AUD Weekly Market Watch 2/3/2015

Last Week recap

EUR/USD Lost ground last week as Greece secured a four month extension to its bailout loan and Janet Yellen gave a balanced testimony before the Senate Banking Committee. The week began with the rate declining after making its weekly high of 1.1392 on Monday after German Ifo Business Climate printed at 106.8 compared to an expected reading of 107.4. Also out on Monday was U.S. Existing Home Sales which declined to an annualized 4.82M versus 5.03M expected. The pair then consolidated at a slightly lower level on Tuesday as Janet Yellen gave testimony in the U.S. Senate, stating that, “The FOMC's assessment that it can be patient in beginning to normalize policy means that the Committee considers it unlikely that economic conditions will warrant an increase in the target range for the federal funds rate for at least the next couple of FOMC meetings. If economic conditions continue to improve, as the Committee anticipates, the Committee will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis.” Economic data on Tuesday had EZ Final CPI decline -0.6% y/y as was widely anticipated, and U.S. CB Consumer Confidence, which printed at 96.4 versus 99.6 expected. On Wednesday, the rate increased a fraction after the second day of Fed Chair Janet Yellen’s testimony and after the ECB’s Draghi reiterated the central bank’s QE program, saying, “Under the programme the Eurosystem will continue its purchases of simple and transparent asset-backed securities and of covered bonds. In addition, we will start purchasing on the secondary market investment-grade securities issued by euro area governments, public agencies and European institutions. The purchases will start in March. The combined purchases of public and private sector securities will amount to €60 billion per month.” Economic data on Wednesday had U.S. New Home Sales at +481K versus +471K expected. The pair then declined sharply on Thursday after U.S. Core CPI increased +0.2% m/m versus +0.1% expected while the headline number declined -0.7% m/m compared to an expected decline of -0.6%, and U.S. Core Durable Goods Orders, which increased +0.3% m/m compared to +0.6% expected. Also out was German Unemployment Change, which saw a decline of -20K compared to an expected -10K. The rate then gained a fraction on Friday after German Preliminary CPI rose to +0.9% m/m compared to an expected increase of +0.6%, while U.S. Preliminary GDP increased +2.2% q/q versus the +2.1% result expected. EUR/USD went on to close the week at 1.1194, with an overall loss of -1.7% from its previous weekly close.

USD/JPY Extended its previous week’s gains last week as the BOJ reiterated its stimulus measures and with mixed economic numbers out of Japan. The week began on a soft note, with the rate declining on Monday after the BOJ’s Monetary Policy Meeting Minutes for its most recent meeting stated, “In the government's economic outlook for fiscal 2015, approved by the Cabinet on January 12, 2015, the government projected that the economy would recover, supported by firm private demand, amid further developments in the virtuous cycle of the economy, brought about mainly by pursuing various policies and through government - labor - management initiatives. Based on this, the government projected that the real and nominal GDP growth rates for fiscal 2015 would be around 1.5 percent and around 2.7 percent, respectively.” The rate then made its weekly high of 119.83 on Tuesday after Fed Chair Janet Yellen began giving testimony in the U.S. Senate. The pair then declined on Wednesday, making its weekly low of 118.62 as Yellen’s second day of testimony was interpreted as dovish and despite positive U.S. New Home Sales data. The pair then picked up steam on Thursday after Japanese Household Spending declined -5.1% y/y versus -4.0% expected, while Japanese Retail Sales fell -2.0% y/y versus -1.2% anticipated and Tokyo Core CPI, which came in as expected at +2.2%. Also out, Japanese Preliminary Industrial Production, which increased by +4.0% m/m compared to an expected increase of +2.9%. On Friday, the rate continued gaining after a better than expected U.S. Preliminary GDP number. USD/JPY closed at 119.56, with an overall gain of +0.5% for the week.

GBP/USD Gained last week as Fed Chair Yellen gave a mostly balanced testimony in the U.S. Senate and with both countries reporting mixed economic data. The week began with Cable making its weekly low of 1.5332 on Monday after UK CBI Realized Sales printed at 1, significantly lower than the expected print of 42. The rate then consolidated at a slightly higher level on Tuesday after a lower than expected U.S. CB Consumer Confidence number. On Wednesday, Cable rallied after UK BBA Mortgage Approvals came out at 36.4, just slightly better than the 36.2 print that was expected. The pair then dropped sharply on Thursday after making its weekly high of 1.5551 after UK Second Estimate GDP increased +0.5% q/q as widely anticipated, while UK Preliminary Business Investment declined -1.4% q/q, notably lower than the expected increase of +2.0% that was expected. Cable then recovered somewhat on Friday after mixed economic data out of the United States. GBP/USD went on to close at 1.5431, with an overall weekly gain of +0.3%.

AUD/USD Lost a fraction last week as both countries reported mixed economic data and ahead of this week’s RBA rate decision. The week began with the pair losing ground on Monday despite a lower than expected U.S. Existing Home Sales number. The pair then gained after making its weekly low of 0.7738 on Tuesday as Janet Yellen began testifying before the U.S. Senate. On Wednesday, the rate continued gaining after Australian Construction Work Done declined -0.2% q/q versus an expected drop of -1.2%, while the Australian Wage Price Index increased +0.6% q/q as widely anticipated. The pair then declined on Thursday after making its weekly high of 0.7912 as Australian Private Capital Expenditure declined -2.2% q/q versus the -1.7% expected. Friday saw the rate gain a fraction after mixed economic data out of the United States. AUD/USD went on to close at 0.7807, with an overall loss of -0.4% for the week.

USD/CAD Lost a fraction last week as Canada reported better than expected economic numbers and with mixed data out of the United States. The week began with the rate gaining on Monday despite a lower than expected U.S. housing number. The pair then declined on Tuesday after making its weekly high of 1.2662 as BOC Governor Poloz said in a speech that, “The experience of the past decade makes a pretty strong case that central banking needs to be reinvented. Keeping inflation on track certainly was not sufficient to keep us out of trouble. Some would even argue that the tranquility fostered by successful inflation targeting helped to spawn the crisis by leading investors and financial intermediaries to take excessive risks. At the very least, it seems to me that we need to take account of a wider range of economic and financial consequences while targeting low inflation.” The pair extended its losses on Wednesday after Fed Chair Janet Yellen’s second day of testimony in the U.S. Senate. On Thursday, the rate made its weekly low of 1.2386 after Canadian CPI declined -0.2% mm compared to an expected decline of -0.4%, while Core CPI gained +0.2% versus +0.1% expected. Nevertheless, the pair declined after a positive U.S. Core CPI number. The rate then consolidated at a slightly lower level on Friday after mixed U.S. economic numbers. USD/CAD went on to close at 1.2503, with a decline of -0.2% from its previous weekly close.

NZD/USD Extended its previous week’s gains last week as New Zealand reported mostly better than expected economic numbers and with mixed data out of the United States. The rate began the week on a quiet note, consolidating at a slightly lower level on Monday despite a negative U.S. Existing Home Sales number. The pair then made its weekly low of 0.7519 on Tuesday after New Zealand Inflation Expectations increased +1.8% q/q compared to a previous reading of +2.1%. The rate then gained sharply on Wednesday after the New Zealand Trade Balance showed a surplus of +56M, significantly better than the expected deficit of -162M that was expected. The pair then lost ground on Thursday after making its weekly high of 0.7612 as the New Zealand ANZ Business Confidence index printed at 34.4 versus a previous reading of 30.4. NZD/USD closed at 0.7561, with an overall weekly gain of +0.5%.

The Week Ahead

USD: The U.S. economic calendar is busy this coming week, featuring key jobs data on Wednesday and Friday. Monday starts the week’s highlights off with the Core PCE Price Index (0.1%), Personal Spending (0.0%), and ISM Manufacturing PMI (53.4), and Tuesday offers nothing of note. Wednesday’s key events then include a speech by Fed Chair Yellen, the ADP Non-Farm Employment Change (219K), a speech by FOMC Member Evans, ISM Non-Manufacturing PMI (56.5), and Crude Oil Inventories (last 8.4M). Thursday then offers Weekly Initial Jobless Claims (319K), Revised Non-farm Productivity (-2.2%), a speech by FOMC Member Williams and Factory Orders (0.1%). Friday’s important data then concludes the week with Non-Farm Payrolls (241K), the Trade Balance (-41.6B), the Unemployment Rate (5.6%) and Average Hourly Earnings (0.2%).

AUD: The Australian economic calendar is rather active this coming week, featuring the RBA’s Cash Rate Decision on Tuesday. Monday starts the week’s highlights off with Company Operating Profits (0.7%), and Tuesday’s key events include Building Approvals (-1.8%), the Current Account (-10.9B), the RBA’s Cash Rate Decision (a 25 bp drop to 2.00% from 2.25% expected), and the RBA Rate Statement. Wednesday then offers GDP (0.7%), while Thursday features Retail Sales (0.4%), the Trade Balance (-0.93B), and a speech by RBA Deputy Governor Lowe. That concludes the week’s key events since Friday offers nothing noteworthy. Resistance for AUD/USD is seen at 0.7840/0.7912, 0.8024/67 and 0.8105, with support noted at 0.7738/56, 0.7684/0.7719 and 0.7625/43.

NZD: The New Zealand economic calendar is quiet this coming week, only featuring the Overseas Trade Index (-1.9%) on Sunday and the tentatively scheduled GDT Price Index (last 10.1%) on Tuesday. The chart for NZD/USD shows resistance at 0.7712, 0.7607/59, and 0.7572. On the downside, technical support is expected at 0.7484/92, 0.7323/0.7430 and 0.7174/0.7213.

GBP: The UK economic calendar is quite active this coming week, featuring the BOE’s Official Bank Rate Decision on Thursday. Monday starts the week’s highlights off with the Nationwide HPI (0.4%), Manufacturing PMI (53.5), and Net Lending to Individuals (2.7B), while Tuesday’s key events include Construction PMI (59.0), and a speech by BOE Governor Carney. Wednesday then offers the Halifax HPI (4th-9th, (0.6%) and Services PMI (57.6), while Thursday features the BOE’s Official Bank Rate Decision (unchanged at (0.50%), the Asset Purchase Facility (unchanged at 375B) and the tentatively scheduled MPC Rate Statement. That concludes the week’s key events since Friday offers nothing of note. Resistance to the topside for GBP/USD shows at 1.5422, 1.5479/85 and 1.5540/51, while support for the pair is expected at 1.5315/93, 1.5222 and 1.5033/1.5101.

EUR: The Eurozone economic calendar is busy this coming week, featuring the ECB’s Minimum Bid Rate Decision on Thursday. Monday starts the week’s highlights off with Spanish Manufacturing PMI (55.2), Italian Manufacturing PMI (50.2), EZ CPI Flash Estimate (-0.5%), Core CPI Flash Estimate (0.6%) and the EZ Unemployment Rate (11.4%), and Tuesday’s key events include German Retail Sales (0.5%) and the Spanish Unemployment Change (10.5K). Wednesday then offers Spanish Services PMI (56.9), Italian Services PMI (51.8) and EZ Retail Sales (0.2%), while Thursday features German Factory Orders (-0.8%), the Minimum Bid Rate (0.05%), and the ECB’s Press Conference. That concludes the week’s important events since Friday offers nothing noteworthy. Resistance for EUR/USD is seen at 1.1422/59, 1.1359/75 and 1.1261/97, with support showing at 1.1159, 1.1097/1.1114 and 1.0762/86.

JPY: The Japanese economic calendar is quiet this coming week, only featuring Average Cash Earnings data (0.6%) on Tuesday. Resistance for USD/JPY currently shows up at 119.21, and 120.47/82 and 121.84, with support indicated at 119.62, 118.29/119.20 and 117.17/118.04.

CAD: The Canadian economic calendar is unusually busy this coming week, featuring the BOC’s Overnight Rate Decision on Wednesday. Monday starts the week’s highlights off with the Current Account (-7.4B), and Tuesday’s key events include GDP (0.1%) and RMPI (-6.8%). Wednesday then offers the BOC Rate Statement and the BOC’s Overnight Rate Decision (unchanged at 0.75%), while Thursday features Ivey PMI (46.2). Friday’s important data then concludes the week with Building Permits (5.5%), the Trade Balance (0.3B), and Labor Productivity (0.2%). Resistance for USD/CAD is seen at 1.2662/76, 1.2591 and 1.2563, while support shows at 1.2456, 1.2421 and 1.2351/86.