Last Week recap
EUR/USD Extended its previous week’s gains last week as the United States reported mixed economic numbers while Eurozone economic data was for the most part better than expected. The week began with the rate gaining ground on Monday after making its weekly low of 1.0766 after ECB President Draghi in a speech stated that, “We expect inflation in the euro area to remain very low or negative in the months ahead, because the recent fall in oil prices will continue to influence the figures until later in the year. However, inflation rates are expected to start increasing gradually towards the end of the year. They will be supported by aggregate demand, by the impact of the lower euro exchange rate and by the recovery of oil prices from their current troughs in the years ahead.” Also on Monday, US Existing Home Sales came out at 4.88M compared to an expected 4.91M. The pair then declined a fraction on Tuesday after French Flash Manufacturing PMI printed at 48.2 versus 48.9 expected, while German Flash Manufacturing PMI came out at 52.4 compared to an expected reading of 51.5. U.S. data had CPI increase +0.2% m/m as widely anticipated with the Core number increasing +0.2% versus +0.1% expected. Also out was U.S. New Home Sales, which increased to an annualized +539K versus +466K expected with the previous number upwardly revised from +481K to +500K. On Wednesday, the rate gained after German Ifo Business Climate printed at 107.9, beating the consensus of 107.4, while U.S. Core Durable Goods Orders surprised the market, showing a decline of -0.4% m/m compared to an expected increase of +0.3% with Durable Goods Orders declining by -1.4% m/m, significantly lower than the +0.3% increase that was expected. The rate then declined on Thursday after making its weekly high of 1.1051 after EZ Private Loans declined -0.1% y/y compared to an expected increase of +0.1%, also out were the M3 Money Supply, which increased +4.0% y/y versus +4.3% expected, and GfK German Consumer Climate, which printed at 10.0 versus 9.8 expected. The pair then consolidated at a slightly higher level on Friday after U.S. Final GDP increased +2.2% q/q compared to an expected increase of +2.4%. EUR/USD went on to close at 1.0888, with an overall gain of +0.6% from its previous weekly close.
USD/JPY Continued selling off last week as asset flows favoured the Yen over the Greenback and with mixed economic numbers out of both countries. The week began with the rate declining on Monday after making its weekly high of 120.16 as the United States reported a lower than expected Existing Home Sales number. The pair then gained a fraction on Tuesday after better than expected U.S. CPI and New Home Sales data. On Wednesday, the rate resumed its selloff after dismal U.S. Durable Goods and Core Durable Goods Orders. The pair then made its weekly low of 118.32 on Thursday after Japanese Household Spending declined -2.9% y/y compared to an expected decline of -3.1%, while Tokyo Core CPI increased +2.2% y/y as was widely anticipated, and Japanese Retail Sales, which fell -1.8% y/y compared to an expected -1.4%. The pair lost another fraction on Friday after a lower than expected U.S. Final GDP number. USD/JPY went on to close at 118.92, with a loss of -0.8% for the week.
GBP/USD Declined last week, in large part due to lower than expected UK consumer inflation data, with both countries reporting mixed economic numbers. Cable began the week on a positive note, gaining a fraction despite UK CBI Industrial Order Expectations printing at 0, significantly lower than the reading of 9 that was expected. The pair then declined sharply on Tuesday after UK CPI came out at 0.0% y/y versus an expected increase of +0.1%, also out was UK RPI, which increased +1.0% y/y compared to +0.9% expected, and PPI Input, which increased only +0.2%, significantly lower than the expected reading of +1.6%. The rate then recovered somewhat on Wednesday after lower than expected U.S. Durable Goods Orders data. The rate then declined on Thursday after making its weekly high of 1.4993 despite UK Retail Sales, which increased +0.7% m/m versus +0.4% expected, while UK CBI Realized Sales, which printed at 18 compared to an expected reading of 16. Cable then gained ground on Friday after making its weekly low of 1.4795 after BOE Governor Carney stated to the press that, “We're still in a position where our message is... that the next move in interest rates is going to be up”. GBP/USD went on to close at 1.4874, with an overall weekly decline of -0.5%.
AUD/USD Lost a fraction last week as the United States reported mixed economic numbers with very little data out of Australia. The week began with the rate gaining ground on Monday after a lower than expected U.S. Existing Home Sales number. The pair then made its weekly high of 0.7937 before selling off on Tuesday after better than expected U.S. CPI and Housing data. On Wednesday, the rate continued its decline after the RBA Financial Stability Review noted that, “Divergent economic and monetary policy outlooks in the major advanced economies have contributed to some sharp adjustments in currency markets as the US dollar has appreciated. The fall in oil prices has added to downward pressure on oil exporters’ currencies and widened yield spreads on bonds issued by oil producers, although it is positive for global growth overall. To date, financial systems have been resilient to this increased volatility.” The pair then consolidated at a slightly lower level on Thursday after a better than expected U.S. Initial Jobless Claims number. Friday saw the rate make its weekly low of 0.7744 despite a lower than expected U.S. Final GDP number. AUD/USD went on to close at 0.7744, with an overall decline of -0.2% from its previous weekly close.
USD/CAD Gained a fraction last week as asset flows favoured the Greenback over the Loonie and with very little economic data out of Canada. The week began with the pair declining on Monday after a lower than expected U.S. Existing Home Sales number. The rate then consolidated at a slightly lower level on Tuesday despite better than expected U.S. CPI and Housing numbers. On Wednesday, the pair gained a fraction despite lower than expected U.S. Durable Goods Orders data. The rate made its weekly low of 1.2409 on Thursday after BOC Governor Poloz said in a speech that, “Eventually, the global headwinds will dissipate and central banks will be able to transition away from unconventional policies and return to more conventional ways of conducting monetary policy. This will mean a return to two-sided risks, where interest rates could rise or fall depending on how economies evolve. During this transition toward normal, more financial volatility is to be expected.” The pair then made its weekly high of 1.2619 on Friday despite a lower than expected U.S. Final GDP number. USD/CAD went on to close at 1.2612, with an overall increase of +0.5% for the week.
NZD/USD Showed little change last week as the United States reported mixed numbers and with very little economic data out of New Zealand. The rate began the week rallying on Monday after a lower than expected U.S. Housing number. The pair then declined on Tuesday after making its weekly high of 0.7695 as the United States reported a better than expected CPI number and the New Zealand Trade Balance came out with a surplus of +50M, significantly lower than the surplus of +375M that was expected. The rate extended its losses on Wednesday despite dismal U.S. Durable Goods Orders data. On Thursday, the pair consolidated after a positive U.S. Initial Jobless Claims number. The rate then made its weekly low of 0.7542 on Friday despite a disappointing U.S. Final GDP number. NZD/USD went on to close at 0.7560, with a loss of only 2 pips and virtually unchanged on the week.
The Week Ahead
USD: The U.S. economic calendar is quite 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 (0.3%) and Pending Home Sales (0.5%). Tuesday’s key events include speeches by FOMC Members Fischer, Lacker and Lockhart, as well as the Chicago PMI (52.5) and CB Consumer Confidence (96.6) surveys. Wednesday then offers the ADP Non-Farm Employment Change (231K), a speech by FOMC Member Williams, ISM Manufacturing PMI (52.5), Crude Oil Inventories (last 8.2M) and a speech by FOMC Member Lockhart. Thursday features the Trade Balance (-41.5B), Weekly Initial Jobless Claims (285K) and Factory Orders (0.0%), while Friday’s important data concludes the week with Non-Farm Payrolls (251K), the Unemployment Rate (5.5%) and Average Hourly Earnings (0.2%).
AUD: The Australian economic calendar is rather quiet this coming week, only featuring Building Approvals (-3.7%) on Wednesday and the Trade Balance (-1.25B) on Thursday. In addition, Thursday is a Bank Holiday, and the Daylight Saving Time Shift occurs on Saturday in Australia. Resistance for AUD/USD is seen at 0.7738/56, 0.7846/75 and 0.7912/37, with support noted at 0.7719/30, 0.7625/43 and 0.7684/0.7705.
NZD: The New Zealand economic calendar is also relatively inactive this coming week, only featuring Building Consents (-3.8%)on Monday, the ANZ Business Confidence survey (last 34.4) on Tuesday and the tentatively scheduled GDT Price Index (last -8.8%) on Wednesday. Also, Thursday is a Bank Holiday and the Daylight Saving Time Shift takes place on Saturday in New Zealand. The chart for NZD/USD shows resistance at 0.7847/88, 0.7679/95 and 0.7572/0.7659. On the downside, technical support is expected at 0.7542, 0.7430/92 and 0.7312.
GBP: The UK economic calendar is quieter than usual this coming week, featuring Current Account data on Tuesday. After the Daylight Saving Time Shift on Sunday, Monday starts the week’s highlights off with Net Lending to Individuals (2.5B). Tuesday’s key events then include the Current Account (-21.2B) and Final GDP (0.5%), while Wednesday offers Manufacturing PMI (54.5). Thursday features the Halifax HPI (2nd-7th, -0.3%) and Construction PMI (60.4), while Friday is a UK Bank Holiday. Resistance to the topside for GBP/USD shows at 1.5222, 1.5033/1.5164 and 1.4950/93, while support for the pair is expected at 1.4795, 1.4698 and 1.4634.
EUR: The Eurozone economic calendar is busy this coming week, featuring CPI data on Monday and Tuesday. After the Daylight Saving Time Shift on Sunday, Monday starts the week’s highlights off with German Preliminary CPI (0.4%) and Spanish Flash CPI (-1.0%). Tuesday’s key events then include German Retail Sales (-0.9%), French Consumer Spending (0.3%), German Unemployment Change (-10K), the EZ CPI Flash Estimate (-0.3%) and EZ Core CPI Flash Estimate (0.6%), and the Unemployment Rate (11.2%). Wednesday then offers Spanish Manufacturing PMI (54.0), Italian Manufacturing PMI (52.3), while Thursday features the ECB’s Monetary Policy Meeting Accounts. Friday is a German Bank Holiday. Resistance for EUR/USD is seen at 1.1097/1.1159, 1.1040/52 and 1.0906, with support showing at 1.0762/1.0800, 1.0608 and 1.0461.
JPY: The Japanese economic calendar is rather peaceful this coming week, featuring Preliminary Industrial Production (-1.8%), Average Cash Earnings (0.7%) on Tuesday, the Tankan Manufacturing Index (14) and the Tankan Non-Manufacturing Index (17) on Wednesday. Resistance for USD/JPY currently shows up at 121.84/122.02, 120.47/121.19 and 119.62, with support indicated at 118.04/119.28, 116.87/92 and 115.56/85.
CAD: The Canadian economic calendar is characteristically quiet this coming week, only featuring RMPI (5.1%) on Monday, GDP (0.2%) on Tuesday and the Trade Balance (-1.8B) on Thursday. In addition, Friday is a Bank Holiday in Canada. Resistance for USD/CAD is seen at 1.2772/1.2822, 1.2662/96 and 1.2619, while support shows at 1.2563/91, 1.2448 and 1.2351/1.2409.
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