AUD Weekly Market Watch 20/4/2015

Last Week recap

EUR/USD Gained ground last week, recovering more than half its previous week’s losses after the ECB left rates unchanged and with mostly lower than expected economic data out of the United States. The week began on a soft note, with the pair making its weekly low of 1.0519 on Monday in the absence of any significant data out of either country. The rate then rallied on Tuesday after U.S. Retail Sales increased +0.9% m/m compared with an expected +1.1% rise, while Core Retail Sales increased +0.4% m/m versus +0.7% expected. Also out were U.S. PPI, which increased +0.2% m/m versus +0.3% anticipated, and U.S. Business Inventories, gaining +0.3% m/m compared to an expected increase of +0.2%. In addition to the weaker than expected U.S. data on Tuesday, the IMF lowered its growth forecast for the United States in both 2015 and 2016. On Wednesday, the pair gained a fraction after the ECB left its benchmark Minimum Bid Rate unchanged at 0.05%. In the press conference after the rate release, ECB President Mario Draghi said that, “As regards non-standard monetary policy measures, on 9 March we started purchasing euro-denominated public sector securities as part of our expanded asset purchase programme, which also comprises purchases of asset-backed securities and covered bonds. Purchases are intended to run until the end of September 2016 and, in any case, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term.” Wednesday’s economic data had U.S. Capacity Utilization decline to 78.4% from 79.0% and versus 78.7% expected, while Industrial Production declined -0.6% m/m compared to -0.3% anticipated, and the Empire State Manufacturing Index, which printed at -1.2, significantly lower than the expected reading of +7.2. The rate continued gaining on Thursday after U.S. Building Permits printed at 1.04M versus 1.08M expected, and Housing Starts, which showed an annualized 0.93M compared to 1.05M expected. Friday saw the pair make its weekly high of 1.0848 after EZ CPI declined -0.1% y/y as widely anticipated, while U.S. CPI and Core CPI both came out in line with expectations of +0.2% each. Also out on Friday was the Preliminary UoM Consumer Sentiment index, which printed at 95.9 compared to 93.8 anticipated. EUR/USD went on to close at 1.0803, with an overall gain of +1.9% for the week.  

USD/JPY Sold off last week as the BOJ left monetary policy unchanged and the United States reported weaker than expected economic numbers. The week began on a soft note, with the rate declining after making its weekly high of 120.84 on Monday as Japanese Core Machinery Orders declined -0.4% m/m, significantly better than the expected decline of -2.6%. Also, the BOJ’s Monetary Policy Meeting Minutes showed the central bank left monetary policy and stimulus measures unchanged, stating that, “With regard to the outlook, excluding the direct effects of the consumption tax hike, producer prices are expected to decline at a reduced pace for the time being, reflecting movements in international commodity prices, and the year-on-year rate of increase in consumer prices is likely to be about 0 percent for the time being, due to the effects of the decline in energy prices. Financial conditions are accommodative.” The rate continued declining on Tuesday after lower than expected U.S. Retail Sales data. On Wednesday, the pair continued heading south after lower than expected U.S. Capacity Utilization and Industrial Production numbers. The rate continued its decline on Thursday after lower than expected U.S. housing data. The pair then made its weekly low of 118.56 despite a better than expected U.S. consumer sentiment number and CPI, which was in line with expectations. USD/JPY closed at 118.84, with an overall loss of -1.1% from its previous weekly close. 

GBP/USD Rallied last week as the United States posted weak economic data, with mixed numbers out of the UK. The week began with Cable gaining after making its weekly low of 1.4565 on Monday in the absence of any significant data out of either country. The rate continued gaining on Tuesday after UK yearly CPI showed a flat reading as was widely expected. Also, UK PPI Input increased +0.3% m/m, significantly higher than the expected decline of -0.5%, while UK RPI increased +0.9% y/y compared with an expected increase of +1.0%. The pair extended its gains on Wednesday after weaker than expected U.S. Industrial Production and Capacity Utilization data. On Thursday, Cable continued rallying after lower than expected U.S. manufacturing and housing numbers. The rate then made its weekly high of 1.5053 on Friday despite UK Claimant Count Change showing a decline of -20.7K versus -29.1K expected with the previous number downwardly revised from -31.0K to -29.1K. Also, the UK Average Earnings Index declined to 1.7% from a previous upwardly revised 1.9% versus expectations of 1.8%. GBP/USD went on to close at 1.4958, with a weekly gain of +2.2%.   

AUD/USD Extended its gains last week as Australia reported better than expected employment data and with lower than expected numbers out of the United States. The week began with the rate selling off on Monday, making its weekly low of 0.7551 after the Chinese Trade Balance showed a surplus of only +3.1B, significantly lower than the +43.4B that was expected, China is one of Australia’s most important trading partners. The rate then recovered some of its losses on Tuesday after Australian NAB Business Confidence printed at 3 versus a previous reading of 0. The pair continued gaining on Wednesday despite Australian Westpac Consumer Sentiment, which declined -3.2% compared to a previous reading of -1.2%. The rate extended its rally on Thursday after Australian Employment Change showed +37.7K new jobs in March, significantly higher than the expected +14.9K, with the previous number significantly revised upward from +15.6K to +42.0K. Also, the Australian Unemployment Rate declined to 6.1% from 6.3% downwardly revised to 6.2%. The pair declined on Friday after making its weekly high of 0.7841 as traders squared positions. AUD/USD closed at 0.7774, with an overall weekly gain of +1.2%.

USD/CAD Gave back its previous week’s gains last week, selling off as the BOC left rates unchanged and Canada reported mostly better than expected economic data. The rate started the week making its weekly high of 1.2645 on Monday in the absence of any significant data out of either country. The pair then declined on Tuesday after the United States reported lower than expected Retail Sales data. On Wednesday, the rate dropped sharply after the BOC left its benchmark Overnight Rate unchanged at 0.75%. The central bank’s Rate Statement noted that, “As the economy reaches and remains at full capacity around the end of 2016, both total and core inflation are projected to be close to 2 per cent on a sustained basis. Risks to the outlook for inflation are now roughly balanced and risks to financial stability appear to be evolving as expected. The Bank judges that the current degree of monetary policy stimulus remains appropriate and therefore is maintaining the target for the overnight rate at 3/4 per cent.” Also out on Wednesday was Canadian Manufacturing Sales, which declined -1.7% m/m, significantly lower than the expected increase of +0.2% with the previous number downwardly revised from -1.7% to -3.0%. The rate continued selling off on Thursday after lower than expected U.S. housing data. The pair then made its weekly low of 1.2087 on Friday after Canadian Core Retail Sales increased +2.0% m/m compared to an expected +0.7% with Retail Sales increasing +1.7% m/m versus +0.5% expected. Also Canadian Core CPI increased +0.6% m/m versus +0.3% expected, and CPI, which increased +0.7% compared to +0.5% anticipated. USD/CAD closed at 1.2240, with an overall decline of -2.7% for the week.   

NZD/USD Gained ground last week as the United States reported mostly weaker than expected economic numbers and with mixed data out of New Zealand. The week began with the pair making its weekly low of 0.7420 on Monday after the New Zealand NZIER Business Confidence index printed at 23 versus a previous reading of 24. The rate then rallied on Tuesday as the United States posted lower than expected Retail Sales numbers. On Wednesday, the pair continued gaining after the New Zealand GDT Price Index printed at -3.6% compared to a previous reading of -10.8%, also out was the Business NZ Manufacturing Index, which printed at 54.5 versus a previous reading of 56.1. Thursday saw the rate continue higher after lower than expected U.S. Housing Starts and Building Permits. The pair then made its weekly high of 0.7739 on Friday after U.S. CPI data came out in line with expectations. NZD/USD closed the week at 0.7677, with an overall gain of +2.0% from its previous weekly close.

The Week Ahead

USD: The U.S. economic calendar is quieter than usual this coming week, featuring housing data on Wednesday and Thursday.  Sunday starts the week’s highlights off with the IMF Meetings, and Monday and Tuesday offer nothing notable. Wednesday’s key events then include Existing Home Sales (5.04M) and Crude Oil Inventories (last 1.3M), while Thursday features Weekly Initial Jobless Claims (290K), Flash Manufacturing PMI (55.6) and New Home Sales (514K). Friday’s important data then concludes the week with Core Durable Goods Orders (0.2%) and Durable Goods Orders (0.7%).

AUD: The Australian economic calendar is moderately active this coming week, featuring CPI data on Wednesday.  Sunday starts the week’s highlights off with the IMF Meetings, while RBA Governor Stevens will speak on Monday and Tuesday’s key events include the RBA’s Monetary Policy Meeting Minutes. Wednesday then offers CPI (0.1%) and Trimmed Mean CPI (0.6%), while Thursday features the NAB Quarterly Business Confidence survey (last 2). That concludes the week’s important events since Friday offers nothing notable. Resistance for AUD/USD is seen at 0.7841/75, 0.7912/37 and 0.8024, with support noted at 0.7684/0.7737, 0.7625/43 and 0.7532/75.

NZD: The New Zealand economic calendar is quite peaceful this coming week, only featuring the IMF Meetings and CPI (-0.3%) on Sunday. The chart for NZD/USD shows resistance at 0.7739, 0.7847/88 and 0.7972/95.  On the downside, technical support is expected at 0.7606/95, 0.7542/72 and 0.7430/92.

GBP: The UK economic calendar is less active than usual this coming week, only featuring the IMF Meetings on Sunday, the MPC Official Bank Rate Votes (0-0-9) and Asset Purchase Facility Votes (0-0-9) on Wednesday, and then Retail Sales (0.4%) and Public Sector Net Borrowing (6.6B) on Thursday. Resistance to the topside for GBP/USD shows at 1.4971/93, 1.5053 and 1.5164, while support for the pair is expected at 1.4795, 1.4698/1.4739 and 1.4634.

EUR: The Eurozone economic calendar is rather busy this coming week, featuring the Eurogroup Meetings on Friday.  Sunday starts the week’s highlights off with the IMF Meetings, and Tuesday’s key events include the German ZEW Economic Sentiment survey (56.0) and the EZ ZEW Economic Sentiment (63.7). Wednesday offers little of note, while Thursday features French Flash Manufacturing PMI (49.4), French Flash Services PMI (52.5), the Spanish Unemployment Rate (23.5%), German Flash Manufacturing PMI (53.1), German Flash Services PMI (55.6), EZ Flash Manufacturing PMI (52.6), and EZ Flash Services PMI (54.5). Friday’s important data then concludes the week with the German Ifo Business Climate survey (108.5) and the Eurogroup Meetings. Resistance for EUR/USD is seen at 1.0848, 1.0906 and 1.1035/52, with support showing at 1.0762/1.0800, 1.0712 and 1.0567.

JPY: The Japanese economic calendar is quiet this coming week, only featuring the IMF Meetings on Sunday and the Trade Balance (-0.41T) on Wednesday. Resistance for USD/JPY currently shows up at 121.84/122.02, 120.36/121.19 and 119.28/62, with support indicated at 118.04/71, 116.87/92 and 115.56/85.

CAD: The Canadian economic calendar is somewhat active this coming week, only featuring the IMF Meetings on Sunday; speeches by BOC Governor Poloz on Monday and Friday; and Wholesale Sales (last -3.1%) and the Annual Budget Release on Tuesday. Resistance for USD/CAD is seen at 1.2563/1.2619, 1.2428/48 and 1.2351/1.2409, while support shows at 1.2045/87, 1.1802/41 and 1.1666/72.