y/y.

Preliminary consumer confidence in February came in at -6.6 vs -8.2 the previous month which gave a short-lived boost to EUR as markets braced for PMI data. PMI data beat the expectations with manufacturing coming in at 49.1 on the back of jump in German manufacturing reading. Services were up to 52.8 which pushed composite to 51.6. A caveat to German manufacturing data is that almost half of the gain can be attributed to decrease in Supplier Delivery Index which indicates increased supply availability - and possibly decreased economic activity.

This week we will have sentiment and preliminary inflation data for February from Germany and EU as well as final Q4 GDP from Germany.

Important news for EUR:


  • Ifo Business Climate (Germany)


  • GDP (Germany)


  • Business Climate Indicator
  • Economic Sentiment Indicator
  • Services Sentiment Indicator
  • Consumer Confidence Index


  • CPI


The unemployment rate in December came in unchanged at 3.8% as expected. Claimant counts dropped from November and employment change in last three months of the year came in better than expected, but average weekly earnings dropped to 2.9% 3m/y from 3.2% 3m/y the previous month. Expectations were for drop to 3% 3m/y. Data still shows tight labour market from UK. Additionally, this is the data from December before the elections while there was a lot of uncertainty in the economy.

January headline inflation came in at 1.8% y/y vs 1.6% y/y as expected and up from 1.3% y/y the previous month. The rise in petrol prices was the main contributor to the inflation growth. Core reading came in at 1.6% y/y vs 1.5% y/y as expected. Although BOE’s target is 2% this move in the right direction will give them cause for happiness and keep them away from further rate cuts. Retail sales staged a rebound in new year coming in at 0.9% m/m vs 0.7% m/m as expected and up from -0.5% m/m the previous month on the back of strong clothing and footwear sales. Ex-fuel sales growth came in at 1.6% m/m, the strongest gain since May 2018.

Preliminary February PMI data showed services at 53.3 vs 53.9 prior, manufacturing at 51.9 vs 50 prior and composite the same at 53.3. Markit notes emergence of supply chain disruptions due to the coronavirus outbreak but they still forecast Q1 GDP to be at 0.2% q/q.


February meeting minutes showed board’s decision to keep rates on hold with their willingness to ease further if need arises. It is reasonable to expect periods of lower rates and further rate cuts will be taken only in order to support growth in inflation and job creation. The coronavirus has been characterized as a new risk for the global economy, but it is too early to judge its impact. Slowdown in Q4 of 2019 and Q1 2020 will be shown due to wildfires but they expect full recovery by the end of the year. Outlook for the economy remains positive.

Employment change in January came in at 13.5k vs 10k as expected. Full-time employment change came in at 46.2k for a big beat and boost to the economy. Part-time employment came in at -32.7k. As for the ugly side of the report, the unemployment rate jumped to 5.3% from 5.1% the previous month. RBA targets the unemployment rate trying to push it down to around 4.5% so this jump is particularly unwelcoming. This rise will spur talks about RBA rate cuts that may come sooner than later. Participation rate ticked up to 66.1% from 66% and this may ease the rise in the unemployment rate a bit.

AUD continues to drop toward new lows mainly on the back of stagnating wages. RBA noted in their minutes that they would welcome the rise in wages, but they do not expect to see it in the next 2 years. China reported that their refineries processed 25% less oil in 2020 than the average in H2 2019 indicating serious slowdown in demand for oil and consequently the fall in economic activity which lead Apple to state that they will not be able to reach their Q1 targets. Moody’s lowered China’s growth to 5.2% from 5.8% previously. China is trying to battle the economic slowdown with rate cuts, a cut to 4.05% from 4.15% on the 1-year loan prime rate as well as a cut to the 5-year rate to 4.75% from 4.80% previously.

This week we will have February PMI data from China showing the effect of coronavirus outbreak.

Important news for AUD:


  • Manufacturing PMI (China)
  • Non-Manufacturing PMI (China)
  • Composite PMI (China)


GDT price index came in at -2.9%. Second consecutive negative auction. Low demand from China seems to be the main culprit. Governor Orr characterized the economy and monetary policy as being in a “good position”. NZDUSD dropped below 0.64 on risk-off sentiment caused by perceived detrimental impact of coronavirus on global economy.

This week we will have trade balance and activity data.

Important news for NZD:


  • Trade Balance


  • ANZ Business Confidence
  • ANZ Activity Outlook


Manufacturing sales in December badly missed coming in at -0.7% m/m vs 0.7% m/m as expected with the prior month’s reading being revised down to -1% m/m from -0.6% m/m. This is the fourth consecutive month of negative readings. The decline was led by motor vehicles and aerospace products. Ex-auto category actually came in positive on month at 0.1% m/m. Sales were down in 11 out of 21 sectors.

Headline inflation in January came in at 2.4% y/y vs 2.3% y/y as expected and up from 2.2% y/y the previous month. Median and trim core inflation came in as expected at 2.2% y/y and 2.1% y/y respectively while common declined to 1.8% y/y from 2% y/y as expected. Retail sales in December came in flat vs 0.1% m/m as expected. The bright spot is that the previous month’s reading has been revised up to 1.1%. Ex-auto category came in at 0.5% m/m vs 0.3% m/m. The biggest contributors were building materials while biggest drag were gasoline stations and motor vehicles. Cannabis sales were up 8.1% m/m.

This week we will have Q4 GDP data.

Important news for CAD:


  • GDP


Preliminary Q4 GDP data came in at -1.6% q/q vs -1% q/q as expected for the first contraction in 5 quarters. The annualized reading came in at -6.3% which is a biggest drop since Q2 of 2014. Private consumption came in at -2.9% q/q vs -2% q/q as expected with business spending coming in at -3.7% q/q vs -1.6% q/q as expected. Expectations for the reading were low and data managed to miss even these low expectations. Both exports and imports dropped although net exports were positive and contributed with 0.5 pp. An atrocious quarter caused by sales tax hike and typhoons. With Japan being the export-oriented economy, the coronavirus outbreak will dampen the recovery in Q1, so the Olympic Games may act as a saving grace for the economy.

Trade balance data for the first month of 2020 came in at -JPY1312.6bn vs -JPY1984.8bn as expected but still a huge fall from -JPY154.6bn the previous month. Exports came in at -2.6% y/y vs -7% y/y as expected for a small positive from the reading, although it is the 14th consecutive month of negative exports. while imports fell -3.6% y/y vs -1.8% y/y as expected. Core machinery orders which serve as the capex indicator for 6 to 9 months in the future continued their decline coming in at -12.5% m/m vs -8.9% m/m as expected and -3.5% y/y vs -0.7% y/y as expected. Industrial production in December came in at 1.2% m/m and -3.1% y/y. Both readings came in better than previous month, however they were not enough to save the GDP.

National CPI data for January came in as expected. Headline number was at 0.7% y/y, ex-fresh food was at 0.8% y/y same as ex-fresh food, energy category. Those are some weak numbers that will pressure BOJ to continue with their massive monetary stimulus. If the sales hike effect is removed, the core CPI came in at just 0.4% y/y. Preliminary February PMI data showed the devastating effect of the coronavirus and China with a slowdown on exports - at 47.6 for manufacturing, 46.7 for services and 47 for composite. All three much weaker than the previous reading and all three in contraction.

This week we will have Tokyo area inflation, consumption, industrial and employment data.

Important news for JPY:


  • Tokyo CPI
  • Unemployment Rate
  • Retail Sales
  • Industrial Production


Trade balance data for the year start came in at CHF4.78bn vs CHF1.96bn the previous month on the back of 1.7% m/m exports and falling imports -1.8% m/m.

This week we will have consumption data.

Important news for CHF:


  • Retail Sales

You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT+2 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets. Please remember that MT4.VAR. and MT4.ECN. accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.

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