Good evening,

The US dollar lost ground last week against all the major currencies group. The rally of Oceanic currencies and Loonie dollar as well continued, thanks to their positive correlation with energy commodities. AudUsd rose 38 Pips to .796 (+0.51% Weekly ) and NzdUsd gained 44 pips at 0.6786 (+0.65% weekly). The Canadian dollar did even better as UsdCad lost 213 pips at 1.3003 (-1.64% weekly).  The Japanese Yen was the currency that gain most against the Greenback on the last week, and UsdJpy closed last Friday at 11.54 (-2.02% weekly).  EurUsd rose 122 pips to 1.1267 (+1.10% weekly) and GbpUsd closed at 1.4473(+0.64% weekly), up 92 pips.  The Swiss Franc consolidated its short term bullish trend thanks to lower highs and lower lows of  UsdChf, that lost 126 pips at 0.9692 and closed near its 2016 low.  Central Banks are engaged in the so called “currency war” and what happened during the last 2 weeks was the confirmation that monetary authorities are not scared to make decisions that bring monetary policies in unchartered territory. The macroeconomic cycle widened its range as one fifth of short term Eurozone Government bond have negative rates, making spreads artificially lows. The ECB started to buy corporate bonds as after its QE program the Sovereign Bond Market became thin. The Bank of Japan, on its Statement of Monetary Policy released the 15^th of March increased the purchase of JGBs (Government bond) to 80 trillion Yen and also confirmed the purchase of Exchange Trade Funds and REIT (Real Estate Investment Trust).

On Wednesday the FOMC decided to keep interest rates at the current level, 0.5%, and reduced the end of the year target from 1.375% to 0.875%. Thus the Federal Reserve may decide to lift rates  twice this year and if global growth may decrease then  rates would be unchaged. Both the Swiss National Bank and the Bank of England kept rates unchanged last Thursday . The SNB  even is keeping rates negative cannot avoid the revaluation of the Swiss Franc, and the BOE, by announcing  bilions of pound of extra liquidity to banks in case of a post Brexit financial stress,  may obtain the same results  of a rate cut.  Competetitive devaluation could be the most important global macro trade of the year.The equilibrium of fiscal and monetary policies is unbalanced as most G10 countries have a DEBT/GDP ratio above 100%;  It is a paradox that Japan has nearly negative rates (thus a nearly irrilevant risk) and  a GDP/DEBT ratio above 200%.   China bond market is the third in the world but much more thinner than the US and the Japanese, but the most relevant aspect  is that it has a DEBT/GDP ratio below 50%, thus it has options to increase growth with public spending,  leveraging more on Fiscal Stimulus than on Monetary easing.  Many countries aleardy are in a deflationary environment and the excess of Quantitative easing may produce an event that has been highly underestimated: Stagflation.  This is the case of high inflation, slow economic growth and high unemployment rate.  Just because happened 40 years ago in UK, Europe and US it does not mean that it will not happen again; if this scenario will materialize precious metals and commodities will be the best assets. Stocks Indices  will suffer as investement will decrease thanks to lower expectations of consumption.  Crude Oil last week rose 2.72% and Gold lost 0.27%, but Year To Date the shiny metal is still the best performer among commodities (+18.41% YTD).  Gold was depressed after a 5 years bear market. The current framework of the commodity is not bullish yet in the long term, thus trend followers are paying attention more than usual on the price activity of the shiny metal.  Monday will be poor of relevant events in the economic calendar and on Tuesday RBA Governor Steven will hold a speech at 05:30 GMT. At 08:30 GMT  UK CPI  and then at 13:00 GMT will be the turn of US Housing Price Index. During the day will be released several markit data regarding Eurozone members and US as well.  On Wednesday EIA Crude Oil Stock at 14:30 GMT  and on Thursday will be the turn of the ECB Targeted LTRO data at 10:15 GMT.  On Friday the FX market will be open but commodities market and stock exchanges  will be closed.