Last week the U.S. dollar continued to depreciate and the global reserve currency index fell to 1-month lows. The high-risk appetite prevailing in the financial markets and the new all-time highs of stock indices are encouraging investors to choose riskier currencies.
U.S. data was very positive and showed rapid recovery. The country’s retail sales in March increased as much as 28% from the same month a year ago. During a part of March last year, the economy was shut down due to pandemic, and in March this year, residents began receiving incentive checks from the state, which led to higher spending, both of which led to impressive growth. The benchmark will also be favourable in April, when in April 2020 the annual economy slowdown due to the pandemic reached as much as -20%. Inflation stood at 2.6% in March, exceeding both 2.5% expectations and 1.7% higher than last month. Industrial volumes in March were 1.0% higher than a year ago. The number of new jobless claims fell from 0.74 to 0.58 million a week.
The pandemic situation in the world showed a growing number of new cases, which rose from 638 to 743 thousand per day. The situation in the U.S. continued to deteriorate slightly as the weekly average rose from 68 to 71 thousand per day. The number of vaccines injected in the country rose from 179 million to 202 million, a change of 23 million and an even faster increase from the previous week. Overall, the number of people vaccinated with at least one dose in the U.S. rose from 34.5% to 39.0% of the population and increased by 4.5% over the week. Globally, the number of people receiving at least one dose in England rose from 48% to 49%, while in Lithuania the figure rose from 16.6% to 20.1%, making it one of the best weeks in the country.
The main currency pair EUR/USD rose to the level of 1,199, driven by the high-risk demand market. Among the economic data in the Old Continent were retail sales in February, which were -2.9% lower than a year ago, but 3.0% higher than last month. The ZEW economic sentiment index in Europe was 66.3 points, and in Germany 70.7 points and showed a positive sentiment among business participants. European industrial production in February was -1.6% lower than a year ago. The EUR/USD pair closed the week with a rise of 0.7%.
The top Asian pair, the USD/JPY, depreciated steadily throughout the week, reaching 108.8 points. No relevant economic data was published. USD/JPY ended the week depreciating -0.8%.
The GBP/USD pair also showed a consistent trend and rose to the level of 1,384 points throughout the past week. Among the important economic data were the volumes of industrial production in February, which fell by -3.5% per year. GBP/USD ended the weekly trading depreciating -0.9%.
This week will start with data on Japan's exports and international trade, as well as the country's industrial output. English labour market data will be expected on Tuesday and inflation rates in Britain on Wednesday. A meeting of the European Central Bank and decisions on further monetary policy and U.S. secondary real estate market activity data are expected on Thursday. On Friday, the focus will shift to preliminary PMI indices, as well as inflation in Japan in March and retail sales data in Britain.
According to Admiral Markets market sentiment data, 28% of investors have long positions in the EUR/USD pair (increased 2 percentage points from last week). In the main Asian pair USD/JPY, 46% of investors have long positions (increased by 9 percentage points). In the GBP/USD pair, 22% of participants expect a rise (down 46 percentage points). Such market data is interpreted as contraindicative, therefore EUR/USD, GBP/USD and USD/JPY are expected to rise. The analysis of positioning data needs to be combined with fundamental projections and technical analysis.
Sources: bloomberg.com, reuters.com, Admiral Markets MT4 Supreme Edition, investing.com
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