Weekly Market Watch

Released 16 February 2015 - Weekly Newsletter

Last week recap

Continued its rally last week after weaker than expected U.S. economic data and mostly strong numbers out of the Eurozone. The week began on a quiet note, with the rate gaining a fraction after making its weekly low of 1.1269 on Monday after U.S. Treasury Secretary, Jack Lew said at the G20 meetings over the weekend that, "In Europe, there's a need for more fiscal policy. Theres a demand shortfall. Different countries have different amount of fiscal space. With the fiscal space, they need to use it to grow demand.” The pair then lost a fraction on Tuesday after concerns over the future of Greece weighed on the Euro. Tuesday’s numbers had U.S. JOLTS Job Openings increase to +5.03M, which was in line with expectations, and French Industrial Production, which increased +1.5% m/m versus +0.3% expected. On Wednesday, the rate gained a fraction despite German Finance Minister Schaeuble who said that the report about giving Greece an additional 6-month extension was erroneous. The pair then gained ground on Thursday after U.S. Retail Sales fell -0.8% m/m versus -0.4% expected while Core Retail Sales declined -0.9% compared to -0.4% anticipated. Also, Initial Jobless Claims increased to 304K versus 282K expected putting additional pressure on the Greenback. The pair declined after it made its weekly high of 1.1442 on Friday as the ECB extended another €5B in emergency loans to Greek banks. Economic data had German Preliminary GDP increase +0.7% q/q versus +0.3% expected, while French Preliminary GDP increased +0.1% q/q as widely anticipated. Also, EZ Flash GDP increased +0.3% q/q versus +0.2% expected. U.S. data had the Preliminary UoM Consumer Sentiment index print at 93.6 compared to an expected reading of 98.2. EUR/USD went on to close at 1.1385, with an overall gain of +0.6% from its previous weekly close.
Lost ground last week as the BOJ reconsidered its stimulus measures and the United States reported weaker than expected economic data. The week began on a soft note, with the pair making its weekly low of 118.32 on Monday after the Japanese Current Account showed a surplus of +0.98T compared to an expected surplus of +0.95T. The pair then strengthened on Tuesday after BOJ Governor Kuroda stated at the G20 meeting in Istanbul that “I don’t think (the) weakening yen so far has caused problems for Japan’s economy overall after it corrected from excessive gains”. Also on Tuesday, Japanese Tertiary Industry Activity declined -0.3% m/m versus an expected increase of +0.1%. The rate then made its weekly high of 120.47 on Wednesday after a U.S. 10y bond auction saw an increase in interest rates. On Thursday, the rate dropped sharply after the BOJ said it would reconsider expanding stimulus measures and Japanese Core Machinery Orders increased +8.3% m/m, significantly higher than the +2.4% increase that was expected. Also weighing on the pair were lower than expected U.S. Retail Sales data. The pair extended its losses on Friday after a lower than expected U.S. consumer sentiment number. USD/JPY went on to close at 118.76, with a decline of -0.3% for the week.
Continued its rally last week as the UK released a hawkish quarterly inflation report and the United States reported lower than expected economic data. The week began with Cable dropping fractionally on Monday in the absence of any significant economic data out of either country. The rate then made its weekly low of 1.5195 on Tuesday after UK Manufacturing Production increased +0.1% m/m compared to an expected increase of +0.3%. The pair then declined on Wednesday in the absence of any significant data out of either country. On Thursday, Cable gained sharply after the BOE’s Inflation Report suggested UK Inflation might fall below 0% near term. The BOE’s Inflation Letter stated that, “In December 2014 twelve-month CPI inflation stood at 0.5%. That is the lowest figure since May 2000 and 1½ percentage points below the inflation target. The MPC’s best collective judgement is that roughly two thirds of the deviation from target (around one percentage point) can be attributed to unusually low contributions from movements in energy, food and other goods prices. “ Cable then consolidated at a slightly higher level after making its weekly high 1.5421 on Friday after a lower than expected U.S. consumer sentiment number. GBP/USD went on to close at 1.5386, with an overall gain of +1.0% for the week.
Lost a fraction last week as Australia reported lower than expected employment data and the United States reported lower Retail Sales data. The week began on a positive note, with the pair gaining ground on Monday after Australian ANZ Job Advertisements increased +1.3% m/m compared to a previous reading of +1.8%. The rate then declined on Tuesday after making its weekly high of 0.7840 as Australia reported NAB Business Confidence, which showed a reading of 3 versus a previous print of 2, and HPI, which increased +1.9% q/q compared to an expected reading of +2.0%. The pair extended its losses on Wednesday despite Australian Home Loans, which increased +2.7% m/m compared to an expected increase of +2.3%. The rate then gained a fraction after making its weekly low of 0.7643 on Thursday as Australian Employment Change showed a decline of -12.2K versus an expected -4.7K; nevertheless, the previous number was upwardly revised from +37.4K to +42.3K. Also, the Australian Unemployment Rate jumped to 6.4% from 6.1%. The pair continued gaining on Friday after RBA Governor Stevens said that, “We need to step back from monthly ups and downs, because theres always going to be those, and try to distil what the trend is. What that trend is, in our view, is that the unemployment rate has been incrementally edging up by about a tenth of a percentage point per quarter, I think that is still happening, and I think that will keep happening for a little while yet. By the historical standards of my professional career that remains low, but its going up not down, we can sustain lower rates of unemployment than this in my opinion and we should be seeking to do so". AUD/USD went on to close at 0.7750, with an overall weekly decline of -0.5%.
Extended its previous week’s losses last week as the price of oil recovered somewhat and with very little economic data out of Canada. The week began with the pair losing ground on Monday in the absence of any significant data out of either country. The rate then gained on Tuesday after U.S. JOLTS Job Openings came out in line with expectations. On Wednesday, the pair made its weekly high of 1.2696 after the price of oil went back above the $50 per barrel handle. The rate then sold off on Thursday after Canadian NHPI increased +0.1% m/m compared to an expected increase of +0.2%. The pair then made its weekly low of 1.2421 on Friday after Canadian Manufacturing Sales increased +1.7% m/m versus +0.8% expected. USD/CAD went on to close at 1.2449, with an overall decline of -0.6% for the week.
Extended its previous week’s gains last week as asset flows favoured the Kiwi over the Greenback and with very little economic news out of New Zealand. The rate began the week gaining ground on Monday in the absence of any significant economic numbers from either country. The pair then consolidated on Tuesday as the United States reported a positive employment number. On Wednesday, the rate declined after the New Zealand Business NZ Manufacturing Index printed at 50.9 versus a previous reading of 57.1. The pair then made both its weekly low of 0.7312 and its weekly high of 0.7484 on Thursday reacting in part to lower than expected Australian employment numbers and disappointing U.S. Retail Sales data. The rate then gained on Friday after a lower than expected U.S. consumer sentiment number. NZD/USD closed at 0.7440, showing an overall gain of +1.4% for the week.

The week ahead

AUD The Australian economic calendar is relatively quiet this coming week, only featuring New Motor Vehicle Sales (last 3.0%) on Monday and the RBA’s Monetary Policy Meeting Minutes on Tuesday. Resistance for AUD/USD is seen at 0.7840/80, 0.8024/67 and 0.8105, with support noted at 0.7719, 0.7684/0.7700 and 0.7625/43.

CAD The Canadian economic calendar is not very active this coming week, only featuring Foreign Securities Purchases (5.35B) on Tuesday, Wholesale Sales (0.4%) on Wednesday, and then Core Retail Sales (-0.7%) and Retail Sales (-0.3%) on Friday. Resistance for USD/CAD is seen at 1.2676, 1.2591 and 1.2456, while support shows at 1.2421 and 1.2351/78.

EUR The Eurozone economic calendar is active this coming week, featuring the Eurogroup Meetings on Monday to start the week’s highlights. Tuesday’s key events then include the German ZEW Economic Sentiment survey (56.2), the EZ ZEW Economic Sentiment survey (51.3) and the ECOFIN Meetings, while Wednesday offers the tentatively scheduled German 10-year Bond Auction (last average yield 0.52 percent with a 1.3 bid to offer ratio). Thursday then features the ECB’s Monetary Policy Meeting Accounts, and the week concludes on Friday with important data releases that include French Flash Manufacturing PMI (49.7), French Flash Services PMI (49.9), German Flash Manufacturing PMI (51.8), German Flash Services PMI (54.3), EZ Flash Manufacturing PMI (51.6) and EZ Flash Services PMI (53.2). Resistance for EUR/USD is seen at 1.1679, 1.1533, 1.1422/59, with support showing at 1.1359/75, 1.1261/97 and 1.1097/1.1114.

GBP The UK economic calendar is rather busy this coming week, featuring key jobs data on Wednesday. Monday is quiet, so Tuesday starts the week’s highlights off with CPI (0.3%), PPI Input (-2.1%) and RPI (1.2%). Wednesday’s key events then include the release of the Average Earnings Index (1.7%), the Claimant Count Change (-25.2K), the MPC’s Official Bank Rate Votes (0-0-9), the MPC’s Asset Purchase Facility Votes (0-0-9), and the Unemployment Rate (5.8%). Thursday then offers CBI Industrial Order Expectations (7), while Friday’s important data concludes the week with Retail Sales (-0.1%) and Public Sector Net Borrowing (-9.5B). Resistance to the topside for GBP/USD shows at 1.5422, 1.5485 and 1.5540, while support for the pair is expected at 1.5351, 1.5222 and 1.5033/1.5101.

JPY The Japanese economic calendar is rather quiet this coming week, only featuring Preliminary GDP (0.9%) on Sunday, as well as the tentatively scheduled BOJ Monetary Policy Statement and BOJ Press Conference, plus the Trade Balance (-0.60T) on Wednesday. Resistance for USD/JPY currently shows up at 118.97/119.21, 119.62 and 120.47/82, with support indicated at 118.32/45, 117.17/118.04 and 115.56/89.

NZD The New Zealand economic calendar is lightly active this coming week, featuring Retail Sales (1.7%) and Core Retail Sales (1.5%) data on Sunday, the tentatively scheduled GDT Price Index (last 9.4%) on Tuesday and PPI Input (-0.2%) on Wednesday. The chart for NZD/USD shows resistance at 0.7712, 0.7607/59 and 0.7484/92. On the downside, technical support is expected at 0.7368/0.7430, 0.7323/25, and 0.7174/0.7213.

USD The U.S. economic calendar is moderately active this coming week, featuring the FOMC Meeting Minutes on Wednesday. Monday is a Bank Holiday, so Tuesday starts the week’s highlights off with the Empire State Manufacturing Index (9.1), Mortgage Delinquencies (17th-24th, last 5.85%), the NAHB Housing Market Index (58). Wednesday’s key events then include Building Permits (1.08M), PPI (-0.4%), Core PPI (0.2%), Housing Starts (1.07M), the Capacity Utilization Rate (79.9%), Industrial Production (0.5%), the FOMC Meeting Minutes, and a speech by FOMC Member Powell. Thursday offers Weekly Initial Jobless Claims (305K), the Philly Fed Manufacturing Index (8.8) and Crude Oil Inventories (last 4.9M), and the week’s important events conclude on Friday with the release of Flash Manufacturing PMI (53.7).


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