Weekly Market Watch

Released 04 September 2017 - Weekly Market News

Last week recap

Sold off last week after Reuters reported unnamed ECB officials were concerned over the strength in the Euro, while the Greenback was resilient despite continued threats from North Korea and the aftermath of Hurricane Harvey. The week began with the rate gaining a fraction on Monday despite the EZ M3 Money Supply, which increased by +4.5% y/y compared to a consensus of +4.8%. The pair increased another fraction on Tuesday after making its weekly high of 1.2069 after news that North Korea had fired a missile over Japan. U.S. President Trump warned that “Threatening and destabilizing actions only increase the North Korean regime''s isolation in the region and among all nations of the world. All options are on the table.”. Economic data on Tuesday had U.S. CB Consumer Confidence print at 122.9 versus 120.9 expected. The rate then declined on Wednesday after German Preliminary CPI increased by +0.1% as widely anticipated. Also, U.S. Preliminary GDP increased by +3.0 q/q compared to an expectation of +2.7%, and ADP Non-Farm Employment Change, which increased to +237K versus +185K expected, with the previous release upwardly revised from +178K to +201K. On Thursday, the pair made its weekly low of 1.1822 after Reuters reported that some ECB officials were concerned over the appreciation of the Euro. The central bank has indicated it would begin tapering its EUR 60B asset purchase program; however, the market now anticipates the tapering could be delayed until their December meeting. Economic data included German Retail Sales, which declined by -1.2% m/m versus -0.5% anticipated. Also, EZ Flash Estimate increased by +1.5% y/y versus +1.4% expected. Thursday’s U.S. data had Initial Jobless Claims show +236K in its latest week, which was in line with expectations, while Pending Home Sales declined by -0.8% compared to an expected increase of +0.4%. Friday saw the rate decline despite U.S. Non-Farm Payroll, which showed +156K new jobs last month compared to an expected +180K, with the previous number downwardly revised from +209K to +189K and the Unemployment Rate increased to 4.4% from 4.3%. Also, Average Hourly Earnings increased by +0.1% versus +0.2% expected and ISM Manufacturing PMI, which printed at 58.8 compared to a consensus of 56.5. EUR/USD closed at 1.1859, with an overall loss of -0.5% from its previous weekly close.
Extended its previous week’s gains last week as both countries reported mixed economic numbers. The week began with the rate selling off on Monday after comments from BOJ Governor Kuroda in Jackson Hole, Wyoming. Kuroda told Bloomberg that, “I think 4 percent growth is excellent but we don’t think 4 percent growth can be sustained. Around 2 percent growth is likely, I think for some time we have to continue this extremely accommodative monetary policy.” The pair then made its weekly low of 108.25 on Tuesday after North Korea launched a missile that crossed Japan and landed in the ocean. Japanese PM Shinzo Abe stated that, “President Trump expressed his strong commitment to defending Japan, saying he was 100 percent with Japan as an ally.” The pair then gained after a better than expected U.S. CB Consumer Confidence number. The rate continued its rally on Wednesday after the United States released better than expected employment and GDP data. Thursday saw the pair make its weekly high of 110.66 despite lower than expected U.S. Personal Spending and Pending Home Sales numbers. On Friday, the rate gained a fraction despite lower than expected U.S. Non-Farm Payroll and Average Hourly Earnings numbers. USD/JPY closed at 110.22, with a weekly gain of +0.8%.
Continued its rally last week as the UK concluded its third round of Brexit negotiations with the EU and with mixed economic numbers from both countries. Cable began the week on a quiet note, gaining a fraction in the absence of any significant data out of either country. The pair consolidated on Tuesday after European Commission President Jean-Claude Juncker complained that, “There are still an enormous number of issues that need to be settled. Not only the border problems with Ireland and Northern Ireland, which is a very serious problem to which we have had no definitive response, but also the issue of European citizens living in the UK and UK citizens living on the continent.” Cable consolidated again on Wednesday after UK Net Lending to Individuals increased by +4.8B m/m versus +5.3B expected. The rate then made its weekly low of 1.2851 before gaining a fraction on Thursday as UK PM Theresa May arrived for her first official visit to Japan with a large British trade delegation. Nevertheless, Japan said earlier in the week that they would refrain from any UK trade agreements until the Brexit situation clarifies. Cable then made its weekly high of 1.2994 on Friday after UK Manufacturing PMI printed at 56.9 versus an expectation of 55.0, while the United States reported lower than expected NFP, Unemployment Rate and Average Hourly Earnings data. GBP/USD closed at 1.2951, with a gain of +0.6% for the week.
Rallied for its third straight week last week as Australia reported mostly better than expected economic data. The rate began the week losing ground on Monday in the absence of any significant numbers from either country. The pair gained on Tuesday as North Korea fired a missile over Japan and despite a better than expected U.S. consumer confidence number. On Wednesday, the rate fell sharply after making its weekly high of 0.7994 after Australian Building Approvals declined by -1.7% m/m, significantly better than the expectation of -5.4%, with the previous number upwardly revised from +10.9% to +11.7%. Also, Australian Construction Work Done increased by a whopping +9.3% versus an expectation of +0.9%. Thursday saw the pair rally after making its weekly low of 0.7870 as Australian Private Capital Expenditure increased by +0.8% versus +0.2% anticipated. The rate continued its rally on Friday after lower than expected U.S. employment, hourly earnings and consumer sentiment data. AUD/USD closed at 0.7966, with a gain of +0.5% from its previous weekly close.
Continued its slide, declining for its third consecutive week as strong GDP data from Canada raised the probability of a rate hike at the BOC’s upcoming rate decision later this week. The pair began the week gaining a fraction on Monday in the absence of any significant data from either country. The rate consolidated on Tuesday after Canadian RMPI declined by -0.6% m/m versus an expectation of -0.2%. On Wednesday, the pair rallied after better than expected U.S. employment data and despite the Canadian Current Account, which showed a contracting deficit of -16.3B compared to a consensus of -17.3B, with the previous number upwardly revised from -14.1B to -12.9B. The rate then declined sharply after making its weekly high of 1.2661 on Thursday after Canadian GDP increased by +0.3% m/m compared to an expectation of +0.1%. The pair then made its weekly low of 1.2339 on Friday after disappointing U.S. NFP and Average Hourly Earnings data. USD/CAD closed at 1.2394, with a net loss of -0.7% for the week.
Extended its previous week’s losses last week as asset flows favoured the Greenback over the Kiwi, with very little significant economic data out of New Zealand. The week began with the rate declining a fraction on Monday in the absence of any significant numbers from either country. The pair then made its weekly high of 0.7297 on Tuesday despite a better than expected U.S. CB Consumer Confidence number. On Wednesday, the rate sold off after comments from RBNZ Governor Graeme Wheeler, who said in a speech that, “The appreciation in the exchange rate has been a headwind for the tradables sector and, by reducing already weak tradables inflation, made it more difficult to reach the Bank’s inflation goals. A lower New Zealand dollar is needed to increase tradables inflation and help deliver more balanced growth.” The pair then made its weekly low of 0.7130 on Thursday after the New Zealand ANZ Business Confidence index printed at 18.3 compared to a previous release of 19.4. The rate continued its slide on Friday despite disappointing U.S. NFP, Average Earnings Index and Unemployment Rate releases. NZD/USD closed at 0.7153, with a net loss of -1.1% for the week.

The week ahead

AUD The Australian economic calendar is very active this coming week, featuring the RBA’s Cash Rate Decision on Tuesday. Monday starts the week’s highlights off with Company Operating Profits (-4.5%), and Tuesday has the Current Account (-7.4B), the RBA Cash Rate Decision (1.50%), the RBA Rate Statement, and a speech by RBA Governor Lowe. Wednesday then offers GDP (0.8%), while Thursday features Retail Sales (0.2%) and the Trade Balance (0.95B). Friday then concludes the week with speeches by RBA Assistant Governor Debelle and RBA Governor Lowe. Resistance for AUD/USD is seen at 0.8162, 0.8042/75 and 0.7962/97, with support noted at 0.7891/0.7938, 0.7807/70 and 0.7222/0.7679.

CAD The Canadian economic calendar is quite busy this coming week, featuring key jobs data on Friday. Monday is a Bank Holiday, and Tuesday is quiet, so Wednesday starts the week’s highlights off with the Trade Balance (-3.8B), Labor Productivity (0.9%), the BOC Rate Statement and the Overnight Rate Decision (unchanged at 0.75%). Thursday then offers Building Permits (2.2%) and the Ivey PMI (61.3), while Friday concludes the week with the Employment Change (15.0K) and the Unemployment Rate (6.3%). Resistance for USD/CAD is seen at 1.2654/1.2772, 1.2522/75 and 1.2413/65, while support shows at 1.2339/62, 1.2127 and 1.1919.

EUR The Eurozone economic calendar is fairly light this coming week, only featuring the Spanish Unemployment Change (16.3K) on Monday, and the Minimum Bid Rate (unchanged at 0.00%) and the ECB Press Conference on Thursday. Resistance for EUR/USD is seen at 1.2329, 1.2042 and 1.1910, with support showing at 1.1822/76, 1.1776 and 1.1661.

GBP The UK economic calendar is moderately busy this coming week, featuring Manufacturing Production on Friday. Monday starts the week’s highlights off with Construction PMI (52.1), and Tuesday has Services PMI (53.6). Wednesday then offers nothing notable, while Thursday features the Halifax HPI (0.2%). Friday’s then concludes the week with Manufacturing Production (0.3%) and the Goods Trade Balance (-12.1B). Resistance to the topside for GBP/USD shows at 1.3120/58, 1.3030/47 and 1.2978/1.2988, while support for the pair is expected at 1.2768/1.2916, 1.2642/90 and 1.2589.

JPY The Japanese economic calendar is very peaceful this coming week, only featuring Final GDP (0.7%) on Friday. Resistance for USD/JPY currently shows up at 112.92/115.61, 110.08/112.25 and 109.74/91, with support indicated at 108.59/109.11, 108.13/26 and 107.48.

NZD The New Zealand economic calendar is very quiet this coming week, only featuring the GDT Price Index (last -0.4%) on Tuesday. The chart for NZD/USD shows resistance at 0.7608/17, 0.7557 and 0.7262/0.7484. On the downside, technical support is expected at 0.6817/0.7131 and 0.6674/0.6738.

USD The U.S. economic calendar is busy this coming week, featuring Trade Balance data on Wednesday. Monday is a Bank Holiday, so Tuesday starts the week’s highlights off with speeches by FOMC Member Brainard, Kashkari and Kaplan, in addition to Factory Orders (-3.1%). Wednesday then offers the Trade Balance (-44.6B) and ISM Non-Manufacturing PMI (55.5), while Thursday features Weekly Initial Jobless Claims (245K) and Crude Oil Inventories (-5.4M). Friday’s important data then concludes the week with speeches by FOMC Members Dudley and Harker.


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