Weekly Market Watch

Released 05 October 2015 - Weekly Newsletter

Last week recap

Showed little change last week as both economies released lower than expected economic data including a disappointing U.S. Non-Farm Payrolls number. The pair began the week on a positive note, gaining after comments from the Fed’s Dudley, who said that, “The unemployment rate has been trending lower. What's happened and both Stan and I mentioned this in our remarks is international developments have created a little bit more uncertainty. Were having a slowdown in China. Its affecting global commodity markets. Its putting pressure on emerging market economies, and we want to also -- we want to assess that, not for itself, but how that affects the U.S. economic outlook.” Also, FOMC’s Williams said that, “I view the next appropriate step as gradually raising interest rates, most likely starting sometime later this year. Of course, that view is not immutable and will respond to economic developments over time.” Monday’s data had U.S. Pending Home Sales decline -1.4% m/m compared to +0.4% expected. The pair gained a fraction on Tuesday despite German Preliminary CPI, which declined -0.2% m/m compared to -0.1% anticipated, and U.S. CB Consumer Confidence, printing at 103.0 versus 96.2 expected. On Wednesday, the rate declined after German Retail Sales declined -0.4% m/m compared to an expected increase of +0.2%, while German Unemployment Change showed an increase of 2K versus -5K expected; also, the EZ Unemployment Rate edged up to 11.0% from 10.9%. U.S. data had ADP Non-Farm Employment Change show +200K new jobs last month compared to an expected increase of +192K. Thursday saw the pair gain a fraction after making its weekly low of 1.1134 as U.S. ISM Manufacturing PMI printed at 50.2 versus an expected reading of 50.8, also, Initial Jobless Claims were in line with expectations at 277K. Thursday’s EZ data had Spanish Manufacturing PMI print at 51.7 compared to 53.0 expected. The rate continued higher on Friday, making its weekly high of 1.1318 after U.S. Non-Farm Payrolls (NFP) came out at a disappointing +142K compared to +201K expected, while U.S. Average Hourly Earnings came in flat, m/m compared to an expected increase of +0.2%. Also, ECB President Draghi said that, “The progress achieved over the past three years to stabilise and strengthen the euro area is real. Growth is returning. The way forward is well identified. And we will not rest until our monetary union is complete. It is in our interest. It is also in your interest and that of everybody, everywhere.” EUR/USD went on to close at 1.1209, with an overall weekly gain of just 14 pips or +0.1%.
Lost ground last week as both countries reported mixed economic data with the Greenback pressured by a weak Non-Farm Payrolls number. The rate began the week on a soft note, declining from its weekly high of 120.56 after comments from BOJ Governor Kuroda on Monday, in which he said that, “Fears that U.S. rate normalization would trigger a massive, sharp outflow of funds from emerging economies and disrupt the global economy appear to be receding somewhat,” adding that, “Exchange rates ought to move in a way reflecting economic fundamentals. I think that understanding is shared by policymakers of Group of Seven leading economies”. The pair declined another fraction on Tuesday after mixed U.S. Consumer Confidence and Goods Trade Balance numbers. On Wednesday, the rate consolidated at a slightly higher level after Japanese Retail Sales increased +0.8% y/y compared to an expected +1.2% and the United States reported a positive ADP Non-Farm Employment number. The pair ended Thursday with no change after the Japanese Manufacturing Index printed at 12 compared to 13 expected, while the Tankan Non-Manufacturing Index printed at 25 versus 21 anticipated. Friday, the rate consolidated at a slightly lower level after Japanese Household Spending increased +2.9% y/y compared to an expected +0.4% and the United States released a disappointing Non-Farm Payrolls number. USD/JPY went on to close at 119.88, with an overall loss of -0.6% for the week.
Closed virtually unchanged last week as the UK reported economic data which beat the consensus with mostly lower than expected numbers from the United States. Cable began the week selling off of its weekly high of 1.5340 on Monday after hawkish comments from the FOMC’s Dudley and Williams and mixed U.S. economic numbers. The pair continued its slide on Tuesday despite UK Net Lending to Individuals, which increased +4.3B m/m versus expectation of +4.1B. Also on Tuesday, BOE Governor Carney, speaking at Lloyds of London said that, “The combination of the weight of scientific evidence and the dynamics of the financial system suggest that, in the fullness of time, climate change will threaten financial resilience and longer-term prosperity. While there is still time to act, the window of opportunity is finite and shrinking. Others will need to learn from Lloyd’s example in combining data, technology and expert judgment to measure and manage risks.” On Wednesday, Cable sold off for its third consecutive day despite the UK Current Account, which showed a deficit of -16.8B, significantly less than the -22.2B expected, while UK Final GDP increased +0.7% q/q as widely anticipated. The rate then consolidated at a slightly higher level on Thursday after making its weekly low of 1.5106 as UK Manufacturing PMI printed at 51.5, in line with expectations. Cable then gained sharply on Friday after a lower than expected U.S. NFP number and UK Construction PMI, which printed at 59.9 compared to 57.5 anticipated. GBP/USD closed at 1.5177, with a loss of four pips for the week and virtually unchanged
Gained a fraction last week after mostly lower than expected U.S. data and very few economic releases out of Australia. The rate began the week selling off on Monday after hawkish comments from U.S. FOMC officials. On Tuesday, the pair began rallying after making its weekly low of 0.6936 after a report from the IMF forecast slower growth for commodity exporters and speculation the RBA would cut interest rates early next year. The rate continued gaining on Wednesday despite Australian Building Approvals dropping -6.9% m/m compared to an expected decline of -1.8%, nevertheless, the previous number was significantly revised up from +4.2% to +7.9%. Thursday saw the pair make its weekly high of 0.7083 after a lower than expected U.S. ISM Manufacturing PMI number. The rate edged higher on Friday after a disappointing U.S. NFP release and Australian Retail Sales, which increased +0.4% m/m as was widely expected. AUD/USD closed at 0.7047, with an overall gain of +0.3% for the week..
Declined last week after making an 11 year high, as the Greenback was pressured by disappointing economic data and with mixed numbers out of Canada. The week began with the pair gaining on Monday after hawkish comments from FOMC members. The rate then made its weekly high — and a level not seen since June of 2004 — of 1.3456 on Tuesday despite Canadian RMPI, which declined -6.6% m/m compared to an expected -7.3%. On Wednesday, the pair began selling off sharply after Canadian GDP increased +0.3% m/m versus +0.2% expected. The rate extended its losses on Thursday after a disappointing U.S. ISM Manufacturing PMI number. The pair then made its weekly low of 1.3150 on Friday after a disappointing U.S. NFP release. USD/CAD closed at 1.3153, with an overall loss of -1.3% from its previous weekly close.
Recovered its previous week’s losses last week as the United States reported lower than expected economic numbers with very little data out of New Zealand. The week began on a soft note, with the rate dropping on Monday after mixed U.S. numbers and hawkish comments from FOMC officials. The rate then made its weekly low of 0.6287 on Tuesday after mixed U.S. Trade and Consumer Confidence data. On Wednesday, the pair continued sharply higher after New Zealand ANZ Business Confidence printed at -18.9 compared to a previous reading of -29.1. The rate then consolidated at a slightly lower level on Thursday after a lower than expected U.S. ISM Manufacturing PMI release. The pair then made its weekly high of 0.6453 on Friday after a dismal U.S. NFP release. NZD/USD closed at 0.6444, with an overall gain of +1.0% for the week.

The week ahead

AUD The Australian economic calendar is fairly busy this coming week, featuring the RBA’s Cash Rate Decision on Tuesday. Sunday is a Bank Holiday, so Monday starts the week’s highlights off with ANZ Job Advertisements (last 1.0%), and Tuesday’s key events include the Trade Balance (-2.36B), the RBA’s Cash Rate Decision (unchanged at 2.00% expected), and the RBA Rate Statement. Wednesday then offers a speech by RBA Assistant Governor Debelle, while Thursday features little of note. Friday’s important data then concludes the week with Home Loans (5.1%). Resistance for AUD/USD is seen at 0.7348/71, 0.7215/84 and 0.7083, with support noted at 0.6981/0.7016, 0.6907/37 and 0.6753/73.

CAD The Canadian economic calendar is busier than usual this coming week, featuring key jobs data on Friday. Monday is quiet, so Tuesday starts the week’s highlights off with the Trade Balance (-0.3B) and the Ivey PMI (last 58.0). Wednesday then offers Building Permits (-0.6%), while Thursday features the NHPI (0.2%). Friday’s important data then includes the Employment Change (last 12.0K), the Unemployment Rate (last 7.0%), and the BOC Business Outlook Survey. Saturday concludes the week with a speech by BOC Governor Poloz. Resistance for USD/CAD is seen at 1.3415/56, 1.3305/52 and 1.3153/92, while support shows at 1.3006/1.3116, 1.2951/90 and 1.2859.

EUR The Eurozone economic calendar is quieter than usual this coming week, featuring a speech by ECB President Draghi on Tuesday. Monday starts the week’s highlights off with the Eurogroup Meetings, and Tuesday’s key events include German Factory Orders (0.5%), the ECOFIN Meetings, the Eurogroup Meetings and a speech by ECB President Draghi. Wednesday offers little of note, while Thursday features the ECB Monetary Policy Meeting Accounts. That concludes the week’s key events, since Friday is quiet. Resistance for EUR/USD is seen at 1.1436/66, 1.1331/1.1409 and 1.1207/95, with support showing at 1.1104/55, 1.1005/86 and 1.0954.

GBP The UK economic calendar is quite active this coming week, featuring the BOE’s Official Bank Rate Decision on Thursday. Monday starts the week’s highlights off with Services PMI (56.4), and Tuesday’s key events include the Halifax HPI (6th-9th Oct, 2.7%). Wednesday then offers Manufacturing Production (0.5%) and the NIESR GDP Estimate (0.5%), while Thursday features the MPC Official Bank Rate Votes (unchanged at 1-0-8 expected), the BOE’s Monetary Policy Summary, the BOE’s Official Bank Rate Decision (unchanged at 0.50%) , the Asset Purchase Facility (unchanged at 375B), the MPC Asset Purchase Facility Votes (unchanged at 0-0-9) and a speech by BOE Governor Carney. Friday’s important data then concludes the week with the Trade Balance (-10.0B). Resistance to the topside for GBP/USD shows at 1.5530/1.5722, 1.5424/66 and 1.5329/35, while support for the pair is expected at 1.5160/89, 1.5106/35 and 1.4950.

JPY The Japanese economic calendar is rather peaceful this coming week, only featuring the tentatively scheduled BOJ Monetary Policy Statement and BOJ Press Conference on Wednesday, followed by Core Machinery Orders (3.1%) and the Current Account (1.28T) on Thursday. Resistance for USD/JPY currently shows up at 121.81/123.00, 121.23/32 and 120.34/98, with support indicated at 119.05/39, 118.49/88 and 116.14.

NZD The New Zealand economic calendar is characteristically quiet this coming week, only featuring the NZIER Business Confidence survey (last 5) on Monday and the tentatively scheduled GDT Price Index (last 16.5%) on Tuesday. The chart for NZD/USD shows resistance at 0.6618/0.6769, 0.6557/71 and 0.6496. On the downside, technical support is expected at 0.6309/88, 0.6234/87 and 0.6032.

USD The U.S. economic calendar is moderately active this coming week, featuring the FOMC Meeting Minutes on Thursday. Monday starts the week’s highlights off with ISM Non-Manufacturing PMI (58.0), and Tuesday’s key events include the Trade Balance (-42.2B) and a speech by FOMC Member Williams. Wednesday then offers Crude Oil Inventories (last 4.0M), while Thursday features Weekly Initial Jobless Claims (274K), the FOMC Meeting Minutes, and a speech by FOMC Member Williams. Friday’s important events then conclude the week with Import Prices (-0.5%), and speeches by FOMC Members Lockhart and Evans.


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