AUD Weekly Market Watch 22/06/2015

Last Week recap

EUR/USD Reversed direction, trading lower last week as the Greek debt negotiations continue without resolution and despite mostly positive numbers out of the Eurozone. The United States reported mixed data overall last week. The week began with the pair declining after making its weekly  high of 1.1409 on Monday after Donald Tusk, President of the European Council stated at the Eurogroup meetings that, “I can say that since I called this informal meeting, some promising things have happened, including today’s talks and meeting. But the most important thing is that the leaders take full responsibility for the political process to avoid the worst case scenario, which means uncontrollable, chaotic Graccident.” No resolution or agreement was made as a result of the Eurogroup meetings or the Euro Summit, in which German Chancellor Merkel said that, “We need to work with the money which is available in the second program... We did not talk about details... All three institutions said that the Greek proposals are a good basis for further talks.” Eco-data on Monday had U.S. Existing Home Sales increase to an annualized +5.35M compared to an expected +5.27M. The rate then declined sharply on Tuesday after creditors rejected equivalent measures suggested by the Greek government. Greek PM Tsipras stated that, “the non-acceptance of equivalent measures has never happened before, neither in Ireland nor in Portugal, nowhere!” Tuesday’s eco-numbers had French Flash Manufacturing PMI print at 50.5 versus 50.1 expected, while German Flash Manufacturing PMI showed a reading of 51.9 compared to 51.5 anticipated. Also, U.S. Core Durable Goods Orders increased +0.5% as widely expected and Durable Goods Orders declined -1.8% versus -0.6% expected. On Wednesday, the pair gained despite no agreement being reached at the Eurogroup Meetings. Also, German Business Climate printed at 107.4 compared to an expected print of 108.2. U.S. data had Final GDP decline -0.2% as was widely anticipated. Thursday saw the rate consolidate as the Eurogroup Meetings and the EU Economic Summit failed to produce an agreement between Greece and its creditors. Christine Lagarde, Managing Director of the IMF stated at the Eurogroup Meetings that, “All I can say is that the three institutions have been absolutely on the same page over the last few weeks and we will continue to work that way. We really want to show flexibility and we want to be as growth friendly as possible. It has to be balanced.” The pair then made its weekly low of 1.1129 on Friday as no resolution was forthcoming at either the summit or the Eurogroup meetings, which concluded with Greek Syriza party MP Yannis Micheloyiannakis saying that, “There is no bigger mistake than accepting an extension until November in exchange for the blood of measures and our own money. It would be humiliating, and at the same time tantamount to acceptance of the course towards a third memorandum (bailout agreement) in November. Now is the time to say the big no.” EUR/USD went on to close at 1.1170, -1.5% lower on the week. As of this writing, Greek PM Tsirpas announced in a televised address Sunday night that Greece will keep its banks and stock market closed on Monday with restrictions imposed on the transfer and withdrawal of money. 

USD/JPY Gained last week as the BOJ left monetary policy unchanged and the United States reported mixed economic data. The rate began the week gaining after making its weekly low of 122.55 on Monday after a positive U.S. Existing Home Sales number. The pair continued gaining on Tuesday after positive U.S. New Home Sales, and the BOJ’s Monetary Policy Meeting Minutes, which left monetary policy unchanged, stating that, “With respect to the Bank's thinking behind its future conduct of monetary policy, many members shared the recognition that QQE had been exerting its intended effects, and that the  Bank  would  continue  with  QQE,  aiming  to  achieve  the  price  stability  target  of  2 percent, as long as it was necessary for maintaining this target in a stable manner.” On Wednesday, the pair consolidated after making its weekly high of 124.37 after U.S. Final GDP came out in line with expectations. The rate then lost ground on Thursday after Japanese Household Spending increased +4.8% compared to an expected +3.5%, while Tokyo Core CPI increased +0.1% as widely anticipated. The rate then increased on Friday after a better than expected U.S. Revised University of Michigan Consumer Sentiment survey result. USD/JPY went on to settle at 123.85, showing an overall gain of +0.9% from its previous weekly close.  

GBP/USD Reversed direction, trading lower last week as asset flows favoured the Greenback over Sterling with very little economic data out of the UK and mixed numbers out of the United States. The week began with Cable making its weekly high of 1.5909 on Monday after comments from MPC member Cunliffe, stating that, “Our forecast is for the economy to grow robustly at around 2.5% a year over the next three years.  That is a bit slower than the average annual growth rate of nearly 3% in the seven years before the crisis.  But it’s a great deal better than the roughly 0.5% annual average over the seven years that followed.” The rate continued lower on Tuesday in the absence of any UK economic numbers and with mixed U.S. releases. Cable then made its weekly low of 1.5666 on Wednesday as U.S. Final GDP came out in line with expectations. On Thursday, the pair turned higher as U.S. numbers came out higher or as expected. Cable then consolidated on Friday after a positive U.S. Consumer Sentiment number. GBP/USD went on to close at 1.5748, up +0.8% overall for the week. 

AUD/USD Reversed direction last week, trading sharply lower as traders are more confident for a September Fed rate hike and with very little economic data out of Australia. The week began with the pair dropping after making its weekly high of 0.7795 on Monday after a positive U.S. Existing Home Sales number. The rate then consolidated at a slightly higher level on Tuesday after Australian HPI increased +1.6% compared to +2.2% expected, while the U.S. posted mixed Durable Goods Orders data. The pair resumed selling off on Wednesday as U.S. Final GDP came out as expected. The rate then rebounded on Thursday, gaining despite mostly positive U.S. economic releases. Friday saw the pair make its weekly low of 0.7629 as asset flows favoured the Greenback over the Aussie. AUD/USD went on to close at 0.7653, with a loss of -1.5% for the week.

USD/CAD Gained a fraction last week as the United States reported mixed economic numbers and with very little data out of Canada.  The week began with the pair making its weekly low of 1.2217 on Monday and gaining after a positive U.S. Existing Home Sales number. The rate continued higher on Tuesday as the United States released mixed Durable Goods Orders data and positive New Home Sales. On Wednesday, the rate made its weekly high of 1.2421 as U.S. Final GDP came out in line with expectations. The pair then declined on Thursday as U.S. numbers came out as expected and comments from BOC Council Member Schembri, who stated that, “If a Canadian bank with U.S. subsidiaries were to fail, it bears asking whether the preemptive actions of U.S. authorities would create obstacles for the orderly resolution of the consolidated bank by Canadian authorities. Canada and the United States should consider the option of a bilateral agreement on the resolution of banks with cross-border operations in order to clarify responsibilities and enhance cooperation.” The pair extended its losses on Friday despite a better than expected U.S. consumer sentiment number. USD/CAD closed at 1.2311, with a gain of +0.3% for the week. 

NZD/USD Extended its previous week’s losses last week as asset flows favoured the Greenback over the Kiwi and with very little economic data out of New Zealand. The rate began the week declining after making its weekly high of 0.6928 on Monday as the United States reported a better than expected housing number. The pair then made its weekly low of 0.6813 on Tuesday after mixed U.S. economic data. The rate then gained ground on Wednesday as U.S. Final GDP came in as expected. Thursday saw the rate consolidate after trading higher as New Zealand reported a +350M surplus in its Trade Balance, significantly higher than the expected deficit of -90M, with the previous number upwardly revised from +123M to +183M. The pair then resumed selling off on Friday after a better than expected U.S. consumer sentiment number. NZD/USD went on to settle at 0.6835 with an overall loss of -1.0% from its previous weekly close. 

The Week Ahead

USD: The U.S. economic calendar is quite active this coming week, featuring key jobs data on Wednesday and Thursday.  Monday starts the week’s highlights off with Pending Home Sales (1.3%), and Tuesday’s key events include Chicago PMI (50.2) and the CB Consumer Confidence survey (97.1). Wednesday then offers the ADP Non-Farm Employment Change (216K), ISM Manufacturing PMI (53.2) and Crude Oil Inventories (last -4.9M), while Thursday features Non-Farm Payrolls (231K), the Unemployment Rate (5.4%), Average Hourly Earnings (0.2%), Weekly Initial Jobless Claims (270K) and Factory Orders -0.5%. Friday is a Bank Holiday in the United States.

AUD: The Australian economic calendar is rather quiet this coming week, only featuring a speech by RBA Governor Stevens on Tuesday, Building Approvals (1.1%) on Wednesday, the Trade Balance (-2.21B) on Thursday and Retail Sales (0.5%) on Friday. Resistance for AUD/USD is seen at 0.7642/82, 0.7785/0.7937 and 0.8024/74, with support noted at 0.7597/0.7603 and 0.7532/59.

NZD: The New Zealand economic calendar is fairly peaceful this coming week, only featuring Building Consents (last -1.7%) on Monday, ANZ Business Confidence (last 15.7) on Tuesday and the tentatively scheduled GDT Price Index (last -1.3%) on Wednesday. The chart for NZD/USD shows resistance at 0.7022, 0.6922/41 and 0.6813/77.  On the downside, technical support is expected at 0.6805, 0.6639/81 and 0.6557/71.

GBP: The UK economic calendar is moderately busy this coming week, featuring Current Account data on Tuesday.  Sunday starts the week’s highlights off with a speech by MPC Member Weale, Monday features Net Lending to Individuals (3.3B), and Tuesday’s key events include the Current Account (-23.7B) and Final GDP (0.4%). Wednesday then offers Manufacturing PMI (52.6) and the BOE’s Financial Stability Report, while Thursday features Halifax HPI (2nd-7th July, -0.1%) and Construction PMI (56.6). Friday’s important data then concludes the week with Services PMI (57.4).  Resistance to the topside for GBP/USD shows at 1.5697, 1.5766/69 and 1.5814, while support for the pair is expected at 1.5315/51, 1.5446/1.5597 and 1.5666.

EUR: The Eurozone economic calendar is quite active this coming week, featuring the Eurogroup Meetings on Tuesday.  Monday is an Italian Bank Holiday, and it starts the week’s highlights off with German Preliminary CPI (0.1%) and Spanish Flash CPI (-0.1%). Tuesday’s key events then include German Retail Sales (0.0%), the German Unemployment Change (-5K), the EZ CPI Flash Estimate (0.2%), the EZ Core CPI Flash Estimate (0.8%), the EZ Unemployment Rate (11.1%) and the Eurogroup Meetings. Wednesday offers Spanish Manufacturing PMI (55.6) and German Final Manufacturing PMI (51.9), while Thursday features the Spanish Unemployment Change (-118.0K) and the ECB’s Monetary Policy Meeting Accounts. Friday’s important data then concludes the week with Spanish Services PMI (58.0) and EZ Retail Sales (0.2%). Resistance for EUR/USD is seen at 1.1379/91, 1.1207/89 and 1.1035/1.1150, with support showing at 1.0818/99, 1.0712 and 1.0659/66.

JPY: The Japanese economic calendar is rather quiet this coming week, only featuring Retail Sales (2.1%) on Monday, Average Cash Earnings (0.7%) on Tuesday, and then the Tankan Manufacturing Index (12) and the Tankan Non-Manufacturing Index (23) on Wednesday. Resistance for USD/JPY currently shows up at 125.05, 124.14/45 and 123.85, with support indicated at 122.45/47, 122.02 and 120.47/84.

CAD: The Canadian economic calendar is quite inactive this coming week, only featuring a speech by BOC Governor Poloz on Sunday, the RMPI (4.4%) on Monday and GDP (0.1%) on Tuesday. Wednesday is a Bank Holiday in Canada. Resistance for USD/CAD is seen at 1.2387/1.2422, 1.2537/1.2562 and 1.2645/65, while support shows at 1.2304, 1.2255 and 1.2102/1.2203.