Aussie gained a fraction last week as the U.S. reported mixed economic numbers

AUD/USD

Gained a fraction last week as the United States reported mixed economic numbers with very little significant data out of Australia. The week began with the pair trading higher on Monday after RBA deputy governor Guy Debelle said that an increase in the cross currency basis many not be a sign of stress in a speech entitled, “How I learned to stop worrying and love the basis”. He stated that “Most of the time, the basis is not a sign of stress,” and that, “I wouldn't be losing sleep over it in the way that I literally lost sleep over it in 2008”. The pair then consolidated after making its weekly high of 0.7516 on Tuesday after a lower than expected U.S. New Home Sales number. On Wednesday, the pair gained ground despite Australian Construction Work Done, which fell by -0.7% q/q versus -0.5% expected. He rate then fell sharply on Thursday after a speech by RBA deputy governor Debelle, who spoke at the launch of the FX Global Code, stating that, “This contribution of time and effort reflects the fact that all of us recognise the need to restore the public's faith in the foreign exchange market.” The pair then made its low of 0.7421 on Friday after mixed economic data from the United States. AUD/USD closed at 0.7444, with an overall gain of +0.3% from its previous weekly close.

GBP/USD

Fell sharply as uncertainty over the General Election on June 8^th put pressure on Sterling. The week began with Cable consolidating after making its weekly high of 1.3041 on Monday after UK PM Theresa May was interviewed by the BBC’s Andrew Neill. . When asked about the double digit lead that her party had when the General election was announced last April, turning into the current single digit lead, she said, “Well, Andrew, there’s only one poll that counts in any election campaign, as I’m sure you know from your long experience, and that’s the one that takes place on 8 June.” The rate sold off on Tuesday after UK Public Sector Net Borrowing increased to +9.6B versus +8.0B expected. The pair gained a fraction on Wednesday after the FOMC Meeting Minutes. Cable resumed its selloff on Thursday after UK Second Estimate GDP increased by +0.2% q/q compared to an expectation of +0.3%. Cable then made its weekly low of 1.2774 on Friday after a YouGov poll released late Thursday indicated that 43% of voters would vote for Theresa May’s Conservative Party, while support for the Labour Party had increased to 38%, a lead of only 5% for the Conservative Party. When the election was announced last April, the Conservative lead was more than 20%. GBP/USD closed at 1.2807, with an overall loss of -1.8% for the week.

EUR/USD

Fell a fraction last week as the FOMC Meeting Minutes indicated a possible rate hike in June, while the Eurozone reported mostly better than expected PMI data. The week began with the pair gaining on Monday despite Eurozone finance ministers who failed to agree on debt relief for Greece. The rate then declined after making its weekly high of 1.1267 on Tuesday after German Ifo Business Climate printed at 114.6 versus 113.1 expected. Also, German Flash Manufacturing PMI printed at 59.4 compared to an expected 58.0, and German Flash Services PMI, which showed a reading of 55.2, in line with expectations. EZ Flash Manufacturing PMI hit a six year high printing at 57.0 versus 56.5 anticipated. On Wednesday, the pair resumed its rally after comments from ECB President Draghi, who said in a speech in Madrid that, “There is no reason to deviate from the indications we have been consistently providing in the introductory statement to our press conferences. Asset purchases are inevitably more difficult to calibrate, more complex to implement, and more likely to produce side effects than other instruments, including moderately negative rates.”  Also, the FOMC Meeting Minutes noted that, “Most participants judged that if economic information came in about in line with their expectations, it would soon be appropriate for the committee to take another step in removing some policy accommodation.” The Fed also suggested it would begin to normalize its $4.5T balance later this year. Thursday saw the pair lose a fraction after OPEC extended their production cut for an additional nine months. Also, U.S. Initial Jobless Claims rose to 234K versus 238K expected. The rate then made its weekly low of 1.1159 on Friday after U.S. Preliminary GDP increased by +1.2% q/q versus an expectation of +0.9%. Also, Durable Goods Orders declined by -0.7% compared to an expectation of -0.9%, while Core Durable Goods Orders declined by -0.4% versus an expected increase of +0.5%. EUR/USD closed at 1.1177, with a loss of -0.4% for the week.

USD/JPY

Showed little change last week as Japan reported mostly lower than expected economic data, while U.S. numbers were mixed. The rate began the week gaining a fraction on Monday after the Japanese Trade Balance showed a surplus of +0.10T compared to an expected +0.25T. The pair extended its gains after making its weekly low of 110.85 on Tuesday after Japanese All Industries Activity declined by -0.6% m/m versus -0.4% expected. The pair then made its weekly high of 112.12 on Wednesday after a somewhat hawkish FOMC Meeting Minutes. The rate gained ground on Thursday after a positive U.S. employment number. Friday saw the pair decline after Tokyo Core CI increased by +0.1% y/y versus an expected flat reading. USD/JPY closed the week at 111.29, with a gain of just four pips and virtually unchanged on the week.

NZD/USD

Extended its previous week’s gains last week as the commodity currencies benefited from the OPEC production cut extension, while the United States reported mixed economic numbers. The rate began the week making its weekly low of 0.6913 on Monday in the absence of any significant data from either country. The pair continued gaining on Tuesday after a lower than expected U.S. New Home Sales number. On Wednesday, the rate extended its rally despite a somewhat hawkish FOMC Meeting Minutes. Thursday saw the rate selloff after the New Zealand Treasury released its Annual Budget. The pair then made its weekly high of 0.7076 on Friday after mixed U.S. economic data. NZD/USD went on to close at 0.7062, with an overall increase of +1.9% for the week.

USD/CAD

Extended its previous week’s losses last week as the BOC left interest rates unchanged while the United States reported mixed economic data. The rate began the week declining after making its weekly high of 1.3540 on Monday in the absence of any significant data our to either country. The pair gained a fraction on Tuesday after Canadian Wholesale Sales increased by +0.9% m/m versus an expectation of +1.1%. The rate then declined sharply on Wednesdayafter the BOC left its benchmark Overnight Rate unchanged at 0.50% as widely anticipated. In the Monetary Policy Report, the central bank noted that, “The global economy continues to gain traction and recent developments reinforce the Bank’s view that growth will gradually strengthen and broaden over the projection horizon. As anticipated, growth in the United States during the first quarter was weak, reflecting mostly temporary factors. Recent data point to a rebound in the second quarter.  The uncertainties outlined in the April MPR continue to cloud the global and Canadian outlooks.” Thursday saw the pair rally after making its weekly low of 1.3386 despite OPEC announcing an extension to their production cut. The pair resumed its selloff on Friday after mixed U.S. GDP and Durable Goods data. USD/CAD closed at 1.3446, with an overall weekly loss of -0.5%.