Key Points
Another strong week from Sterling, strengthening against majority of its peers.
Interest rate decisions for Australia and New Zealand due mid-week.
Another strong figure expected from US Non-Farm Employment on Friday.
FX Update
GBP
Sterling enjoyed another strong week last week, rising to 7-week highs and within touching distance of the $1.24 handle, as the pound continues to benefit from the broad improvement in risk appetite across markets, as concern over the banking sector continues to fade
The pound also received a tailwind from favourable month- and quarter-end flows, something that bears in mind watching as we move into April, which is traditionally the strongest month of the year for the quid
This week, the economic docket is a little quiet, with just final readings of the latest PMI surveys due, while the week is also holiday-shortened owing to Good Friday bringing trading to a premature halt
EUR
The EUR also had another solid week last week, notching a third weekly advance, albeit failing on a number of occasions to break north of the $1.09 handle, a sign that perhaps the bulls require a new catalyst in order to force a more decisive and prolonged move higher
Nevertheless, monetary policy divergence continues to work in the common currency’s favour, especially in the crosses, with the ECB set to remain the last hawk in town, especially after Friday’s data showed core inflation rising to a new record high 5.7% YoY in March
As with the UK, this week’s calendar is a little quiet for the bloc, with only the aforementioned PMI surveys of note, and Good Friday again bringing the week to an early conclusion
USD
While ‘no news is good news’ holds true for risk assets such as equities and commodities, the same cannot be said for the USD, which lost ground for the fourth week running last week, as risk appetite continued to improve, and major Wall St indices rose into a new bull market
End of month and end of quarter rebalancing also worked against the greenback, though it is important to note that the buck’s correlation with Treasury yields appears to have gone rather awry, with the 2-year yield notching its biggest weekly advance since last September, but the USD failing to find demand – perhaps something to have on the radar should that relationship reassert itself
Looking ahead, a busy week awaits Stateside; Friday’s jobs report is clearly the highlight, with nonfarm payrolls set to have increased by 223k, though the latest ISM PMIs, factory orders, and JOLTS job openings figures will also all attract attention
World News
Oil prices have risen after major producers such as Saudi Arabia have vowed to cut production. Brent crude was up 5.5% to $84.28, following the announcement that production would be cut by 1.15 million barres per day from May until the end of this year. These cuts will take some time to filter through but will add to the difficulties of the UK cost of living crisis.
French anger shows no sign of lessening after Macron forces rise in pension age. Â Protests have sparked across France, following the raise in retirement age from 62 to 64. Uncollected rubbish has piled up due to ongoing strikes, fires are being lit on the streets, as France erupts in chaos following the announcement.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Tuesday 4th March | AU | Interest Rate Decision | 3.60% | 3.85% |
| Tuesday 4th March | US | JOLTS Job Openings | 10.82m | 10.49m |
| Wednesday 5th March | NZ | Interest Rate Decision | 4.75% | 5.00% |
| Friday 7th March | US | Average Hourly Earnings m/m | 0.20% | 0.30% |
| Friday 7th March | US | Non-Farm Employment Change | 311k | 235k |
Indices
| Share Index | Prev. Close | Open |
| FTSE100 | 7631.74 | 7631.74 |
| DAX | 15628.84 | 15623.45 |
| CAC40 | 7322.39 | 7341.69 |