Weekly Market Watch

Released 06 March 2017 - Weekly Newsletter

Last week recap

Reversed direction, gaining ground last week as polls revealed that French presidential candidate Marine LePen had lost ground in France’s upcoming election, and despite raised expectations of a March Fed interest rate hike. The rate began the week on a positive note, gaining ground after U.S. Core Durable Goods Orders declined by -0.2% m/m compared to an expected increase of +0.5%, nevertheless, the Headline number showed an increase of +1.8% compared to an expectation of +1.6% which mitigated the effect on the Greenback. Also out was U.S. Pending Home Sales, which disappointed the market with a decline of -2.8% m/m compared to an expected increase of +1.1%. The pair then declined after making its weekly high of 1.0629 on Tuesday as French presidential candidate Emmanuel Macron gained ground against Republican Francois Fillon, closing the gap with right wing anti-Euro candidate Marine LePen. Tuesday’s economic numbers had U.S. Preliminary GDP increase by +1.9% q/q versus +2.1% expected and the U.S. CB Consumer Confidence index, which printed at 114.8 compared to an expectation of 111.3. On Wednesday, the rate continued selling off after U.S, president Trump, in his first address to the U.S. Congress stated that, “Since my election, Ford, Fiat, Chrysler, General Motors, Sprint, Softbank, Lockheed, Walmart, and many others have announced they will invest billions and billions of dollars in the United States and will create tens of thousands of new American jobs.” Wednesday’s eco-numbers had U.S. ISM Manufacturing PMI print at 57.7 versus an expectation of 56.2, while German Unemployment Change saw a decline of -14K compared to an expected decline of -10K. Thursday saw the pair make its weekly low of 1.0494 despite EZ CPI Flash Estimate, which increased by +2.0% y/y compared to +1.8% expected, while U.S. Weekly Initial Jobless Claims declined to 223K compared to an expected 243K. The pair went on to rally sharply on Friday after a poll by BVA, a research firm, reported that Marine Le Pen would get 26% of votes in the election’s first round in May, off -1.5% from their previous poll made on February 23. Also on Friday, Fed Chair Janet Yellen inferred a possible March interest rate hike, stating that, “at our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.” Friday’s economic numbers had German Retail Sales decline by -0.8% m/m, versus an expected increase of +0.2%, while U.S. ISM Non-Manufacturing PMI printed at 57.6 versus an expectation of 56.5. EUR/USD closed at 1.0619, with an overall weekly gain of +0.6%.
Reversed direction, gaining ground last week as the Greenback was supported by a possible March interest rate hike, while Japan reported mixed economic numbers. The week began with the rate gaining ground on Monday after the United States reported mixed Durable Goods Orders data. The pair then consolidated at a slightly higher level after making its weekly low of 111.68 on Tuesday as the United States reported a lower than expected Preliminary GDP release. The pair continued sharply higher on Wednesday after a speech by U.S. president Donald Trump and despite Japanese Capital Spending, which increased by +3.8% q/y versus +0.6% anticipated. Thursday saw the pair extend its gains after a better than expected U.S. Jobless Claims report. The rate then sold off after making its weekly high of 114.74 on Friday after Japanese Household Spending declined by -1.2% y/y compared to an expectation of -0.3%. USD/JPY closed at 114.02, with an overall gain of +1.7% for the week.
Sold off last week as both countries reported mixed economic numbers. Cable began the week trading lower after making its weekly high of 1.2478 on Monday after UK PM May, when asked about allowing Scotland a second referendum, stated that, “The Scottish people determined at that time that they wanted Scotland to remain a part of the United Kingdom. The SNP at the time said it was a ‘once in a generation vote’.” There is speculation that May is preparing for Scotland to call for another independence referendum. The rate continued lower on Tuesday after mixed U.S. Preliminary GDP and Consumer Confidence data. On Wednesday, Cable added to its losses after UK Manufacturing PMI printed at 54.6 compared to an expectation of 55.7, while UK Net Lending to Individuals increased to 4.8B compared to an expected 4.0B. The rate extended its losses on Thursday after UK Construction PMI printed at 52.5, which was in line with expectations. Cable then made its weekly low of 1.2213 on Friday after UK Services PMI printed at 53.3 compared to an expectation of 54.2, which brought the pair to close the week at 1.2289, with a decline of -1.4% from its previous weekly close.
Lost ground last week as commodity and oil prices were pressured while both countries reported mixed economic numbers. The rate began the week on a soft note, declining after making its weekly high of 0.7707 on Monday despite Australian Company Operating Profits, which showed an increase of +20.1% q/q, significantly higher than the expectation of an +8.0% increase. The pair extended its losses on Tuesday after the Australian Current Account showed a deficit of -3.9B, which was in line with expectations. On Wednesday, the rate gained a fraction after Australian GDP increased by +1.1% q/q versus +0.7% anticipated. The pair then fell sharply on Thursday after the Australian Trade Balance showed a contracting surplus of +1.30B, less than half the expectation of +3.82B with the previous number downwardly revised from +3.51B to +3.33B. Nevertheless, Australian Building Approvals increased by +1.8% m/m, which was significantly higher than the expected decline of -0.1%, although the previous number was downwardly revised to -2.5%. The rate recovered somewhat on Friday after making its weekly low of 0.7542 as traders squared positions and despite a better than expected U.S. ISM Non-Manufacturing PMI number. AUD/USD closed at 0.7594, with a loss of -1.0% from its previous weekly close.
Gained sharply last week as the price of crude oil declined and the BOC left interest rates unchanged. The week began with the pair rallying after making its weekly low of 1.3082 on Monday as the United States reported mixed Durable Goods Orders data. The rate continued higher on Tuesday as the United States reported mixed consumer confidence and GDP data and despite Canadian RMPI, which increased by +1.7% m/m versus +1.3% anticipated. The pair extended its gains on Wednesday after the BOC left its benchmark Overnight Rate unchanged at 0.50% as widely anticipated. The central bank’s Rate Statement noted that, “In Canada, recent consumption and housing indicators suggest growth in the fourth quarter of 2016 may have been slightly stronger than expected. However, exports continue to face the ongoing competitiveness challenges described in the January MPR. The Canadian dollar and bond yields remain near levels observed at that time.” The rate continued its rally on Thursday after Canadian GDP increased by +0.3% m/m as was widely expected. Friday saw the pair sell off as traders squared positions and despite a better than expected U.S. ISM Non-Manufacturing PMI number. USD/CAD closed at 1.3374, with an overall weekly gain of +2.1%.
Lost ground last week as both countries reported mixed economic data. The rate began the week declining by a fraction on Monday after the New Zealand Trade Balance showed an expanding deficit of -285M, significantly higher than the -3M that was expected. The pair then made its weekly high of 0.7236 on Tuesday before consolidating at a slightly lower level after New Zealand ANZ Business Confidence printed at 16.6 compared to a previous print of 21.7. The rate continued selling off on Wednesday after a speech by U.S. president Trump and mixed U.S. economic data. On Thursday, the selloff continued after better than expected employment data from the United States. The pair then made its weekly low of 0.7001 on Friday after a better than expected U.S. ISM Non-Manufacturing PMI number, which brought the rate to close at 0.7039, with an overall decline of -2.2% for the week.

The week ahead

AUD The Australian economic calendar is sparse this coming week, only featuring Retail Sales (0.40%) on Monday, followed on Tuesday by the RBA’s Cash Rate Decision (unchanged at 1.50%) and the RBA Rate Statement. Resistance for AUD/USD is seen at 0.7834 and 0.7648/0.7777, with support noted at 0.7492/0.7556 and 0.7222/0.7310.

CAD The Canadian economic calendar is rather busy this coming week, featuring key jobs data on Friday. Monday is quiet, so Tuesday starts the week’s highlights off with the Trade Balance (0.2B) and the Ivey PMI (58.9). Wednesday then offers Building Permits (last -6.6%) and Labor Productivity (last 1.2%), while Thursday features the NHPI (last 0.1%). Friday’s important data then concludes the week with the Employment Change (last 48.3K) and the Unemployment Rate (last 6.8%). Resistance for USD/CAD is seen at 1.3533/63, 1.3436/64 and 1.3386, while support shows at 1.3312/56, 1.3209/11 and 1.3125/77.

EUR The Eurozone economic calendar is light this coming week, only featuring German Factory Orders (-2.50%) on Tuesday, followed on Thursday by the ECB’s Minimum Bid Rate Decision (unchanged at 0.00%) and the ECB Press Conference. Resistance for EUR/USD is seen at 1.1139, 1.0774/1.0964 and 1.0617/1.0718, with support showing at 1.0461/1.0520 and 1.0339/1.0419.

GBP The UK economic calendar is somewhat active this coming week, featuring the Annual Budget on Wednesday. Monday starts the week’s highlights off with a speech by MPC Member Hogg, and Tuesday’s key events include the Halifax HPI (0.40%). Wednesday then offers the Annual Budget Release, while Thursday features nothing notable. Friday’s important data then concludes the week with Manufacturing Production (-0.60%) and the Goods Trade Balance (-11.1B). Resistance to the topside for GBP/USD shows at 1.2672/1.2790, 1.2451/1.2581 and 1.2346/1.2411, while support for the pair is expected at 1.2213, 1.2081/1.2199 and 1.1985/1.2037.

JPY The Japanese economic calendar is very quiet this coming week, only featuring Final GDP (0.40%) on Tuesday, followed on Thursday by BSI Manufacturing Index (8.4). Resistance for USD/JPY currently shows up at 116.86, 115.06/116.07 and 114.74/95, with support indicated at 112.61/113.79, 111.92/112.04 and 111.35/68.

NZD The New Zealand economic calendar is very quiet this coming week, only featuring the GDT Price Index (last -3.20%) on Tuesday. The chart for NZD/USD shows resistance at 0.7217/46, 0.7116/72 and 0.7042. On the downside, technical support is expected at 0.6948/96, 0.6882/84 and 0.6861.

USD The U.S. economic calendar is moderately busy this coming week, featuring key jobs data on Friday. Monday starts the week’s highlights off with Factory Orders (1.10%) and a speech by FOMC Member Kashkari, and Tuesday’s key events include the Trade Balance (-47.0B). Wednesday then offers the ADP Non-Farm Employment Change (184K), Revised Nonfarm Productivity (1.50%) and Crude Oil Inventories (last 1.5M), while Thursday features Weekly Initial Jobless Claims (239K) and Import Prices (0.10%). Friday’s important data then concludes the week with Average Hourly Earnings (0.30%), Non-Farm Payrolls (185K) and the Unemployment Rate (4.70%).


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