Weekly Market Watch

Released 13 April 2015 - Weekly Newsletter

Last week recap

Reversed direction, trading sharply lower last week as continued uncertainties for Greece and a possible Fed rate hike in June pressured the rate. The week began with the pair declining after making its weekly high of 1.1035 on Monday despite Spanish Unemployment Change showing a drop of -60.2K, significantly higher than the anticipated -18.3K, while U.S. ISM Non-Manufacturing PMI came out in line with expectations at 56.5. The rate continued its decline on Tuesday despite Spanish Services PMI printing at 57.3 versus 56.6 expected and German Final Services PMI, which printed at 55.4, in line with expectations. U.S. data on Tuesday had JOLTS Job Openings show 5.13M new jobs versus 5.01M expected. On Wednesday, the pair declined a fraction after the FOMC Meeting Minutes showed members were divided in the timing of the first rate hike, the minutes stated that members, “generally saw the new language as providing the Committee with the flexibility to begin raising the target range for the federal funds rate in June or at a subsequent meeting. Members noted that the timing of the first increase would depend on the evolution of economic conditions and the outlook and that the change in the forward guidance was not intended to indicate that the Committee had decided on the timing of the initial increase in the target range for the federal funds rate”. Also pressuring the rate on Wednesday were EZ Retail Sales, which declined -0.2% m/m versus -0.1% expected and German Factory Orders, which fell -0.9% m/m compared to an expected increase of +1.5%. The rate continued heading south on Thursday as asset flows favoured the Greenback and U.S. Initial Jobless Claims showed 281K claims last week, in line with expectations. The pair then made its weekly low of 1.0567 on Friday despite news that Greece had completed its payment to the IMF and that the country would resume its asset sales which were halted after the election of the left wing government in January. Greek Finance Minister Yanis Varoufakis speaking to a conference in Paris said that, “We are restarting the privatization process as a program making rational use of existing public assets. What we are saying is the Greek state does not have the capacity to develop public assets.” EUR/USD went on to close the week at 1.0599, with an overall loss of -3.5% from its previous weekly close.
Gained ground last week as the BOJ left monetary policies unchanged and the FOMC Meeting Minutes were interpreted as hawkish by the market. The week began with the rate gaining after making its weekly low of 118.79 on Monday as the United States reported ISM Non-Manufacturing PMI in line with expectations. The pair continued rallying on Tuesday after a positive U.S. employment number and the Japanese Current Account, which showed a surplus of +0.60T, in line with the consensus. The rate then declined a fraction on Wednesday after the BOJ’s Monetary Policy Meeting Minutes showed no change in the central bank’s monetary policy; the Minutes stated that, “Japan's economy has continued its moderate recovery trend. Overseas economies --mainly advanced economies-- have been recovering, albeit with a lacklustre performance still seen in part. In this situation, exports have been picking up. Business fixed investment has been on a moderate increasing trend as corporate profits have improved.” The pair then resumed its uptrend on Thursday, making it weekly high of 120.73 after a positive U.S. Initial Jobless Claims number. The rate then declined on Friday as asset flows favoured the Yen over the Greenback. USD/JPY went on to close at 120.19, with an overall weekly gain of +1.0%.
Lost ground last week as the BOE left interest rates and stimulus measures unchanged while the FOMC Meeting Minutes showed members divided on when to raise rates. The week began on a soft note, with Cable declining on Monday after making its weekly high of 1.4980 as U.S. ISM Non-Manufacturing PMI came out in line with expectations. The rate extended its losses on Tuesday despite UK Services PMI, which printed at 58.9 compared to an expected reading of 57.1. On Wednesday, Cable gained ground after the FOMC Meeting Minutes showed that members were divided on the timing of the bank’s first rate increase. Cable then declined sharply on Thursday after the BOE left its benchmark Official Bank Rate unchanged at 0.50% and the Asset Purchase Facility at 375B as widely expected. In addition to the BOE rate announcement, the UK Trade Balance showed a deficit of -10.3B compared to an expected deficit of -8.9B. Cable then made its weekly low of 1.4586 on Friday after UK Manufacturing Production showed an increase of +0.4% m/m as widely anticipated. GBP/USD went on to close at 1.4631, with a loss of -1.9% for the week.
Reversed direction, gaining ground last week as the RBA left rates unchanged and the FOMC Meeting Minutes showed members divided on the timing of the first rate hike. The week began on a soft note, with the rate declining on Monday after a positive U.S. ISM PMI number. The pair then rallied sharply on Tuesday after making its weekly low of 0.7575 as the RBA left its benchmark Cash Rate unchanged at 2.25%. The rate statement noted that, “The Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. Further depreciation seems likely, 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 todays meeting the Board judged that it was appropriate to hold interest rates steady for the time being. Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The Board will continue to assess the case for such action at forthcoming meetings.” Also out on Tuesday were Australian Retail Sales, which increased +0.7% m/m versus +0.4% expected. On Wednesday, the pair continued higher after the FOMC Meeting Minutes indicated members were not clear as to when to begin a cycle of tighter monetary policy. The rate then made its weekly high of 0.7737 on Thursday as asset flows continued favouring the Aussie over the Greenback. The pair then declined on Friday as traders squared positions, bringing AUD/USD to close at 0.7677, with an overall gain of +0.6% from its previous weekly close.
Gained ground last week as asset flows favoured the Greenback over the Loonie and despite mostly better than expected economic numbers out of Canada. The week began with the pair consolidating at a slightly higher level on Monday after Canadian Ivey PMI printed at 47.9 versus 51.1 expected. The rate continued gaining on Tuesday after a positive U.S. JOLTS employment number. The pair extended its gains after making its weekly low of 1.2387 on Wednesday after the FOMC Meeting Minutes showed dissension in the timing of the Fed’s first rate hike. On Thursday, the pair continued its rally after Canadian Building Permits declined -0.9% m/m, significantly lower than the expected increase of +3.4%. Also, Canadian NHPI increased +0.2% m/m versus +0.1% expected. Friday saw the rate decline after making its weekly high of 1.2665 as Canadian Employment Change increased to +28.7K, significantly higher than the expected decline of -0.5K, while the Canadian Unemployment Rate held steady at 6.8%. USD/CAD went on to close at 1.2568, showing an overall gain of +0.7% for the week.
Lost a fraction as the United States reported mixed economic numbers and with virtually no significant economic data out of New Zealand last week. The week began with the pair declining on Monday after making its weekly high of 0.7620 as the United States reported a positive ISM PMI number. The rate continued declining on Tuesday, making its weekly low of 0.7438 after a positive U.S. employment number. On Wednesday, the pair rallied after the FOMC Meeting Minutes showed members uncertain as to the timing of the first Fed rate hike. On Thursday, the rate consolidated at a slightly higher level as U.S. Initial Jobless Claims came out in line with expectations. The pair then fell on Friday as asset flows favoured the Greenback over the Kiwi. NZD/USD went on to close at 0.7523, with a weekly loss of –0.6%.

The week ahead

AUD The Australian economic calendar is moderately active this coming week, featuring key jobs data on Thursday. Monday is quiet, so Tuesday starts the week’s highlights off with the NAB Business Confidence survey (last 0). Wednesday’s key events then include the Westpac Consumer Sentiment survey (last -1.2%), while Thursday offers MI Inflation Expectations (last 3.2%), the Employment Change (14.9K), the Unemployment Rate (6.3%) and the first day of the G20 Meetings. Friday then concludes the week with the second day of the G20 Meetings. Resistance for AUD/USD is seen at 0.7684/0.7737, 0.7846/75 and 0.7912/37, with support noted at 0.7625/43, 0.7559/75 and 0.7532.

CAD The Canadian economic calendar is busy this coming week, featuring the BOC Rate Decision on Wednesday. Monday and Tuesday offer nothing notable, so Wednesday starts the week’s highlights off with Manufacturing Sales (0.0%), the BOC’s Monetary Policy Report, the BOC Rate Statement, the BOC’s Overnight Rate Decision (unchanged at 0.75%) and the BOC Press Conference. Thursday’s key events then include the first day of the G20 Meetings, while Friday concludes the week with Core CPI (0.3%), Core Retail Sales (0.7%), CPI (0.5%), Foreign Securities Purchases (6.00B), Retail Sales (0.5%) and the second day of the G20 Meetings. Resistance for USD/CAD is seen at 1.2772/1.2822, 1.2662/96 and 1.2563/1.2619, while support shows at 1.2428/48, 1.2351/1.2409 and 1.2045.

EUR The Eurozone economic calendar is quiet this coming week, only featuring the ECB’s Minimum Bid Rate Decision (unchanged at 0.05%) and the ECV Press Conference on Wednesday, and Final EZ CPI (-0.1%) on Friday. In addition, the G20 Meetings will be held on Thursday and Friday. Resistance for EUR/USD is seen at 1.0906, 1.0762/1.0800 and 1.0712, with support showing at 1.0567, 1.0493 and 1.0461.

GBP The UK economic calendar is somewhat active this coming week, featuring key jobs data on Friday. Monday offers nothing notable, so Tuesday starts the week’s highlights off with CPI (0.0%), PPI Input (-0.5%) and RPI (1.0%), and Wednesday is quiet. Thursday’s key events then include the first day of the G20 Meetings, while Friday’s important data then concludes the week with the Average Earnings Index (1.8%), the Claimant Count Change (-29.0K), the Unemployment Rate (5.6%) and the second day of the G20 Meetings. Resistance to the topside for GBP/USD shows at 1.4950/1.5164, 1.4795 and 1.4698/1.4739, while support for the pair is expected at 1.4634, 1.4586 and 1.4232.

JPY The Eurozone economic calendar is quiet this coming week, only featuring the ECB’s Minimum Bid Rate Decision (unchanged at 0.05%) and the ECV Press Conference on Wednesday, and Final EZ CPI (-0.1%) on Friday. In addition, the G20 Meetings will be held on Thursday and Friday. Resistance for EUR/USD is seen at 1.0906, 1.0762/1.0800 and 1.0712, with support showing at 1.0567, 1.0493 and 1.0461.

NZD The New Zealand economic calendar is rather quiet this coming week, only featuring the NZIER Business Confidence survey (last 23) on Monday, and the tentatively scheduled GDT Price Index (-10.8%) and the Business NZ Manufacturing Index (last 55.9) on Tuesday. The week concludes with the G20 Meetings on Thursday and Friday. The chart for NZD/USD shows resistance at 0.7847/88, 0.7606/95 and 0.7542/72. On the downside, technical support is expected at 0.7430/92, 0.7389 and 0.7273/0.7312.

USD The U.S. economic calendar is very busy this coming week, featuring CPI data on Friday. Monday is quiet, so Tuesday starts the week’s highlights off with Core Retail Sales (0.7%), Retail Sales (1.1%), PPI (0.3%), Core PPI (0.2%) and Business Inventories (0.2%). Wednesday’s key events then include the Empire State Manufacturing Index (7.2), the Capacity Utilization Rate (78.7%), Industrial Production (-0.3%), the NAHB Housing Market Index (55), and Crude Oil Inventories (10.9M). Thursday offers speeches by FOMC Members Lacker, Lockhart and Fischer, as well as Building Permits (1.08M), Weekly Initial Jobless Claims (284K), Housing Starts (1.05M), the Philly Fed Manufacturing Index (6.5) and the start of the G20 Meetings. Friday’s important data then concludes the week with CPI (0.2%), Core CPI (0.2%), the Preliminary University of Michigan Consumer Sentiment survey (93.8), plus the second day of the G20 Meetings.


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