AUD Weekly Market Watch 20/10/2014

Last Week recap

EUR/USD Extended its previous week’s gains last week as traders pushed back their estimates on the Fed’s first interest rate hike and with both economies reporting mixed economic data. The week began on a quiet note on Monday with the rate making its weekly low of 1.2626 as the United States observed a bank holiday and the conclusion of the Eurogroup meetings. The pair then sold off on Tuesday after German ZEW Economic Sentiment showed its first negative reading since November of 2012 at -3.6 versus an expected increase of +0.2. Also out Tuesday, EZ ZEW Economic Sentiment printed at 4.1 compared to an expected reading of 7.1, and EZ Industrial Production, which declined -1.8% m/m versus -1.5% expected. The rate then gained sharply on Wednesday, making its weekly high of 1.2886 after U.S. Core Retail Sales declined -0.2% m/m versus an expected increase of +0.2%, while Retail Sales declined -0.3% versus an expected -0.1% decline and U.S. PPI, which declined -0.1% versus an expected increase of +0.1%, while Core PPI came out with a flat reading versus an expected increase of +0.1%. The pair then consolidated at a lower level on Thursday after U.S. Initial Jobless Claims dropped to 264K from 287K with an expected 286K. Elsewhere, the Philly Fed Manufacturing Index printed at 20.7 versus 19.9 expected while Industrial Production increased +1.0% m/m compared to an expected increase of +0.4%. Thursday’s Eurozone data had EZ Final CPI increase +0.3% y/y in line with expectations. The pair continued declining on Friday after U.S. Building Permits came out at 1.02M, in line with expectations and Housing Starts, at 1.02M, also as expected, while the Preliminary UoM Consumer Sentiment index printed at 86.4 compared to 84.3 anticipated. EUR/USD closed at 1.2758, showing an overall gain of +1.0% from its previous weekly close. 

USD/JPY Extended its previous week’s losses last week as risk appetite favoured the Yen over the Greenback and with very few economic releases out of Japan. The week began with the pair making its weekly high of 107.56 on Monday in the absence of any data out of either country. On Tuesday, the pair gained moderately after Japanese PPI increased +3.5% y/y as widely expected, and the Japanese M2 Money Stock increased +3.0% y/y compared to an expected rise of +2.9%. The rate then dropped sharply on Wednesday, making its weekly low of 105.19 after lower than expected U.S. Retail Sales and PPI data. The pair then gained ground on Thursday after better than expected U.S. employment and manufacturing numbers. The pair continued higher on Friday as the United States reported better than expected Consumer Sentiment and housing data. USD/JPY went on to close at 106.87, showing a loss of -0.7% for the week.

GBP/USD Showed little change last week as the UK reported lower than expected CPI and employment data and with mixed numbers out of the United States. The week began with Cable consolidating at a slightly higher level on Monday after making its weekly high of 1.6125 on Monday in the absence of any data out of either country. The pair then dropped sharply on Tuesday after UK CPI came out showing an increase of +1.2% y/y compared to an expected +1.4% rise. Also, UK PPI Input declined -0.6% m/m versus -0.4% expected, while RPI input gained +2.3% y/y, in line with expectations. Cable then reversed direction on Wednesday after making its weekly low of 1.5874 as the UK reported Claimant Count Change declined -18.6K, significantly lower than the expected decline of -34.2K that was expected, while the UK Unemployment Rate declined to 6.0% from 6.2%. Also out was the UK Average Earnings Index, which increased +0.7% 3m/y as was widely anticipated. Cable continued strengthening on Thursday despite better than expected U.S. economic data. On Friday, the rate consolidated at a slightly higher level despite better than expected U.S. Consumer Sentiment data. GBP/USD closed at 1.6088, up a mere 13 pips and virtually unchanged on the week.  

AUD/USD Gained ground last week as the price of gold rallied and Australia reported economic data in line with expectations. The week began with the rate rallying after making its weekly low of 0.8651on Monday in the absence of any significant numbers out of either country. The pair then declined on Tuesday after a speech by RBA Assistant Governor, Guy Debelle, in which he said that, “In thinking about the magnitude and nature of any sell off, an important question to think about is who will take the other side of the trade? How far do prices need to go before someone is willing to take the position? Those questions are always relevant but the answers may be different this time around.” Also pressuring the Aussie on Tuesday was the Australian NAB Business Confidence index, which showed a reading of 5 compared to a previous print of 7. The rate then made its weekly high of 0.8859 on Wednesday after Australian Westpac Consumer Sentiment showed a reading of +0.9% versus a previous print of -4.6%, while Australian New Motor Vehicle Sales increased +2.9% m/m compared to a previous decline of -1.6% downwardly revised from -1.8%. The pair then declined on Thursday after the United States reported better than expected employment and manufacturing data, while Australian MI Inflation Expectations increased +3.4% versus a previous reading of +3.5%. The rate then consolidated at a slightly lower level on Friday after positive U.S. economic numbers, bringing AUD/USD to close at 0.8743, showing an overall weekly gain of +0.7%. 

USD/CAD Gained ground last week after the Loonie was pressured by a sharp drop in the price of oil and despite Canada reporting mostly better than expected economic data. The pair began the week making its weekly low of 1.1181 in the absence of any economic data out of either country. The pair then gained sharply on Tuesday as risk appetite favoured the Greenback over the Loonie. The rate then made a five year high on Wednesday before dropping sharply after oil prices sold off and the United States reported lower than expected Retail Sales and PPI data. On Thursday, the pair consolidated at a slightly higher level after Canadian Manufacturing Sales declined -3.3% m/m versus an expected drop of -1.6%, while Canadian Foreign Securities Purchases increased to +10.28B versus an expected +4.31B. The pair continued higher on Friday after positive U.S. economic data and despite Canadian Core CPI, which increased +0.2% m/m versus +0.1% expected, and CPI, rising +0.1% compared to an expected flat reading. USD/CAD went on to close at 1.1276, with an overall gain of +0.7% from its previous weekly close. 

NZD/USD Extended its previous week’s gains last week as asset flows favoured the Kiwi over the Greenback and with mixed economic numbers out of both countries. The week began with the pair making its weekly low of 0.7793 on Monday after NZ REINZ HPI increased +0.2% m/m compared to a previous increase of +1.1%, while NZ FPI declined -0.8% versus a previous increase  of +0.3%. The rate then declined on Tuesday in the absence of any significant economic data out of either country. On Wednesday, the pair gained sharply after the NZ GDT Price Index increased +1.4% compared to a previous reading of -7.3%, while the NZ Business NZ Manufacturing Index printed at 58.1 compared to a previous reading of 57.0 upwardly revised from 56.5. The rate then declined after making its weekly high of 0.7995 on Thursday after positive U.S. economic data. The pair extended its decline on Friday as the United States continued reporting better than expected data, which brought NZD/USD to close at 0.7912, showing an overall weekly increase of +1.0%.

The Week Ahead

USD: The upcoming U.S. economic calendar is less active than usual, featuring CPI data on Wednesday.  Monday starts the week’s highlights off with a speech by FOMC Member Powell, and Tuesday’s key events include Existing Home Sales (5.11M).  Wednesday then features Core CPI (0.2%), CPI (0.0%), and Crude Oil Inventories (last 8.9M), while Thursday offers Weekly Initial Jobless Claims (269K), and Flash Manufacturing PMI (57.2). Friday’s important data then concludes the week with New Home Sales (473K).

AUD: The upcoming Australian economic calendar is moderately active, featuring CPI data on Wednesday.  Monday starts the week’s highlights off with a speech by RBA Assistant Governor Kent, and Tuesday’s key events include the RBA’s Monetary Policy Meeting Minutes and a speech by RBA Deputy Governor Lowe.  Wednesday then features CPI (0.4%) and Trimmed Mean CPI (0.6%), while Thursday offers a speech by RBA Governor Stevens and the NAB Quarterly Business Confidence survey (6), which concludes the week’s important events. Resistance for AUD/USD is seen at 0.8826/47, 0.8859 and 0.8889/97, with support noted at 0.8729, 0.8679 and 0.8641/59.

NZD: The upcoming New Zealand economic calendar is rather peaceful, only featuring CPI (0.5%) on Thursday and the Trade Balance (-620M) on Friday. The chart for NZD/USD shows resistance at 0.7995, 0.7972 and 0.7927. On the downside, technical support is expected at 0.7859/75, 0.7751/81 and 0.7705/35.

GBP: The upcoming UK economic calendar is somewhat active, featuring Preliminary GDP data on Friday.  Monday is quiet, so Tuesday starts the week’s highlights off with Public Sector Net Borrowing (9.3B), and Wednesday’s key events include the MPC’s Asset Purchase Facility Votes (0-0-9) and the MPC’s Official Bank Rate Votes (2-0-7).  Thursday then features Retail Sales (-0.1%), BBA Mortgage Approvals (41.5K) and CBI Industrial Order Expectations (-3), while Friday’s important data then concludes the week with Prelim GDP (0.7%). Resistance to the topside for GBP/USD shows at 1.6204/26, 1.6161 and 1.6125, while support for the pair is expected at 1.6008, 1.5948/61 and 1.5874/1.5927.

EUR: The upcoming Eurozone economic calendar is moderately active, featuring PMI data on Thursday.  Monday starts the week’s highlights off with the German Buba Monthly Report, but Tuesday and Wednesday are quiet. Thursday’s key events then include French Flash Manufacturing PMI (48.6), French Flash Services PMI (48.2), the Spanish Unemployment Rate (24.1%), German Flash Manufacturing PMI (49.6), German Flash Services PMI (55.0), EZ Flash Manufacturing PMI (50.0), EZ Flash Services PMI (52.0), and the first day of the EU Economic Summit.  Friday’s important data then concludes the week with the GfK German Consumer Climate survey (8.1) and the second day of the EU Economic Summit. Resistance for EUR/USD is seen at 1.2791, 1.2815, 1.2886/1.2900, with support showing at 1.2715, 1.2661/63 and 1.2624/25.

JPY: The upcoming Japanese economic calendar is quiet this week, only featuring the Trade Balance (-0.91T) on Wednesday. Resistance for USD/JPY currently shows up at 108.53/98 and 108.00/24 and 107.39/49, with support indicated at 106.80, 105.70 and 105.19.

CAD: The upcoming Canadian economic calendar is rather busy, featuring the BOC Rate Decision on Wednesday.  Monday starts the week’s highlights off with Wholesale Sales (0.2%), and Tuesday is quiet. Wednesday’s key events then include Core Retail Sales (0.3%), Retail Sales (0.2%), the BOC’s Monetary Policy Report, the BOC Rate Statement, the BOC’s Overnight Rate Decision (unchanged at 1.00%), and the BOC Press Conference.  That concludes the week’s important data, since Thursday and Friday offer nothing notable. Resistance for USD/CAD is seen at 1.1716, 1.1360/84 and 1.1269/77, while support shows at 1.1210/29, 1.1158/94 and 1.1070/97.

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