Last week recap
EUR/USD extended its previous week’s gains last week as the Fed’s Bernanke gave a dovish speech at the Fed’s Jackson Hole symposium and both countries reported mixed economic data. The week began on a quiet note as the rate consolidated at a slightly lower level after German Ifo Business Climate came out at 102.3, versus an expected 102.7 print. The pair then rose on Tuesday after making its weekly low of 1.2518 after a successful auction of Spanish Treasury bills, which saw yields decline dramatically from 2.43% in July to 0.95% in the latest auction. Tuesday’s economic data had U.S. CB Consumer Confidence decline to 60.6, versus an expected reading of 65.8, and the EZ M3 Money Supply, which rose +3.8% y/y, versus an expected +3.3% increase. Also out was GfK German Consumer Climate, which showed a reading of 5.9 in line with expectations. On Wednesday, the rate began dropping despite a successful auction of Italian 5-month Treasury bills that saw yields decline significantly. The Dollar was further supported by U.S. Preliminary GDP, which was revised to +1.7% q/q as widely expected, and U.S. Pending Home Sales, rising +2.4% m/m, versus +1.1% anticipated. The pair continued sliding on Thursday as German Unemployment Change came out at 9K, versus 7K expected and despite favourable results from an auction of 10-year Italian bonds. The pair then rallied on Friday making its weekly high of 1.2637, as the Fed’s Bernanke delivered a speech at the Fed’s annual Jackson Hole Symposium in Colorado, Bernanke stated, “The stagnation of the labour market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years,” EUR/USD went on to close at 1.2575, showing an overall gain of +0.6% for the week.
USD/JPY lost ground last week as both countries reported mixed economic data. The week began on a positive note, with the rate rising moderately and making its weekly high of 78.83 in the absence of any significant economic data out of either country. The pair then declined on Tuesday after the United States reported lower than expected CB Consumer Confidence number and despite the Japanese government downgrading its economic assessment due to slowing exports. Wednesday saw the rate trade marginally higher after the United States reported favourable Pending Home Sales and a higher Preliminary GDP number. On Thursday, the pair fell somewhat despite Japanese Retail Sales declining by -0.8% y/y, versus an expected decline of only -0.1%. The rate then declined on Friday, making its weekly low of 78.18 after Japanese Household Spending rose +1.7% y/y, versus an increase of +1.2% expected and Tokyo Core CPI, which declined -0.5% y/y, versus an expected decline of -0.6%. Nevertheless, Japanese Preliminary Industrial Production declined -1.2% m/m, versus an expected increase of +1.7%. USD/JPY went on to close at 78.37, showing an overall loss of -0.4% from its previous weekly close.
GBP/USD continued gaining last week as the United Stated reported mixed economic data and with very little economic data reported by the UK. Cable began the week on a soft note, dropping on Monday in the absence of any significant economic data out of either country. The rate then made its weekly low of 1.5753 on Tuesday as Sterling sold off along with the other European currencies only to rally after less than favourable economic data out of the United States. On Wednesday, the pair continued climbing despite favourable U.S. Preliminary GDP and Pending Home Sales numbers. Cable then reversed direction and traded lower on Thursday as UK Net Lending to Individuals came out as expected at +0.9B, nevertheless, the previous number was revised down from +0.3B to -0.1B. The rate then made its weekly high of 1.5894 on Friday after UK Nationwide HPI increased by +1.3% m/m, versus an expected +0.1% rise, and UK GfK Consumer Confidence came out at -29, versus an expected reading of -27. GBP/USD went on to close at 1.5862, with an overall gain of +0.3% for the week.
AUD/USD extended its previous week’s losses as Australia reported weaker than expected economic data. The rate began the week on a soft note, dropping sharply from its weekly high of 1.0425 in the absence of any significant economic data out of either country. The pair then consolidated at a slightly higher level on Tuesday despite Australian HIA New Home Sales falling -5.6% m/m, versus a previous reading of +2.8%. On Wednesday, the pair resumed its decline after Australian Construction Work Done dropped -0.2% q/q, versus an expected increase of +0.6%, nevertheless, the previous number was significantly revised higher from +5.5% to +7.8%, which neutralized its effect somewhat. The rate continued declining on Thursday, making its weekly low of 1.0275 as Australian Building Approvals declined by -17.3%, significantly more than the -4.8% that was expected, with the previous number revised up from -2.5% to -1.0%. Also out were Australian Capital Expenditure, which increased by +3.4% q/q, versus +2.7% expected, the previous number was also significantly revised up from +6.1% to +7.7%. The pair then rallied on Friday as traders squared positions and despite Australian Private Sector Credit rising only +0.2% m/m, versus +0.4% expected. AUD/USD went on to close at 1.0318, showing an overall loss of -1.0 from its previous weekly close.
USD/CAD lost ground last week as the Loonie was favoured over the Greenback with both countries releasing mixed economic data. The week began on a soft note, with the rate dropping in the absence of any significant economic data out of either country. The pair continued weakening on Tuesday, making its weekly low of 0.9841 after the United States reported a weaker than expected CB Consumer Confidence number. On Wednesday, the rate began trading higher as Canadian RMPI increased by only +0.9% m/m, versus an expected increase of +2.1%. The pair then made its weekly high of 0.9930 on Thursday after the Canadian Current Account widened to a deficit of -16.0B, versus -15.2B that was expected. The pair then dropped sharply on Friday after Canadian GDP increased by +0.2% m/m, versus an expected +0.1% rise. USD/CAD went on to close at 0.9861, with an overall loss of -0.5% for the week.
NZD/USD lost ground last week as the Kiwi reacted to the Aussie and with very little economic data out of New Zealand. The week began with the rate trading lower after making its weekly high of 0.8123 on Monday in the absence of any significant economic data out of either country. The pair continued selling off on Tuesday despite a weaker than expected U.S. CB Consumer Confidence number. On Wednesday, the rate continued heading south as New Zealand Building Consents increased only +2.0% m/m, versus a previous increase of +5.9%. The pair then made its weekly low of 0.7966 on Thursday despite New Zealand NBNZ Business Confidence coming out at 19.5, versus a previous reading of 15.1. The rate then traded sharply higher on Friday as traders squared positions, bringing the rate to close the week at 0.8026, showing an overall loss of -1.2% from its previous weekly close.
The week ahead
USD: The upcoming U.S. economic calendar is quieter than last week, featuring key Jobs data out Wednesday through Friday. Monday is a Bank Holiday, so Tuesday starts the week’s highlights off with ISM Manufacturing PMI (50.1). Wednesday’s key events include Revised Nonfarm Productivity (1.8%), while Thursday offers the ADP Non-Farm Employment Change (141K), Weekly Initial Jobless Claims (369K), ISM Non-Manufacturing PMI (52.6) and Crude Oil Inventories (last 3.8M). Friday’s important data then concludes the week with Non-Farm Payrolls (121K), the Unemployment Rate (8.3%) and Average Hourly Earnings (0.2%).
AUD: The upcoming Australian economic calendar is busier than last week, featuring the RBA Cash Rate Decision on Tuesday. Monday starts the week’s highlights off with Retail Sales (0.3%), ANZ Job Advertisements (-0.8%) and Company Operating Profits (1.1%). Tuesday’s key events include the Current Account (-12.3B), the RBA’s Cash Rate Decision (3.50%) and the associated RBA Rate Statement. Wednesday then features the AIG Services Index (last 46.5) and GDP (0.9%), while Thursday offers the Employment Change (5.1K) and Unemployment Rate (5.3%). Friday’s important data then concludes the week with the Trade Balance (-0.30B). Resistance for AUD/USD is seen at 1.0435/96, 1.0544 and 1.0612, with support noted at 1.0275, 1.0175/1.0223 and 1.0099.
NZD: The upcoming New Zealand economic calendar is quieter than last week, featuring just the Overseas Trade Index (-2.0%) on Monday and ANZ Commodity Prices data (last -0.5%) on Tuesday. The chart for NZD/USD shows resistance at 0.8184, 0.8218/0.8317 and 0.8468. On the downside, technical support is expected at 0.8013/78, 0.7966 and 0.7805/58.
GBP: The upcoming UK economic calendar is considerably busier than last week, featuring the BOE’s Rate Decision on Thursday. Monday starts the week’s highlights off with Manufacturing PMI (46.1), and Tuesday’s key events include the BRC Retail Sales Monitor (last 0.1%), the Halifax HPI (4th-6th, 0.3%) and Construction PMI (50.1). Wednesday then features Services PMI (51.5), while Thursday offers the Asset Purchase Facility (375B), the BOE’s Official Bank Rate Decision (0.50%) and the tentatively scheduled MPC Rate Statement. Friday’s offers Manufacturing Production (2.1%), PPI Input (1.6%), Consumer Inflation Expectations (3.7%) and the NIESR GDP Estimate -0.2%. Saturday ends the week’s highlights with a speech by MPC Member Dale. Resistance to the topside for GBP/USD shows at 1.5894/1.5912 and 1.6025, while support for the pair is expected at 1.5743/77, 1.5629/35 and 1.5403/89.
EUR: The upcoming Eurozone economic calendar is about as active as last week, featuring the ECB Rate Decision on Thursday. Monday starts the week’s highlights off with Spanish Manufacturing PMI (last 42.3), Italian Manufacturing PMI (44.9), and a tentatively scheduled speech by ECB President Draghi. Tuesday’s key events include the Spanish Unemployment Change (last -27.8K). Wednesday then features EZ Retail Sales (-0.2%) and the tentatively scheduled German 10-year Bond Auction (last average yield was 1.42, with a 1.8 bid-to-cover ratio). Thursday offers the tentatively scheduled French 10-year Bond Auction (last average yield was 2.53, with a 1.9 bid-to-cover ratio), German Factory Orders (0.3%), the ECB’s Minimum Bid Rate Decision (0.50%, down 0.25%) and the associated ECB Press Conference. Friday’s important data then concludes the week with German Industrial Production (0.1%). Resistance for EUR/USD is seen at 1.2589, 1.2637, 1.2692 and 1.2747, with support showing at 1.2407/81, 1.2381/85 and 1.2241/59.
JPY: The upcoming Japanese economic calendar is a bit quieter than last week, featuring Capital Spending data (8.9%) on Monday. Tuesday’s key events include Average Cash Earnings (-0.3%), while Wednesday is quiet. Thursday then offers a speech by BOJ Governor Shirakawa. That concludes the week’s important data since Friday offers little of note. Resistance for USD/JPY currently shows up at 78.83, 79.65/80.09 and 80.54/61, with support indicated at 78.13/28, 77.66/94 and 76.02.
CAD: The upcoming Canadian economic calendar is busier than last week, featuring the BOC’s Rate Decision on Wednesday. Monday is a Bank Holiday, and Tuesday is quiet, so Wednesday starts the week’s highlights off with the BOC’s Rate Statement and Overnight Rate Decision (1.00%). Thursday is quiet, while Friday’s important data concludes the week with Building Permits (-1.5%), the Employment Change (9.9K), the Unemployment Rate (7.3%), Labor Productivity (0.2%), the Ivey PMI (64.5), and a speech by BOC Governor Carney. Resistance for USD/CAD is seen at 0.9931/79, 1.0064/83 and 1.0200/49, while support shows at 0.9841/59 and 0.9799.
