Weekly Market Watch

Released 07 September 2015 - Weekly Newsletter

Last week recap

Lost a fraction last week as the ECB left rates unchanged and the United States reported a lower than expected Non-Farm Payrolls number and Unemployment Rate. The week began on a positive note, with the pair gaining on Monday after German Retail Sales increased +1.4% m/m compared to a previous reading of -1.0 downwardly revised from -2.3%. Also out were EZ CPI Flash Estimate, which increased +0.2% y/y and Core CPI Flash Estimate, which increased +1.0% y/y, both as widely anticipated. The rate continued higher on Tuesday, making its weekly high of 1.1331 after the Eurozone Unemployment Rate declined to 10.9% from 11.1% and German Unemployment Change, which came out at -7K versus -3K expected. U.S. numbers had ISM Manufacturing PMI print at 51.1 compared to an expected reading of 52.6. On Wednesday, the pair weakened despite U.S. ADP Non-Farm Employment Change printing at +190K versus +204K expected, and Spanish Unemployment Change, which showed 21.7K versus 35.3K expected. The rate then made its weekly low of 1.1086 on Thursday after the ECB left its benchmark Minimum Bid Rate unchanged at 0.05%. In the introduction to the press conference, ECB President Mario Draghi noted that, “The risks to the euro area growth outlook remain on the downside, reflecting in particular the heightened uncertainties related to the external environment. Notably, current developments in emerging market economies have the potential to further affect global growth adversely via trade and confidence effects.” Elsewhere, the U.S. Trade Balance showed a deficit of -41.9B compared to an expected deficit of -43.2B, while ISM Non-Manufacturing PMI printed at 59.0 versus 58.3 expected and Initial Jobless Claims, which showed 282K new weekly claims versus 273K expected. The pair gained a fraction on Friday after U.S. Non-Farm Payrolls came out showing 173K new jobs in August compared to 215K expected, nevertheless, the U.S. Unemployment Rate declined to 5.1% and Average Hourly Earnings increased +0.3% compared to +0.2% expected which mitigated the NFP number’s effect. EUR/USD went on to close at 1.1150, with an overall loss of -0.3% for the week.
Continued selling off last week as risk assets favoured the Yen over the Greenback with mixed economic data out of both countries. The week began with the pair making its weekly high of 121.59 on Monday after Japanese Housing Starts increased +7.4% y/y compared to an expected +11.2%. The pair then declined sharply on Tuesday after a lower than expected U.S. ISM Manufacturing PMI number. On Wednesday, the rate gained ground despite a lower than expected U.S. employment number. Thursday saw the pair decline a fraction despite better than expected U.S. trade and PMI data. The rate resumed its downtrend on Friday after a lower than expected U.S. Non-Farm Payrolls number. USD/JPY closed at 119.04, with an overall loss of -2.2% from its previous weekly close.
Extended its previous week’s losses last week as asset flows favoured the Greenback over Sterling with mixed economic numbers out of both countries. The week began with Cable making its weekly high of 1.5436 on Monday after U.S. Chicago PMI came out in line with expectations. The pair continued lower on Tuesday after UK Manufacturing PMI printed at 51.5 versus 51.9 expected, while UK Net Lending to Individuals increased +3.9B m/m as widely anticipated. On Wednesday, the pair consolidated at a slightly lower level after UK Construction PMI printed at 57.3, in line with expectations. Cable resumed its downtrend on Thursday after UK Services PMI showed a reading of 55.6 compared to an expected reading of 57.6. The pair continued declining on Friday, making its weekly low of 1.5160 despite a lower than expected U.S. Non-Farm Payrolls number. GBP/USD went on to close the week at 1.5168, with an overall weekly loss of -1.8%.
Extended its previous week’s losses last week as the RBA left interest rates unchanged with mostly lower than expected economic data out of Australia. The week began with the rate declining on Monday after making its weekly high of 0.7162 as Australia reported Company Operating Profits declined -1.9% q/q as was widely expected. The pair then dropped sharply on Tuesday after the RBA left its benchmark Cash Rate unchanged at 2.0% as was widely expected. In the Statement on Monetary Policy, Governor Glenn Stevens noted that, “While growth has been somewhat below longer-term averages for some time, it has been accompanied with somewhat stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.” The rate then gained a fraction on Wednesday despite Australian GDP, which increased +0.2% q/q compared to an expected increase of +0.4%. On Thursday, the pair resumed its selloff after Australian Retail Sales declined -0.1% m/m, versus an expected increase of +0.4%, nevertheless, the Australian Trade Balance mitigated the effect on the rate, showing a deficit of -2.46B versus -3.10B expected. The pair then made its weekly low of 0.6907 on Friday after the United States reported a lower than expected NFP number, but a lower Unemployment Rate. AUD/USD closed at the week’s low of 0.6907, showing an overall decline of -3.6% from its previous weekly close.
Extended its previous week’s gains last week as the price of oil continued under pressure and with mixed economic numbers out of both countries. The week began on a volatile note, with the pair making both its weekly high of 1.3325 and its weekly low of 1.3116 on Monday as the price of oil dropped more than $3 per barrel on Monday. Also, the Canadian Current Account showed a deficit of -17.4B compared to -17.2B expected. Tuesday saw the rate gain ground despite Canadian GDP, which increased +0.5% m/m versus +0.2% expected. The pair then gained a fraction on Wednesday despite mostly lower than expected U.S. economic data. On Thursday, the rate declined after the Canadian Trade Balance showed a deficit of only -0.6B, less than half the expected deficit of -1.4B that was expected. The pair then recovered on Friday despite Canadian Employment Change showing an increase of +12.0K jobs compared to an expected decline of -4.8K, nevertheless, the Canadian Unemployment Rate edged up to 7.0% from 6.8%, while Labor Productivity declined -0.6% q/q versus -0.7% expected. USD/CAD went on to close the week at 1.3275 with an overall gain of +0.6%.
Extended its previous week’s decline last week as risk appetite favoured the Greenback over the commodity currencies and with very little economic data out of New Zealand. The week began with the pair declining sharply on Monday after New Zealand ANZ Business Confidence showed a reading of -29.1 versus a previous print of -15.3. The pair then consolidated at slightly lower level on Tuesday after New Zealand GDT Price Index increased +10.9% versus a previous reading of +14.8%. On Wednesday, the rate gained a fraction after a lower than expected U.S. ADP Non-Farm Employment Change number. The pair gained on Thursday despite the U.S. Trade Balance, which showed a lower than expected deficit. Friday saw the rate make its weekly low of 0.6268 after a lower than expected U.S. NFP number, but also a lower Unemployment Rate and higher Average Hourly Earnings. NZD/USD closed the week at 0.6275, with an overall decline of -2.8% for the week.

The week ahead

AUD The Australian economic calendar is fairly active this coming week, featuring key jobs data on Thursday. Monday starts the week’s highlights off with ANZ Job Advertisements (-0.4%), and Tuesday’s key events include the NAB Business Confidence survey (last 4). Wednesday then offers the Westpac Consumer Sentiment survey (last 7.8%) and Home Loans (0.8%), as well as speeches by RBA Deputy Governor Lowe and RBA Assistant Governor Debelle. Thursday features MI Inflation Expectations (last 3.7%), the Employment Change (5.2K) and the Unemployment Rate (6.2%), which concludes the week’s important data. Resistance for AUD/USD is seen at 0.7348/71, 0.7215/84 and 0.7016/69, with support noted at 0.6907, 0.6753/73 and 0.6670/97.

CAD The Canadian economic calendar is quiet this coming week, only featuring Building Permits (14.8%), the BOC Rate Statement and the BOC Overnight Rate Decision (unchanged at 0.50%) on Wednesday, as well as the NHPI (0.2%) on Thursday. Also, Monday is a Bank Holiday in Canada. Resistance for USD/CAD is seen at 1.3352, 1.3323/25 and 1.3305 and while support shows at 1.3192/60, 1.3006/1.3116 and 1.2915/51.

EUR The Eurozone economic calendar is very quiet this coming week, only featuring the ECOFIN Meetings on Friday, plus the ECOFIN Meetings and Eurogroup Meetings on Saturday. Resistance for EUR/USD is seen at 1.1436/66, 1.1331/1.1409 and 1.1207/89, with support showing at 1.1128/55, 1.1005/86 and 1.0954.

GBP The UK economic calendar is quite active this coming week, featuring the MPC Rate Decision on Thursday. Monday is quiet, so Tuesday starts the week’s highlights off with the Halifax HPI (8th-10th of Sept, 0.5%). Wednesday then offers Manufacturing Production (0.2%), the Trade Balance (-9.5B) and the NIESR GDP Estimate (last 0.7%). Thursday then concludes the week’s key events, featuring the MPC Official Bank Rate Votes (1-0-8), the Official Bank Rate Decision (0.50%), the Asset Purchase Facility Decision (375B), the MPC Asset Purchase Facility Votes (0-0-9) and the tentatively scheduled MPC Rate Statement. Resistance to the topside for GBP/USD shows at 1.5335, 1.5424/66 and 1.5530/1.5722, while support for the pair is expected at 1.5160/89, 1.5088 and 1.5033/53.

JPY The Japanese economic calendar is rather inactive this coming week, only featuring the Current Account (1.25T) and Final GDP (-0.4%) on Tuesday, Core Machinery Orders (3.4%) on Thursday and the BSI Manufacturing Index (-6.0) on Friday. Resistance for USD/JPY currently shows up at 122.45/123.00, 121.81/93 and 120.08/50, with support indicated at 118.49/88 and 116.14.

NZD The New Zealand economic calendar is rather quiet this coming week, only featuring the Official Cash Rate (a 25bp drop to 2.75% is expected), the RBNZ Rate Statement, the RBNZ Monetary Policy Statement and the RBNZ Press Conference. 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 0.6248/68 and 0.6032.

USD The U.S. economic calendar is quieter than usual this coming week, featuring PPI data on Friday. Monday is a Bank Holiday, and Tuesday is quiet, so Wednesday starts the week’s highlights off with JOLTS Job Openings (5.30M). Thursday then features Weekly Initial Jobless Claims (279K), Import Prices (-1.7%) and Crude Oil Inventories (last 4.7M). Friday’s important data then concludes the week with PPI (-0.1%), Core PPI (0.1%) and the Preliminary University of Michigan Consumer Sentiment survey (91.8).


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