Weekly Market Watch

Released 23 November 2015 - Weekly Newsletter

Last week recap



Lost ground last week as the ECB reaffirmed the possibility of further stimulus at the upcoming December meeting and the FOMC Meeting Minutes showed division on a number of issues among members. The week began with the rate selling off on Monday after ECB President Draghi stated that, “If we conclude that the balance of risks to our medium-term price stability objective is skewed to the downside, we will act by using all the instruments available within our mandate”. Monday data had Eurozone Final CPI increase +0.1% y/y compared to 0.0% expected, while the U.S. Empire State Manufacturing Index printed at -10.7 versus -5.3 anticipated. The pair extended its losses on Tuesday despite German ZEW Economic Sentiment printing at 10.4 versus expectation of 6.7, nevertheless, Eurozone ZEW Economic Sentiment printed at 28.3 compared to an expected reading of 35.2. Tuesday’s U.S. numbers had CPI and Core CPI, which both increased +0.2% m/m, in line with expectations. On Wednesday, the rate made its weekly low of 1.0616 after the U.S. FOMC Meeting Minutes noted that, “A number of participants pointed to various reasons why the Committee should avoid a delay in policy firming. One concern was that such a delay, if the reasons were not well understood by market participants could increase uncertainty in financial markets and unduly magnify the perceived importance of the beginning of the policy normalization process.” Wednesday’s economic data had U.S. Building Permits increase to +1.15M, as widely anticipated, while Housing Starts increased an annualized +1.06M compared to +1.16M expected. Thursday saw the pair make its weekly high of 1.0762 after the ECB Monetary Policy Meeting Accounts said that, “The change in market expectations regarding US monetary policy had supported risk sentiment globally. Equity market indices had bounced back from their September lows, emerging market currencies had stabilised and implied volatilities had started to decrease across market segments.” Thursday numbers had the U.S. Philly Fed Manufacturing Index print at +1.9, significantly higher than the +0.1 expected, while U.S. Initial Jobless Claims showed 271K, in line with expectations. The rate then resumed its selloff on Friday after the ECB’s Draghi said that, “If we decide that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible. That is what our price stability mandate requires of us,” which suggested the central bank will increase stimulus measures at their next meeting in December. EUR/USD closed at 1.0646, with an overall loss of -1.6% on the week.



Gained a fraction last week as the BOJ left interest rates and monetary policy unchanged and the FOMC indicated members were divided on key issues such as inflation and employment. The week began with the rate gaining sharply after making its weekly low of 122.21 on Monday as Japanese Preliminary GDP declined -0.2% q/q compared to an expectation of -0.1%. The pair extended its gains on Tuesday after U.S. CPI numbers came out in line with expectations. On Wednesday, the pair made its weekly high of 122.74 after a hawkish FOMC Meeting Minutes and the BOJ’s Monetary Policy Statement, which showed the central bank was keeping interest rate near zero with monetary base expansion of ¥80 trillion annually. In the press conference after the rate release, BOJ Governor Kuroda said that, “In the long term, prices won’t rise if wages don’t rise”. Mr. Kuroda continued saying, “We’ll be watching over next year’s wage round with the greatest of interest.” The rate then declined sharply on Thursday despite a better than expected U.S. Philly Fed Manufacturing Index number. The pair continued lower on Friday as asset flows favoured the Yen, bringing the rate to close at 122.80, with a gain of +0.2% for the week.


Lost a fraction last week as both countries released mixed economic data and the FOMC Minutes showed a hawkish bias. The week began with Cable declining on Monday despite a lower than expected U.S. manufacturing number. The pair then rose after making its weekly low of 1.5153 on Tuesday after UK CPI declined -0.1% y/y as was widely anticipated. Also out were UK PPI Input, which increased +0.2% m/m, in line with expectations, and RPI, which increased +0.7% y/y compared to an expected reading of +0.9%. Cable extended its gains on Wednesday, gaining a fraction despite a hawkish FOMC Meeting Minutes. The pair then made its weekly high of 1.5334 on Thursday despite UK Retail Sales, which came out with a decline of -0.6% m/m compared to an expected -0.4%. The rate then declined sharply on Friday after UK Public Sector Net Borrowing came out at 7.5B compared to 5.5B expected. GBP/USD closed at 1.5190, with an overall loss of -0.2% for the week.



Extended its previous week’s gains last week as the RBA’s minutes for the November meeting indicated the Australian economy was strengthening, while the FOMC released hawkish minutes for its October meeting. The week began on a soft note, with the rate declining on Monday despite a lower U.S. manufacturing number. Tuesday saw the rate gain after the RBA’s Monetary Policy Meeting Minutes noted that the domestic economy was improving but that “the inflation outlook may afford some scope for further easing of monetary policy, should that be appropriate to lend support to demand”. The pair then made its weekly low of 0.7067 on Wednesday after the FOMC released hawkish Meeting Minutes, while the Australian Wage Price Index increased +0.6% q/q, in line with expectations. The rate recovered, rallying sharply on Thursday as asset flows favoured the Aussie over the Greenback and despite a positive U.S. manufacturing number. Friday saw the pair extend its gains, making its weekly high of 0.7249 before settling at 0.7235, with an overall gain of +1.6% for the week.



Added another fraction to its fractional gain last week after mostly lower than expected economic data out of Canada and with mixed numbers out of the United States. The week began with the pair making its weekly high of 1.3369 on Monday after Canadian Manufacturing Sales declined -1.5% m/m compared to an expected increase of +0.3%, also, Canadian Foreign Securities Purchases increased +3.35B versus +4.12B expected with the previous number upwardly revised from +3.11B to +5.78B. The rate then declined on Tuesday after U.S. CPI data was in line with expectations. On Wednesday, the pair lost a fraction despite a hawkish FOMC Meeting Minutes release. The rate then made its weekly low of 1.3245 on Thursday despite Canadian Wholesale Sales, which declined -0.1% m/m compared to an expected increase of +0.2%. Friday saw the pair rally after Canadian Core Retail Sales declined -0.5% m/m compared to an expected decline of -0.3%, while Retail Sales also declined -0.5% m/m versus an expected increase of +0.2%. Nevertheless, Canadian Core CPI increased +0.3% m/m versus +0.2% expected, while CPI increased +0.1% as widely anticipated. USD/CAD closed at 1.3348, with a weekly gain of +0.2%.



Gained ground last week as asset flows favoured the Kiwi over the Greenback and with mixed economic data both countries. The week began with the rate selling off on Monday after New Zealand Core Retail Sales increased +1.0% q/q compared to an expected +1.4%, while Retail Sales increased +1.6% versus +1.0% anticipated. The pair extended its losses on Tuesday after New Zealand Inflation Expectations increased +1.9% q/q, unchanged from its previous reading, while the NZ GDT Price Index showed a decline of -7.9% compared to a previous reading of -7.4%. The pair then made its weekly low of 0.6427 on Wednesday after a hawkish FOMC Meeting Minutes and despite New Zealand PPI Input, which increased +1.6% q/q compared to an expected +0.1% increase. Thursday saw the rate gain sharply despite a better than expected U.S. manufacturing number. On Friday, the pair made its weekly high of 0.6604 before consolidating lower to close at 0.6558, with an overall gain of +0.4% from its previous weekly close.

The week ahead

AUD The Australian economic calendar is rather quiet this coming week, only featuring a speech by RBA Governor Stevens on Tuesday; Construction Work Done (-1.8%) and a speech by RBA Assistant Governor Debelle on Wednesday; and Private Capital Expenditure (-2.8%) on Thursday. Resistance for AUD/USD is seen at 0.7427/38, 0.7343/81 and 0.7223/95, with support noted at 0.7157/81, 0.6907/0.7083 and 0.6246.

CAD The Canadian economic calendar is very peaceful this coming week, only featuring the RMPI (last 3.0%) on Friday. Resistance for USD/CAD is seen at 1.3415/56 and 1.3367/69, while support shows at 1.3245/1.3352, 1.3153/97 and 1.2900/1.3054.

EUR The Eurozone economic calendar is quite busy this coming week, featuring the German Ifo Business Climate survey on Tuesday. Sunday starts the week’s highlights off with a speech by German Buba President Weidmann, and Monday’s key events include French Flash Manufacturing PMI (50.7), French Flash Services PMI (52.1), German Flash Manufacturing PMI (52.2), German Flash Services PMI (54.3), EZ Flash Manufacturing PMI (52.3), EZ Flash Services PMI (54.2) and the Eurogroup Meetings. Tuesday then offers the German Ifo Business Climate survey (108.3), Wednesday is quiet, while Thursday features the EZ M3 Money Supply (4.9%). Friday’s important data then concludes the week with Spanish Flash CPI (-0.5%). Resistance for EUR/USD is seen at 1.0996/1.1005, 1.0808/96 and 1.0659/1.0762, with support showing at 1.0616 and 1.0520.

GBP The UK economic calendar is less active than usual this coming week, only featuring the Autumn Forecast Statement on Wednesday; and then Second Estimate GDP (0.5%) and Preliminary Business Investment (1.5%) on Thursday. 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 1.5026/1.5160, 1.4900/93 and 1.4852/55.

JPY The Japanese economic calendar is fairly quiet this coming week, only featuring the BOJ’s Monetary Policy Meeting Minutes on Tuesday; Household Spending (0.0%) and Tokyo Core CPI (-0.1%) on Thursday, plus a Bank Holiday on Monday. Resistance for USD/JPY currently shows up at 125.06/85, 124.47/57 and 123.00/75, with support indicated at 122.22/61, 120.02/122.02 and 118.49/119.65.

NZD The New Zealand economic calendar is very quiet this coming week, only featuring the Trade Balance (-1,000M) on Wednesday. The chart for NZD/USD shows resistance at 0.6790/0.6813, 0.6604/0.6738 and 0.6557/86. On the downside, technical support is expected at 0.6427/99, 0.6388/0.6400 and 0.6234/87.

USD The U.S. economic calendar is fairly busy this coming week, featuring Preliminary GDP data on Tuesday. Monday starts the week’s highlights off with Existing Home Sales (5.39M) and the tentatively scheduled Fed Announcement that could involve a key benchmark interest rate adjustment, and Tuesday’s key events include Preliminary GDP (2.0%), Goods Trade Balance (-61.8B), and CB Consumer Confidence (99.3). Wednesday then offers Core Durable Goods Orders (0.5%), Weekly Initial Jobless Claims (273K), the Core PCE Price Index (0.1%), Durable Goods Orders (1.6%), Personal Spending (0.3%), New Home Sales (500K), the Revised University of Michigan Consumer Sentiment survey (93.2) and Crude Oil Inventories (last 0.3M). Thursday is the Thanksgiving Bank Holiday, and Friday is quiet.


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