Weekly Market Watch

Released 11 May 2015 - Weekly Newsletter

Last week recap

Extended its gains last week as the European Commission upwardly revised EZ economic forecasts and optimism over the situation in Greece supported the rate with both countries reporting mixed economic data. The week began with the pair consolidating on Monday after Spanish Manufacturing PMI printed at 54.2 versus 54.6 expected, while German Final Manufacturing PMI printed at 52.1, in line with expectations. The rate then lost ground on Tuesday despite an upward revision from the European Commission on EZ GDP growth. The agency revised GDP growth for 2015 from +1.3% to +1.5%. Also, Spanish Unemployment Change showed a drop of -118.9K, almost double the expected print of -64.8K. U.S. numbers on Tuesday had the Trade Balance show a deficit of -51.4B versus -41.2B expected, while ISM Non-Manufacturing PMI printed at 57.8 compared to an expected reading of 56.2. On Wednesday, the pair gained ground after U.S. ADP Non-Farm Employment Changed showed only +169K new jobs in April, compared to an expected +199K, also, U.S. Preliminary Unit Labour Costs increased +5.0% q/q compared to an expected +4.5%. EZ numbers had Retail Sales decline -0.8% m/m versus -0.4% expected, and German Final Services PMI, which printed at 54.0 versus 54.4 expected. The pair then declined on Thursday after making its weekly high of 1.1391 after the ECB approved an additional 2B in liquidity to Greek banks through the Emergency Liquidity Assistance mechanism of the Bank of Greece. Economic data on Thursday had German Factory Orders increase +0.9% m/m versus +1.6% expected, and U.S. Initial Jobless Claims, which showed 265K claims versus 277K expected. The pair continued lower on Friday after U.S. Non-Farm Payrolls came out at 223K, in line with expectations, while the U.S. Unemployment Rate declined a notch to 5.4% as was widely expected. EUR/USD went on to close at 1.2151, with an overall gain of +0.5% from its previous weekly close.
Reversed direction, trading lower last week as the BOJ’s Monetary Policy Meeting Minutes reiterated the central bank’s stimulus measures and with mixed economic numbers out of the United States. The week began with the pair declining on Monday after U.S. Factory Orders came out in line with expectations. The rate then declined on Tuesday after making its weekly high of 120.49 as the United States reported a lower than expected Trade Balance and higher ISM Non-Manufacturing PMI number. Wednesday saw the rate continued selling off after a lower than expected U.S. ADP Non-Farm Employment number. On Thursday, the pair gained ground after making its weekly low of 119.04 as the BOJ’s Monetary Policy Meeting Minutes left monetary policy unchanged, noting that, “In the money market, interest rates on both overnight and term instruments continued to be at low levels. The uncollateralized overnight call rate and general collateral (GC) repo rates had been at levels below 0.1 percent, the interest rate applied to the Bank's complementary deposit facility.” The pair then consolidated on Friday after U.S. Non-Farm Payrolls came out in line with expectations. USD/JPY closed at 119.73, with an overall loss of -0.4% for the week.
Gained ground last week as the UK held parliamentary elections and with mixed economic numbers out of the United States. The week began with Cable consolidating at a slightly lower level on Monday after U.S. Factory Orders came in as expected. The rate then gained a fraction on Tuesday despite UK Construction PMI printing at 54.2 compared to an expected reading of 57.8. On Wednesday, Cable continued gaining strength after UK Services PMI printed at 59.5 compared to an expected 58.6. The rate then gained sharply on Thursday after the UK Conservative Party won 331parliamentary seats, giving the party more than 50% of the 650 and securing a majority. Cable then made its weekly high of 1.5521 on Friday before retreating after the UK Trade Balance showed a deficit of -10.1B compared to an expected deficit of -9.8B, while UK Halifax HPI increased +1.6% m/m versus +0.3% expected. GBP/USD closed at 1.5443, showing a gain of +1.9% for the week.
Extended its previous week’s gains last week as the RBA lowered its benchmark Cash Rate by 25 bps and with mixed economic data out of the United States. The week began with the pair consolidating on Monday after Australian Building Approvals increased +2.8% m/m, significantly higher than the decline of -1.7% that was expected. The rate then rallied after making its weekly low of 0.7785 on Tuesday after the RBA lowered its benchmark Cash Rate to 2.0% from 2.25% as was widely anticipated. In his introduction to the rate statement, Governor Glenn Stevens 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 both likely and necessary, particularly given the significant declines in key commodity prices. At todays meeting, the Board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand.” Also out on Tuesday was the Australian Trade Balance, which showed a deficit of -1.32B compared to -0.98B expected. On Wednesday, the pair made its weekly high of 0.8029 despite Australian Retail Sales, which increased +0.3% m/m versus +0.4% expected. Thursday saw the rate sell off after Australian Employment Change declined by -2.9K, significantly lower than the expected increase of +4.5K, with the previous number upwardly revised from +37.7K to +48.1K, while the Australian Unemployment Rate increased to 6.2% from 6.1% as widely expected. The pair then gained a fraction on Friday after U.S. Non-Farm Payrolls came out in line with expectations. AUD/USD went on to close the week at 0.7931, with an overall gain of +1.1% from its previous weekly close.
Extended its previous week’s losses last week as asset flows favoured the Loonie over the Greenback and with mixed economic numbers from both countries. The rate started the week declining after making its weekly high of 1.2179 on Monday as the United States reported Factory Orders in line with expectations. The pair continued selling off on Tuesday despite the Canadian Trade Balance, which showed a deficit of -3.0B versus -0.8B expected. On Wednesday, the rate made its weekly low of 1.1939 after Canadian Ivey PMI printed at 58.2, significantly higher than the expected reading of 50.1. The pair recovered on Thursday despite Canadian Building Permits, which increased +11.6% m/m, notably higher than the expected increase of +2.1%. The rate then declined on Friday despite Canadian Employment Change declining by -19.7K versus -4.2K expected, nevertheless, the Canadian Unemployment Rate held steady at 6.8% versus an expected increase to 6.9%. USD/CAD went on to close at 1.2079, with an overall loss of -0.7% for the week.
Lost a fraction last week as the United States reported mixed economic data, with mostly lower than expected numbers out of New Zealand. The rate started the week consolidating at a slightly higher level on Monday after U.S. Factory Orders came in as expected. The pair then made its weekly high of 0.7575 on Tuesday despite New Zealand Employment Change showing an increase of +0.7% q/q versus +0.8% expected, while the New Zealand Unemployment Rate increased to 5.8% from 5.7% revised up to 5.8% with an expected decline to 5.5%. Also out was the New Zealand GDT Index, showing a decline of -3.5% versus a previous reading of -3.6%. On Wednesday, the rate declined sharply despite a lower than expected U.S. ADP Non-Farm Employment Change number. The pair extended its losses on Thursday after U.S. Initial Jobless Claims beat expectations. The rate then gained on Friday after U.S. Non-Farm Payrolls met expectations. NZD/USD closed at 0.7487, with an overall loss of -0.7% from its previous weekly close.

The week ahead

AUD The Australian economic calendar is rather quiet this coming week, only featuring NAB Business Confidence (last 3) on Monday, Home Loans (1.1%) and the Annual Budget Release on Tuesday, and the Wage Price Index (0.6%) on Wednesday. Resistance for AUD/USD is seen at 0.7937, 0.8024/29 and 0.8074, with support noted at 0.7839/0.7912, 0.7785 and 0.7625/0.7737.

CAD The Canadian economic calendar is not very active this coming week, only featuring the NHPI (0.3%) on Thursday, and then Manufacturing Sales (0.3%) and Foreign Securities Purchases (7.23B) on Friday. Resistance for USD/CAD is seen at 1.2304/1.2448, 1.2203 and 1.2102/62, while support shows at 1.2045/1.2087, 1.1939/44 and 1.1802/41.

EUR The Eurozone economic calendar is moderately active this coming week, featuring the Eurogroup Meetings on Monday to start off the week’s highlights. Tuesday’s key events then include the ECOFIN Meetings, while Wednesday offers French Preliminary GDP (0.4%), German Preliminary GDP (0.5%), French Preliminary Non-Farm Payrolls (0.0%), Italian Preliminary GDP (0.2%), EZ Flash GDP (0.5%), and the ECB’s Monetary Policy Meeting Accounts. That concludes the week’s important data releases, since Thursday is a Bank Holiday in France and Germany, and Friday offers nothing notable. Resistance for EUR/USD is seen at 1.1269/89, 1.1388/91 and 1.1442/49, with support showing at 1.1097, 1.1035/66 and 1.0899/1.0906.

GBP The UK economic calendar is quite busy this coming week, featuring the BOE’s Official Bank Rate Decision on Monday and key jobs data on Wednesday. Monday starts the week’s highlights off with the BOE’s Official Bank Rate Decision (unchanged at 0.50%), the Asset Purchase Facility (unchanged at 375B) and the tentatively scheduled MPC Rate Statement. Tuesday’s key events then include Manufacturing Production (0.3%) and the NIESR GDP Estimate (0.6%), while Wednesday offers the Average Earnings Index (1.7%), the Claimant Count Change (-20.1K), the Unemployment Rate (5.5%),a speech by BOE Governor Carney and the BOE Inflation Report. That concludes the week’s important events since Thursday and Friday offer nothing notable. Resistance to the topside for GBP/USD shows at 1.5491/1.5551, 1.5785 and 1.5874, while support for the pair is expected at 1.5164, 1.5222/68 and 1.5315/51.

JPY The Japanese economic calendar is very quiet this coming week, only featuring Current Account data (1.34T) on Tuesday. Resistance for USD/JPY currently shows up at 120.14/121.27 and 121.84/122.02, with support indicated at 119.05/62, 118.04/71 and 116.87/92.

NZD The New Zealand economic calendar is also fairly inactive this coming week, featuring the RBNZ’s Financial Stability Report and a speech by RBNZ Governor Wheeler on Tuesday, and then the Business NZ Manufacturing Index (last 54.5), Retail Sales (1.6%) and Core Retail Sales (1.5%) on Wednesday. The chart for NZD/USD shows resistance at 0.7492/0.7575, 0.7605/95 and 0.7739/42. On the downside, technical support is expected at 0.7420/30, 0.7389 and 0.7273.

USD The U.S. economic calendar is active this coming week, featuring Retail Sales data on Wednesday. Monday is quiet, so Tuesday starts the week’s highlights off with JOLTS Job Openings (5.21M) and a speech by FOMC Member Williams. Wednesday’s key events then include Core Retail Sales (0.4%), Retail Sales (0.3%), Import Prices (0.3%), Business Inventories (0.2%) and Crude Oil Inventories (last -3.9M). Thursday then offers PPI (0.1%), Weekly Initial Jobless Claims (271K), and Core PPI (0.1%), while Friday’s important data then concludes the week with the Empire State Manufacturing Index (5.1), the Capacity Utilization Rate (78.4%), Industrial Production (0.1%) and the Preliminary University of Michigan Consumer Sentiment survey (96.5).


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