Weekly Market Watch

Released 18 July 2017 - Weekly Market News

Last week recap

Gained a fraction last week after Fed Chair Janet Yellen testified before the United States’ Congress, and with very little significant economic data seen from the Eurozone. The rate began the week consolidating at a slightly higher level on Monday after the EZ Sentix Investor index fell by -0.1 to 28.3, retreating from its 10-year high of 28.4 made last month. The pair then gained ground on Tuesday despite hawkish comments from San Francisco Fed President John Williams. Economic numbers had U.S. JOLTS decline to +5.67M versus an expectation of +5.98M. On Wednesday, the rate declined after making its weekly high of 1.1488 after comments from Fed Chair Janet Yellen, who testified before the U.S. Congress, speaking from her prepared remarks, Yellen said, “Ongoing job gains should continue to support the growth of incomes and, therefore, consumer spending; global economic growth should support further gains in U.S. exports; and favorable financial conditions, coupled with the prospect of continued gains in domestic and foreign spending and the ongoing recovery in drilling activity, should continue to support business investment. These developments should increase resource utilization somewhat further, thereby fostering a stronger pace of wage and price increases. Of course, considerable uncertainty always attends the economic outlook. There is, for example, uncertainty about when--and how much--inflation will respond to tightening resource utilization.” The rate then made its weekly low of 1.1370 on Thursday after U.S. PPI increased by +0.1% m/m versus an expected flat reading, while Initial Jobless Claims dropped to 247K versus 245K expected. The pair rallied on Friday after U.S. CPI came out with a flat reading m/m versus an expected increase of +0.1%, while Core CPI increased by +0.1% versus +0.2% anticipated. Also pressuring the Greenback were U.S. Core Retail Sales, which declined by -0.2% m/m versus an expected increase of +0.2%, and Retail Sales, which also fell by -0.2% versus an expected increase of +0.1%. EUR/USD closed at 1.1467, with a gain of +0.6% from its previous weekly close.
Reversed direction, selling off last week as BOJ Governor Kuroda reiterated his position on continuing the bank’s loose monetary policy until achieving its two percent inflation target. The week began with the pair gaining a fraction on Monday after a BOJ report offered its most optimistic view on regional economies in more than a decade. Speaking at a quarterly meeting of the central bank’s regional bank managers, Kuroda said that, “Japan''s economy is expected to continue expanding moderately ahead”. The rate then sold off after making its weekly high of 114.48 on Tuesday as the United States reported a lower than expected employment number. The pair continued its slide on Wednesday after Fed Chair Yellen’s testimony was considered dovish for the market. The rate consolidated at a slightly higher level on Thursday after news sources from Japan reported that the BOJ was preparing to downwardly revise inflation forecasts. According to The Japan News, the BOJ was expected to revise its April inflation forecast from 1.4% to 1% - 1.4%. Friday saw the pair make its weekly low of 112.26 after lower than expected U.S. CPI and Retail Sales data. USD/JPY closed at 112.50, with an overall loss of -1.2% for the week.
Rallied last week as the UK reported better than expected economic data, while the United States reported mostly lower than expected numbers. The week began with Cable declining a fraction on Monday in the absence of any significant economic data from either country. The rate lost another fraction on Tuesday after MPC Member Ben Broadbent avoided talking about BOE monetary policy in a speech. Speaking about the UK’s trade situation in light of Brexit, Broadbent said that, “All else equal, the first shift - i.e. away from services exports - would tend to lower UK income, the second to raise certain costs - that is, of food and machinery," He added that, “Trade really is mutually beneficial and less of it costs us all”. Cable made its weekly low of 1.2811 on Wednesday before gaining ground after MPC member Ian McCafferty said the bank should consider unwinding its QE program sooner than previously planned and that he would vote for an interest rate increase at the next meeting. Economic data had Claimant Count Change decline to 6.0K compared to an expectation of 10.5K, while the UK Unemployment Rate declined to 4.5% from 4.6%. Also, the UK Average Earnings Index increased by +1.8% 3m/y, in line with the consensus. The rate continued higher on Thursday after mixed U.S. PPI data. Cable then made its weekly high of 1.3112 on Friday after dismal U.S. CPI and Retail Sales data. GBP/USD closed at 1.3094, with a weekly gain of +1.6%.
Gained sharply last week as the Aussie reacted to a rally in iron ore and crude oil prices, with very little significant economic data from Australia. The week began with the rate making its weekly low of 0.7585 on Monday in the absence of any significant economic data from either country. The pair continued higher on Tuesday after the Australian NAB Business Confidence index printed at 9 versus a previous reading of 8 upwardly revised from 7. The rate extended its gains on Wednesday after Fed Chair Yellen’s testimony before the U.S. Congress. The rally continued Thursday as the United States reported mixed PPI data, while iron ore and crude oil prices soared. The pair then made its weekly high of 0.7833 on Friday after lower than anticipated U.S. CPI and Retail Sales numbers. AUD/USD closed at 0.7824, with an impressive gain of +3.0% from its previous weekly close.
Continued selling off last week as the Loonie benefited from higher crude oil prices and a BOC interest rate hike. The week began with the pair gaining a fraction on Monday in the absence of any significant economic data from either country. The rate then made its weekly high of 1.2942 on Tuesday despite Canadian Housing Starts, which increased to an annualized +213K versus an expectation of +200K. The pair then declined sharply on Wednesday after the BOC increased its benchmark Overnight Rate to 0.75% from 0.50% as was widely anticipated. The BOC’s Rate Statement noted that, “Governing Council judges that the current outlook warrants today’s withdrawal of some of the monetary policy stimulus in the economy. Future adjustments to the target for the overnight rate will be guided by incoming data as they inform the Bank’s inflation outlook, keeping in mind continued uncertainty and financial system vulnerabilities.” The rate continued its slide on Thursday as crude oil prices rallied and Canadian NHPI increased by +0.7% m/m versus +0.3% expected. The pair then made its weekly low and closing price of 1.2640 after dismal U.S. CPI and Retail Sales data. USD/CAD showed a net decline of -1.8% for the week.
Gained ground last week as the Kiwi benefitted from a rally in commodities with very little significant economic data from New Zealand, while the United States reported mostly lower than expected economic numbers. The week began with the pair selling off sharply on Monday in the absence of any significant economic data from either country. The rate then made its weekly low of 0.7200 on Tuesday despite a lower than expected U.S. employment number. On Wednesday, the pair began rallying after Fed Chair Yellen’s testimony before the U.S. Congress. Thursday saw the rate make its weekly high of 0.7367 after mixed U.S. PPI data and the New Zealand Business NZ Manufacturing Index, which printed at 56.2 versus a previous reading of 58.2. The pair continued its rally on Friday after lower than expected U.S. Retail Sales and CPI releases. NZD/USD closed at 0.7342, with a gain of +0.9% for the week.

The week ahead

AUD The Australian economic calendar is somewhat active this coming week, featuring the RBA’s Monetary Policy Meeting Minutes on Tuesday that also starts the week’s highlights. Wednesday then offers the Employment Change (15.3K), the Unemployment Rate (5.60%) and the NAB Quarterly Business Confidence survey (last 6), while Friday’s important events then conclude the week with speeches by RBA Assistant Governor Debelle and RBA Assistant Governor Bullock. Resistance for AUD/USD is seen at 0.8068/75, 0.7913/38 and 0.7833/34, with support noted at 0.7572/0.7679, 0.7222/0.7535 and 0.7159/62.

CAD The Canadian economic calendar is somewhat busy this coming week, featuring inflation data on Friday. Monday starts the week’s highlights off with Foreign Securities Purchases (9.78B), while Wednesday offers Manufacturing Sales (0.80%). Friday’s important data then concludes the week with CPI (0.00%), Core Retail Sales (0.40%), Common CPI (last 1.30%), Median CPI (last 1.50%), Retail Sales (0.50%) and the Trimmed CPI (last 1.20%). Resistance for USD/CAD is seen at 1.2822/59, 1.2763 and 1.2654, while support shows at 1.2563, 1.2362 and 1.2127.

EUR The Eurozone economic calendar is rather peaceful this coming week, only featuring Final CPI (1.30%) on Monday; the German ZEW Economic Sentiment survey (17.6) on Tuesday; and the ECB’s Minimum Bid Rate Decision (unchanged at 0.00%) and the ECB Press Conference on Thursday. Resistance for EUR/USD is seen at 1.1714, 1.1616 and 1.1489/94, with support showing at 1.1312/1.1445, 1.1209/99 and 1.1109/66.

GBP The UK economic calendar is somewhat busy this coming week, featuring inflation data on Tuesday. Tuesday starts the week’s highlights off with CPI (2.90%), PPI Input (-0.80%), RPI (3.60%) and a speech by BOE Governor Carney, and Thursday’s key events include Retail Sales (0.30%). Friday’s important data then concludes the week with Public Sector Net Borrowing (4.3B). Resistance to the topside for GBP/USD shows at 1.3371, 1.3279 and 1.3093/1.3120, while support for the pair is expected at 1.2976/1.3057, 1.2768/1.2899 and 1.2690.

JPY The Japanese economic calendar is quite sparse this coming week, only featuring the BOJ’s Monetary Policy Statement, the BOJ Outlook Report, the BOJ Policy Rate (unchanged at -0.10%) and the BOJ Press Conference on Thursday. Also Monday is a Japanese Bank Holiday. Resistance for USD/JPY currently shows up at 115.30/61, 114.17/95 and 112.92/113.79, with support indicated at 111.41/112.25, 110.08/111.12 and 109.74.

NZD The New Zealand economic calendar is light this coming week, only featuring CPI (0.20%) on Monday and the GDT Price Index (last -0.40%) on Tuesday. The chart for NZD/USD shows resistance at 0.7608/17, 0.7402/84 and 0.7364/75. On the downside, technical support is expected at 0.7297/0.7344, 0.6817/0.7246 and 0.6674/0.6738.

USD The U.S. economic calendar is quite busy this coming week, featuring housing market data on Wednesday. Monday starts the week’s highlights off with the Empire State Manufacturing Index (15.2), and Tuesday’s key events include Import Prices (-0.20%). Wednesday then offers Building Permits (1.20M), Housing Starts (1.16M) and Crude Oil Inventories (last -7.6M); while Thursday features Weekly Initial Jobless Claims (245K) and the Philly Fed Manufacturing Index (23.8) that conclude the week’s highlights.


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