Weekly Market Review - April 8-12
This has been a bullish week for euro, as the European Central Bank left the rates unchanged and expressed its openness to continue with the stimulus. Euro was the best performer among major currencies, adding 0.83% against the US dollar for the week. The European currency is also about 1% higher than the Japanese Yen and Swiss Franc.
In the crypto space, Bitcoin tried to surprise the market with another bullish surge but eventually entered a correction and now fluctuates close to $5,000.
German Govt to Cut GDP Growth Forecast
The German government is about to cut its economic growth forecast for this year to 0.5% from the previous outlook at 1.0% due to a decline in exports amid global trade tensions, according to a government source that revealed the information to Reuters. While some slight changes might arise until the release date on Wednesday, the previous forecast will be greatly reduced. German economic institutes also cut their 2019 GDP growth forecast to 0.8% from 1.9%.
US Jobless Claims Close to 50-Year Low
The US Department of Labor said that the number of applicants for initial unemployment benefits had declined by 8,000 last week, to 196,000, which is the lowest level since October 1969. Analysts anticipated that the weekly figure would rise 211,000, but were surprised to see the fourth weekly decline in a row, which demonstrates the good shape of the labor market. The four-week average, a more accurate indicator, was 207,000, which is 7,000 down from the previous week.
US PPI Shows Highest Gain In 5 Months
The Producer Prices Index (PPI) in the US rose last month above expectations, with the Labor Department reporting an increase by 0.3% in March and 2.2% year on year (y/y), up from February’s 0.1% monthly increase and 1.9% annual reading. The core PPI, which doesn’t include food and energy prices, rose 0.6% in monthly terms and 2.4% y/y. The fact that the annualised figure for core PPI slowed from February’s 2.5% explains why the Federal Reserve doesn’t hurry to tighten its policy this year.
EBC Keeps Policy Unchanged
The European Central bank (ECB) didn’t make any changes to its monetary policy on Wednesday, keeping interest rates at record low levels and maintaining its guidance for steady rates even if the economic growth has slowed down. Given the current deceleration in economic and inflation growth, the ECB has given up its intention to tighten policy by the end of 2019, proposing instead more stimulus to encourage exports amid global trade tensions. The decision was in line with analysts’ expectations.
UK GDP Grew in Line with Forecasts
The rate of the UK’s GDP growth decelerated in February in line with expectations. The updated from the Office for National Statistics (ONS) came while the markets were waiting for another delay of the Brexit deadline. Thus, GDP growth was 0.2% in February, down from January’s 0.5% growth. Rob Kent-Smith, head of ONS, said that the economic growth had been driven by the services sector and a strong performance in IT. Manufacturing, chemicals, and alcohol markets also had a positive contribution.
US Home Purchase Sentiment Increases
In the US, the consumer sentiment for purchasing a home increased to the highest level in nine months thanks to a healthy employment situation and a year-to-date decrease in mortgage rates, federal mortgage agency Fannie Mae said on Monday. Thus, the home purchase sentiment rose 5.5 points to 89.8, the highest since June 2018. Interestingly, the next share of consumers that believe it is a good time to sell a home surged 13 points to 43%.
Upcoming News to Watch
Next week, several important macroeconomic updates will come from the eurozone. Thus, Germany will report on its ZEW Economic Sentiment on Tuesday. On Wednesday, we’ll find out the consumer price index (CPI) and trade balance in the eurozone. Canada will also report on its inflation changes during the same day, while Australia will release employment data.
Many traders will be active for only four days, as the major markets will be closed on Friday due to the Good Friday holiday. This concerns the US, Germany, the UK, France, Spain, Brazil, Canada, Australia, Singapore, India, and Hong Kong among others.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.