Weekly Market Watch

Released 19 September 2017 - Weekly Market News

Last week recap

Lost ground last week as the Greenback was supported by better than expected U.S. inflation data and news from the Trump administration announcing it would release its tax reform plan in the next few weeks. The week began with the rate making its weekly high of 1.2028 on Monday after ECB Executive Board member Benoit Coeure said that, “Compared with past demand shocks, policy will remain more accommodative for longer, thereby likely muting further the pass-through of any growth-driven exchange rate appreciation”. On Tuesday, the pair gained a fraction after ECB Vice President Vitor Constancio, speaking in Frankfort stated that, “By keeping a sufficient degree of monetary policy accommodation we can be confident that our goal will eventually be reached, in accordance with our mandate. Non-standard measures are going to be part of our toolkit for some time to come, and some of them might even be deemed standard measures at some point”. Tuesday’s Eco-data had U.S. JOLTS Job Openings increase to +6.17M compared to an expectation of +5.96M. The rate resumed its selloff on Wednesday after news that U.S. President Donald Trump’s tax reform would be released the week of September 25th. Wednesday’s numbers had U.S. PPI increase by +0.2% m/m versus +0.3% expected, and Core PPI, which increased by +0.1%, missing the consensus of +0.2%. The pair then made its weekly low of 1.1837 on Thursday before gaining after ECB governing council member Bostjan Jazbec said that, “The timing for the decision (on reducing bond purchases) has been postponed mainly because developments are in our view still not confirming the decision which will inevitably follow.” Economic numbers on Thursday included U.S. CPI, which increased by +0.4% compared to +0.3% expected, while Core CPI increased by +0.2%, in line with expectations, and Initial Jobless Claims, which dropped to 284K versus 303K anticipated. The rate extended its gains on Friday after U.S. Core Retail Sales increased by +0.2% m/m versus +0.5% expected, while Retail Sales declined by -0.2%, significantly lower than the expectation of +0.1%, with the previous number downwardly revised from +0.6% to +0.3%. EUR/USD closed at 1.1943, with an overall loss of -0.7% for the week.
Rallied sharply last week as risk appetite returned to the markets, as well as progress on U.S. President Trump’s tax reform package and U.S. inflation data, which supported the Greenback. The pair began the week selling off after making its weekly low of 108.20 on Monday in the absence of any significant economic data from either country. Tuesday saw the rate continue to gain after a better than expected U.S. JOLTS Job Openings number. The pair extended its gains on Wednesday despite lower than expected U.S. PPI data. On Thursday, the rate declined despite U.S. CPI and Jobless Claims, which both beat market expectations. The pair them made its weekly high of 111.32 on Friday after comments from former BOJ economist Hideo Hayakawa, criticizing the BOJ’s Yield Curve Control stating that, “YCC is a sustainable framework but doesn’t have the power to dramatically boost inflation,” Hayakawa added that, “if the BOJ fails to hit its price target during the current economic expansion, it''s left with a pretty bad situation.” USD/JPY closed at 110.80, gaining +2.8% from its previous weekly close.
Continued rallying last week as the BOE left interest rate unchanged and Sterling reacted to speculation of a November interest rate hike after better than anticipated inflation data. Cable began the week losing a fraction on Monday in the absence of any significant economic numbers from either country. The rate rallied on Tuesday after UK CPI increased by +2.9% y/y, beating the market consensus of +2.8% and the highest level the number has seen in a year. Also supporting the rate were PPI Input, which increased by +1.6% m/m versus +1.2% expected and RPI, which increased by +3.9% y/y versus an expectation of +3.7%. On Wednesday, Cable sold off after UK Average Earnings increased by +2.1% 3m/y, missing the market consensus of +2.3%. Nevertheless, the UK Unemployment Rate dropped to a 42-year low of 4.3% versus an expectation of 4.4%, while Claimant Count Change declined by -2.8K versus an expected increase of +0.8K. Thursday saw the rate make its weekly low of 1.3149 before gaining after the BOE left its benchmark Official Bank Rate unchanged at 0.25% and the Asset Purchase Facility at 435B as widely expected. MPC members McCafferty and Saunders continued to vote for a +25-bps increase to the Bank Rate, with a unanimous vote on the Asset Purchase Facility. The minutes of the meeting indicated that for most policymakers, “some withdrawal of monetary stimulus was likely to be appropriate over the coming months in order to return inflation sustainably to target.” Cable extended its gains on Friday, making its weekly high of 1.3615 as the United States reported weaker than expected Retail Sales data. GBP/USD closed at 1.3586, with a net weekly gain of +3.0%.
Lost ground last week as both countries reported mixed economic numbers. The week began with the pair making its weekly high of 0.8057 on Monday in the absence of any significant numbers from either country. The rate declined another fraction on Tuesday after Australian NAB Business Confidence printed at 5 compared to a previous reading of 12. NAB chief economist Alan Oster said after the release that, “For those indicating deterioration in confidence, the biggest concerns appear to be customer demand, government policy, as well as cost pressures - both energy and wages.” The pair continued its slide on Wednesday despite lower than expected U.S. PPI data. On Thursday, the rate gained ground after making its weekly low of 0.7954 as Australian Employment Change showed +54.2K new jobs compared to an expectation of +17.5K, while the Australian Unemployment Rate held steady at 5.6%. The pair then consolidated at a slightly lower level on Friday despite lower than expected U.S. Retail Sales data. AUD/USD went on to close at 0.7998, with a loss of -0.7% for the week.
Reversed direction, gaining a fraction last week as the United States reported mixed economic numbers, with very little significant data from Canada. The rate began the week declining a fraction on Monday in the absence of any significant data from either country. The pair then rallied after making its weekly low of 1.2081 on Tuesday after a better than expected U.S. employment number. On Wednesday, the rate consolidated after U.S. PPI data failed to meet the market consensus. The pair then made its weekly high of 1.2138 on Thursday before consolidating at a slightly lower level after Canadian NHPI increased by +0.4% m/m versus an expectation of +0.3%. Friday saw the rate gain a fraction despite lower than expected U.S. Retail Sales data. USD/CAD closed at 1.2191, with an overall weekly gain of +0.3%.
Extended its previous week’s gains last week as the United States reported mixed economic numbers with very little significant data from New Zealand. The week began with the pair gaining a fraction on Monday in the absence of any significant data from either country. The rate then made its weekly high of 0.7319 on Tuesday despite a better than expected U.S. employment number. On Wednesday, the pair sold off despite lower than expected U.S. PPI and Core PPI releases. The rate continued selling off on Thursday, making its weekly low of 0.7182 despite the New Zealand Business NZ Manufacturing Index, which printed at 57. 9 compared to a previous reading of 55.5. The pair then rallied sharply on Friday after lower than expected U.S. Retail Sales numbers. NZD/USD closed at 0.7289, with an overall weekly gain of +0.6%.

The week ahead

AUD The Australian economic calendar is very quiet this coming week, only featuring the RBA’s Monetary Policy Meeting Minutes and the HPI (1.3%) on Tuesday. Resistance for AUD/USD is seen at 0.8659, 0.8124/62 and 0.8042/75, with support noted at 0.7891/0.7997, 0.7807/70 and 0.7222/0.7679.

CAD The Canadian economic calendar is busy this coming week, featuring CPI data on Friday. Monday starts the week’s highlights off with Foreign Securities Purchases (4.46B), and Tuesday has Manufacturing Sales (-1.4%). Wednesday then offers nothing notable, while Thursday features Wholesale Sales (-0.9%). Friday’s then concludes the week with CPI (0.2%), Core Retail Sales (0.4%), Common CPI (1.4%), Median CPI (1.7%), Retail Sales (0.1%), and Trimmed CPI (1.3%). Resistance for USD/CAD is seen at 1.2522/75, 1.2339/1.2465 and 1.2238, while support shows at 1.2127, 1.2060 and 1.1919.

EUR The Eurozone economic calendar is quite busy this coming week, featuring CPI data on Monday. Monday starts the week’s highlights off with EZ Final CPI (1.5%), and Tuesday has the German ZEW Economic Sentiment survey (12.3). Wednesday and Thursday then offer nothing of note, while Friday then concludes the week with French Flash Manufacturing PMI (55.6), French Flash Services PMI (54.8), German Flash Manufacturing PMI (59.0), German Flash Services PMI (53.8), EZ Flash Manufacturing PMI (57.2), and EZ Flash Services PMI (54.8). Resistance for EUR/USD is seen at 1.2623, 1.2329 and 1.1979/1.2091, with support showing at 1.1822/1.1909, 1.1776 and 1.1661.

GBP The UK economic calendar is light this coming week, only featuring Retail Sales (0.2%) on Wednesday and Public Sector Net Borrowing (6.5B) on Thursday. Resistance to the topside for GBP/USD shows at 1.4004/56, 1.3834 and 1.3615, while support for the pair is expected at 1.3444/80, 1.3371 and 1.3223/65

JPY The Japanese economic calendar is somewhat active this coming week, featuring the tentatively scheduled BOJ Policy Rate Decision on Thursday. Monday is a Japanese Bank Holiday, and Tuesday and Wednesday offer nothing notable, so Thursday starts and finishes the week’s highlights off with the tentatively scheduled BOJ Monetary Policy Statement, BOJ Policy Rate Decision (unchanged at -0.10%) and the BOJ Press Conference. Resistance for USD/JPY currently shows up at 112.92/115.61 and 111.33/112.25, with support indicated at 110.08/111.04, 108.13/109.91 and 107.31/48.

NZD The New Zealand economic calendar is quite active this coming week, featuring parliamentary elections on Friday. Monday is quiet, so Tuesday starts the week’s highlights off with the tentatively scheduled GDT Price Index (0.3%) and the Current Account (-0.89B). Wednesday then offers GDP (0.8%), while Thursday features nothing notable. Friday’s then concludes the week’s highlights with the New Zealand Parliamentary Elections, and the New Zealand Daylight Saving Time Shift will take place on Saturday. The chart for NZD/USD shows resistance at 0.7608/17, 0.7557 and 0.7319/0.7484. On the downside, technical support is expected at 0.7182/0.7262, 0.6817/0.7131 and 0.6674/0.6738.

USD The U.S. economic calendar is active this coming week, featuring the FOMC’s Fed Funds Rate Decision on Wednesday. Monday is quiet, so Tuesday starts the week’s highlights off with Building Permits (1.22M), the Current Account (-113B), Housing Starts (1.18M), and Import Prices (0.4%). Wednesday then offers Existing Home Sales (5.46M) and Crude Oil Inventories (last 5.9M), the FOMC’s Economic Projections, the FOMC Rate Statement, the Federal Funds Rate Decision (unchanged at <1.25%), and the FOMC Press Conference. Thursday then concludes the week’s highlights with Weekly Initial Jobless Claims (300K) and the Philly Fed Manufacturing Index (17.2).


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