Weekly Market Watch

Released 21 September 2015 - Weekly Newsletter

Last week recap



Lost fractionally last week after the U.S. Federal Reserve left interest rates unchanged and both economies reported mostly lower than expected economic data. The week began with the rate declining on Monday in the absence of any significant data out of either economy. The pair extended its losses on Tuesday after German ZEW Economic Sentiment printed at 12.1 compared to 18.3 expected, while EZ ZEW Economic Sentiment came out with a reading of 33.3 versus 42.1 anticipated. Also out were U.S. Core Retail Sales, which increased +0.1% m/m versus an anticipated rise of +0.2%, while Retail Sales increased +0.2% compared with an expected +0.3% gain, nevertheless, the previous releases were upwardly revised to +0.6% and +0.7% from +0.4% and +0.6% respectively. Wednesday saw the rate make its weekly low of 1.1213 after EZ Final CPI showed an increase of +0.1% y/y versus +0.2% expected, while U.S. CPI showed a negative -0.1% m/m compared to an expected flat reading, while Core CPI showed an increase of only +0.1% as widely expected. The pair then gained sharply on Thursday after the Fed left its benchmark Fed Funds rate unchanged at 0.25% as widely anticipated. The FOMC Statement noted that, “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term. Nonetheless, the Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad.” Other economic data released on Thursday included U.S. Building Permits, which showed 1.17M, in line with expectations and the FOMC Economic Projections, which showed fewer FOMC members favouring a rate hike this year and one member supporting negative interest rates. On Friday, the pair made its weekly high of 1.1459 before selling off sharply as traders took profits and after the previous day’s FOMC results were perceived as less dovish. EUR/USD closed at 1.1298, with an overall weekly loss of -0.3%. As of this writing, exit polls show that the Syriza party is set to return to power in Greece after its second parliamentary victory in eight months. Former Prime Minister Alex Tsipras’ Coalition of the Radical Left is leading polls with 34% of the vote.



Lost ground last week as the BOJ left monetary policy and stimulus measures unchanged while the U.S. Fed held off on raising interest rates. The pair began the week on a soft note, declining on Monday in the absence of any significant economic data from either country. Tuesday saw the rate gain a fraction after the BOJ’s Monetary Policy Statement indicated the bank would leave monetary policy and stimulus measures unchanged. In a press conference after the release, BOJ Governor Kuroda said that, ““The slowdown in emerging economies is already affecting Japan’s exports and output. Even so, Japan’s economy continues to recover moderately. Corporate revenues are at record-high levels, underpinning a steady improvement in job and income conditions. A positive cycle of rising income leading to higher expenditure is firmly in place, having said that, we will closely monitor global market developments and the outlook for the world economy.” The rate edged up on Wednesday after mixed U.S. CPI data. On Thursday, the pair made its weekly high of 120.98 before selling off after the Japanese Trade Balance showed a deficit of -0.36T, in line with expectations, and comments from the BOJ’s Kuroda, who said that, “The bank will make necessary adjustments on monetary policy, while examining both upside and downside risks on the economy and prices”. The rate then made its weekly low of 119.05 on Friday after the BOJ’s Monetary Policy Meeting Minutes noted that, “Regarding global financial markets, concern over political and economic conditions in Greece had abated for now. A significant decline in Chinese stock prices --which had once been observed-- had paused, although it remained uncertain whether the decline had actually come to a halt. In this situation, currencies and stock prices in emerging economies as well as commodity prices had declined, mainly due to the spread of uncertainty about the outlook for these economies.” USD/JPY closed at 119.94, showing a loss of -0.5% from its previous weekly close.



Extended its previous week’s gains last week as Sterling was supported by the Fed rate decision and both countries reported mixed economic numbers. The week began on a quiet note, with Cable consolidating in the absence of any significant economic data out of either country. The rate then made its weekly low of 1.5329 on Tuesday after UK CPI came out with a flat reading, as widely expected, while PPI Input declined -2.4% m/m versus -2.3% expected and RPI, which increased +1.1% y/y versus +0.9% anticipated. On Wednesday, Cable gained sharply after the UK Average Earnings Index increased +2.9% 3m/y compared to an expected increase of +2.5%. Also, Claimant Count Change showed an increase of +1.2K compared to an expected decline of -5.1K with the previous number upwardly revised from -4.9K to -6.8K and the UK Unemployment Rate, which declined to 5.5% from 5.6%. The rate continued gaining on Thursday after UK Retail Sales increased +0.2% m/m as widely anticipated and the FOMC Statement, which showed the Fed was leaving the Fed Funds Rate unchanged. Cable then made its weekly high of 1.5658 on Friday before selling off as traders squared positions ahead of the weekend. GBP/USD went on to close at 1.5523, with an overall gain of +0.9% for the week.



Extended its previous week’s gains last week as the U.S. Fed left rates unchanged and the RBA’s minutes for its latest meeting indicated concern over the international economy. The rate began the week gaining ground on Monday after making its weekly low of 0.7061 in the absence of any significant data out of either country. The pair then consolidated at a slightly higher level on Tuesday after the RBA’s Monetary Policy Meeting Minutes noted that, “Members noted that the key news internationally over the past month had been developments in the Asian region. The weakening in Chinese economic activity combined with developments in Chinese financial markets had led to sharp declines in global equity prices. So far, this volatility had not impaired the functioning of other financial markets and funding remained readily available to creditworthy borrowers. Moreover, several recent policy measures designed to support activity in China had not yet had their full effect.” The rate resumed its uptrend on Wednesday after mixed U.S. CPI data. Thursday saw the rate decline after initially rallying as the Fed held off on raising U.S. interest rates. The pair then made its weekly high of 0.7279 on Friday after comments from the RBA’s Glenn Stevens, who said, “More recently, the significant decline in the exchange rate is starting to have more discernible effects on the pattern of spending and production. The decline over the past two years amounts to about 25 per cent against a rising US dollar and 18 per cent against the trade-weighted basket.” AUD/USD closed the week at 0.7182, with an overall gain of +1.3%.


Extended its previous week’s losses last week as the price of crude oil recovered somewhat last week and with mixed economic numbers from both countries. The week began on a quiet note, with the rate ending the session unchanged after making its weekly high of 1.3279 on Monday. The pair then consolidated at a slightly lower level on Tuesday after mostly lower than expected U.S. economic data. On Wednesday, the rate declined after Canadian Manufacturing Sales increased +1.7% m/m compared to an expected increase of +1.1%, nevertheless, Canadian Foreign Securities Purchases declined -10.12B, significantly lower than the increase of +5.5B that was anticipated. Thursday saw the pair show a slight gain after previously selling off as the U.S. Fed announced it would leave rates unchanged. The rate then gained ground after making its weekly low of 1.3011 on Friday after Canadian CPI came out with a flat reading as widely expected, while Core CPI increased +0.2%, also as widely anticipated. USD/CAD closed at 1.3219, with an overall loss of -0.3% from its previous weekly close.



Extended its previous week’s gains last week as the U.S. Fed left rates unchanged and with mixed economic numbers out of both countries. The rate began the week consolidating on Monday in the absence of any significant economic numbers out of either country. The pair then gained on Tuesday after making its weekly low of 0.6291 after the NZ GDT Price Index increased to +16.5% versus a previous reading of +10.9%, while the NZ Current Account showed a deficit of -1.22B versus -1.40B anticipated. The pair continued gaining on Wednesday despite NZ GDP, which increased +0.4% q/q compared to an expected +0.5%. The rate then lost a fraction on Thursday after having rallied sharply after the FOMC left the Fed Funds Rate unchanged. The pair then gained sharply on Friday in the absence of any significant numbers from either country.

The week ahead

AUD The Australian economic calendar is extremely light this coming week with the only economic release on Tuesday, Australian Quarterly HPI (2.5%). Resistance for AUD/USD is seen at 0.7427/38, 0.7348/71 and 0.7215/84, with support noted at 0.7016/98, 0.6907 and 0.6753/73.

CAD The Canadian economic calendar is quiet this coming week, featuring Core Retail Sales (last 0.8%) and Retail Sales (0.6%) on Wednesday. In addition to the highlight, Wholesale Sales (0.3%) and a speech by BOC Governor Poloz will take place on Monday. Resistance for USD/CAD is seen at 1.3352, 1.3323/25 and 1.3305/09, while support shows at 1.3153/92, 1.3006/1.3116 and 1.2915/51.

EUR The Eurozone economic calendar is moderately busy this coming week, featuring the ECB’s Targeted LTRO (Last 73.8B) on Thursday. The week begins with the Greek Parliamentary Election, which according to the most recent exit polls is another victory for the Szyriza Party. The week then picks up on Wednesday with German Flash Manufacturing PMI (52.8), French Flash Manufacturing PMI (49.2), German Flash Services PMI (54.5), French Flash Services PMI (50.9), EZ Flash Manufacturing PMI (52.2), EZ Flash Services PMI (54.1) and a speech by ECB President Draghi. In addition to the week’s highlight, German Ifo Business Climate (107.8) will be released on Thursday. The week then concludes on Friday with the Eurozone M3 Money Supply (5.4%) and two speeches by Bundesbank President Weidmann. Resistance for EUR/USD is seen at 1.1713, 1.1436/66 and 1.1331/1.1409, with support showing at 1.1207/89, 1.1128/55 and 1.1005/86.

GBP The UK economic calendar is rather light this coming week, featuring Public Sector Net Borrowing (8.7B) on Tuesday. The only other economic data point for Sterling this week is a speech by MPC Member Broadbent on Wednesday. Resistance to the topside for GBP/USD shows at 1.5530/1.5722, 1.5818 and 1.5909/29, while support for the pair is expected at 1.5424/66, 0 1.5335 and 1.5160/89.

JPY The Japanese economic calendar is unusually light this coming week due to bank holidays on Monday, Tuesday and Wednesday. The only major economic data point this week for JPY will be Tokyo Core CPI (-0.2%) on Friday. Resistance for USD/JPY currently shows up at 121.81/123.00, 121.32 and 120.08/50, with support indicated at 119.05/39, 118.49/88 and 116.14.

NZD The New Zealand economic calendar is also quiet this coming week, with the Trade Balance (-875M) being the only important release out on Wednesday. The chart for NZD/USD shows resistance at 0.6618/0.6769, 0.6557/71 and 0.6407/96. On the downside, technical support is expected at 0.6309, 0.6248/68 and 0.6032.

USD The U.S. economic calendar is moderately busy this coming week, featuring Durable Goods Orders (-0.2%) and Core Durable Goods Orders (0.2%), as well as a speech by Fed Chair Janet Yellen on Thursday. Monday will have Existing Home Sales (5.5M) and a speech by FOMC Member Lockhart. On Tuesday, the only significant event is another speech by FOMC Member Lockhart. Wednesday then offers Crude Oil Inventories (Last -2.1M). In addition to the above mentioned highlights, Thursday features Initial Jobless Claims (268K) and New Home Sales (516K). Friday concludes the week’s events with Final Quarterly GDP (3.7%) and Revised UoM Consumer Sentiment (87.2).


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