Weekly Market Watch

Released 03 July 2017 - Weekly Market News

Last week recap



Gained sharply last week after ECB President Draghi made hawkish comments, while both economies reported mixed economic data. The rate began the week making its weekly low of 1.1171 on Monday after New York Fed President William Dudley said that, “When financial conditions ease, as has been the case recently, this can provide additional impetus for the decision to continue to remove monetary policy accommodation.” Monday’s economic numbers had German Ifo Business Climate print at 115.1 versus an expectation of 114.7, the reading showed its fifth consecutive monthly increase and a level not seen in the index since 1991. U.S. data had Core Durable Goods Orders increase by +0.1% m/m versus +0.4% expected, while the headline number declined by -1.1% m/m compared to an expectation of -0.5%. The pair rallied sharply on Tuesday after ECB President Draghi hinted at winding down its stimulus measures. Speaking in Portugal, Draghi stated that, “Political winds are becoming tailwinds. There is newfound confidence in the reform process, and newfound support for European cohesion, which could help unleash pent-up demand and investment”. Nevertheless, Draghi also said that, “any adjustments to our stance have to be made gradually, and only when the improving dynamics that justify them appear sufficiently secure.” Tuesday’s economic data had U.S. CB Consumer Confidence print at 118.9 versus an expected reading of 116.1. On Wednesday, the rate extended its gains after the EZ M3 Money Supply increased by +5.0% y/y which was in line with expectations. Also, U.S. Pending Home Sales declined by -0.8%, significantly worse than the expected increase of +0.9%. Thursday saw the pair make its weekly high of 1.1444 after German Preliminary CPI increased by +0.2% m/m versus an expected flat reading, while U.S. Final GDP increased by +1.4% q/q versus an expectation of +1.2%. The rate then declined a fraction on Friday as traders squared positions and despite German Retail Sales, which increased by +0.5% m/m versus an expectation of +0.3%, also, EZ CPI Flash Estimate increased by +1.3% y/y compared to +1.2% anticipated. EUR/USD closed at 1.1425, with a gain of +2.1% for the week.



Gained ground last week as the BOJ is expected to continue with stimulus measures in light of its 0.4% inflation level that is still considerably lower than the central bank’s 2% target. The week began with the rate rallying after making its weekly low of 111.20 on Monday after the BOJ’s Summary of Opinions had members of the central bank express their desire to continue with stimulus measures. One member stated that, “It is crucial to maintain accommodative financial conditions and keep the economy expanding as long as possible”. Another member noted that, “It''s necessary to continue with the current easy policy persistently and wait for a steady increase in demand and further falls in unemployment rate to lead to higher wages, prices and inflation expectations”. The pair continued higher on Tuesday after a better than expected U.S. CB Consumer Confidence number. The rate gained a fraction on Wednesday after comments from BOJ Governor Kuroda, who stated that, “Firms are still hesitating to make long-term commitments because they are waiting to see a sustained pickup in growth and inflation that has yet to materialize.” On Thursday, the pair made its weekly high of 112.91 after Japanese Retail Sales increased by +2.0% y/y versus an expectation of +2.6%. The rate resumed its rally on Friday after Tokyo Core CPI showed a flat reading y/y versus an expected increase of +0.2%, while National Core CPI increased by +0.4%, in line with expectations. USD/JPY went on to close at 112.34, with a weekly gain of +1.0%.


Gained sharply last week as BOE Governor Mark Carney called for a tighter monetary policy, reversing his position of maintaining low rates, which he stated just last week. Cable began the week making its weekly low of 1.2705 on Monday after lower than expected U.S. Durable Goods Orders data. The pair began rallying on Tuesday after BOE Governor Carney stated that, “Some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional.” Also, the BOE’s Financial Stability Report requested UK banks to raise their capital requirement by £11.4B to protect the banks from Brexit risk and external shocks. Cable extended its gains on Wednesday after BOE Chief Economist Andy Haldane said that, “We need to look seriously at the possibility of raising interest rates to keep the lid on those cost of living increases”. He also added that, “For now we are happy with where the rates are, we need to be vigilant for what happens next.” The rally continued Thursday after UK Net Lending to Individuals increased to +5.3B compared to an expectation of +4.0B. Cable then made its weekly high of 1.3028 on Friday after the UK Current Account showed a deficit of -16.9B versus an expected deficit of -17.2B, while UK Final GDP increased by +0.2% q/q, as widely expected. GBP/USD closed at 1.3020, with an overall gain of +2.4% from its previous weekly close.



Gained ground last week as copper prices rallied, while the United States reported mixed economic numbers with very little data from Australia. The rate began the week trading higher after making its weekly low of 0.7564 on Monday after lower than expected U.S. Durable Goods Orders data. The pair then consolidated on Tuesday after a better than expected U.S. CB Consumer Confidence number. On Wednesday, the rate resumed its rally, gaining after a lower than expected U.S. housing number. The pair extended its gains on Thursday despite a better than anticipated U.S. Final GDP number. Friday saw the rate consolidate after making its weekly high of 0.7711 after mixed U.S. data, ending the week at 0.7685 — a three-month high — with a gain of +1.5%.


Traded lower last week BOC President Poloz hinted of an upcoming rate decision that increased the chances of a BOC rate hike later this month. The week began with the pair consolidating after making its weekly high of 1.3226 on Monday as the United States reported dismal Durable Goods Orders data. The rate began selling off on Tuesday despite a better than expected U.S. CB Consumer Confidence number. On Wednesday, the pair declined sharply after BOC Governor Stephen Poloz reiterated that the two previous rate cuts had stimulated the economy, stating that, “It does look as though those cuts have done their job,” Poloz continued saying that, “But we’re just approaching a new interest rate decision so I don’t want to prejudge. But certainly we need to be at least considering that whole situation now that the capacity, excess capacity, is being used up steadily.” Thursday saw the pair continue its slide despite a better than expected U.S. Final GDP number. The rate then made its weekly low of 1.2946 on Friday after Canadian GDP increased by +0.2% m/m, in line with expectations, also, RMPI declined by -1.8% m/m versus an expectation of -0.6%. USD/CAD closed the week at 1.2958, with a loss of -2.4% for the week.



Extended its previous week’s gains last week as asset flows favoured the Kiwi over the Greenback with very little economic data out of New Zealand. The week began with the rate consolidating on Monday after the New Zealand Trade Balance showed a surplus of +103M compared to an expected surplus of +420M. The pair then declined on Tuesday after a better than expected U.S. CB Consumer Confidence number. Wednesday saw the rate gain ground after making its weekly low of 0.7252 after a lower than anticipated U.S. housing number. The pair gained a fraction on Thursday after the New Zealand ANZ Business Confidence index printed at 24.8 compared to a previous reading of 14.9. On Friday, the rate made its weekly high of 0.7345 as the United States released mixed economic numbers. NZD/USD closed at 0.7324, with an overall weekly gain of +0.7%.

The week ahead

AUD The Australian economic calendar is rather light this coming week, only featuring Building Approvals (-1.20%) on Monday; Retail Sales (0.30%), the RBA Rate Statement and the Cash Rate Decision (unchanged at 1.50%) on Tuesday; the Trade Balance (1.11B) on Thursday; and the G20 Meetings on Friday that will run until Saturday. Resistance for AUD/USD is seen at 0.8068/75, 0.7913/38 and 0.7712/0.7834, with support noted at 0.7582/0.7679, 0.7222/0.7535 and 0.7159/62.

CAD The Canadian economic calendar is somewhat busy this coming week, featuring key jobs data on Friday. Monday is a Bank Holiday in Canada, and Tuesday and Wednesday are quiet, so Thursday starts the week’s highlights off with the Trade Balance (last -0.4B) and Building Permits (last -0.20%). Friday then features the G20 Meetings that will last until Saturday, as well as the Employment Change (last 54.5K), the Unemployment Rate (last 6.60%) and Ivey PMI (last 53.8). Resistance for USD/CAD is seen at 1.3191/1.3312, 1.3164/69 and 1.3056, while support shows at 1.2946/68, 1.2822 and 1.2863.

EUR The Eurozone economic calendar is moderately busy this coming week, featuring a speech by German Buba President Weidmann on Sunday. Monday has Spanish Manufacturing PMI (55.6) scheduled for release, and Tuesday’s key events include the Spanish Unemployment Change (-120.3K). Wednesday then offers nothing notable, while Thursday features the ECB’s Monetary Policy Meeting Accounts. Friday’s important events then include the G20 Meetings that will run until Saturday. Resistance for EUR/USD is seen at 1.1714, 1.1616 and 1.1414/94, with support showing at 1.1326/76, 1.1209/99 and 1.1109/66.

GBP The UK economic calendar is somewhat busy this coming week, featuring a speech by BOE Governor Carney on Friday. Monday starts the week’s highlights off with Manufacturing PMI (56.4), and Tuesday’s key events include Construction PMI (55.2). Wednesday then offers Services PMI (53.5), while Thursday features nothing notable. Friday’s important data then includes the Halifax HPI (0.20%), Manufacturing Production (0.40%), the Goods Trade Balance (-10.9B), the G20 Meetings that will run through Saturday, and a speech by BOE Governor Carney. Resistance to the topside for GBP/USD shows at 1.3279, 1.3093/1.3120 and1.3029/57, while support for the pair is expected at 1.2814/1.2983, 1.2768/74 and 1.2690.

JPY The Japanese economic calendar is light this coming week, only featuring the Tankan Manufacturing Index (17) and the Tankan Non-Manufacturing Index (23) on Monday, in addition to the G20 Meetings on Friday that will continue until Saturday. Resistance for USD/JPY currently shows up at 114.75/95, 113.79/114.36 and 112.92/113.04, with support indicated at 111.41/112.14, 110.08/1.1112 and 108.81/109.11.

NZD The New Zealand economic calendar is quiet peaceful this coming week, only featuring NZIER Business Confidence (last 17) on Monday; the GDT Price Index (last -0.80%) on Tuesday and the G20 Meetings on Friday that will run until Saturday. The chart for NZD/USD shows resistance at 0.7608/17, 0.7402/84 and 0.7343/75. On the downside, technical support is expected at 0.7297/0.7318, 0.6817/0.7246 and 0.6674/0.6738.

USD The U.S. economic calendar is moderately active this coming week, featuring key data on Wednesday and Friday. Monday starts the week’s highlights off with ISM Manufacturing PMI (55), and Tuesday will be a U.S. Bank Holiday. Wednesday then offers Factory Orders (-0.40%) and the FOMC Meeting Minutes, while Thursday features the ADP Non-Farm Employment Change (181K), Weekly Initial Jobless Claims (245K), the Trade Balance (-46.3B), ISM Non-Manufacturing PMI (56.6), a speech by FOMC Member Powell and Crude Oil Inventories (last 1.0M). Friday’s important data then concludes the week with a speech by FOMC Member Fischer, the G20 Meetings, Average Hourly Earnings (0.30%), Non-Farm Payrolls (175K), the Unemployment Rate (4.30%), the Fed’s Monetary Policy Report, and the G20 Meetings that will conclude on Saturday.


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