Weekly Economic & Financial Commentary: Central Banks Front and Center This Week

Summary United States: Labor Market Continues to Exude Resilience Coming into the week, financial markets were looking for validation that January’s unexpected strength was not a fluke and that the downward slide in economic momentum experienced late last year had stabilized. On balance, this week’s indicators supported that notion. Next week: CPI (Tue), Retail Sales […]

The Weekly Bottom Line: BoC on Hold Amid Defiant Labour Market

U.S. Highlights Chair Powell’s testimony threw the market in to risk-off mode with both the Treasury and equity market falling on the week. The economy added 311k jobs in February, well ahead of the consensus forecast of 225k, reinforcing the resilience of the job market. There’s still plenty of data to come in before the […]

What Do Higher US Interest Rates Mean for the Risk-Linked Currencies?

With expectations about the Fed’s future course of action changing radically lately, the commodity-linked or risk-sensitive currencies aussie, kiwi, and loonie have been under strong pressure. But why are those currencies suffering and how could they perform in the near future? What does commodity-linked currencies mean? Commodity currencies are the currencies of economies that are […]

Forex and Cryptocurrency Forecast

EUR/USD: USA Labor Market Stops USD Jerome Powell played on the dollar side last week. Of course, the Fed Chairman knew that markets expected an interest rate increase of 25 basis points (bps) from the next FOMC (Federal Open Market Committee) meeting. But he did not rule out that his organization could take a more […]

Preview of NZ Q4 GDP and OCR Forecast Change

Bumps along the road We expect a 0.2% fall in GDP for the December quarter, following two quarters of extremely strong growth. This does not necessarily mark the start of a recession. GDP data has been choppy since Covid, and the details don’t tell a consistent story about whether monetary policy is biting. Nevertheless, it […]

Bank Crisis Hammers Fed Hike Expectations

The Silicon Valley Bank (SVB) went bust on Friday, around 44 hours after announcing that they would raise capital to fill in an almost $2 billion hole, after the bank sold its loss-making portfolio, rich in US treasuries, to pay their depositors – who are mostly tech startups – back in the actual environment of […]

Contagion Fears

Market movers today We start the week in a quiet fashion on the data front, but market focus remains on the collapse of Silicon Valley Bank (SVB) and the repercussions for the wider US banking system. Later the this week the key data release for markets will be the US CPI for February on Tuesday, […]

Reaction of Fed to the New Financial Stability Issues is Difficult to Assess

Markets On Friday, it was impossible for markets to decouple its reaction to the US payrolls from the developing story on Silicon Valley Bank. The US economy in February added an above-consensus 311 000 jobs. The unemployment rate rose from 3.4% to 3.6%, but at the same time participation rate improved from 62.4% to 62.5%. […]

Will US CPI Report Cause Another Market Storm?

The last CPI report before the Fed’s March policy meeting is due on Tuesday at 12:30 GMT and after the recent nasty surprises in the data, anxiety is running high about another hot print. Fed chief Jerome Powell has already upped the stakes by opening the door to a return to double rate hikes, while […]

Pound Extends Gains on US Bank Debacle, UK Employment Report and US Inflation Next

The British pound continues to rally and punched as high as 1.2141 earlier today before retreating. In the European session, GBP/USD is trading at 1.2100, up 0.56%. There are no economic releases out of the US or UK or Monday, but the markets have plenty to digest after the sudden collapse of the Silicon Valley […]