AUD Weekly Market Watch 01/09/2014

Last Week recap

EUR/USD Extended its losses last week as asset flows favoured the Greenback over the Euro and with both economies reporting mixed numbers. The week began with the pair consolidating at a slightly lower level on Monday in the wake of the Jackson Hole Economic symposium where ECB President Draghi stated that, “it would be helpful for the overall stance of policy if fiscal policy could play a greater role alongside monetary policy, and I believe there is scope for this, while taking into account our specific initial conditions and legal constraints.” The comments were interpreted by the market as dovish and implied the possibility of the central bank beginning a program of QE sooner than later. Monday’s economic numbers had German Ifo Business Climate printing at 106.3 versus an expected reading of 107.1, and U.S. New Home Sales dropping to 412K versus a consensus of 426K. The rate continued lower on Tuesday after U.S. Durable Goods Orders increased +22.6% m/m, significantly higher than the expected +7.8% print. The reading was due in large part to an increase in aircraft orders in July. Core Durable Goods Orders declined by -0.8% however, versus an expected increase of +0.5%. Also out was U.S. CB Consumer Confidence, printing at 92.4 versus 89.1 expected. On Wednesday, the pair recovered some of its losses despite GfK German Consumer Climate printing at 8.6 versus 8.9 anticipated and after comments from German Finance Minister Schauble, in which he stated that the market had “overinterpreted” Draghi’s comments at Jackson Hole. The rate then resumed its downtrend on Thursday after making its weekly high of 1.3220 as GfK German Preliminary CPI came out with a flat reading, while Spanish Flash CPI declined -0.5% y/y versus -0.2% expected; also out was German Unemployment Change, showing an increase of +2K versus an expected decline of -6K, and EZ Private Loans, dropping -1.6% y/y versus an expected decline of -1.5%. Thursday’s U.S. numbers had Preliminary GDP increase +4.2% q/q versus +3.9% expected and Pending Home Sales, showing an increase of +3.3%, significantly higher than the anticipated rise of +0.6%. The pair then made its weekly low of 1.3133 on Friday after German Retail Sales declined -1.4% m/m, significantly lower than the increase of +0.1% that was anticipated, and EZ CPI Flash Estimate, increasing to +0.9% y/y versus +0.8% expected. Friday’s U.S. data had Chicago PMI increase to 64.3 versus the consensus of a 56.8 print, and the Revised UoM Consumer Sentiment index, which came out with a reading of 82.5 versus 80.2 expected. EUR/USD went on to close at 1.3135, showing an overall loss of -0.8% for the week. 

USD/JPY Closed relatively unchanged last week as both countries reported mixed economic numbers. The week began with the pair declining after making its weekly high of 104.26 on Monday as the United States reported a lower than expected New Home Sales number. The rate then consolidated at a slightly higher level on Tuesday after mixed U.S. Durable Goods Orders numbers. On Wednesday, the rate continued heading south after U.S. Crude Oil Inventories came in at a deficit of -2.1M versus an expected surplus of +1.1M. The pair made its weekly low of 103.54 on Thursday despite better than expected U.S. GDP and Pending Home Sales data. The rate then gained ground on Friday after Japanese Household Spending declined -5.9% y/y versus -2.7% expected, while Tokyo Yearly CPI came out in line with expectations at +2.7%. Also out were Japanese Retail Sales, increasing +0.5% y/y versus an expected decline of -0.1% and Japanese Preliminary Industrial Production, increasing +0.2%, notably lower than the consensus of a +1.2% increase. USD/JPY went on to close at 104.04, an increase of 12 pips or +0.1% and virtually unchanged on the week.

GBP/USD Reversed direction, gaining fractionally last week as both countries reported mixed economic data. The week began with Cable gaining on Monday after the United States reported a lower than expected New Home Sales number. The pair then lost ground on Tuesday after UK BBA Mortgage Approvals dropped to 42.8K versus an expected 44.2K. Cable made its weekly low of 1.6536 on Wednesday before rallying after a lower than expected U.S. Crude Oil Inventories number. On Thursday, the rate made its weekly high of 1.6613 after UK CBI Realized Sales came out with a reading of 37 versus an expected print of 27 and despite higher than expected U.S. GDP and Pending Home Sales numbers. Cable then traded higher on Friday after UK Nationwide HPI increased +0.8% m/m, versus a consensus of a +0.1% increase, which brought GBP/USD to close at 1.6595, with an overall gain of +0.2% from its previous weekly close.

AUD/USD Gained fractionally last week as asset flows favoured the Aussie over the Greenback and with very little economic data out of Australia. The week began with the pair gaining on Monday after a lower than expected U.S. New Home Sales number. The rate then made its weekly low of 0.9271  before rallying despite a better than expected U.S. CB Consumer Climate number and mixed Durable Goods Orders data. On Wednesday, the pair continued higher despite Australian Construction Work Done showing a decline of -1.2% q/q versus an expected drop of -0.4%. The rate then made its weekly high of 0.9373 on Thursday after Australian Private Capital Expenditure increased +1.1% q/q, significantly higher than the decline of -0.6% that was expected. The pair declined on Friday as traders squared positions and after mixed economic data out of the United States, which brought AUD/USD to close at 0.9332, showing an overall weekly gain of +0.2%. 

USD/CAD Lost ground last week as asset flows favoured the Loonie over the Greenback and with mixed economic data out of both countries. The week began on a positive note, with the pair gaining ground on Monday despite a lower than expected U.S. housing number. The rate then made its weekly high of 1.0996 on Tuesday before selling off after mixed U.S. Durable Goods Orders data and a positive U.S. CB Consumer Confidence number. On Wednesday, the pair declined sharply as risk appetite favoured the Loonie over the Greenback and after U.S. Crude Oil Inventories showed a deficit. The rate consolidated at a slightly lower level on Thursday despite the Canadian Current Account showing a deficit of -11.9B versus -11.6B expected. The pair then made its weekly low of 1.0809 on Friday after Canadian GDP showed an increase of +0.3% m/m versus +0.2% anticipated with the previous number upwardly revised from +0.4% to +0.5%. USD/CAD went on to close at 1.0869, showing an overall decline of -0.7% for the week.  

NZD/USD Extended its previous week’s losses last week as New Zealand reported a negative Trade Balance and with mixed numbers out of the United States. The week began with the pair trading lower on Monday after the New Zealand Trade Balance showed a deficit of -692M versus a consensus of a -475M deficit. The rate then made its weekly low of 0.8310 on Tuesday after mixed U.S. economic data. On Wednesday, the pair gained ground as asset flows favoured the commodity currencies over the Greenback. The pair then made its weekly high of 0.8407 on Thursday despite better than expected U.S. GDP and Pending Home Sales numbers and New Zealand Building Consents, showing an increase of +0.1% versus a previous print of +3.5%. The rate then lost ground on Friday after New Zealand ANZ Business Confidence came out with a reading of 24.4 versus a previous print of 39.7, bringing NZD/USD to close at 0.8358, declining -0.5% from its previous weekly close.

The Week Ahead

USD: The upcoming U.S. economic calendar is busier than last week, featuring key jobs data on Wednesday and Friday.  Monday is a Bank Holiday, so Tuesday starts the week’s highlights off with ISM Manufacturing PMI (57.0), Final Manufacturing PMI (58.0) and ISM Manufacturing Prices (59.0). Wednesday’s key events then include Factory Orders (+10.9%) and the Fed’s Beige Book. Thursday then features ADP Non-Farm Employment Change (216K), the U.S. Trade Balance (-42.5B) Initial Jobless Claims (298K) and ISM Non-Manufacturing PMI (57.3), while Friday offers speeches by three FOMC members, Narayana Kocherlakota, Jerome Powell and Richard Fisher, plus U.S. Non-Farm Payrolls (222K) and the U.S. Unemployment Rate (6.1%). Saturday then concludes the week with a speech by FOMC member Charles Plosser.

AUD: The upcoming Australian economic calendar is busier than last week, featuring the RBA’s Cash Rate Decision on Tuesday.  Monday starts the week’s highlights off with the AIG Manufacturing Index (last 50.7), the MI Inflation Gauge (last +0.2%), Company Operating Profits (-1.8%) and Commodity Prices (last -12.1%).  Tuesday’s key events include the RBA’s Cash Rate Decision (unchanged at 2.5%) and the RBA Rate Statement, as well as Building Approvals (+1.7%) and the Current Account (-13.8B).  Wednesday then features GDP (0.4%) and a speech by RBA Governor Stevens, while Thursday offers Retail Sales (+0.4%) and the Australian Trade Balance (-1.77B) to conclude the week’s highlights. Resistance for AUD/USD is seen at 0.9345/0.9373, 0.9401/0.9469 and 0.9504, with support noted at 0.9271/74, 0.9200/53 and 0.9112/37.

NZD: The upcoming New Zealand economic calendar is quieter than last week, only featuring the Overseas Trade Index (-3.5%) on Monday and ANZ Commodity Prices (last -2.4%) on Tuesday. The chart for NZD/USD shows resistance at 0.8390/61, 0.8512/0.8602, and 0.8640/0.8734.  On the downside, technical support is expected at 0.8346, 0.8309 and 0.8240.

GBP: The upcoming UK economic calendar is more active than last week, featuring the BOE’s Official Bank Rate Decision on Thursday.  Monday starts the week’s highlights off with Manufacturing PMI (55.1), Net Lending to Individuals (+2.4B), Mortgage Approvals (+66K) and the UK M4 Money Supply (+0.5%), and Tuesday’s key events include Construction PMI (61.5).  Wednesday then features Services PMI (58.6) and the Halifax HPI (3rd-8th, 0.2%), while Thursday offers the BOE’s Official Bank Rate Decision (unchanged at 0.50%) and its Asset Purchase Facility (unchanged at 375B), as well as the tentatively scheduled MPC Rate Statement. Friday’s important data then concludes the week with Consumer Inflation Expectations (last +2.6%). Resistance to the topside for GBP/USD shows at 1.6612/13, 1.6656/67 and 1.6730/65, while support for the pair is expected at 1.6534, 1.6465 and 1.6251/1.6309.

EUR: The upcoming Eurozone economic calendar is about as active as last week, featuring  the ECB’s Minimum Bid Rate Decision on Thursday.  Monday starts the week’s highlights off with German Final Quarterly GDP (-0.2%), Spanish Manufacturing PMI (53.4), Italian Manufacturing PMI (51.0) and EZ Final Manufacturing PMI (50.8), and Tuesday’s key events include the Spanish Unemployment Change (+25.5K) and EZ PPI (0.0%).  Wednesday then features Spanish Services PMI (55.5), Italian Services PMI (53.5) and Eurozone Retail Sales (-0.3%), while Thursday offers the ECB’s Minimum Bid Rate Decision, the ECB Press Conference and German Factory Orders (+1.6%). Friday’s important data then concludes the week with German Industrial Production (+0.5%) and Eurozone Revised GDP 0.0%). Resistance for EUR/USD is seen at 1.3152, 1.3220/94 and 1.3332/66, with support showing at 1.3130, 1.3104 and 1.3003.

JPY: The upcoming Japanese economic calendar is as quiet as last week, tentatively featuring the BOJ Monetary Policy Statement and Press Conference on Thursday.  The only other notable economic releases are Capital Spending (3.8%) on Monday and Average Cash Earnings (0.9%) on Tuesday. Resistance for USD/JPY currently shows up at 104.12/26, 105.43 and 110.39, with support indicated at 103.55/75, 102.71/103.07 and 101.31/102.12.

CAD: The upcoming Canadian economic calendar is busier than last week, featuring the BOC’s Overnight Rate Decision on Wednesday.  Monday is a Bank Holiday and Tuesday is quiet, so Wednesday starts the week’s highlights off with the BOC’s Overnight Rate Decision (unchanged at 1.0%) decision and the BOC Rate Statement.  Thursday’s key events then include the Canadian Trade Balance (+0.9B), while. Friday’s important data then concludes the week with Canadian Employment Change (+10.3K), the Unemployment Rate (7.0%), Labor Productivity (+0.1%) and Ivey PMI (55.7). Resistance for USD/CAD is seen at 1.0903/27, 1.0943/96 and 1.1052, while support shows at 1.0859, 1.0813/27 and 1.0693/1.0793