AUD Weekly Market Watch 03/08/2015

Last Week recap

EUR/USD Ended the week up a fraction after expectations of a Fed rate hike in September faded and both economies reported mixed economic numbers. The week began on a strong note, with the rate making its weekly high of 1.1128 on Monday after German Ifo Business Climate printed at 108.0 compared to an expected reading of 107.6. Also out on Monday were U.S. Durable Goods Orders, which increased +3.4% m/m versus +3.2% anticipated, while Core Durable Goods increased +0.8% m/m versus +0.4% expected. The pair then declined on Tuesday after comments from ECB Executive Board member Benoit Coere in a press interview, where he said that, “In truth, the question is not whether to restructure Greece's debt but rather how to do it so that it would be really useful for the country's economy,” adding, “that's why it's important to make this restructuring, whatever form it takes, conditional on the application of measures that reinforce the economy and ensure the sustainability of Greek public finances”. Tuesday’s numbers had U.S. CB Consumer Confidence print at 90.9 versus an expected reading of 100.1. The rate extended its losses on Wednesday after the FOMC Statement noted that, “Inflation continued to run below the Committee's longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remain low; survey‑based measures of longer-term inflation expectations have remained stable.” On Thursday, the pair made its weekly low of 1.0892 after German Unemployment Change showed an increase of +9K m/m compared to an expected decline of -5K, while Spanish Flash GDP rose +1.0% q/q versus +1.1% expected. U.S. numbers had Advance GDP increase +2.3% q/q versus +2.6% expected with the Advance GDP Price Index increasing +2.0% q/q compared to +1.5% anticipated. Thursday also saw the first release of the U.S. Goods Trade Balance, which showed a deficit of -62.3B. The number will be released monthly approximately 30 days after month’s end. Friday saw the pair gain after the U.S. Employment Cost Index increased only +0.2% q/q versus +0.6% expected and U.S. Revised UoM Consumer Sentiment, which printed at 93.1 versus 94.2 expected. EZ numbers had EZ Core CPI Flash Estimate increase +1.0% y/y versus +0.8% expected, nevertheless, German Retail Sales declined -2.3% m/m versus an expected increase of +0.3%. EUR/USD closed at 1.0983, off just -7 pips from the previous weekly close and virtually unchanged.

USD/JPY Showed little change last week as the Fed left rates unchanged and both countries reported mixed economic data. The week began with the rate making its weekly low of 123.00 on Monday after comments from the BOJ’s Deputy Governor Hiroshi Nakaso, who warned that Japanese exports could be negatively impacted by the slowdown in the Chinese economy, “Even if China's economy maintained its growth rate, the main contribution would be from public investment, so the effect on Asian economies and Japan's exports warrants due attention”. He later told a news conference that, “The slowdown in exports and output are likely temporary”. The pair reversed direction on Tuesday, gaining ground despite a lower than expected U.S. consumer confidence number. On Wednesday, the pair extended its gains after Japanese Retail Sales increased +0.9% y/y, in line with expectations, while the FOMC Statement indicated members were still undecided as to when to begin raising interest rates. The rate then made its weekly high of 124.57 on Thursday after mixed U.S. economic numbers. Friday saw the pair lose ground despite Japanese Household Spending, which dropped -2.0% y/y, significantly lower than the +2.0% increase that was expected, while Tokyo Core CPI declined -0.1% y/y versus an expected flat reading. USD/JPY closed at 123.86, up +5 pips and practically unchanged on the week. 

GBP/USD Reversed direction, gaining ground last week as expectations of the BOE’s upcoming meeting this week — which will contain an unprecedented amount of information on MPC voting, policy decisions and rate forecasts — supported Sterling. The week began on a positive note, with Cable gaining despite better than expected U.S. Durable Goods Orders data. The rate continued gaining on Tuesday after UK Preliminary GDP increased +0.7% q/q, in line with expectations. On Wednesday, Cable made its weekly high of 1.5688 after UK Net Lending to Individuals increased +3.8B m/m versus +3.0B expected with the previous number upwardly revised from +3.1B to +3.5B. Thursday saw the pair consolidate at a slightly lower level after mixed U.S. economic releases. Cable then gained on Friday after the United States reported a lower than expected Employment Cost Index, bringing GBP/USD to close at 1.5621, showing an overall gain of +0.7% for the week. 

AUD/USD Reversed direction, gaining a fraction last week as traders’ expectations for an RBA rate hike next week dropped to only 10 percent, while both countries reported mixed economic data. The week began with the rate consolidating at a slightly lower level on Monday after better than expected U.S. Durable Goods Orders data. The pair then gained on Tuesday after U.S. CB Consumer Confidence printed 10 points under expectations. On Wednesday, the rate fell after the Fed left rates at record lows and the FOMC Statement indicated the committee was still not sure when to begin tightening. The pair then consolidated on Thursday after Australian Building Approvals declined -8.2% m/m, which was significantly lower than the -0.8% expected, and Australian Import Prices, which increased +1.4% q/q, as was widely expected. The pair then made both its weekly low of 0.7233 and its weekly high of 0.7365 on Friday as commodity and gold prices recovered. Also, Australian PPI increased +0.3% q/q versus +0.2% expected. AUD/USD closed at 0.7300, with an overall weekly gain of +0.2%.

USD/CAD Extended its previous week’s gains last week, as oil and gold prices stabilized and Canada reported lower than expected economic data. The week began on a soft note, with the pair consolidating at a slightly lower level despite better than expected U.S. Durable Goods Orders data. The rate then fell sharply on Tuesday after the price of oil rose over $48.50 per barrel and despite Canadian RMPI, which came out at 0.00 m/m compared to an expected increase of +1.1%. On Wednesday, the pair made its weekly low of 1.2859 after a somewhat dovish FOMC statement and lower than expected U.S. Pending Home Sales. Thursday saw the rate continue higher after mixed U.S. GDP and Trade data. The pair then made its weekly high of 1.3087 after Canadian GDP declined -0.2% m/m compared to an expected flat reading. USD/CAD went on to close the week at 1.3087, up +0.3%.  

NZD/USD Extended its previous week’s gains last week, rising a fraction despite lower than expected economic data out of New Zealand. The week began with the pair gaining on Monday despite positive U.S. Durable Goods Orders data. Tuesday the pair made its weekly high of 0.6736 after comments from RBNZ Governor Wheeler who said that “There are, however, several risks and uncertainties around the inflation outlook. These include the future path of the exchange rate, which will be influenced by future commodity prices, and the speed with which the recent depreciation feeds through to higher inflation.” As to the exchange rate, he stated, “At current levels of export prices, a more substantial exchange rate depreciation will be required to stabilise the net external liabilities position relative to GDP.” The rate then declined on Wednesday after New Zealand Building Consents declined -4.1% m/m versus a previous flat reading. Thursday saw the pair extend its losses after mixed U.S. GDP and trade data. On Friday, the pair made its weekly low of 0.6533 after New Zealand ANZ Business Confidence printed at -15.3 versus a previous reading of -2.3. NZD/USD went on to close at 0.6588, with a gain of +0.2% from its previous weekly close.

The Week Ahead

USD: The U.S. economic calendar is active 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 (0.2%), ISM Manufacturing PMI (53.6), and a speech by FOMC Member Powell, and Tuesday’s key events include Factory Orders (1.8%). Wednesday then offers ADP Non-Farm Employment Change (218K), the Trade Balance (-42.6B), ISM Non-Manufacturing PMI (56.4) and Crude Oil Inventories (last -4.2M), while Thursday features Weekly Initial Jobless Claims (269K) and Mortgage Delinquencies (6th-13th July, 5.54%). Friday’s important data then concludes the week with Non-Farm Payrolls (224K), the Unemployment Rate (5.3%) and Average Hourly Earnings (0.2%).

AUD: The Australian economic calendar is rather busy this coming week, featuring the RBA’s Cash Rate Decision on Tuesday.  Sunday is a Bank Holiday, and Monday starts the week’s highlights off with ANZ Job Advertisements (1.3%). Tuesday’s key events include Retail Sales (0.5%), the Trade Balance (-3.06B), the RBA’s Cash Rate Decision (unchanged at 2.00%) and the RBA Rate Statement. Wednesday then offers little of note, while Thursday features the Employment Change (12.5K) and the Unemployment Rate (6.1%). Friday’s important releases then conclude the week with the RBA Monetary Policy Statement and Home Loans (5.2%). Resistance for AUD/USD is seen at 0.7532/0.7682, 0.7448/95 and 0.7348/71, with support noted at 0.7271, 0.7233/59 and 0.7016.

NZD: The New Zealand economic calendar is fairly quiet this coming week, only featuring the tentatively scheduled GDT Price Index (-10.7%), as well as the Employment Change (0.5%) and Unemployment Rate (5.9%) on Tuesday. The chart for NZD/USD shows resistance at 0.6813, 0.6736/69 and 0.6618/93.  On the downside, technical support is expected at 0.6557/71, 0.6442/96 and 0.5926/91.

GBP: The UK economic calendar is busier than usual this coming week, featuring the MPC’s Official Bank Rate Decision on Thursday.  Monday starts the week’s highlights off with Manufacturing PMI (51.6), and Tuesday’s key events include GBP Halifax HPI (4th-7th July, 0.5%) and Construction PMI (58.6). Wednesday then offers Services PMI (58.1), while Thursday features Manufacturing Production (0.2%), the BOE Inflation Report, the MPC’s Official Bank Rate Votes (2-0-7 changed from 0-0-9), the MPC’s Official Bank Rate Decision (unchanged at 0.50%), the Asset Purchase Facility (unchanged at 375B), the MPC Asset Purchase Facility Votes (unchanged at 0-0-9), the tentative MPC Rate Statement and a speech by BOE Governor Carney. Friday’s important data then concludes the week with the Trade Balance (-9.1B). Resistance to the topside for GBP/USD shows at 1.5666/97, 1.5766/88 and 1.5814, while support for the pair is expected at 1.5530/97, 1.5440/66 and 1.5315/51.

EUR: The Eurozone economic calendar is rather quiet this coming week, only featuring Spanish Manufacturing PMI (54.2) on Monday; Spanish Unemployment Change (-45.6K) on Tuesday; Spanish Services PMI (55.6) on Wednesday and German Factory Orders (0.4%) on Thursday.  Resistance for EUR/USD is seen at 1.1436/66, 1.1207/89 and 1.1017/1.1150, with support showing at 1.0954/69, 1.0892, 1.0808/28 and 1.0712.

JPY: The Japanese economic calendar is peaceful this coming week, only featuring the tentatively scheduled BOJ Monetary Policy Statement and BOJ Press Conference on Friday. Resistance for USD/JPY currently shows up at 125.67/85, 125.05 and 124.14/57, with support indicated at 123.56/85, 122.45/123.00 and 121.93/122.02.

CAD: The Canadian economic calendar is moderately busy this coming week, featuring key jobs data on Friday.  Monday is a Bank Holiday, and Tuesday is quiet, so Wednesday starts the week’s highlights off with the Trade Balance (-2.8B). Thursday then offers little of note, while Friday’s important releases then conclude the week with Building Permits (2.6%), the Employment Change (5.7K), the Unemployment Rate (6.8%), and Ivey PMI (56.2). Resistance for USD/CAD is seen at 1.3305, 1.3260 and 1.3093/1.3102, while support shows at 1.3006/62, 1.2915 and 1.2778/1.2859.