Major Currencies Week in Review March 25-29

Week in review March 25 29
.31 Mar 2024
author avatar image Andreas Thalassinos

Table of Contents

Briefing

The “Major Currencies Week in Review March 25-29” was marked by the release of several high-impact reports that showed little change in the prior technical outlook of EURUSD, GBPUSD, and USDCAD.

GDP rose in January by 0.6%

  • The Gross Domestic Product grew by 0.6% beyond expectations.
  • Technically, the USDCAD remained above the 50-period Moving Average, and the Momentum oscillator was above its baseline when the survey was released.
USDCAD price chart showing the exchange rate above the 50-period moving average and the momentum oscillator above its baseline.

In January, the real gross domestic product (GDP) of Canada increased by 0.6%. The services-producing industries also showed growth, increasing by 0.7%. This was, in part, due to a rebound in educational services following the resolution of the public sector strikes in Quebec in November and December. Additionally, goods-producing industries were up by 0.2% in January 2021, with the utilities and manufacturing sectors rebounding from declines in the previous month. Overall, there was broad-based growth, with 18 out of 20 sectors showing growth in January.

The Gross Domestic Product (GDP) measures the change in the inflation-adjusted value of all goods and services produced by the economy. It is widely regarded as the broadest measure of economic activity and the primary gauge of the economy’s health. The release of this economic indicator is of particular interest to traders due to its impact on currency values. In general, when the actual value of GDP exceeds the forecasted value, it is considered to be good for the currency. This economic indicator is released monthly, approximately 60 days after the end of the month being measured. 

CB Consumer Confidence Ticked Lower

  • The Consumer Confidence Index fell to 104.7 in March, below expectations of 106.9.
  • Technically, the EURUSD was below the 50-period Moving Average, and the Momentum oscillator was below its baseline when the survey was released.
EURUSD price chart showing the currency pair below the moving average line and the  momentum oscillator below its baseline.

The Consumer Confidence Survey is a monthly report that provides an overview of the prevailing business conditions and potential developments for the upcoming months. This report presents a detailed analysis of consumer attitudes, buying intentions, vacation plans, and expectations related to inflation, stock prices, and interest rates. The data is available based on age, income, nine different regions, and the top eight states (California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio, and Michigan). 

Market participants and analysts closely monitor these readings to gauge economic conditions and make informed decisions.

A reading that exceeds expectations should be interpreted as an encouraging sign for the United States dollar (USD) and viewed as a bullish indicator. Conversely, a reading that falls below expectations should be deemed a negative signal for the USD and regarded as a bearish indicator. 

Core Personal Consumption Expenditure rose by 0.3 percent 

  • The index for core personal consumption expenditures, which excludes the typically volatile food and energy components, has increased by 0.3% from the preceding month, indicating a deceleration from the unexpectedly robust reading in January.
  • Technically, the GBPSUD remained below the 50-period Moving Average, and the Momentum oscillator was below its baseline when the survey was released.
GBPUSD price chart showing the pair below the moving average and the momentum oscillator below its baseline.

The Core Personal Consumption Expenditures (PCE) Price Index is a measure of the monthly change in the price of goods and services that consumers purchase, excluding food and energy. As one of the Federal Reserve’s tools to gauge inflation, this index is instrumental in informing monetary policy decisions. The importance of inflation to currency valuation lies in the fact that the central bank may opt to increase interest rates in response to rising prices as part of its mandate to contain inflation. The Core PCE Price Index measures the monthly change in the price of goods and services purchased by consumers, excluding food and energy.

It’s the Federal Reserve’s primary inflation measure. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

The Pending Home Sales Index (PHS) is a key leading indicator of housing activity by measuring the contract activity for housing. It is based on signed real estate contracts for single-family homes, condos, and co-ops. This index is especially useful as it provides insight into the state of the housing market by anticipating the future trends of housing sales. The housing market is known for its lengthy process, and the PHS allows for the prediction of future trends in the market in a timely manner. As a result, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two, as a contract is signed several weeks before the home is counted as sold.

Summary

It is paramount for traders to remain up-to-date with the latest geopolitical and economic developments, exercise caution, and closely monitor market trends to optimize their investments and mitigate potential risks or losses. Utilize technical analysis tools to assess market sentiment and validate underlying fundamentals.

author avatar image
Andreas Thalassinos

Experienced educator with a demonstrated history of working in the financial services industry. Skilled in Technical Analysis, Market Risk, Asset Management, Stock Market, and Trading Systems. Strong professional with a MSTA by Society of Technical Analysts (UK), CFTe and MFTA focused in Master of Financial Technical Analysis from International Federation of Technical Analysts (USA).