Market Update – March 20th
Here’s a brief overview of the latest market insights as of Friday.
Financial markets were relatively calm today as investors took stock of recent decisions made by major central banks. The US economic calendar didn’t offer any significant macroeconomic indicators today, leading participants to keep a close eye on ongoing developments related to the conflict in the Middle East.
USD Performance This Week
This week, the US dollar demonstrated notable weakness against major currencies, particularly the New Zealand dollar, as illustrated in the following table.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.26% | -1.37% | -0.76% | -0.02% | -1.42% | -1.66% | -0.13% | |
| EUR | 1.26% | -0.09% | 0.42% | 1.25% | -0.15% | -0.39% | 1.14% | |
| GBP | 1.37% | 0.09% | 0.66% | 1.34% | -0.05% | -0.30% | 1.30% | |
| JPY | 0.76% | -0.42% | -0.66% | 0.77% | -0.65% | -0.88% | 0.66% | |
| CAD | 0.02% | -1.25% | -1.34% | -0.77% | -1.43% | -1.63% | -0.10% | |
| AUD | 1.42% | 0.15% | 0.05% | 0.65% | 1.43% | -0.27% | 1.30% | |
| NZD | 1.66% | 0.39% | 0.30% | 0.88% | 1.63% | 0.27% | 1.53% | |
| CHF | 0.13% | -1.14% | -1.30% | -0.66% | 0.10% | -1.30% | -1.53% |
This table showcases the percentage changes of the US dollar against various currencies, with the base currency listed on the left and the quote currency along the top. It’s clear that the greenback has struggled this week.
The Bank of England decided to maintain its bank interest rate at 3.75%, which was anticipated by most. All members of the Monetary Policy Committee (MPC) supported this decision. Markets were hopeful for a rate cut, but the MPC noted the impact of increasing global energy prices, particularly on gasoline costs. They expressed readiness to act to keep inflation in check, aiming for a 2% target. Following this announcement, the GBP/USD experienced a more than 1% increase, consolidating above 1.3400 earlier in the day.
The European Central Bank also kept its key interest rate steady after the March meeting. They pointed out that the ongoing conflict in the Middle East has introduced considerable uncertainty, posing both upward inflation risks and potential downward effects on economic growth. ECB President Christine Lagarde highlighted that prolonged conflict could lead to sustained energy price increases and reductions in income. The euro/USD gained traction, advancing 1.2% the previous day before slightly retreating while maintaining levels above 1.1550.
Following a rally prompted by the US Federal Reserve’s recent hawkish tone, the US dollar took a downturn on Thursday, closing significantly lower. Currently, it appears stable above 99.00. Futures for US stock indexes show a mixed trend after yesterday’s modest declines.
In the context of rising concerns about the war in Iran and its global economic implications, EU leaders have pushed for a halt on military attacks targeting energy and water infrastructures in the Middle East. In parallel, Treasury Secretary Scott Bessent suggested that the U.S. might lift sanctions on Iranian oil within days. As a result, oil prices have seen a decrease, with West Texas Intermediate (WTI) trading around $93.50, down roughly 1% today.
Gold has also seen a significant weekly decline, recently touching around $4,500, the lowest since early February. However, it bounced back this morning in Europe, trading close to $4,700.
USD/JPY rebounded after dropping over 1% on Thursday, now moving towards 158.50. Meanwhile, the US dollar/Canadian dollar pair has been fluctuating, closing mostly unchanged yesterday but dropping on Friday, hovering just above 1.3700. As a note, Statistics Canada is set to release January retail sales figures today.
