Weekly Market Watch

Released 16 November 2015 - Weekly Newsletter

Last week recap

Gained a fraction last week as ECB President Mario Draghi acknowledged the chance of further stimulus in December and as the Greenback consolidated at a slightly lower level after last week’s positive employment numbers. The rate began the week on a positive note, gaining a fraction on Monday in the absence of any significant economic data out of either economy. The pair then made its weekly low of 1.0673 on Tuesday after comments from ECB governing council member Erkki Liikanen, who said that the governing council “is willing and able to act by using all the instruments available within its mandate if warranted in order to maintain an appropriate degree of monetary accommodation.” Tuesday’s economic data had U.S. Import Prices decline -0.5% compared to an expected -0.1% with the previous number downwardly revised from -0.1% to -0.6%. On Wednesday, the pair gained a fraction after ECB President stated, “Cross border markets create a community of interest from which each member stands to benefit. But they also heighten shared exposure to the potential detriment of all, so they need governance. This is true at the global level and the European level.” The pair then made its weekly high of 1.0829 on Thursday after ECB president Mario Draghi speaking to the European Parliament in Brussels, said that “signs of a sustained turnaround in core inflation have somewhat weakened.” He continued saying that “while the recovery will gradually strengthen the impulse underlying the inflation process, the protracted economic weakness of the past years continues to weigh on nominal wage growth, and this could moderate price pressures as we move forward.” Also, comments from the Fed’s Evans, who stated, “I believe that it could be well into next year before the headwinds from lower energy prices and the stronger dollar dissipate enough so that we begin to see some sustained upward movement in core inflation. After liftoff, I think it would be appropriate to raise the target interest rate very gradually.” Thursday’s economic numbers had U.S. JOLTS Job Openings increase to +5.53M versus an expectation of +5.39M. The rate declined on Friday after Eurozone Flash GDP increased +0.3% q/q compared to an expected +0.4%, while German Preliminary GDP printed at +0.3%, in line with expectations. Also out were U.S. Retail Sales, which increased +0.1% m/m versus +0.3% anticipated while Core Retail Sales increased +0.2% m/m versus +0.4% expected, and U.S. PPI, which declined -0.4% m/m versus an expected increase of +0.2%. EUR/USD went on to close at 1.0768, with an overall gain of +0.2% for the week.
Declined last week as asset flows favoured the Yen over the Greenback with mixed U.S. numbers and with very little economic data out of Japan. The week began with the pair making its weekly high of 123.60 on Monday in the absence of any significant data out of either country. The rate gained a fraction on Tuesday after the Japanese Current Account showed a surplus of +0.78T, significantly lower than the +1.50T that was expected. On Wednesday, the pair resumed its downtrend with no data out of either country. Thursday saw the rate extend its losses after Japanese Core Machinery Orders increased +7.5% m/m, more than double the expected +3.3%. The pair then consolidated at a slightly lower level after making its weekly low of 122.44 on Friday as the United States reported lower than expected Retail Sales data. USD/JPY closed at 122.58, with a weekly loss of -0.5%.
Gained ground last week as both countries reported mixed economic data, with positive employment numbers out of the UK. The week began with Cable making its weekly low of 1.5040 on Monday in the absence of any significant data out of either country. The pair continued fractionally higher on Tuesday after lower than expected U.S. Import Prices. Cable then shot up on Wednesday after the UK Unemployment Rate dropped a notch to 5.3% from 5.4%, while Claimant Count Change increased +3.3K versus an expected increase of +1.6K, however the previous number was significantly revised down from +4.6K to +0.5K. Also, the UK Average Earnings Index increased +3.0% 3m/y compared to an expected increase of +3.2%. On Thursday, the pair gained a fraction after comments from the BOE’s chief economist, Andy Haldane who said that, “My personal view is that, in the current environment, a rate rise would increase unnecessarily the chances of the economy falling below critical velocity, thereby extending the period inflation remains below target. For those reasons, I have continued to vote to leave rates unchanged, with a neutral stance on the future direction of monetary policy.” The rate then made its weekly high of 1.5263 on Friday after disappointing U.S. Retail Sales and PPI data. GBP/USD closed at 1.5231, with an overall weekly gain of +1.2%.
Rallied last week as Australia posted mostly better than expected economic numbers with mixed data out of the United States. The week began with the rate gaining a fraction on Monday despite Australian ANZ Job Advertisements, which increased +0.4% m/m compared to a previous reading of +3.8%. The pair then made its weekly low of 0.7015 on Tuesday after Australian NAB Business Confidence printed at 2 compared to a previous reading of 5, nevertheless, Australian Home Loans increased by +2.0% m/m, significantly higher than the +0.1% increase that was expected. The rate then turned higher on Wednesday despite Australian Westpac Consumer Sentiment, which printed at +3.9% compared to a previous reading of +4.2%. On Thursday, the pair continued rallying after Australian Employment Change showed an increase of +58.6K jobs in October, notably higher than the +14.8K that was expected, with the previous number upwardly revised from -5.1K to -0.8K. Also, the Australian Unemployment Rate dropped to 5.9% from 6.2%. In addition to the employment data, Australian MI Inflation Expectations printed at 3.5%, unchanged from its previous release. The pair then consolidated at a slightly higher level after making its weekly high of 0.7157 on Friday after dismal U.S. Retail Sales data. AUD/USD closed the week at 0.7126, with a gain of +1.2% from its previous weekly close.
Gained a fraction last week as asset flows favoured the Greenback over the Loonie with very little economic data out of Canada. The week began with the rate declining on Monday in the absence of any significant data out of either country. The pair continued fractionally lower on Tuesday after lower than expected U.S. Import Prices. On Wednesday, the rate extended its losses with no significant economic data out of either country. The pair then gained ground after making its weekly low of 1.3224 on Thursday after Canadian NHPI increased +0.1% m/m compared to an expected +0.2%. The rate then made its weekly high of 1.3348 on Friday despite lower than expected U.S. Retail Sales data. USD/CAD closed at 1.3325, with a gain of +0.2% for the week.
Showed little change last week as the RBNZ released it Financial Stability report and with mostly lower than expected economic numbers out of the United States. The rate started the week rising a fraction on Monday in the absence of any significant data out of either country. The pair gained another fraction on Tuesday after the RBNZ Financial Stability Report noted that, “Low interest rates continue to support global recovery, but also encourage leverage and financial risk-taking. At the same time low interest rates may be disguising a decline in market liquidity, which could amplify volatility in financial markets. Slowing growth in China has been a key driver of deterioration.” After the release of the report, RBNZ Governor Wheeler said that, “The possibility of us raising interest rates at this point to lean against house price pressures in Auckland are probably pretty negligible”. On Wednesday, the pair made its weekly high of 0.6586 in the absence of any significant numbers out of either country. Thursday saw the rate make its weekly low of 0.6498 as the United States reported mixed employment numbers. The rate then consolidated at a slightly lower level despite lower than expected U.S. Retail Sales and PPI data. NZD/USD closed at 0.6535, with an overall weekly gain of +0.2%.

The week ahead

AUD The Australian economic calendar is quieter this coming week, only featuring the G20 Meetings on Sunday; a speech by RBA Assistant Governor Kent on Monday; the RBA’s Monetary Policy Meeting Minutes and a speech by RBA Assistant Governor Debelle on Tuesday; and the Wage Price Index (0.6%) on Wednesday. Resistance for AUD/USD is seen at 0.7279/84, 0.7181/0.7223 and 0.7157, with support noted at 0.7041/83, 0.6907/0.7021 and 0.6246.

CAD The Canadian economic calendar is busier than usual this coming week, featuring CPI data on Friday. Sunday starts the week’s highlights off with the G20 Meetings, and Monday has Manufacturing Sales (0.3%) and Foreign Securities Purchases (4.12B) due out. Tuesday and Wednesday offer little of note, while Thursday features Wholesale Sales (last -0.1%). Friday’s important data then concludes the week with Core CPI (last 0.2%), Core Retail Sales (last 0.0%), CPI (last -0.2%) and Retail Sales (last 0.5%). Resistance for USD/CAD is seen at 1.3415/56 and 1.3316/52, while support shows at 1.3278/1.3309, 1.3153/97 and 1.2900/1.3054.

EUR The Eurozone economic calendar is moderately active this coming week, featuring the German ZEW Economic Sentiment survey on Tuesday. Sunday starts the week’s highlights off with the G20 Meetings; Monday offers Final CPI (0.0%) and a speech by ECB President Draghi; and Tuesday’s key events include the German ZEW Economic Sentiment survey (6.7) and the EZ ZEW Economic Sentiment survey (35.2). Wednesday then has no noteworthy data, while Thursday features a speech by German Buba President Weidmann and the ECB Monetary Policy Meeting Accounts. Friday’s important data then concludes the week with speeches by ECB President Draghi and German Buba President Weidmann. Resistance for EUR/USD is seen at 1.1052/1.1171, 1.0996/1.1005 and 1.0808/96, with support showing at 1.0712, 1.0659/73 and 1.0520.

GBP The UK economic calendar is less active than usual this coming week, only featuring the G20 Meetings on Sunday; CPI (-0.1%), PPI Input (0.2%) and RPI (0.9%) on Tuesday; Retail Sales (-0.4%) on Thursday; and Public Sector Net Borrowing (5.5B) on Friday. Resistance to the topside for GBP/USD shows at 1.5496/1.5508, 1.5304/82 and 1.5241/63, while support for the pair is expected at 1.5026/1.5199, 1.4900/93 and 1.4852/55.

JPY The Japanese economic calendar is rather quiet this coming week, only featuring the G20 Meetings on Sunday; Preliminary GDP (-0.2%) on Monday; and then the tentatively scheduled BOJ Monetary Policy Statement and BOJ Press Conference on Thursday. Resistance for USD/JPY currently shows up at 125.06/85, 124.47/57 and 123.00/72, with support indicated at 122.29, 120.02/122.02 and 118.49/119.65.

NZD The New Zealand economic calendar is also rather peaceful this coming week, only featuring the G20 Meetings, Retail Sales (1.6%) and Core Retail Sales (1.0%) on Sunday; Inflation Expectations (last 1.9%) and the tentatively scheduled GDT Price Index (last -7.4%) on Tuesday; and PPI Input (-0.3%) on Wednesday. The chart for NZD/USD shows resistance at 0.6790/0.6813, 0.6618/0.6738 and 0.6557/86. On the downside, technical support is expected at 0.6455/99, 0.6388/0.6400 and 0.6234/87.

USD The U.S. economic calendar is busy this coming week, featuring the FOMC Meeting Minutes on Wednesday. Sunday starts the week’s highlights off with the G20 Meetings, and Monday has the Empire State Manufacturing Index (-5.3) due out. Tuesday’s key events then include CPI (0.2%), Core CPI (0.2%), the Capacity Utilization Rate (77.5%), Industrial Production (0.1%) and Mortgage Delinquencies (17th-19th Nov., last 5.30%). Wednesday offers a speech by FOMC Member Lockhart, Building Permits (1.15M), Housing Starts (1.16M), Crude Oil Inventories (last 4.2M) and the FOMC Meeting Minutes, while Thursday features Weekly Initial Jobless Claims (272K), the Philly Fed Manufacturing Index (0.1), and a speech by FOMC Member Lockhart. Friday is quiet, and Saturday concludes the week’s highlights with a speech by FOMC Member Williams.


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