AUD Weekly Market Watch 07/04/2014

Last week recap

EUR/USD Extended its previous week’s losses last week as the ECB left rates unchanged, and the United States reported a slightly worse than expected Non-Farm Payrolls number. The week began on a positive note, with the pair gaining after German Retail Sales increased +1.3% m/m, versus an expected decline of -0.3%, while EZ CPI Flash Estimate increased +0.5% y/y, versus +0.6% expected, its lowest reading in four years. U.S. numbers had Chicago PMI print at 55.9, versus an expected reading of 59.2. The rate continued higher on Tuesday after German Unemployment Change showed a drop of -12K, versus -9K expected, while U.S. ISM Manufacturing PMI printed at 53.7, versus an expected reading of 54.2. The pair then made its weekly high of 1.3819 on Wednesday after Spanish Unemployment Change showed a drop of -16.6K, versus -5.3K expected, the rate then sold off after U.S. ADP Non-Farm Employment Change came out as expected at 191K. Also out were U.S. Factory Orders, increasing +1.6% m/m, versus +1.3% expected. The rate continued selling off on Thursday after the ECB left its Minimum Bid Rate unchanged at 0.25%. The press conference comments from ECB chief Draghi were decidedly dovish, stating that, “We are resolute in our determination to maintain a high degree of accommodative monetary policy,” he continued, “we firmly reiterate that we continue to expect key ECB rates to remain at present or lower levels for an extended period of time.” U.S. numbers out on Thursday had the U.S. Trade Balance show a deficit of -42.3B, versus -38.3B expected, and Initial Jobless Claims, which rose to a weekly 326K, versus 319K expected. The rate then made its weekly low of 1.3672 on Friday after U.S. Non-Farm Payrolls came in at 192K, missing expectations of 199K, nevertheless, the previous number was revised up from 175K to 197K, also, the U.S. Unemployment Rate stayed at 6.7% versus an expected decline to 6.6%. EUR/USD went on to close at 1.3700, showing an overall weekly decline of 0.4%. 

USD/JPY Continued its rally last week despite lower U.S. numbers and with Japan reporting mixed economic data. The week began on a positive note, with the pair rallying after making its weekly low of 102.78 on Monday after Japanese Preliminary Industrial Production decreased -2.3% m/m, significantly lower than the expected increase of +3.6%. The rate continued higher on Tuesday after the Japanese Tankan Manufacturing Index printed at 17, versus an expected reading of 19, while the Tankan Non-Manufacturing Index printed at 24 as was widely anticipated. Also out were Japanese Average Cash Earnings, which increased +0.0% y/y, versus an expected decline of -0.1%. On Wednesday, the pair extended its gains as the United States reported a solid ADP Non-Farm Employment number. The rate then consolidated its gains at a slightly higher level on Thursday despite negative U.S. Trade Balance and ISM Manufacturing PMI numbers.  The pair then made its weekly high of 104.12 on Friday before dropping sharply after U.S. Non-Farm Payrolls missed expectations, which brought USD/JPY to close the week at 103.24, showing an overall increase of +0.5% from its previous weekly close. 

GBP/USD Gave back its previous week’s gains last week as Cable reacted to weaker numbers from both economies. The week began on a positive note, with the rate making its weekly high of 1.6683 on Monday after UK Net Lending to Individuals came in at 2.3B m/m, as was widely anticipated. Cable then began heading south on Tuesday after UK Manufacturing PMI printed at 55.3, versus an expected reading of 56.7. On Wednesday, Cable consolidated at a slightly lower level after UK Nationwide HPI increased +0.4% m/m, versus +0.7% expected, while UK Construction PMI printed at 62.5, versus an expected print of 63.1. The rate continued selling off on Thursday after UK Services PMI missed the mark printing at 57.6, versus 58.2 expected. Cable then made its weekly low of 1.6548 on Friday after the UK Halifax HPI showed a decline of -1.1% m/m, significantly lower than the expected increase of +0.7% and despite a lower than expected U.S. NFP number. GBP/USD went on to close at 1.6570, showing an overall loss of -0.4% for the week. 

AUD/USD Continued its rally last week as the RBA left rates unchanged and the United States reported mostly lower than expected economic data. The week began with the pair moving higher after on Monday after Australian HIA New Home Sales increased +4.6% m/m, significantly higher than the previous reading of +0.5%. The rate then declined on Tuesday after the RBA left its benchmark Cash Rate unchanged at 2.5%. In the statement accompanying the rate release, Governor Glenn Stevens noted, “The decline in the exchange rate from its highs a year ago will assist in achieving balanced growth in the economy, but less so than previously as a result of the rise over the past few months. The exchange rate remains high by historical standards.” On Wednesday, the pair edged up despite Australian Building Approvals declining by -5.0% m/m, significantly more than the -1.7% decline that was expected. The rate then made its weekly low of 0.9204 on Thursday after Australian Retail Sales increased only +0.2% m/m, versus +0.4% expected. Nevertheless, the Australian Trade Balance came in showing a surplus of +1.20B, versus an expected surplus of +0.82B. The pair then made its weekly high of 0.9306 on Friday after a lower than expected U.S. Non-Farm Payrolls number. AUD/USD went on to close at 0.9289, showing an increase of +0.5% from its previous weekly close. 

USD/CAD Extended its previous week’s losses last week as Canada reported better than expected economic data, while U.S. numbers were mostly lower. The week began with the rate consolidating at a slightly lower level on Monday after making its weekly high of 1.1066, after Canadian GDP came out showing an increase of +0.5% m/m, versus +0.4% expected. The pair sold off further on Tuesday after Canadian RMPI increased +5.7% m/m, more than double the anticipated reading of +2.3%. On Wednesday, the rate consolidated at a slightly higher level after a solid U.S. ADP Non-Farm Employment Change number. The rate continued edging up on Thursday after the Canadian Trade Balance showed a surplus of +0.3B as was widely expected. The rate then dropped sharply on Friday, making its weekly low of 1.0955 after Canadian Employment Change showed the addition of +42.9K jobs in March, versus an expected increase of +21.5K, while Canadian Ivey PMI came out with a reading of 55.2, versus 58.3 expected, which brought USD/CAD to close at 1.0979, showing an overall decline of -0.7% for the week. 

NZD/USD Lost ground last week as asset flows favoured the Greenback over the Kiwi and with very little economic data out of New Zealand. The week began with the rate increasing on Monday after New Zealand Building Consents dropped -1.7% m/m, versus a previous reading of -8.6%. The pair then made its weekly high of 0.8700 on Tuesday before selling off after New Zealand ANZ Business Confidence printed at 67.3, versus a previous reading of 70.8. The rate continued losing ground on Wednesday after a positive U.S. ADP Non-Farm Employment Change number and positive Factory Orders. The pair kept selling off on Thursday, making its weekly low of 0.8512, despite the United States reporting an expanding trade deficit and lower than expected ISM Non-Manufacturing PMI number. The rate then rallied on Friday after U.S. Non-Farm Payrolls missed expectations, bringing NZD/USD to close at 0.8596, showing an overall decline of -0.6% for the week.

The Week Ahead

USD: The upcoming U.S. economic calendar is a bit busier than last week, featuring the FOMC Meeting Minutes on Wednesday.  Monday is quiet, so Tuesday starts the week’s highlights off with JOLTS Job Openings (3.99M) and a speech by FOMC Members Kocherlakota and Plosser. Wednesday’s key events then include Crude Oil Inventories (-2.4M), the 10-year Bond Auction (last average yield 2.73%, with a 2.9 bid-to-cover ratio) and the FOMC Meeting Minutes, while Thursday features Weekly Initial Jobless Claims (314K), Import Prices (0.2%) and the Federal Budget Balance (-76.5B). Friday’s important data then concludes the week with PPI (0.1%), Core PPI (0.2%) and the Preliminary University of Michigan Consumer Sentiment survey (81.2), as well as the G20 Meetings. 
  
AUD: The upcoming Australian economic calendar is more active than last week, featuring key jobs data on Thursday. After the Australian Daylight Savings Time Shift on Sunday, Monday starts the week’s highlights off with ANZ Job Advertisements (last 5.1%), and Tuesday’s key events include the NAB Business Confidence survey (last 7).  Wednesday then features Westpac Consumer Sentiment (last -0.7%) and Home Loans (1.7%), while Thursday offers MI Inflation Expectations (2.1%), the Employment Change (7.3K) and the Unemployment Rate (6.1%). The week concludes with the G20 meetings scheduled for Friday and Saturday. Resistance for AUD/USD is seen at 0.9279/0.9317, 0.9527 and 0.9757, with support noted at 0.9204, 0.9112/37 and 0.8981/0.9085.

NZD: The upcoming New Zealand economic calendar is a bit busier than last week, only featuring the NZIER Business Confidence survey (last 52) on Tuesday and the Business NZ Manufacturing Index (last 56.2) on Thursday, with the G20 Meetings also scheduled for Friday and Saturday.  In addition, the Daylight Saving Time Shift will take place in New Zealand on Sunday. The chart for NZD/USD shows resistance at 0.8638/41, 0.8671/95 and 0.8764.  On the downside, technical support is expected at 0.8499/0.8584, 0.8423/32 and 0.8343.

GBP: The upcoming UK economic calendar is about as active as last week, featuring the BOE Rate Decision on Thursday.  Monday is quiet, so Tuesday starts the week’s highlights off with Manufacturing Production (0.3%) and the NIESR GDP Estimate (last 0.8%). Wednesday’s key events then include the Trade Balance (-9.3B), and Thursday features the BOE’s Asset Purchase Facility (unchanged at 375B) and Official Bank Rate Decision (unchanged at 0.50%), as well as the tentatively scheduled MPC Rate Statement. The G20 meetings conclude the week on Friday and Saturday. Resistance to the topside for GBP/USD shows at 1.6577/1.6683, 1.6717/85 and 1.6802/22, while support for the pair is expected at 1.6548, 1.6441/65 and 1.6251/60.
   
EUR: The upcoming Eurozone economic calendar is much quieter than last week, only featuring the German Trade Balance (18.0B) on Wednesday; French Industrial Production (0.2%) and the ECB Monthly Bulletin on Thursday; and the G20 Meetings on Friday and Saturday. Resistance for EUR/USD is seen at 1.3748/98, 1.3824/1.3970 and 1.4000, with support showing at 1.3672/98, 1.3642 and 1.3561.

JPY: The upcoming Japanese economic calendar is a bit busier than last week, featuring the BOJ Rate Decision tentatively scheduled for Tuesday.  Monday is quiet, so Tuesday starts the week’s highlights off with the Current Account (-0.04T), the BOJ Rate Decision and the tentatively scheduled BOJ Monetary Policy Statement and Press Conference.  Wednesday then offers little of note, and Thursday’s key events include Core Machinery Orders (-3.2%).  The G20 meetings conclude the week on Friday and Saturday. Resistance for USD/JPY currently shows up at 103.75, 104.12 and 104.83/91, with support indicated at 102.64/102.97, 101.43/102.14 and 100.00/101.20.

CAD: The upcoming Canadian economic calendar is about as quiet as last week, only featuring the BOC Business Outlook Survey on Monday; Building Permits (-2.4%) on Tuesday; the NHPI (0.2%) on Thursday and the G20 Meetings on Friday and Saturday. Resistance for USD/CAD is seen at 1.1039/1.1053, 1.1099/94 and 1.1229, while support shows at 1.0939/99, 1.0909 and 1.0736.