Weekly Market Watch

Released 06 February 2017 - Weekly Newsletter

Last week recap



Gained ground last week as the FOMC left the benchmark Fed Funds Rate unchanged, while both economies reported mixed economic numbers. The week began with the pair making its weekly low of 1.0619 on Monday after German Preliminary CPI declined by -0.6% m/m, disappointing the market that expected a decline of -0.5%, also out was U.S. Personal Spending, which increased by +0.5% m/m compared to an expected increase of +0.4%. The rate then rallied on Tuesday after German Unemployment Change showed a decline of -26K, significantly lower than the -5K that was expected. Also out on Tuesday was EZ CPI Flash Estimate, which increased by +1.8% y/y versus an expectation of +1.5%. U.S. data had CB Consumer Confidence print at 111.8 versus an expected reading of 112.6, while Chicago PMI printed at 50.3, significantly lower than the expected reading of 55.1. On Wednesday, the pair retreated after the FOMC left the benchmark Fed Funds Rate unchanged at 0.75%. The FOMC Statement noted that, “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.” Wednesday’s economic numbers had U.S. ADP Non-Farm Employment Change show +246K new jobs compared to an expectation of +165K, while ISM Manufacturing PMI printed at 56.0 versus 55.0 expected. Thursday saw the pair consolidate at a slightly lower level after making its weekly high of 1.0828 after comments from ECB President Draghi, who stated that, “There are some today who believe that Europe would be better off if we did not have the single currency and could devalue our exchange rates instead. But as we have seen, countries that have implemented reforms do not depend on a flexible exchange rate to achieve sustainable growth. And for those that have not reformed, one has to ask how beneficial a flexible exchange rate would really be. After all, if a country has low productivity growth because of deep-rooted structural problems, the exchange rate cannot be the answer.” Thursday’s economic data had U.S. Weekly Initial Jobless Claims decline to 246K compared to an expected 251K. The rate then gained fractionally on Friday despite U.S. Non-Farm Payrolls, which showed +227K new jobs last month compared to +170K that was expected, nevertheless, the U.S. Unemployment Rate edged up to 4.8%, also, U.S. ISM Non-Manufacturing PMI printed at 56.5 compared to an expected reading of 57.0. EUR/USD closed at 1.0780, with an overall gain of +0.8% from its previous weekly close.



Fell sharply last week as both the FOMC and the BOJ left their respective interest rates unchanged. The week began with the pair selling off of its weekly high of 1.0828 on Monday after mixed U.S. Personal Spending and Pending Home Sales numbers. The rate extended its losses on Tuesday after the BOJ left its Policy Rate unchanged at -0.10%. Annual asset purchases were left at 80T JPY under the central bank’s yield curve control framework. The BOJ’s Outlook Report noted that, “As for the conduct of monetary policy, the Bank will continue with ‘Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control,’ aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner. The Bank will make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target.” Tuesday’s economic data had Japanese Household Spending decline by -0.3% y/y versus an expected decline of -0.8%. The pair then recovered somewhat on Wednesday after a better than expected U.S. employment number and FOMC rate decision. Thursday saw the pair resume its downtrend, making its weekly low of 112.04 despite a better than anticipated U.S. Initial Jobless Claims number. The rate continued selling off on Friday after disappointing U.S. Hourly Earnings and PMI data and despite a better than expected U.S. Non-Farm Payrolls release. USD/JPY closed at 112.60, with a net decline of -2.1% for the week.


Lost a fraction last week as the BOE left its Official Bank Rate, while the FOMC also left rates unchanged with mixed economic numbers from both countries. The week began with Cable selling off on Monday after a better than expected U.S. Personal Spending number. The pair then rallied after making its weekly low of 1.2411 on Tuesday after UK Net Lending to Individuals declined to 4.8B m/m compared to an expected 5.3B. On Wednesday, Cable continued higher after UK Manufacturing PMI printed at 55.9, in line with expectations. The pair then made its weekly high of 1.2705 on Thursday before selling off after the BOE left its benchmark Official Bank Rate unchanged at 0.25% and the Asset Purchase Facility at 435B by a unanimous MPC vote on both. The BOE Inflation Report noted that, “The MPC has long emphasised that the effects of the process of leaving the EU on inflation would be the product of its impact on demand, supply and the exchange rate. And it has consistently stressed that as a result, the implications for monetary policy would not be automatic. During these exceptional circumstances, the MPC is required by its remit to balance a period of above-target inflation with a period of weaker growth.” The BOE’s Monetary Policy Summary said that, “The value of sterling remains 18% below its peak in November 2015, reflecting investors’ perceptions that a lower real exchange rate will be required following the UK’s withdrawal from the EU. Over the next few years, a consequence of weaker sterling is that the higher imported costs resulting from it will boost consumer prices and cause inflation to overshoot the 2% target.” In addition to the interest rate news, UK Construction PMI printed at 52.2 compared to an expected reading of 53.9. Cable then traded lower on Friday after UK Services PMI showed a reading of 54.5 versus 55.8 that was expected. GBP/USD closed at 1.2478, with an overall weekly decline of -0.3%.


Gained ground last week as Australia reported better than expected trade data, while the United States reported mixed economic numbers and the FOMC left interest rates unchanged. The rate began the week making its weekly low of 0.7527 on Monday after mixed U.S. economic releases. The pair then gained a fraction on Tuesday after lower than expected U.S. consumer confidence and PMI data. On Wednesday, the rate consolidated at a slightly lower level after the FOMC left the Fed Funds Rate unchanged and after better than anticipated U.S. employment and manufacturing numbers. The pair then gained sharply on Thursday, making its weekly high of 0.7695 after the Australian Trade Balance came out with a surplus of +3.51B, significantly higher than the +2.00B surplus that was expected. Also out was Australian Building Approvals, which showed a decline of -1.2% compared to an expected decline of -1.7%. The rate continued fractionally higher on Friday after the United States reported mixed employment and wage data. AUD/USD went on to close at 0.7676,with an overall gain of +1.6% for the week.


Extended its previous week’s losses last week as crude oil held comfortably above the $50 handle while Canada reported better than expected economic numbers. The week began with the pair selling off after making its weekly high of 1.3168 on Monday after mixed U.S. economic data. The rate then made its weekly low of 1.2967 on Tuesday after Canadian GDP increased by +0.4% m/m, edging the market consensus of a +0.3% increase, and Canadian RMPI, which showed an increase of +6.5% m/m, significantly higher than the expected +2.9%. Also on Tuesday, BOC Governor Poloz said in a speech that, “The Bank has been pursuing inflation targets for 25 years, and the average rate of inflation has been extremely close to target over that period. This alone suggests that our models have done their job reasonably well. And while our current models continue to perform well, recent experience is pointing to some shortcomings that we need to address.” The pair gained a fraction on Wednesday after the FOMC left interest rates unchanged and the United States reported mixed PMI and employment data. On Thursday, the pair fell fractionally after mixed U.S. employment and industrial data. Friday saw the pair consolidate at a slightly higher level after a better than expected U.S. Non-Farm Payrolls number, nevertheless, the increase was pressured by lower than expected Average Hourly Earnings and Factory Orders. USD/CAD closed the week at 1.3033, with an overall loss of -0.9% from its previous weekly close.



Gained a fraction last week as New Zealand reported positive trade data, but mixed employment numbers, while the FOMC left interest rates unchanged with mixed economic numbers from the United States. The week began with the pair gaining on Monday after the New Zealand Trade Balance showed a deficit of -41M, less than half the -95M that was anticipated, however the previous number was downwardly revised from -705M to -746M. The pair then made its weekly high of 0.7349 on Tuesday after New Zealand Employment Change increased by +0.8% q/q, in line with market expectations, nevertheless, the NZ Unemployment Rate popped up to 5.2% from 4.9%, with an expected reading of 4.8%. The pair then declined on Wednesday, making its weekly low of 0.7238 after encouraging U.S. PMI and employment numbers. On Thursday, the rate resumed its rally, gaining a fraction after mixed U.S. economic releases. Friday saw the pair extend its gains after mixed U.S. employment and wage data. NZD/USD closed at 0.7309, with a weekly net gain of +0.6%.

The week ahead

AUD The Australian economic calendar is moderately busy this coming week, featuring the RBA’s Cash Rate Decision on Monday. Sunday starts the week’s highlights off with Retail Sales (-0.1%), and Monday’s key events include the RBA’s Cash Rate Decision (unchanged at 1.50%) and the RBA Rate Statement. Wednesday then offers the NAB Quarterly Business Confidence survey (last 5), while Thursday features a speech by RBA Governor Lowe and the RBA Monetary Policy Statement. Resistance for AUD/USD is seen at 0.7834, 0.7733/77 and 0.7695/0.7709, with support noted at 0.7568/0.7608, 0.7492/0.7557 and 0.7222/0.7310.

CAD The Canadian economic calendar is quite active this coming week, featuring key jobs data on Friday. Tuesday starts the week’s highlights off with the Trade Balance (1.2B), Building Permits (last -0.1%) and the Ivey PMI (58.3), and Wednesday offers nothing notable. Thursday then features the NHPI (0.3%), and Friday’s important data then concludes the week with the Employment Change (last 53.7K) and the Unemployment Rate (last 6.9%). Resistance for USD/CAD is seen at 1.3312/56, 1.3147/77 and 1.3018/80, while support shows at 1.2995/1.3005, 1.2967/79 and 1.2910.

EUR The Eurozone economic calendar is light this coming week, only featuring German Factory Orders (0.6%) on Monday and the tentatively scheduled EU Economic Forecasts on Wednesday. Resistance for EUR/USD is seen at 1.1298, 1.1139 and 1.0774/1.0964, with support showing at 1.0708/18, 1.0461/1.0620 and 1.0339/1.0419.

GBP The UK economic calendar is sparse this coming week, only featuring the Halifax HPI (0.2%) on Tuesday; and Manufacturing Production (0.3%) and the Goods Trade Balance (-11.5B) on Friday. Resistance to the topside for GBP/USD shows at 1.2705/90, 1.2672/73 and 1.2511/56, while support for the pair is expected at 1.2451/81, 1.2387/1.2411 and 1.2081/1.2199.

JPY The Japanese economic calendar is quiet this coming week, featuring no notable data releases. Resistance for USD/JPY currently shows up at 115.06/116.07, 113.49/79 and 112.51/113.12, with support indicated at 112.04/07, 111.35/44 and 110.58.

NZD The New Zealand economic calendar is this coming week, featuring the RBNZ’s Official Cash Rate Decision on Wednesday. Sunday is a Bank Holiday in New Zealand, and Monday starts the week’s highlights off with Inflation Expectations (last 1.7%). Tuesday’s key events include the GDT Price Index 0.6%, and Wednesday then concludes the week’s highlights with the RBNZ’s Official Cash Rate Decision (unchanged at 1.75%), the RBNZ Rate Statement, the RBNZ Monetary Policy Statement, the RBNZ Press Conference and a speech by RBNZ Governor Wheeler. The chart for NZD/USD shows resistance at 0.7484, 0.7349/0.7420 and 0.7311. On the downside, technical support is expected at 0.7219/40, 0.7116/43 and 0.7042.

USD The U.S. economic calendar is quite active this coming week, featuring Trade Balance data on Tuesday. Tuesday starts the week’s highlights off with the Trade Balance (-45.0B), JOLTS Job Openings (5.56M) and Mortgage Delinquencies (7th-12th Feb, 4.52%), and Wednesday’s key events include Crude Oil Inventories (last 6.5M). Thursday then offers Weekly Initial Jobless Claims (249K) and a speech by FOMC Member Evans, and Friday’s important data concludes the week with Import Prices (0.4%), the Preliminary University of Michigan Consumer Sentiment survey (97.9) and a speech by FOMC Member Fischer.


Currency Converter

Market Rate For information purposes only. Terms of Use
For details, see My Dashboard

For USForex’s customer rate
Log In or Register Now
Rate: 1.1750
=
Rate: 0.8511
=
Convert

Register Free

For international money transfers at better rates than the banks, register now.


Get free rate alerts

/
 
Choose currency pair and enter the exchange rate. An alert will be triggered when the exchange rate is reached and an email will be sent to you. You can unsubscribe any time and your email address is safe – see our Privacy Policy.

NOTE: These rates are for informational purposes only

Get our Free Commentary



RSS Follow Facebook Twitter Follow on LinkedIn Google Plus Follow on YouTube

Sitemap

© 2017. USForex Inc. dba OFX or its affiliates. All rights reserved. OFX is the registered trade name of USForex Inc., a licensed money transmitter. NMLS #1021624.