AUD Weekly Market Watch 27/07/2015

Last Week recap

EUR/USD Reversed direction, trading higher last week after the Greek Parliament voted in favour of a second package of prerequisites to obtain further financial assistance, while both economies reported mixed economic data. The week began with the rate consolidating after making its weekly low of 1.0808 on Monday after Greece begun repayment of €6.35B to the ECB and IMF. Greeks were allowed to withdraw up to €420.00 from banks per week instead of €60.00 per day. The pair then rose sharply on Tuesday after news that Greek PM Tsipras had submitted legislation necessary for securing a new three-year bailout. On Wednesday, the rate consolidated at a slightly lower level after U.S. Existing Home Sales increased to an annualized +5.49M versus +5.40M expected. Thursday, the pair proceeded to make its weekly high 1.1017 after the Greek Parliament passed a vote on further measures to obtain more money and after the Spanish Unemployment Rate declined to 22.4% from 23.8% and versus 22.8% expected. Also, U.S. Unemployment Claims dropped to 255K versus 279K expected, its lowest level since November of 1973. The rate then declined a fraction on Friday after French Flash Manufacturing PMI printed at 49.6 versus 51.1 expected, while German Flash Manufacturing PMI printed at 51.5 compared to an expected reading of 52.1. Also, French Flash Services PMI came out with a reading of 52.0 compared to 53.9 expected and German Flash Services PMI, which showed a reading of 53.7 versus 54.1 expected. U.S. Friday numbers had New Home Sales drop to 482K compared to 543K expected. EUR/USD closed at 1.0976, with an overall gain of +1.3% from its previous weekly close.

USD/JPY Lost a fraction last week as the BOJ’s Monetary Policy Meeting Minutes announced expanded reporting, while both countries reported mixed economic numbers. The rate began the week gaining a fraction in the absence of any significant data out of either country. The rate then declined on Tuesday after making its weekly high of 124.47 after the BOJ’s Monetary Policy Meeting Minutes showed no change in policy, but announced more frequent and more detailed forecasts: “Under a new framework, the Bank will provide, with higher  frequency, more  detailed  forecasts for Japan's  economy  and  prices,  which serve  as the  basis  of  policy  decisions. In addition, the Bank will start releasing a document that contains summary of opinions presented at each MPM soon after the meeting.   The framework --in which (1) forecasts for the economy and prices are released on a quarterly basis, (2) meetings on monetary policy are held eight times a year, that is, four  meetings  for  forecasts and four  other meetings in  between  them,  and  (3) a  summary  of discussion at each MPM is released quickly --has been widely adopted by major central banks.” The pair then gained a fraction after making its weekly low of 123.56 on Wednesday after Japanese All Industries Activity declined -0.5% m/m as was widely anticipated. On Thursday, the pair consolidated after the Japanese Trade Balance came out showing a -0.25T deficit, in line with expectations. The rate then lost a fraction on Friday after Japanese Flash Manufacturing PMI printed at 51.4 compared to 50.5 expected. USD/JPY closed at 123.81, with an overall loss of -0.2% for the week.

GBP/USD Declined last week as the BOE’s MPC Meeting Minutes voted unanimously on interest rates and stimulus measures, while both countries reported mixed economic data. The week began with Cable losing ground on Monday after UK Rightmove HPI increased +0.1% m/m versus a previous reading of +3.0%. The rate then consolidated on Tuesday after UK Public Sector Net Borrowing came out at +8.6B, in line with expectations. On Wednesday, Cable rose after the MPC Meeting Minutes showed a unanimous decision to keep both the Official Bank Rate and the Asset Purchase Facility unchanged at 0.50% and 375B respectively. The Minutes noted that, “In light of recent developments, all members thought it appropriate to leave the stance of monetary policy unchanged at this meeting.  For a number of members, the balance of risks to medium-term inflation relative to the 2% target was becoming more skewed to the upside at the current level of Bank Rate.  For these members, the uncertainty caused by recent developments in Greece was a very material factor in their decisions:  absent that uncertainty, the decision between holding Bank Rate at its current level versus a small increase was becoming more finely balanced.” Thursday saw the rate decline sharply after making its weekly high of 1.5670 after UK Retail Sales declined -0.2% m/m, significantly worse than the expected increase of +0.4% that was anticipated. Cable then made its weekly low of 1.5466 on Friday despite UK BBA Mortgage Approvals, which increased to 44.5K compared to an expected 43.5K. GBP/USD closed the week at 1.5511, with a loss of -0.6%.

AUD/USD Continued its decline last week as commodity and precious metals prices sold off sharply while the RBA’s Monetary Policy Meeting Minutes maintained a slightly easing stance. The week began with the pair consolidating on Monday in the absence of any significant data out of either country. The pair then made its weekly high of 0.7448 on Tuesday after the RBA’s Monetary Policy Meeting Minutes noted that, “Commodity prices had fallen further and the Australian dollar had depreciated over the past month. Although the exchange rate against the US dollar was close to levels last seen in 2009, the decline in the Australian dollar had been more modest in terms of a basket of currencies. Members noted that the exchange rate had thus far offered less assistance than would normally be expected in achieving balanced growth in the economy and that further depreciation seemed both likely and necessary.” The rate then declined on Wednesday after Australian CPI increased +0.7% q/q, in line with expectations, while Trimmed Mean CPI increased +0.6% q/q, also as anticipated. On Thursday, the pair continued heading south despite Australian NAB Quarterly Business Confidence, which printed at 4 compared to a previous reading of 0. Friday saw the rate make its weekly low of 0.7259 after declines in the prices of oil, gold and copper. AUD/USD went on to close at 0.7283, with an overall loss of -1.2% for the week. 

USD/CAD Extended its previous week’s gains last week, reaching a level not seen since September of 2004. The rate gained in large part due to the price of oil (WTI) — Canada is a net oil exporter — breaking down through the $50 per barrel price to end the week just above $48 per barrel that put pressure on the Loonie. The week began with the rate gaining a fraction on Monday after Canadian Wholesale Sales declined by -1.0% m/m versus an expected increase of +0.1%. The pair then declined on Tuesday in the absence of any significant data out of either country. On Wednesday, the rate gained after better than expected U.S. Existing Home Sales and the price of oil falling below $50 per barrel. The pair continued fractionally higher on Thursday despite Canadian Retail Sales, which increased +1.0% m/m compared to +0.4% expected, while Core Retail Sales rose +0.9% m/m versus +0.7% anticipated. The rate then made its weekly and nine-year high of 1.3101 on Friday despite a lower than expected U.S. New Home Sales number of 482K versus the anticipated 543K. USD/CAD went on to close at 1.3042, with a weekly gain of +0.5%.

NZD/USD Reversed direction, gaining ground last week after the RBNZ cut its Official Cash Rate by 25 bps and with mixed economic numbers from both countries. The week began on a positive note, with the pair gaining after making its weekly low of 0.6503 on Monday in the absence of any significant numbers out of either country. The rate continued gaining on Tuesday, again, with no major economic data from either country. On Wednesday, the pair gained a fraction after the RBNZ cut its benchmark Official Cash Rate to 3.0% from 3.25% as widely expected. The rate release noted that, “The New Zealand dollar has declined significantly since April and, along with lower interest rates, has led to an easing in monetary conditions. While the currency depreciation will provide support to the export and import competing sectors, further depreciation is necessary given the weakness in export commodity prices. A reduction in the OCR is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely.” Thursday saw the rate make its weekly high of 0.6693 despite the New Zealand Trade Balance showing a deficit of -60M compared to an expected surplus of +100M. The pair continued lower on Friday as traders squared positions, which brought NZD/USD to close at 0.6571, with an overall gain of +0.8% from its previous weekly close.

The Week Ahead

USD: The U.S. economic calendar is very active this coming week, featuring the Fed Funds Rate Decision on Wednesday.  Monday starts the week’s highlights off with Core Durable Goods Orders (0.4%) and Durable Goods Orders (3.2%), and Tuesday’s key events include the CB Consumer Confidence survey (100.1). Wednesday then offers Pending Home Sales (1.2%), Crude Oil Inventories (last 2.5M), the FOMC Rate Statement, and the Federal Funds Rate Decision (unchanged at <0.25%), while Thursday features Weekly Initial Jobless Claims (264K) and the Advance GDP Price Index (1.5%). Friday’s important data then concludes the week with the Employment Cost Index (0.6%), the Chicago PMI (50.7) and the Revised University of Michigan Consumer Sentiment survey (94.2).

AUD: The Australian economic calendar is rather quiet this coming week, only featuring a speech by RBA Governor Stevens, Building Approvals (-0.9%) and Import Prices (1.4%) on Thursday and then PPI (last 0.5%) on Friday. Resistance for AUD/USD is seen at 0.7532/0.7682, 0.7448/95 and 0.7348/71, with support noted at 0.7271, 0.7259 and 0.7016.

NZD: The New Zealand economic calendar is peaceful this coming week, only featuring ANZ Business Confidence (last -2.3) on Friday. The chart for NZD/USD shows resistance at 0.6751/69, 0.6618/93 and 0.6557/71.  On the downside, technical support is expected at 0.6442/96, 0.5991 and 0.5926.

GBP: The UK economic calendar is less active than usual this coming week, only featuring Preliminary GDP (0.7%) on Tuesday and Net Lending to Individuals (3.0B) on Wednesday. Resistance to the topside for GBP/USD shows at 1.5530/97, 1.5666/97 and 1.5766/88, while support for the pair is expected at 1.5169/89, 1.5315/51 and 1.5440/66.

EUR: The Eurozone economic calendar is quite busy this coming week, featuring the German Ifo Business Climate survey (107.6) and EZ M3 Money Supply (5.1%) data on Monday to start the week’s highlights off.  Tuesday is quiet, while Wednesday offers the EZ GfK German Consumer Climate survey (10.2)  and Thursday features German Preliminary CPI (0.2%), Spanish Flash CPI (0.1%), Spanish Flash GDP (1.1%), and the German Unemployment Change (-5K). Friday’s important data then concludes the week with German Retail Sales (0.3%), the EZ CPI Flash Estimate (0.2%), the EZ Core CPI Flash Estimate (0.8%), and the EZ Unemployment Rate (11.0%). 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, 1.0808/28 and 1.0712.

JPY: The Japanese economic calendar is rather quiet this coming week, only featuring Retail Sales (1.1%) on Wednesday, and then Household Spending (2.0%) and Tokyo Core CPI (0.0%) on Friday. Resistance for USD/JPY currently shows up at 125.67/85, 125.05 and 124.14/47, with support indicated at 123.56/85, 122.45/87 and 121.93/122.02.

CAD: The Canadian economic calendar is quite inactive this coming week, only featuring RMPI (last 4.4%) on Tuesday, and then GDP (0.0%) on Friday. Resistance for USD/CAD is seen at 1.3305, 1.3260 and 1.3062/1.3102, while support shows at 1.3006, 1.2915 and 1.2778/1.2834.