Weekly Market Review - March 11-15

The week ending March 15 saw weaker US dollar and Japanese Yen. On the other side, the euro and British pound increased against their rivals. The European currency rose 0.78% against the US dollar on the week, to 1.132, and fell 1.35% against the pound. GBP/USD has added 2.16% since Monday. Japanese Yen fell 1.06% against the euro and 0.27% against the US dollar.

Macroeconomic News

UK Parliament Seeks Delay to Brexit

The UK parliament conducted a series of votes to decide on how the country would leave the EU. However, it is still unsure exactly how and when the Brexit will happen. Members of Parliament (MPs) voted against Prime Minister Theresa May’s exit agreement again. Also, on Thursday, the MPs voted against no-deal Brexit. Instead, the majority of MPs voted in favor of a short delay in the exit process, though such a procedure requires approval of all EU member countries.

EU’s Production Increases

Strong economic figures come from the eurozone, where industrial production increased in January 1.4% against December 2018, which is more than expected by experts. Manufacturing activity rose in France, Italy, Spain, and the Netherlands, with Germany recording a negative figure of -0.8%. Recently, the Ifo institute reduced its forecast for German economic growth in 2019 to 0.6% from 1.1%, mainly because of weaker demand for industrial goods from foreign countries.

US CPI Declines

The consumer price index in the US increased by 1.5% last month compared to February 2018, which represents a slower growth rate than January’s 1.6% gain. Core CPI, which excludes the prices of food and energy, declined to 2.1% from 2.2% the previous month. The inflation index is an important measure used by the Fed to decide its monetary policy and the interest rates.

US Retail Sales Increase

The US retail sales indicator showed a growth of 0.2% in January of this year compared to the previous month, driven by higher purchase of construction materials and discretionary spending. December retail sales figures were revised down at -1.6%. Even though December and January aggregate increase was slower than initially expected, Bloomberg still forecasts US consumer spending to keep strong at 2.7% in annual terms.

UK GDP Growth Was Revised

This year, the British GDP might add 1.2% instead of the previously expected growth of 1.6%, according to a forecast submitted by HM Treasury Secretary Philip Hammond. The GDP growth forecast for 2020 was maintained at 1.4% while the forecast figures for 2021 and 2022 have both been raised to 1.6% from the previously expected 1.4% and 1.5% respectively.

China’s Economic Growth Slows

The second largest economy in the world faces real challenges. In the first two months, industrial output increased 5.3% year on year, the worst result in more than a decade. Retail sales increased 8.2%, the slowest pace since 2012. The good news is that fixed-asset investment recorded gains and real estate investment surged.

Upcoming News to Watch

In the coming week, several important events are planned, with the Fed’s interest rate decision on Wednesday being in the spotlight. The Bank of England will also present its interest rate decision the next day. On Tuesday, Bank of Japan and the Reserve Bank of Australia will present their meeting minutes.

Besides, PM Theresa May is expected to ask for a third Brexit vote, which might be organized this Tuesday before the EU summit.

All of these events will likely cause increased volatility in the respective currencies.

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