Market review 3.3.2017

Amidst the alleged plans of the Trump administration of interest rate hikes fairly soon, the delay of its implementation has the U.S. dollar hitting a low.  United States Secretary of Treasury Steven Mnuchin announced last week that the Trump administration will implement a small percentage of the promised economic reforms, and the implementation will be delayed until August of this year. This has resulted in a mediocre performance of the U.S. dollar against other major currencies.

The political rumours in the UK about the Scottish referendum have also affected the pairing of the USD and the GBP.  It started out as a promising pairing at the beginning of the week, but it turned out to be an exercise in caution, at least until the rumours have abated. Many investors watched with bated breath whether the USD/GBP pair will continue to decline this week.  It continues its slight decline.  Although this is the case, the real estate market, durable goods orders and GDP data from both the United States and the United Kingdom has increased slightly, making the future of this currency pairing slightly brighter.

U.S. durable goods orders such as electrical gear and communications equipment rose the previous month, and are expected to continue rising all throughout March. There is in fact, an estimated increase of 0.5% monthly until December 2017. The United States manufacturing sector also showed an increased manufacturing PMI, and by February month-end should be at 56.1 points. The U.S. Services sector, on the other hand, has shown a bit of an increase as the employment index continues to rise in February. It is also good news for the U.S. oil sector, as crude exports continue to rise. When it comes to the U.S. market, investors need to keep a close watch on unemployment claims, as this might affect the standing of the U.S. dollar.

In the United Kingdom, the construction and housing sector continues to be bullish, and there is an expected increase in business during the next 12 months.  Although there is a decrease in export orders and new businesses, Manufacturing PMI output and prices charged increased. Because of the bright standing of the real estate housing industry in the UK, the business confidence of construction companies increased this year.

The pairing of the Euro and US Dollar also showed a bit of a decline this week. There are two significant political events to watch out for in Europe, and both of these will most likely affect the standing of the Euro. On March 15, the Dutch General Elections will be held.  If the PVV party is victorious, then the Euro will definitely be shaken.  The PVV party is in favour of The Netherlands leaving the European Union. On April 23, the French Presidential election will be held. If the political party Front National is victorious, its leader Le Pen promises a referendum of French nationals on EU membership. This will also significantly affect the Euro. Should the Euro decline, many financial analysts are recommending investors to rely on safe-haven instruments, and the popular ones right now are the Japanese Yen and gold.

On the other hand, the Australian Dollar and US Dollar pair has stayed on the periphery of the bullish trend line, albeit only for a short term. Many investors are still a bit wary about the negative reading of the Australian economy.  However, the economy of Australia is slowly bouncing back, and expected to recover in the next few months. Although there is an overall slump in most economic sectors, the agricultural sector gained 7.5 %, a figure which provided the much-needed offset to their numbers.