Weekly Market Watch

Released 08 June 2015 - Weekly Newsletter

Last week recap

Extended its previous week’s gains last week as Greece entered into another stage of negotiations with creditors and the EU reported better than expected economic data. The rate started the week making its weekly low of 1.0886 on Monday after German Preliminary CPI increased +0.1% m/m versus an expected flat reading, while Spanish Manufacturing PMI printed at 55.8 compared to expectation of 54.4 and Italian Manufacturing PMI, which printed at 54.8 versus 53.1 expected. U.S. data on Monday had ISM Manufacturing PMI print at 52.8 versus 51.9 expected and Personal Spending, which came out with a flat reading m/m versus +0.2% expected. The pair then gained sharply on Tuesday after Greece and international creditors arrived at a draft agreement and Greece offered creditors a comprehensive reform proposal. Also supporting the rate was EZ CPI Flash Estimate, which increased +0.3% y/y versus +0.2% expected, while EZ Core CPI Flash Estimate increased +0.9% y/y compared to +0.7% anticipated. The pair continued gaining on Wednesday after the ECB left its benchmark Minimum Bid Rate unchanged at 0.05%. In his introductory statement to the press conference, ECB President Draghi noted that, “In the coming months, our measures will further ease the monetary policy stance more broadly, support our forward guidance on the key ECB interest rates and reinforce the fact that there are significant and increasing differences in the monetary policy cycle between major advanced economies.” Also, the Eurozone Unemployment Rate declined a notch to 11.2%. Wednesday’s U.S. numbers had the Trade Balance show a contracting deficit of -40.9B compared to -43.9B anticipated, while ADP Non-Farm Employment Change showed +201K new jobs in May, in line with analyst expectations. On Thursday, the pair made its weekly high of 1.1379 before selling off after Greece and international creditors prepared for another round of negotiations with a June 14th target date to complete the agreement. Economic numbers had U.S. Initial Jobless Claims show 276K new claims, in line with expectations. The pair then dropped sharply on Friday after U.S. Non-Farm Payrolls came out at +280K compared to an expected +222K, nevertheless, the U.S. Unemployment Rate rose to 5.5% from 5.4%. Friday’s European data saw German Factory Orders increase +1.4% m/m versus the +0.6% rise expected. EUR/USD went on to close at 1.1113, showing an overall gain of +1.1% from its previous weekly close.
Continued its rally last week, making a new 12-year high as asset flows favoured the Greenback over the Yen along with better than expected numbers out of the United States and very little economic data out of Japan. The week began with the pair gaining on Monday after a better than expected U.S. ISM Manufacturing PMI number. The rate then dropped sharply on Tuesday, making its weekly low of 123.74 after Japanese Average Cash Earnings increased +0.9% y/y compared to an expected rise of +0.4%. On Wednesday, the pair resumed its rally after a better than expected U.S. Trade Balance and ADP Non-Farm Employment number. The rate continued higher on Thursday after better than expected U.S. Revised Nonfarm Productivity data. Friday saw the pair make its weekly high of 125.85 after a better than expected U.S. Non-Farm Payrolls number. USD/JPY went on to close at 125.61, a level not seen since December of 2002 and up +1.1% for the week.
Lost a fraction as the BOE left rates and stimulus measures unchanged and with mixed economic data out of both countries. Cable began the week making its weekly low of 1.5169 on Monday after UK Manufacturing PMI printed at 52.0 versus 52.7 expected. The rate then gained sharply on Tuesday after UK Construction PMI printed at 55.9, beating expectations of a 55.1 reading. Also, UK Net Lending to Individuals increased +2.9B m/m compared to an expected +2.3B. On Wednesday, Cable consolidated at a slightly lower level after UK Services PMI came out with a reading of 56.5 versus 59.2 expected. The rate then made its weekly high of 1.5440 on Thursday after the BOE left its benchmark Official Bank Rate at 0.50% and the Asset Purchase Facility at 375B. Cable then sold off on Friday after a better than expected U.S. Non-Farm Payrolls number, which brought the pair to close at 1.5267, with an overall weekly loss of -18 pips or -0.1%.
Extended its previous week’s losses last week as the RBA left rates unchanged and both countries reported mixed economic numbers. The week began with the rate making its weekly low of 0.7596 on Monday after Australian Building Approvals declined -4.4% m/m, significantly lower than the -1.7% decline that was expected. On Tuesday, the pair rallied sharply after the RBA left its benchmark Cash Rate unchanged at 2.0%. In his Statement on Monetary Policy, 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. Having eased monetary policy last month, the Board today judged that leaving the cash rate unchanged was appropriate at this meeting.” The rate then made its weekly high of 0.7818 on Wednesday after Australian GDP increased +0.9% q/q versus +0.7% expected. The pair then began selling off on Thursday after Australian Retail Sales printed a flat number m/m compared to an expected increase of +0.4%, while the Australian Trade Balance came out with a deficit of -3.89B versus an expected deficit of -2.17B with the previous number upwardly revised from -1.32B to -1.23B. The rate extended its losses on Friday after a better than expected U.S. Non-Farm Payrolls number. AUD/USD went on to close at 0.7611, with an overall decline of -0.4% for the week.
Lost a fraction last week as Canada reported mostly better than expected economic data with mixed numbers out of the United States. The rate began the week making its weekly high of 1.2562 on Monday after a better than expected U.S. ISM Manufacturing PMI number. The pair then declined on Tuesday, making its weekly low of 1.2366 after lower than expected U.S. Factory Orders data. The pair then gained ground on Wednesday after the Canadian Trade Balance came out showing a deficit of -3.0B compared to an expected deficit of -2.1B. The rate continued gaining on Thursday despite Canadian Ivey PMI, which printed at 62.3, significantly higher than the expected reading of 55.1. The rate then declined on Friday after Canadian Employment Change showed an increase of +58.9K jobs in May, notably higher than the +10.2K jobs that were expected, with the Canadian Unemployment Rate holding steady at 6.8%. USD/CAD closed at 1.2432, with a loss of 15 pips or -0.12% from its previous weekly close.
Continued selling off last week as New Zealand reported lower than expected economic data with mixed numbers out of the United States. The week began with the pair consolidating at a slightly higher level on Monday after the New Zealand Overseas Trade Index increased +1.5% q/q compared to an expected increase of +1.6%. The rate then made its weekly high of 0.7199 on Tuesday despite the New Zealand GDT Price Index declining -4.3% versus a previous reading of -2.2%. The pair then declined on Wednesday after a better than expected U.S. Trade Balance number. The rate extended its losses on Thursday after better than expected U.S. employment data. On Friday, the pair made its weekly low of 0.7022 after the United States reported a better than expected Non-Farm Payrolls number, which brought the rate to close at 0.7044, with a decline of -0.9% for the week.

The week ahead

AUD The Australian economic calendar is moderately busy this coming week, featuring key jobs data on Thursday. Sunday and Monday start the week’s highlights off with the G7 Meetings, and Sunday is an Australian Bank Holiday. Tuesday’s key events include the NAB Business Confidence survey (last 3), ANZ Job Advertisements (last 2.3%) and Home Loans (-1.8%). Wednesday then offers the Westpac Consumer Sentiment survey (last 6.4%) and a speech by RBA Governor Stevens, while Thursday features MI Inflation Expectations (last 3.6%), the Employment Change (15.2K) and the Unemployment Rate (6.2%). That concludes the week’s important data since Friday offers nothing notable. Resistance for AUD/USD is seen at 0.7682/0.7785, 0.7818/0.7937 and 0.8024/74, with support noted at 0.7617/25, 0.7597 and 0.7552/59.

CAD The Canadian economic calendar is characteristically quiet this coming week, only featuring the G7 Meetings on Sunday and Monday, as well as Building Permits (3.4%) and a speech by Governing Council Member Wilkins on Monday. Thursday then features the NHPI (0.2%) and a speech by BOC Governor Poloz. Resistance for USD/CAD is seen at 1.2537/1.2562, 1.2645/65 and 1.2783, while support shows at 1.2406/09, 1.2304/87 and 1.2102/1.2203.

EUR The Eurozone economic calendar is very quiet this coming week, only featuring the G7 Meetings on Sunday and Monday, and German Industrial Production data (0.6%) on Monday. Resistance for EUR/USD is seen at 1.1379/91, 1.1207/89 and 1.1097/1.1133, with support showing at 1.1035/65, 1.0818/99 and 1.0659/1.0712.

GBP The UK economic calendar is rather quiet this coming week, only featuring the G7 Meetings on Monday and Tuesday; the Trade Balance (-10.0B) on Tuesday; and then Manufacturing Production (0.1%), the NIESR GDP Estimate (last 0.4%) and a speech by BOE Governor Carney on Wednesday. Resistance to the topside for GBP/USD shows at 1.5222/68, 1.5315/51 and 1.5446/1.5551, while support for the pair is expected at 1.5164/89, 1.5053/90 and 1.4855.

JPY The Japanese economic calendar is somewhat active this coming week, featuring Final GDP data on Monday. Sunday starts the week’s highlights off with the G7 Meetings that run until Monday, which also features the Current Account (1.45T) and Final GDP (0.7%). Tuesday is quiet, while Wednesday offers Core Machinery Orders (-1.7%). Thursday features the BSI Manufacturing Index (3.2), which concludes the week’s important data since Friday offers nothing of note. Resistance for USD/JPY currently shows up at 125.67/126.17, 126.90 and 135.08/19, with support indicated at 125.05, 124.14/45 and 123.85.

NZD The New Zealand economic calendar is rather quiet this coming week, featuring the G7 Meetings on Sunday and Monday, as well as 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 on Wednesday. The week’s highlights conclude on Thursday with the Business NZ Manufacturing Index (51.8). The chart for NZD/USD shows resistance at 0.7326/0.7430, 0.7273/80, and 0.7076/0.7186. On the downside, technical support is expected at 0.7022, 0.6639/81 and 0.6557/71.

USD The U.S. economic calendar is fairly active this coming week, featuring Retail Sales data on Thursday. The G7 Meetings start off the week’s highlights on Sunday and Monday, followed by Tuesday’s key events, which include JOLTS Job Openings (5.03M). Wednesday then offers Crude Oil Inventories (last -1.9M), while Thursday features Core Retail Sales (0.7%), Retail Sales (1.1%), Weekly Initial Jobless Claims (277K), Import Prices (0.9%) and Business Inventories (0.2%). Friday’s important data then concludes the week with PPI (0.4%), Core PPI (0.1%), and the Preliminary University of Michigan Consumer Sentiment survey (91.3).


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