Weekly Market Watch

Released 09 March 2015 - Weekly Newsletter

Last week recap

Extended its previous week’s losses, closing at a level not seen since September of 2003 last week. The loss in the rate was in large part due to a better than expected U.S. Non-Farm Payrolls release and the ECB leaving rates unchanged and reiterating its stimulus program which begins this month. Then pair began the week making its weekly high of 1.1240 on Monday after Eurozone CPI Flash Estimate declined -0.3% y/y compared to an expected decline of -0.5%, while U.S. ISM Manufacturing PMI printed at 52.9 versus an expected reading of 53.4. The rate then consolidated on Tuesday after Spanish Unemployment Change declined -13.5K versus -10.5K expected and German Retail Sales increased +2.9% m/m compared to +0.5% anticipated. On Wednesday, the rate began weakening after U.S. ISM Non-Manufacturing PMI printed at 56.9 versus 56.5 expected and ADP Non-Farm Employment Change, which showed an increase of +212K compared to +219K expected, with the previous number significantly revised up from +213K to +250K. Also out were EZ Retail Sales, which increased +1.1% m/m compared to an expected increase of +0.2%. The pair continued its slide on Thursday after the ECB left its benchmark Minimum Bid Rate unchanged at 0.05% and reiterated its €60B per month QE program. In his introduction to the press conference, ECB President Draghi stated that, “The substantial additional easing of our monetary policy stance supports and reinforces the emergence of more favourable developments for the euro area economy. In an environment of improving business and consumer sentiment, the transmission of our measures to the real economy will strengthen, contributing to a further improvement in the outlook for economic growth and a reduction in economic slack.” The rate then made its weekly and 12 year low of 1.0838 after U.S. Non-Farm Employment Change showed the addition of +295K jobs in February significantly higher than the expected +240K, with the U.S. Unemployment Rate falling to 5.5% from 5.7%. EUR/USD went on to close at 1.0840, showing an overall decline of -3.3% for the week.
Continued its rally as the United States reported mixed economic data and a better than expected Non-Farm Payrolls number, while Japan had very few economic releases last week. The rate began the week gaining ground despite a lower than expected U.S. ISM Manufacturing PMI number. The pair then declined on Tuesday after Japanese Average Cash Earnings increased +1.3% y/y, more than double the expected +0.6% rise that was expected. On Wednesday, the rate consolidated at a slightly higher level after mixed U.S. employment and PMI data. The pair extended its gains on Thursday after news that U.S. banks had passed stress tests and despite a lower than expected Initial Jobless Claims number. Friday saw the rate make its weekly high of 121.27 after better than expected U.S. Non-Farm Payrolls and Unemployment Rate numbers. USD/JPY went on to close at 120.80, with an overall weekly gain of +1.0 percent.
Reversed direction, selling off last week as the BOE left interest rates and stimulus measures unchanged and the United States reported better than expected employment data. Cable began the week on a soft note, declining after making its weekly high of 1.5428 on Monday after UK Manufacturing PMI printed at 54.1 compared to an expected reading of 53.5, while UK Nationwide HPI declined -0.1% m/m versus an expected increase of +0.4%. The rate then consolidated at a slightly higher level on Tuesday after UK Construction PMI showed a reading of 60.1 compared to an expected print of 59.0. On Wednesday, Cable fell sharply after UK Services PMI printed at 56.7 versus an expected reading of 57.6. The rate then consolidated at a slightly level on Thursday after the BOE left its benchmark Official Bank Rate unchanged at 0.50% and the Asset Purchase Facility at 375B as was widely anticipated. Cable then dropped sharply on Friday, making its weekly low of 1.5031 after a better than expected U.S. Non-Farm Payrolls number and Unemployment Rate. GBP/USD closed at 1.5036, with an overall decline of -2.6% from its previous weekly close.
Extended its previous week’s losses last week as the RBA left rates unchanged and the United States reported strong employment data. The rate started the week on a soft note, declining on Monday after Australian Company Operating Profits declined -0.2% q/q, versus an expected increase of +0.7%. The pair then rallied on Tuesday after the RBA unexpectedly left its benchmark Cash Rate unchanged at 2.25%. The consensus was for the central bank to cut the rate by -25 bps to 2.0%. In his statement after the rate release, RBA Governor Glenn Stevens noted that, “The Australian dollar has declined noticeably against a rising US dollar, though less so against a basket of currencies. It remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy. At today’s meeting the Board judged that, having eased monetary policy at the previous meeting, it was appropriate to hold interest rates steady for the time being.” Also out were Australian Building Approvals, which increased by +7.9% m/m and was significantly higher than the expected -1.8% decline. The rate then made its weekly high of 0.7859 on Wednesday despite Australian GDP increasing +0.5% q/q compared to an expected +0.7% rise. On Thursday, the pair resumed its selloff, after Australian Retail Sales increased +0.4% m/m as widely anticipated, and the Australian Trade Balance, which showed a deficit of -0.98B versus -0.94B expected. The rate then made its weekly low of 0.7705 on Friday after better than expected U.S. Non-Farm Payrolls and Unemployment Rate data. AUD/USD went on to close at 0.7713, with an overall loss of -1.2% for the week.
Gained ground last week as the BOC left rates unchanged and the United States reported better than expected employment numbers. The week began with the pair gaining on Monday after the Canadian Current Account came out with a deficit of -13.9B, almost double the expected deficit of -7.4B. The pair then declined on Tuesday after Canadian GDP increased +0.3% m/m compared to +0.2% expected, while Canadian RMPI declined -7.7% m/m versus -6.2% anticipated. On Wednesday, the pair made its weekly low of 1.2405 after the BOC left its benchmark Overnight Rate unchanged at 0.75% as widely expected. The bank’s rate statement noted that, “Financial conditions in Canada have eased materially since January, in response to the Bank’s recent monetary policy action and to global financial developments. This easing is reflected across the yield curve and in a wide range of asset prices, including the Canadian dollar. These conditions will mitigate the negative effects of the oil price shock, further boosting growth through stronger non-energy exports and investment. In light of these developments, the risks around the inflation profile are now more balanced and financial stability risks are evolving as expected in January.” The pair resumed its uptrend on Thursday after Canadian Ivey PMI printed at 49.7, in line with expectations. On Friday, the rate made its weekly high of 1.2625 after Canadian Building Permits declined -12.9% m/m, significantly more than the expected decline of -4.2%, with the previous number downwardly revised from +7.7% to +6.1%, and the Canadian Trade Balance, which showed a deficit of -2.5B versus -0.9B expected, with the previous number upwardly revised from -0.6B to -1.2B. USD/CAD went on to close at 1.2621, with an overall gain of +0.9% from its previous weekly close.
Reversed direction, trading lower last week as the United States reported better than expected employment data and with very few economic releases out of New Zealand. The week began with the rate declining on Monday despite the New Zealand Overseas Trade Index, which declined -0.9% q/q versus an expected drop of -2.9%. The pair then rallied on Tuesday despite the New Zealand GDT Price Index, which increased by +1.1% compared to a previous reading of +10.1%. On Wednesday, the rate made its weekly high of 0.7608 after mixed U.S. economic data. The pair then sold off sharply on Thursday despite lower than expected U.S. Initial Jobless Claims and Factory Orders data. The rate then made its weekly low of 0.7355 after better than expected U.S. employment numbers. NZD/USD went on to close at 0.7359, with an overall weekly decline of -2.7%.

The week ahead

AUD The Australian economic calendar is quite active this coming week, featuring key jobs data on Thursday. Monday starts the week’s highlights off with ANZ Job Advertisements (1.3%), and Tuesday’s key events include the NAB Business Confidence survey (last 3), a speech by RBA Assistant Governor Kent, and the Westpac Consumer Sentiment survey (last 8.0%). Wednesday then offers Home Loans (-1.9%), while Thursday features the MI Inflation Expectations (4.0%), Employment Change (15.3K), and the Unemployment Rate (6.4%). That concludes the week’s important data since Friday offers nothing of note. Resistance for AUD/USD is seen at 0.7719/56, 0.7840/0.7912 and 0.8024/67, with support noted at 0.7684/0.7705 and 0.7625/43.

CAD The Canadian economic calendar is relatively quiet this coming week, only featuring the Daylight Saving Time Shift on Sunday, the NHPI (0.2%) on Thursday, and the Employment Change (21.3K) and Unemployment Rate (6.5%) on Friday. Resistance for USD/CAD is seen at 1.2662/96 and 1.2772/97, while support shows at 1.2563/91, 1.2421/56 and 1.2351/86.

EUR The Eurozone economic calendar is quieter than usual this coming week, featuring the Eurogroup Meetings on Monday. Monday starts the week’s highlights off with the Eurogroup Meetings and a speech by German Buba President Weidmann, and Tuesday’s key events include French Industrial Production (-0.2%), and the ECOFIN Meetings. Wednesday then offers a speech by ECB President Draghi, while Thursday features a speech by German Buba President Weidmann. That concludes the week’s highlights since Friday offers nothing notable. Resistance for EUR/USD is seen at 1.1261/97, 1.1159 and 1.1097/1.1114, with support showing at 1.0762/86, 1.0608 and 1.00499.

GBP The UK economic calendar is active this coming week, featuring speeches by BOE Governor Carney on Tuesday and Thursday. Monday is quiet, so Tuesday starts the week’s highlights off with speeches by BOE Governor Carney and MPC Member McCafferty. Wednesday’s key events then include Manufacturing Production (0.2%), a speech by MPC Member Weale, and the NIESR GDP Estimate (last 0.7%), while Thursday offers the Trade Balance (-9.7B) and a speech by BOE Governor Carney. Friday’s highlights then conclude the week with speeches by MPC Member Shafik and Haldane. Resistance to the topside for GBP/USD shows at 1.5315/93, 1.5222 and 1.5056/1.5101, while support for the pair is expected at 1.5033, 1.4988 and 1.4950.

JPY The Japanese economic calendar is rather inactive this coming week, only featuring the Current Account (1.16T) and Final GDP (0.5%) on Sunday, Core Machinery Orders (-3.9%) on Tuesday, and the BSI Manufacturing Index (5.7) on Wednesday. Resistance for USD/JPY currently shows up at 120.82 and 121.84, with support indicated at 120.47/72, 119.62 and 118.29/119.21.

NZD The New Zealand economic calendar is somewhat busy this coming week, featuring the RBNZ’s Official Cash Rate Decision on Wednesday. Monday and Tuesday offer nothing notable, so Wednesday starts the week’s highlights off with the RBNZ’s Official Cash Rate Decision (unchanged at 3.50%), the RBNZ Rate Statement, the RBNZ Monetary Policy Statement and the RBNZ Press Conference. Thursday’s key events then include a speech by RBNZ Governor Wheeler and the Business NZ Manufacturing Index (last 50.9), which conclude the week’s highlights since Friday is quiet. The chart for NZD/USD shows resistance at 0.7607/59, 0.7572 and 0.7484/92. On the downside, technical support is expected at 0.7312/0.7430 and 0.7174/0.7213.

USD The U.S. economic calendar is busy this coming week, featuring Retail Sales data on Thursday. After the Daylight Saving Time Shift on Sunday, Monday is quiet, and Tuesday’s key events include JOLTS Job Openings (5.04M). Wednesday then offers Crude Oil Inventories (10.3M), the 10-year Bond Auction (last average yield 2.00% with a 2.6 bid to cover ratio), and the Bank Stress Test Results. Thursday features Core Retail Sales (0.6%), Retail Sales (0.5%), Weekly Initial Jobless Claims (317K), Import Prices (0.2%), and Business Inventories (0.2%). Friday’s important data then concludes the week with PPI (0.2%), Core PPI (0.1%), and the Preliminary University of Michigan Consumer Sentiment survey (95.6).


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