AUD Weekly Market Watch 07/07/2014

Last week recap

EUR/USD Gained fractionally last week, despite worries about a major Portuguese lender and after the FOMC Meeting Minutes reiterated the Fed’s loose monetary policy. The week began with the rate making its weekly low of 1.3575 on Monday after German Industrial Production declined -1.8% m/m, versus an expected increase of +0.3%, while the EZ Sentix Investor Confidence index came out with a reading of +10.1, versus +7.5 expected. The pair continued marginally higher on Tuesday after the German Trade Balance showed a surplus of +18.8B, versus +15.7B expected, while U.S. JOLTS Job Openings came out at 4.64M, versus 4.53M expected. On Wednesday, the rate traded higher after the FOMC Meeting Minutes reiterated that, “When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run." The pair then made its weekly high of 1.3650 before dropping sharply on Thursday due to a surge in risk appetite after news that a Portuguese financial institution, Espiritu Santo International had delayed coupon payments related to some short-term debt instruments. The rate then consolidated at a slightly lower level on Friday in the absence of any significant data out of either country. EUR/USD went on to close at 1.3603, showing an increase of only 9 pips and virtually unchanged on the week. 

USD/JPY Lost ground last week as risk appetite favoured the Yen after news of the financial trouble in Portugal and with Japan reporting mixed economic data. The week began on a soft note, with the pair declining after making its weekly high of 102.19 on Monday after the Japanese Current Account showed a surplus of +0.38T, versus +0.17T expected. The rate continued selling off on Tuesday despite a better than expected U.S. JOLTS Job Openings number. On Wednesday, the pair gained fractionally after the FOMC Meeting Minutes supported the U.S. Dollar and after Japanese Core Machinery Orders declined -19.5% m/m, significantly worse than the +0.9% increase that was expected. Also out was Japanese Tertiary Industry Activity, which showed an increase of +0.9%, versus +1.9% expected. The pair then made its weekly low of 101.06 on Thursday after news of the Portuguese Espiritu Santo bank missing some debt payments drove the Yen higher on risk concerns. The rate then consolidated at a slightly lower level on Friday in the absence of any significant data out of either country. USD/JPY went on to close at 101.20, showing an overall loss of -0.8% for the week. 

GBP/USD Reversed direction last week, falling marginally after the BOE left rates and the Asset Purchase Facility unchanged and with lower than expected economic data out of the UK. The week began on a soft note, with Cable losing ground in the absence of any significant data out of either country. The pair extended its losses on Tuesday, making its weekly low of 1.7084 after UK Manufacturing Production declined -1.3% m/m, versus an expected increase of +0.4%, also, UK NIESR GDP Estimate came out a +0.9%, versus a previous reading of +0.7% downwardly revised from +0.9%. Cable then gained on Wednesday as the FOMC Meeting Minutes indicated continued lower U.S. rates and despite UK Halifax HPI declining -0.6%, versus -0.3% expected. The rate then made its weekly high of 1.7167 on Thursday as the BOE left the benchmark Official Bank Rate and the Asset Purchase Facility unchanged at 0.50% and 375B respectively. Cable then resumed its downtrend after the UK Trade Balance came out showing a deficit of -9.2B, versus -9.0B expected. Cable continued lower on Friday in the absence of any economic numbers out of either country bringing GBP/USD to close at 1.7101, with an overall loss of -0.3% from its previous weekly close. 

AUD/USD Gained fractionally last week as Australia posted mostly better than expected economic data and the FOMC reiterated their stance on low rates. The week began with the pair gaining after making its weekly low of 0.9340 on Monday after Australian ANZ Job Advertisements increased +4.3% m/m, versus a previous reading of -5.7%. The rate continued gaining on Tuesday after Australian Westpac Consumer Sentiment came out with a reading of +1.9%, versus a previous +0.2% print. On Wednesday, the pair extended its gains after Australian Employment Change increased by +15.9K, versus +12.3K expected, nevertheless, the Australian Unemployment Rate increased to 6.0% from 5.9%. The rate then made its weekly high of 0.9455 on Thursday before selling off as risk appetite surged after news of the troubled Portuguese bank and despite Australian Home Loans showing a flat reading, versus an expected decline of -0.6%. The pair then consolidated at a slightly higher level on Friday in the absence of any significant data out of either country. AUD/USD went on to close the week at 0.9390, showing an overall weekly gain of +0.3%. 

USD/CAD Gained ground last week as asset flows favoured the Greenback over the Loonie and as Canada reported mostly lower than expected economic numbers. The week began on a positive note, with the pair gaining on Monday after Canadian Ivey PMI came out with a reading of 46.9, significantly lower than the 51.3 print that was expected. Nevertheless, Canadian Building Permits increased by +13.8%, versus +3.1% expected, which limited the gain on the rate. Tuesday saw the pair consolidate at a slightly lower level despite a better than expected U.S. JOLTS Job Openings number. On Wednesday, the pair continued lower after Canadian Housing Starts increased to +198K, versus +191K expected and the FOMC released their Meeting Minutes. The pair then consolidated slightly lower despite Canadian NHPI increasing +0.1% m/m, versus +0.3% expected. The rate then made both its weekly low of 1.0629 and its weekly high of 1.0736 on Friday after Canadian Employment Change showed a decline of -9.4K, significantly lower than the increase of +20.7K that was expected, also, the Canadian Unemployment Rate rose to 7.1% from 7.0% further supporting the rate. USD/CAD went on to close at 1.0733, showing an overall increase of +0.8% for the week. 

NZD/USD Gained ground last week as asset flows favoured the Kiwi over the Greenback and with very little economic data out of New Zealand. The week began with the pair consolidating at a slightly higher level on Monday, after making its weekly low of 0.8712 as New Zealand NZIER Business Confidence came out with a reading of 32, versus a previous 52 print. The pair continued higher on Tuesday despite a better than expected U.S. JOLTS Job Openings number. On Wednesday, the rate kept rallying after the New Zealand Business NZ Manufacturing Index printed 53.3, versus a previous reading of 52.6. The pair then made its weekly high of 0.8834 on Thursday before consolidating at a slightly lower level despite a better than expected U.S. Initial Jobless Claims number. The rate then dropped fractionally on Friday in the absence of any significant data, bringing NZD/USD to close at 0.8808, with an overall gain of +0.9% from its previous weekly close. 

The Week Ahead

USD: The upcoming U.S. economic calendar is busier than last week, featuring Retail Sales data on Tuesday.  Monday is quiet, so Tuesday starts the week’s highlights off with Core Retail Sales (0.5%), Retail Sales (0.6%), the Empire State Manufacturing Index (17.2), Import Prices (0.5%), testimony by Fed Chair Yellen and Business Inventories (0.6%).  Wednesday’s key events then include PPI (0.2%), Core PPI (0.2%), TIC Long-Term Purchases (27.4B), the Capacity Utilization Rate (79.4%), Industrial Production (0.4%), more testimony by Fed Chair Yellen, the NAHB Housing Market Index (51), Crude Oil Inventories (last -2.4M), a speech by FOMC Member Fisher and the Fed’s Beige Book.  Thursday then features Building Permits (1.04M), Weekly Initial Jobless Claims (310K), Housing Starts (1.02M), and the Philly Fed Manufacturing Index (15.6). Friday’s important data then concludes the week with the Preliminary University of Michigan Consumer Sentiment survey (83.5).

AUD: The upcoming Australian economic calendar is a bit less active than last week, featuring the RBA’s Monetary Policy Meeting Minutes on Tuesday. Monday is quiet, so Tuesday starts the week’s highlights off with the RBA’s Monetary Policy Meeting Minutes and New Motor Vehicle Sales (0.3%).  Wednesday is quiet, while Thursday’s key events then include the CB Leading Index (-0.1%), the NAB Quarterly Business Confidence survey (6) and a speech by RBA Assistant Governor Edey.  That concludes the week’s important data since Friday offers nothing significant. Resistance for AUD/USD is seen at 0.9386/0.9460, 0.9504 and 0.9757, with support noted at 0.9321/0.9360, 0.9200/53 and 0.9112/37.

NZD: The upcoming New Zealand economic calendar is even quieter than last week, only featuring CPI data (0.4%) on Wednesday. The chart for NZD/USD shows resistance at 0.8834 and 0.8840.  On the downside, technical support is expected at 0.8777/92, 0.8640/0.8734 and 0.8536/0.8602.

GBP: The upcoming UK economic calendar is about as active as last week, featuring Claimant Count Change data on Wednesday.  Monday is quiet, so Tuesday starts the week’s highlights off with the BRC Retail Sales Monitor (0.5%), CPI (1.6%), PPI Input (0.2%), RPI (2.5%) and a speech by BOE Governor Carney.  Wednesday’s key events then include the Claimant Count Change (-27.1K), the Unemployment Rate (6.5%) and the Average Earnings Index (0.5%).  That concludes the week’s important data since Thursday and Friday offer nothing notable. Resistance to the topside for GBP/USD shows at 1.7167/78 and 1.7443, while support for the pair is expected at 1.7051/84, 1.6991/95 and 1.6902/51.

EUR: The upcoming Eurozone economic calendar is a bit busier than last week, featuring the German ZEW Economic Sentiment survey on Tuesday.  Monday is a French Bank Holiday, and starts the week’s highlights off with EZ Industrial Production (0.3%) and a speech by ECB President Draghi. Tuesday’s key events include the German ZEW Economic Sentiment survey (28.9) and the EZ ZEW Economic Sentiment survey (62.3).  Wednesday then features the tentatively scheduled German 10-year Bond Auction (last average yield 1.39 percent, with a 1.2 bid-to-cover ratio), while Thursday offers EZ CPI (0.5%) and Core CPI (0.8%). That concludes the week’s important data since Friday is quiet. Resistance for EUR/USD is seen at 1.3633/1.3700 and 1.3732/1.3854, with support showing at 1.3561/88 and 1.3476/1.3512.

JPY: The upcoming Japanese economic calendar is as quiet as last week, only featuring the tentatively scheduled BOJ Rate Decision, Monetary Policy Statement and BOJ Press Conference on Wednesday, and the BOJ’s Monetary Policy Meeting Minutes on Friday. Resistance for USD/JPY currently shows up at 101.59, 102.12/103.01 and 103.75/104.12, with support indicated at 100.00/101.43 and 96.56.

CAD: The upcoming Canadian economic calendar is about as busy as last week, featuring the BOC’s Overnight Rate Decision on Wednesday.  Monday and Tuesday are quiet, so Wednesday starts the week’s highlights off with Manufacturing Sales (1.3%), the BOC Monetary Policy Report, the BOC Rate Statement, the BOC Overnight Rate Decision (unchanged at 1.00%), and the BOC Press Conference. Thursday’s key events then include Foreign Securities Purchases (14.23B), while Friday’s important data concludes the week with Core CPI (-0.1%), Wholesale Sales (0.7%) and CPI (0.1%). Resistance for USD/CAD is seen at 1.0736/50 and 1.0813/1.0959, while support shows at 1.0656/79, 1.0625/29 and 1.0559.