Weekly Market Watch

Released 26 June 2017 - Weekly Market News

Last week recap

Continued treading water last week as both economies reported mixed economic data. The rate began the week by selling off sharply after making its weekly high of 1.1212 on Monday after comments from New York Fed President William Dudley, who said that, “We are pretty close to full employment. Inflation is a little lower than what we would like, but we think that if the labor market continues to tighten, wages will gradually pick up and with that, inflation will gradually get back to 2 percent.” The pair declined a fraction after making its weekly low of 1.1118 on Tuesday as the U.S. Current Account showed a deficit of -117B compared to an expectation of -124B. On Wednesday, the rate gained after the ECB’s monthly Economic Bulletin described Brexit, China and the U.S. as new sources of risk. The Bulletin noted that, “Careful communications by the Federal Reserve System, coupled with a very gradual course of monetary policy tightening, and the decline in vulnerabilities in major emerging markets, appears to have eased the risk of a disorderly tightening of global financial conditions.” The pair resumed its downtrend on Thursday after U.S. Initial Jobless Claims rose to 241K, in line with expectations. The rate then gained ground on Friday after French Flash Manufacturing PMI printed at 55.0 versus 54.1 expected, while French Flash Services PMI showed a reading of 55.3 compared to an expectation of 57.1. Also, German Flash Manufacturing PMI printed at 59.3, in line with the consensus and German Flash Services PMI showed a reading of 53.7 versus 55.4 anticipated. Friday’s U.S. data had New Home Sales show an annualized 610K versus 599K expected. EUR/USD closed at 1.1192, with an overall loss of a mere two pips and virtually unchanged for its second consecutive week.
Extended its previous week’s gains last week as the BOJ released its Monetary Policy Meeting Minutes for its June Meeting with mixed economic numbers from both countries. The week began with the rate gaining after making its weekly low of 110.9 on Monday after the Japanese Trade Balance showed a surplus of +0.13T compared to an expectation of 0.35T, with the previous number upwardly revised from +0.10T to +0.16T. The pair then sold off after making its weekly high of 1.1178 on Tuesday after a better than expected U.S. Current Account number. On Wednesday, the rate consolidated as the BOJ’s Monetary Policy Meeting Minutes showed that members were comfortable with their JGB purchases, noting that, “Members reaffirmed their view that debt purchases will fluctuate within a range depending on market conditions and agreed this poses no problems to the BOJ's guidance for market operations.” Also, BOJ Governor Kuroda said that he was not considering an exit to stimulus measures yet and that, “it is appropriate to keep monetary conditions easy with our current market operations framework.” Thursday saw the pair lose a fraction as risk appetite favoured the Yen over the Greenback. The rate consolidated yet again on Friday after a better than expected U.S. New Home Sales number. USD/JPY closed at 111.23, with a gain of +0.3% for the week.
Lost ground last week as BOE Governor Mark Carney stated that it was too soon for the BOE to begin raising interest rates, while both countries reported mixed economic data. Cable began the week trading lower after making its weekly high of 1.2813 on Monday as negotiations for Brexit began in Brussels. The rate then fell sharply on Tuesday after comments from BOE Governor Carney, who stated that, “Different members of the MPC will understandably have different views about the outlook and therefore on the potential timing of any Bank rate increase. But all expect that any changes would be limited in scope and gradual in pace. From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment”. Cable then made its weekly low of 1.2588 on Wednesday before gaining ground after BOE chief economist Andy Haldane said that removing monetary stimulus would be “prudent relatively soon” and that, “Risks associated with tightening too early, on the one hand, and too late, on the other, has swung materially towards the latter in the past six to nine months.” Also supporting the rate was UK Public Sector Net Borrowing, which dropped to 6.0B compared to an expected 7.3B, with the previous number downwardly revised from 9.6B to 8.7B. Thursday saw the rate consolidate at a slightly higher level as the United States reported weekly Initial Jobless Claims, which were in line with expectations. Cable continued gaining on Friday despite a better than expected U.S. housing number. GBP/USD closed at 1.2713, with a loss of -0.5% from its previous weekly close.
Reversed direction, trading lower last week as the RBA’s Monetary Policy Meeting Minutes showed the central bank was confident that growth would resume, while the decline in the price of oil negatively affected the rate. The week began with the rate selling off after making its weekly high of 0.7628 on Monday despite comments from RBA Governor Phillip Lowe, who said in a speech that, “Monetary policy continues to provide support and survey-based measures of business conditions have improved noticeably. Employment growth has also strengthened over recent months. These are all positive developments.” The pair extended its losses on Tuesday after the RBA’s Monetary Policy Meeting Minutes noted that, “Over the past couple of years, the Australian dollar has traded in a fairly narrow range. This followed a significant depreciation in nominal and real exchange rates from 2013 alongside a decline in Australias terms of trade. Recently, the Australian dollar has depreciated a little reflecting a fall in the price of iron ore. Volatility in the Australian dollar remains below average.” The pair continued its decline on Wednesday as the price of crude oil fell to $42 per barrel, while the United States reported a better than expected housing number. The pair then made its weekly low of 0.7534 on Thursday as U.S. Initial Jobless Claims were in line with expectations. The rate gained ground on Friday despite a better than expected U.S. housing number, which brought the rate to close at 0.7566, with a loss of -0.6% for the week.
Gained fractionally last week as the decline in the price of crude oil pressured the Loony. The rate began the week gaining after making its weekly low of 1.3190 on Monday in the absence of any significant data out of either country. The pair extended its gains on Tuesday after a better than expected U.S. Current Account, and despite Canadian Wholesale Sales, which increased by +1.0% m/m versus an expectation of +0.5%. On Wednesday, the rate made its weekly high of 1.3346 after the price of crude oil tested the $42 per barrel level. Thursday saw the pair fall sharply after Canadian Core Retail Sales increased by +1.5% m/m versus +0.6% expected, while Retail Sales increased by +0.8% m/m versus an expectation of +0.3%. The rate then gained a fraction on Friday after Canadian CPI disappointed the market, increasing by +0.1% m/m versus a consensus of +0.2%, also, Trimmed Mean CPI increased by +1.2% versus a previous reading of +1.3%, Median CPI, which increased by +1.5% versus a previous +1.6% and Common CPI, which printed at +1.3%, in line with expectations. USD/CAD closed at 1.3265, with an overall weekly gain of +0.4%.
Continued its rally last week as the RBNZ left interest rates unchanged with mixed economic numbers from both countries. The week began with the rate declining sharply after making its weekly high of 0.7297 on Monday in the absence of any significant data out of either country. The pair gained a fraction on Tuesday despite the New Zealand GDT Price Index, which declined by -0.8% compared to a previous reading of +0.6%. On Wednesday, the pair made its weekly low of 0.7192 before gaining ground after the RBNZ left its benchmark Official Cash Rate unchanged at 1.75%. In the RBNZ’s rate statement, the central bank noted that, “Monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward. The trade-weighted exchange rate has increased by around 3 percent since May, partly in response to higher export prices. A lower New Zealand dollar would help rebalance the growth outlook towards the tradables sector.” The rate continued higher on Thursday after U.S. Initial Jobless Claims came in as expected. Friday saw the pair extend its gains despite a better than expected U.S. New Home Sales number. NZD/USD closed at 0.7272, with a gain of +0.4% from its previous weekly close.

The week ahead

AUD The Australian economic calendar is very quiet this coming week, only featuring a speech by RBA Assistant Governor Debelle on Tuesday. Resistance for AUD/USD is seen at 0.7913/38, 0.7718/0.7834 and 0.7582/0.7679, with support noted at 0.7416/0.7535, 0.7222/0.7388 and 0.7159/62.

CAD The Canadian economic calendar is somewhat active this coming week, only featuring a speech by BOC Governor Poloz on Wednesday, and GDP (last 0.50%), RMPI (last 1.60%) and the BOC Business Outlook Survey on Friday. Resistance for USD/CAD is seen at 1.3752/92, 1.3347/1.3696 and 1.3263/1.3312, while support shows at 1.3191/1.3223, 1.3164/69 and 1.3056.

EUR The Eurozone economic calendar is fairly busy this coming week, featuring CPI data on Friday. Monday starts the week’s highlights off with the German Ifo Business Climate survey (114.7) and a speech by ECB President Draghi, and Tuesday’s key events include a speech by ECB President Draghi. Wednesday then offers the EZ M3 Money Supply (5.00%) and a speech by ECB President Draghi, while Thursday features German Preliminary CPI (0.00%), Spanish Flash CPI (1.60%) and an Italian Bank Holiday. Friday’s important data then concludes the week with German Retail Sales (0.30%), the EZ CPI Flash Estimate (1.30%) and the EZ Core CPI Flash Estimate (1.00%). Resistance for EUR/USD is seen at 1.1414/27, 1.1326/65 and 1.1209/95, with support showing at 1.1166, 1.1109/39 and 1.1020/45.

GBP The UK economic calendar is somewhat active this coming week, featuring Final GDP data on Friday. Tuesday starts the week’s highlights off with the BOE Financial Stability Report and a speech by BOE Governor Carney, and Wednesday offers another speech by BOE Governor Carney. Thursday then features Net Lending to Individuals (4.0B), while Friday’s important data then concludes the week with the Current Account (-16.5B) and Final GDP (0.20%). Resistance to the topside for GBP/USD shows at 1.3047/57, 1.2814/1.2983 and 1.2768/74, while support for the pair is expected at 1.2690, 1.2557/1.2635 and 1.2358/1.2376.

JPY The Japanese economic calendar is light this coming week, only featuring a speech by BOJ Governor Kuroda on Wednesday. Resistance for USD/JPY currently shows up at 114.75/95, 113.79/114.36 and 111.41/113.04, with support indicated at 110.08/95, 108.81/109.11 and 107.48/108.12.

NZD The New Zealand economic calendar is sparse this coming week, only featuring ANZ Business Confidence (last 14.9) on Thursday. The chart for NZD/USD shows resistance at 0.7402/84, 0.7349/75 and 0.7297/0.7318. On the downside, technical support is expected at 0.7205/46, 0.6817/0.7184 and 0.6674/0.6738.

USD The U.S. economic calendar is quite active this coming week, featuring GDP data on Thursday. Monday starts the week’s highlights off with Core Durable Goods Orders (0.40%) and Durable Goods Orders (-0.50%), and Tuesday’s key events include CB Consumer Confidence (116.2), and speeches by FOMC Members Harker and Kashkari, as well as Fed Chair Yellen. Wednesday then offers Pending Home Sales (0.60%) and Crude Oil Inventories (last -2.5M), while Thursday features Final GDP (1.20%), and Weekly Initial Jobless Claims (240K). Friday’s important data then concludes the week with the Core PCE Price Index (0.10%), Personal Spending (0.10%), Chicago PMI (58.2), the Revised University of Michigan Consumer Sentiment survey (94.6).


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