In a relatively subdued trading week, the Kiwi takes the top spot as positive broad risk sentiment recovered after bond yields fell, and recovery optimism sparked by more proposed stimulus measures.
Business sentiment updates were largely positive as well from around the globe, likely contributing to the risk-on lean this week. And as usual in risk-on environments, the Japanese yen didn’t fare well, actually closing out as the biggest loser of the week.
Notable News & Economic Updates:
Another Relatively Quiet Week in Markets
Not much to talk about in the financial markets this week as volatility across the different asset classes remained relatively contained. Most of the action came early on Monday and Tuesday as traders were pulled between several themes, including rising bond yields, OPEC output expectations, and last Friday’s Margin call at Archegos Capital Management, before settling into a slow groove on Wednesday.
It’s likely that as fears of contagion from Archegos Capital Management’s blow up faded, and the lack of fresh major catalysts / news headlines, traders decided to stayed on the sidelines ahead of Friday’s U.S. employment situation report and the Easter holiday.
Broad risk sentiment leaned positive for most of the week, again, likely on fading contagion risks from the Archegos Capital Management story, but possibly also on improving business sentiment data released this week, as well as late week positive headlines from the covid vaccine story (e.g., Pfizer-BioNTech says Covid vaccine is 100% effective in kids ages 12 to 15, Japan secured more Pfizer vaccines to immunize elderly population)
Most asset classes are likely to close relatively near their opening prices on Monday, with exception to Bitcoin, which seems to have benefitted from a slew of arguably bullish headlines this week of further institutional / mainstream adoption (e.g., Visa now settles payments in USDC stablecoin on Ethereum blockchain, Goldman Sachs is close to offering bitcoin and other digital assets to its wealth management clients, PayPal now allows crypto spending at millions of merchants)
USD Pairs
The U.S. dollar spent much of the week in the green against the rest of the major currencies, likely supported by another round of rising bond yields. But USD bulls luck changed on Thursday, possibly on rising positive risk sentiment. This may have been sparked by positive covid headlines, most notably from Pfizer, as well as better-than-expected reads on business sentiment updates from around the globe.
GBP Pairs
Sterling nearly takes the top spot this week, likely support by both the general risk-on vibe, but likely on the positive rhetoric from BOE officials, covid developments in the U.K. and better-than-expected GDP data.
EUR Pairs
The euro spent most of the week in the red against the majors, likely on the continued pressure from the market that’s been fueled by the that renewed covid lockdowns in Europe, which have been bringing down economic growth expectations.
CHF Pairs
The franc’s choppy, net loss against the majors despite positive economic updates from Switzerland indicates that broad risk sentiment was the top influence in CHF price action this week.
CAD Pairs
The Canadian dollar is once again a net gainer, likely on both positive economic updates as well as the broad risk-on lean. It was enough to avoid the Loonie from being dragged lower by oil prices this week.
NZD Pairs
The Kiwi was a net gainer this week despite weaker-than-expected updates from New Zealand. That makes the probability high that Kiwi was trading off of risk sentiment and counter currency flows.
AUD Pairs
The Australian dollar wasn’t able to join its Comdoll cousins to net gains this week as the new set of lockdowns overshadowed arguably net positive economic updates.
JPY Pairs
We saw selling pressure on the Japanese yen all week, likely on the broad risk-on sentiment discussed above, as well as net negative economic updates from Japan. The growing geopolitical risks developing between Japan and China (China issues strong warning to Japan over ‘negative moves’ in East China Sea dispute) may have been a contributor as well.
