Weekly Market Watch

Released 28 September 2015 - Weekly Newsletter

Last week recap

Extended its previous week’s losses last week after FOMC members — including Chair Janet Yellen — reiterated that the Fed would raise interest rates by the end of this year. The week began with the rate dropping sharply on Monday after making its weekly high of 1.1329 as FOMC member Lockhart stated that, “As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment. I am confident the much-used phrase ‘later this year’ is still operative”. Also, FOMC member Bullard said that “there''s a chance” for an October rate hike, but that, “the problem with going from one meeting to the next is how much information has really changed.” Eco-data on Monday had U.S. Existing Home Sales at 5.31M compared to an expected 5.50M. The pair extended its losses on Tuesday after talk in the market of the ECB increasing stimulus measures, and with no significant data out of either economy. On Wednesday, the rate rebounded after making its weekly low of 1.1104 as French Flash Manufacturing PMI printed at 50.4 versus an expectation of 48.6, while French Flash Services PMI printed at 51.2, in line with expectations. Also out was German Flash Manufacturing PMI at 52.5 and German Flash Services PMI at 54.3, both numbers just slightly lower than predicted. Thursday saw the pair consolidate at a slightly lower level after Fed Chair Janet Yellen said that, “Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter”. Also, ECB President Draghi said that, “The asset purchase program has sufficient in-built flexibility". He added that, "We will adjust its size, composition and duration as appropriate, if more monetary policy impulse should become necessary.” EZ data had German Ifo Business Climate, which printed at 108.5 versus 107.8 expected, nevertheless, the ECB’s Targeted LTRO only managed to create 15.5B for loans to EZ banks, the consensus was for 50.3B. Thursday’s U.S. data had Core Durable Goods Orders come out with a flat reading m/m versus an expected increase of +0.2%, while Durable Goods Orders declined -2.0 m/m in line with expectations. Also, New Home Sales increased to an annualized 552K versus 516K expected. The rate then gained a fraction on Friday as traders squared positions and despite U.S. Final GDP, which increased +3.9% q/q compared to an expected +3.7%. EUR/USD closed at 1.1195, with an overall weekly loss of -0.9%.
Rose last week as asset flows favoured the Greenback over the Yen with very little economic data out of Japan. The week began with the pair gaining on Monday despite a lower than expected U.S. Existing Home Sales number. The rate then declined on Tuesday in the absence of any significant data out of either country. On Wednesday, the pair consolidated at a slightly higher level made after hawkish comments from the Fed’s Lockhart. Thursday saw the pair make its weekly low of 119.22 before closing the session unchanged after hawkish comments from Fed Chair Yellen and mixed U.S. Durable Goods Orders and New Home Sales numbers. The rate gained on Friday after a positive U.S. Final GDP number and Tokyo Core CPI, which showed a decline of -0.2% y/y as was widely anticipated. USD/JPY closed the week at 120.56 with a gain of +0.5% from its previous weekly close.
Reversed direction last week, falling sharply despite expectations of the BOE raising rates later this year and with very little economic data out of the UK. Cable began the week declining a fraction after making its weekly high of 1.5567 on Monday despite a lower than expected U.S. Existing Home Sales number. The rate continued sharply lower on Tuesday after UK Public Sector Net Borrowing showed 11.3B versus 8.7B expected with the previous number significantly revised up from -2.1B to -0.1B. Also, MPC member Shafik stated that, “We need a stronger and more resilient global financial safety net to reduce the systemic implications of sovereign crises and allow nations to cope with shocks in order to reap the economic rewards of an integrated system of trade and finance”. Cable continued its steep selloff on Wednesday after comments from the MPC’s Broadbent, who said, “Since the minutes of the September MPC meeting were released which showed an 8-1 vote in favour of unchanged monetary policy we have had the release of the key jobs report for July/August, which we believe offered strong evidence that the UK labour market may be tightening more quickly than the MPC is currently acknowledging.” The pair continued declining on Thursday after hawkish comments from Fed Chair Yellen and mixed U.S. economic data. Cable then made its weekly low of 1.5134 on Friday after a better than expected U.S. Final GDP number. GBP/USD closed at 1.5181, with an overall weekly loss of -2.2%.
Reversed direction last week, trading sharply lower as U.S. Fed officials reiterated their intention of raising interest rates before the end of the year and with very little significant economic data out of Australia. The week began with the pair declining off of its weekly high of 0.7196 on Monday after hawkish comments from the Fed’s Lockhart. The rate continued its slide on Tuesday despite Australian HPI, which increased +4.7% q/q versus an expectation of +2.5%. On Wednesday, the pair extended its losses after more hawkish comments from the Fed’s Lockhart. Thursday saw the rate make its weekly low of 0.6937 after Fed Chair Yellen indicated that the Fed was still on track to raise rates by the end of the year, as well as mixed U.S. economic numbers. The pair then rebounded on Friday, gaining ground as traders squared positions and despite a better than expected U.S. Final GDP number. AUD/USD closed the week at 0.7024, with an overall loss of -2.2% from its previous weekly close. .
gained ground last week as asset flows favoured the Greenback over the Loonie with mixed economic numbers out of both countries. The week began with the pair gaining after making its weekly low of 1.3175 on Monday after Canadian Wholesale Sales came in with a flat reading m/m versus an expected increase of +0.3%. Also on Monday, BOC Governor Poloz said that, “When all the temporary factors are stripped out, the underlying trend in inflation in Canada is in the range of 1.5 per cent to 1.7 per cent, below our target of two per cent.” The rate extended its gains on Tuesday in the absence of any significant economic data out of either country. The pair continued rallying on Wednesday after Canadian Core Retail Sales printed at 0.0% m/m versus +0.4% expected, while Retail Sales increased +0.5% as widely anticipated. The rate then made its weekly high of 1.3415 on Thursday after hawkish comments from Fed Chair Yellen and mixed U.S. economic numbers. Friday saw the pair lose a fraction after profit taking and despite a better than expected U.S. Final GDP number. USD/CAD closed at 1.3326, with an overall gain of +0.8% from its previous weekly close.
Lost a fraction last week as New Zealand reported a wider Trade deficit and the Greenback was supported by comments from FOMC members. The week began with the pair losing ground after making its weekly high of 0.6398 after a lower than expected U.S. Existing Home Sales number. The pair continued heading south on Tuesday in the absence of any significant economic data out of either country. On Wednesday, the pair made its weekly low of 0.6234 after the New Zealand Trade Balance showed a deficit of -1035M compared to an expected deficit of -875M. The rate then rallied on Thursday after mixed U.S. economic data and despite hawkish words from the Fed’s Yellen. The pair continued higher on Friday despite a better than expected U.S. Final GDP number. NZD/USD closed at 0.6380, with an overall loss of -0.3% for the week.

The week ahead

AUD The Australian economic calendar is rather quiet this coming week, only featuring Building Approvals (-1.9%) on Wednesday and Retail Sales (0.4%) on Friday. In addition, the Daylight Saving Time Shift will take place on Saturday. Resistance for AUD/USD is seen at 0.7427/38, 0.7348/71 and 0.7215/84, with support noted at 0.6981/0.7016, 0.6907/37 and 0.6753/73.

CAD The Canadian economic calendar is quiet this coming week, only featuring RMPI (last -5.9%) on Tuesday and GDP (0.2%) on Wednesday. Resistance for USD/CAD is seen at 1.4006, 1.3415 and 1.3352, while support shows at 1.3305/25, 1.3153/92 and 1.3006/1.3116.

EUR The Eurozone economic calendar is characteristically busy this coming week, featuring CPI data on Tuesday and Wednesday. Monday is quiet, so Tuesday starts the week’s highlights off with German Preliminary CPI (0.0%) and Spanish Flash CPI (-0.6%). Wednesday then offers German Retail Sales (0.3%), the German Unemployment Change (-5K), the EZ CPI Flash Estimate (0.0%), the EZ Core CPI Flash Estimate (0.9%) and the EZ Unemployment Rate (10.9%). Thursday features Spanish Manufacturing PMI (53.00, while Friday’s important data concludes the week with the Spanish Unemployment Change (17.9K). Resistance for EUR/USD is seen at 1.1436/66, 1.1331/1.1409 and 1.1207/89, with support showing at 1.1104/55, 1.1005/86 and 1.0954.

GBP The UK economic calendar is moderately active this coming week, featuring Current Account data on Wednesday. Monday starts the week’s highlights off with a speech by MPC Member Cunliffe, and Tuesday’s key events include Net Lending to Individuals (4.1B) and a speech by BOE Governor Carney. Wednesday then offers the Current Account (-22.3B) and Final GDP (0.7%), while Thursday features Manufacturing PMI (51.3). Friday’s important data then concludes the week with Construction PMI (57.5). Resistance to the topside for GBP/USD shows at 1.5530/1.5722, 1.5424/66 and 1.5335, while support for the pair is expected at 1.5160/89, 1.5135 and 1.4950.

JPY The Japanese economic calendar is rather sparse this coming week, only featuring Retail Sales (1.3%) on Wednesday; the Tankan Manufacturing Index (13) and the Tankan Non-Manufacturing Index (21) on Thursday; and Household Spending (0.4%) on Friday. Resistance for USD/JPY currently shows up at 121.81/123.00, 121.23/32 and 120.50/98, with support indicated at 119.05/39, 118.49/88 and 116.14.

NZD The New Zealand economic calendar is very quiet this coming week, only featuring ANZ Business Confidence (last -29.1) on Wednesday. The chart for NZD/USD shows resistance at 0.6618/0.6769, 0.6557/71 and 0.6388/0.6496. On the downside, technical support is expected at 0.6309, 0.6234/68 and 0.6032.

USD The U.S. economic calendar is unusually busy this coming week, featuring key jobs data on Friday. Monday starts the week’s highlights off with speeches by FOMC Members Tarullo, Dudley, Evans and Williams, as well as the Core PCE Price Index (0.1%), Personal Spending (0.3%) and Pending Home Sales (0.4%). Tuesday’s key events include the Goods Trade Balance (-57.3B) and CB Consumer Confidence (96.2), while Wednesday offers speeches by FOMC Member Dudley and Fed Chair Janet Yellen, in addition to the ADP Non-Farm Employment Change (191K), Chicago PMI (53.2) and Crude Oil Inventories (-1.9M). Thursday features speeches by FOMC Members Brainard and Williams, plus Weekly Initial Jobless Claims (273K) and ISM Manufacturing PMI (50.8). Friday’s important data includes Average Hourly Earnings (0.2%), Non-Farm Payrolls (202K), the Unemployment Rate (5.1%), Factory Orders (-0.9%), and a speech by FOMC Member Fischer. The week concludes on Saturday with a speech by FOMC Member Dudley.


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