Forex Market Update - page 12
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Weekly Forex Update
The greenback rallied against major currencies last week, after the Federal Reserve (Fed) chief, Janet Yellen indicated that the central bank could accelerate plans to raise interest rates if US data on inflation and employment continues to improve more rapidly than expected. However, she further suggested that recovery in the nation still remains fragile and needs support in the form of easy monetary policy. Also, the St. Louis Fed President, James Bullard opined that with the US economy attaining normalcy, the central bank may act soon to avoid any economic problems that could arise in the near future.
The Fed’s Beige Book survey released during the week, revealed that the economy grew in all regions of the US in June and early July, buoyed by rise in consumer spending.
Meanwhile, “risk-off” sentiment prevailed among investors as concerns over tensions in Ukraine and the Middle East continued to support safe-haven demand. On Thursday, a civil airplane of the Malaysian Airlines was shot down over disputed Ukrainian region, killing all the people aboard, with the US blaming Ukrainian pro-Russian separatists for the act. The crash came a day after the US and the European Union announced a fresh round of sanctions against Russia. Markets were also jittery after Israel late Thursday announced ground offensive in Gaza.
The USD came under pressure on Friday, after the Thomson Reuters/University of Michigan preliminary consumer sentiment index slipped to a four-month low in July, while the Conference Board’s leading index in the US rose less than expected in June.
The Euro fell against the USD, after data indicated that inflation in the Euro-zone stayed low as expected in June. Meanwhile, disappointing industrial production data added to evidence that economic growth in the region is slowing. The common currency also came under pressure on rising risk aversion among investors, as tensions in the Eastern Europe region resurfaced, following news of attack on a civilian flight above the Ukrainian airspace.
The Pound failed to gain traction against its US counterpart, after the testimony by the Fed chief supported the greenback, while “risk-off” sentiment prevailed among investors amid geopolitical developments in the Middle East and the Eastern Europe.
The Japanese Yen came under pressure, after minutes of the Bank of Japan’s (BoJ) June policy meeting indicated that majority of policymakers agreed on continuing its stimulus measures to achieve its inflation target of 2%. Furthermore, the policymakers insisted that the central bank should closely monitor geopolitical risks posed by Ukraine and Iraq on the Japanese economy.
EUR USD
Last week, the EUR traded 0.62% lower against the USD and closed at 1.3524, following the recent spate of disappointing economic reports from the Eurozone. Industrial production dropped sharply in May, reinforcing concerns over economic recovery in the region. Construction output declined markedly in May, after rebounding in the previous month. Also, the current account surplus fell to a seasonally adjusted €19.5 billion in May from €21.6 billion in the previous month. Data released on Thursday confirmed that inflation in the region remained below the ECB’s target for the ninth consecutive month in June. The final consumer price index held steady at 0.5% as initially estimated in June. Moreover, the German economic confidence weakened for the seventh consecutive month in July. Earlier in the week, the European Central Bank (ECB) President, Mario Draghi expressed concerns over a stronger Euro and urged that it would hurt the recovery process in the Eurozone. He reiterated his earlier stance that policymakers are committed to use “unconventional measures”, if required. During the week, the pair traded at a high of 1.3641 and a low of 1.3490. The pair is expected to find its first support at 1.3462, with the next support expected at 1.3401. The first resistance is at 1.3613, and the next at 1.3703.
Ahead this week, investors have their plate full with a raft of manufacturing PMI data scheduled for release across the Europe. Additionally, the Eurozone consumer confidence data and the German Ifo sentiment indices will be closely watched.
GBP USD
In the last week, GBP traded 0.16% lower against the USD and closed at 1.7088, despite positive economic data from the UK. Data revealed that consumer price inflation in the UK rose more than expected to 1.9% in June, tilting the scale in favor of the Bank of England (BoE) to raise interest rate sooner than expected. Moreover, labor market report indicated that the unemployment rate in the UK dropped to 6.5% for three months to May, while the number of people seeking jobless benefits also declined more than expected in June. The GBP also came under pressure, amid increased demand for save haven assets as geopolitical tensions between Russia and the West escalated. Moreover, increased ground offensive by Israel in Gaza, prompted traders to stay away from riskier assets. The pair traded at a high of 1.7192 and a low of 1.7036 in the previous week. GBPUSD is expected to find its first support at 1.7019, with the next at 1.6949. Resistance exists first at 1.7175, and then at 1.7261.
In the week ahead, UK’s preliminary GDP data for the second quarter and the minutes of BoE’s latest monetary policy meeting would be crucial for determining short term trend in the Pound.
USD JPY
The USD traded marginally higher against the JPY over the past week, closing at 101.34. The Yen came under pressure, following the minutes of the Bank of Japan’s (BoJ) latest monetary policy meeting. The minutes indicated that nation’s sluggish exports and geopolitical tensions surrounding Ukraine and Iraq might hamper Japan’s inflation in the near term. Additionally, the minutes indicated that quantitative and qualitative monetary easing measures has been exerting its intended effects, and the bank will continue this measures to achieve the price stability target of 2.0%. In economic news, Japan's department store sales fell 4.6% (YoY) in June, marking the third successive month of decline in sales. The pair traded at a high of 101.81 and a low of 101.09. The pair is expected to find its first support at 101.01, with the next support expected at 100.69. The first resistance is at 101.74, and the next at 102.14.
Ahead this week, market participants would eye the Japanese consumer price inflation data along with domestic trade, leading economic and coincident indicators.
USD CHF
The USD traded 0.71% higher against the CHF and closed at 0.8985 in the last week, after the Fed chief, Janet Yellen, signaled that the central bank would raise interest rates sooner than expected, if the US data on labor and inflation shows sustained improvement. Meanwhile, the Swiss Franc lost ground, after the ZEW survey reported that economic expectations in Switzerland declined to 18-month low level of 0.1 in July, compared to a reading of 4.8 in the prior month. Markets were anticipating the economic expectations index to climb to 5.0. A separate data revealed that the producer and import price index dropped 0.8% in June, in line with market expectations. During the period, the pair traded at a high of 0.9005 and a low of 0.8898. The first support is at 0.8920, and the next at 0.8856. Resistance exists first at 0.9027, and then at 0.9070.
Apart from external cues, traders would keep an eye on the Swiss trade balance data for June.
USD CAD
Last week, the USD traded tad lower against the CAD and closed at 1.0733. Earlier, the Canadian dollar came under pressure, after the Bank of Canada (BoC) maintained its overnight interest rate at 1.0%, in line with market expectations. Moreover, the BoC Governor indicated that the Canadian economy is growing slowly than previously thought and will take longer time to fully recover. However, the CAD rebounded on Friday, as upbeat Canadian wholesales data lent support to the Loonie. A separate data revealed that consumer price index in the nation rose 2.4% from a year earlier, the fastest in more than two years, trumping market estimates for a 2.3% increase. Other data revealed that the Canadian manufacturing sales registered its strongest gain in almost a year and climbed 1.6% in May, surpassing market expectations of a 1.0% rise and reversing previous month’s 0.2% decline. Existing home sales in Canada increased 0.8% (MoM) in June, while the Teranet and National Bank of Canada reported that housing price index in Canada rose 4.4% (YoY) in June. USDCAD traded at a high of 1.0796 and a low of 1.0706 in the previous week. The first support is at 1.0694, with the next at 1.0655. The first resistance is at 1.0784, while the next is at 1.0835.
Moving ahead, consumer price inflation and retail sales data from Canada and a slew of economic releases from the US will be the key market triggers.
AUD USD
The AUD finished slightly lower against the USD last week, and closed at 0.9390. The minutes of the Reserve Bank of Australia’s (RBA) latest monetary policy meeting revealed concerns among policymakers about non-mining growth and the elevated value of the Australian Dollar. The minutes also indicated that consumer demand might remain subdued in the coming months. However, positive economic data from China, Australia’s largest trading partner boosted investors demand for the AUD. Data revealed that industrial production in China registered a 9.2% rise in June, while retail sales rose 12.4%. Moreover, upbeat Chinese economic growth data for the second quarter also supported the Aussie Dollar. During the week, the pair traded at a high of 0.9412 and a low of 0.9329. The first support is at 0.9342, and the next at 0.9294. The first resistance is at 0.9425, and the next at 0.9460.
This week, the Australian inflation data will be on investors’ radar. Also, speech by the RBA Governor, Glenn Stevens will be monitored closely. Additionally, preliminary manufacturing PMI data from China would be a key determinant for the Aussie.
Gold
In the prior week, Gold traded 1.97% lower against the USD and closed at USD1311.00, as the greenback strengthened triggered by Fed Chief, Janet Yellen’s comments that the interest rate in the US would be raised sooner than expected, while traders also took advantage of recent spike in gold prices for profit-taking. Nonetheless, the losses were limited as the greenback came under pressure on Friday, after data revealed that US consumer sentiment index fell unexpectedly in July, while leading economic index in the US rose less than expected in June. Continued tensions in Eastern Europe and Middle East also supported gold prices. The yellow metal traded at a high of 1339.90 and a low of 1292.60 in the previous week. Gold is expected to find support at 1289.10 and the next at 1267.20. The first resistance is at 1336.40, while the next is at 1361.80.
Looking ahead, gold traders will focus on inflation and durable goods order numbers along with other economic data from the US.
Crude Oil
Oil prices surged 2.28% last week and closed at USD103.13, amid growing geopolitical tensions in Eastern Europe and Middle East. On Wednesday, the US and the European Union announced fresh sanctions on Russia, over its support of rebels in Ukraine. Tensions escalated on Thursday, after the Malaysian passenger plane was shot down in Eastern Ukraine, raising concerns that a wider conflict or further sanctions could disrupt supplies from Russia. Oil prices spiked further after Israel send ground troops into the Gaza Strip, intensifying turmoil in the Middle East, the world’s most important oil-producing region. A higher than expected drop in weekly US crude inventories also supported crude oil prices. According to data released by the US Energy Information Administration (EIA), US crude stockpiles declined 7.5 million barrels for the week ended July 11. Meanwhile, the American Petroleum Institute (API) reported a drop of 4.8 million barrels in crude inventories for the same week. Oil traded at a high of 103.94 and a low of 99.01 in the previous week. Oil has its first major support at 100.11, while the next support exists at 97.10. The first resistance is at 105.04, and the next at 106.96.
In the week ahead, oil traders will keep a track on manufacturing data from the Eurozone and China for further direction. Additionally, US durable goods orders and housing data will be eyed for further direction.
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EUR USD
In the midst of deflationary concerns in the Euro-zone, market participants will keep a tab on preliminary annual inflation data. Additionally, employment data from Euro-zone and Germany will also attract market attention.
GBP USD
During this week, UK’s consumer confidence and manufacturing activity data would help in determining the trend in the Sterling.
USD JPY
Ahead this week, market participants would eye retail sales, industrial production and housing data from Japan which could prove a key determinant for the Yen.
USD CHF
Ahead this week, market participants will keep a close watch on UBS consumption and KOF leading indicator from Switzerland along with a slew of macroeconomic releases in the US for further direction.
USD CAD
Apart from external cues, the Loonie traders would keep a tab on the Canadian GDP data ahead this week.
AUD USD
In the week ahead, investors have their plate full with a raft of economic data scheduled for release in Australia including new home sales, building permits and manufacturing data.
Gold
The Fed’s interest rate decision and its monetary policy statement are expected to be the key determinants this week, as another reduction in the size of the bond purchases would further weigh on gold prices. Moreover, traders would also keep a tab on US nonfarm payrolls and second quarter growth data.
Crude Oil
In the week ahead, market participants will keenly await data from US, especially growth and the nonfarm payrolls data for hints on the strength of nation’s economic recovery. Moreover, US Fed’s interest rate decision will be keenly awaited. Geopolitical tensions in Ukraine and Gaza strip would also remain in focus, as any flare-up in situation could send oil prices higher.
Weekly Forex Update
The greenback ended the week on a weaker footing, ahead of US Federal Reserve meeting scheduled on December 15-16, where investors anticipate policy makers to raise interest rates for the first time in almost a decade.
In economic news, the US initial jobless claims rose more-than-expected to a five-month high level in the week ended 05 December. However, the data will probably bring little change to views of the Fed raising rates next week, as the claims have been below the 300.0K threshold for the 40th straight week, which is normally associated with healthy labor market conditions. Meanwhile, advance retail sales rose in November, after months of lackluster spending, highlighting that the US economy can withstand an interest rate hike. Also, producer prices in the US unexpectedly advanced for the first time in four months, on a monthly basis in November. However, the nation’s wholesale inventories surprisingly declined in October, reflecting decreases in the inventories of both durable and non-durable goods.
The Euro ended the week on stronger footing, after Germany’s final consumer price inflation advanced as expected by 0.1% on a monthly basis in November. Other macroeconomic data released during the week showed that the Eurozone GDP rose 0.3% QoQ in 3Q 2015, driven by a growth in private consumption and government spending, indicating that the region’s economic growth is on the right track. Meanwhile, German industrial production rebounded after two months of declines, but fell short of expectations, indicating that weak demand from emerging markets is adversely affecting a key sector of the Eurozone’s largest economy. Moreover, the nation’s trade surplus narrowed, while exports and imports fell more-than-expected in October. The British Pound ended the week in the green. The BoE left the benchmark interest rate unchanged at a record low of 0.5% and kept the asset purchase facility steady at £375 billion, as it expressed concerns over UK’s subdued inflation and wage growth. Further, the central bank also reiterated that it expected headline inflation to remain below 1.0% until the second half of 2016. In other economic news, Britain’s UK’s NIESR estimated GDP rose 0.6% during the September-November 2015 period, thus paving way for the BoE to raise interest rates in February next year. Also, the nation’s industrial production topped market expectations on a monthly basis in October. However, manufacturing production fell more-than-anticipated on a monthly basis during the same month, thereby indicating a weak start for the sector in the fourth quarter. Additionally, UK’s total trade deficit widened more-than-expected in October, as imports grew at its fastest pace in nearly a year and as the global economic slowdown weighed on demand for exports.
EURUSD
Last week, the EUR traded 1.06% higher against the USD and closed at 1.0989. Macroeconomic data showed that Eurozone GDP rose 0.3% QoQ in 3Q 2015, in line with market expectations, indicating that the region’s economy is gradually moving in the right direction. The growth was mainly attributed to a rise in private consumption and government spending. Additionally, the Euro-zone’s Sentix investor confidence index rose for a second straight month in December, notching its highest level in four months. Separately, the ECB member, Ewald Nowotny, defended the ECB’s recent monetary policy decision and criticized the financial community for having unrealistic expectations. Elsewhere in Germany, weak demand from emerging markets took a toll on the nation’s economy. Data showed that the nation’s industrial production rebounded in October after two months of declines, but failed to meet market expectations. Meanwhile, Germany’s final consumer price inflation advanced as expected by 0.1% on a monthly basis in November. During the previous week, the pair traded at a high of 1.1044 and a low of 1.0796. Immediate downside, the first support level is seen at 1.0843, followed by 1.0695, while on the upside, the first resistance level situated in 1.1091, followed by 1.1191. This week, investors would focus on the Markit manufacturing and services PMI data across the Eurozone to gauge the strength in the European economy. Additionally, the Eurozone’s consumer price inflation data for November would also be keenly watched by investors.
GBPUSD
Last week, the GBP traded 0.79% higher against the USD and closed at 1.5226. The BoE kept benchmark interest rate unchanged at a record low level of 0.5% and kept the size of its bond-buying intact at £375 billion. Also, the minutes of the BoE’s recent monetary policy revealed that the policymakers were in no rush about raising interest rates, pointing towards falling in oil prices and slower wage growth. In other economic news, industrial output was marginally up on a monthly basis in October on the back of stronger production of oil, water and power while manufacturing output unexpectedly fell on an annual basis in October, denting hopes of a balanced economic growth recovery in the fourth quarter. During the previous week, the pair traded at a high of 1.5240 and a low of 1.4956. Immediate downside, the first support level is seen at 1.5041, followed by 1.4857, while on the upside, the first resistance level situated in 1.5325, followed by 1.5425. Looking ahead, investors would closely monitor Britain’s consumer price inflation, retail sales as well as ILO unemployment rate to get better insights in the UK economy.
USDJPY
The USD traded 1.88% lower against the JPY last week, with the pair closing at 120.87. On the macroeconomic front, Japan dodged a recession in the third quarter led by a rise in business investments, which in turn brought about a 0.3% growth in the nation’s final GDP, defying market expectations for a flat reading. Additionally, machine orders in Japan surprisingly advanced for the second consecutive month, on a monthly basis in October, helping ease concerns about weakness in the nation’s capital spending. In other economic news, Japan’s Tankan large manufacturing index surprisingly remained steady in 4Q 2015, suggesting that the BoJ will likely hold off on further easing when it meets for its next monthly policy review. However, the survey also showed both big manufacturers and non-manufacturers expect a deterioration in business conditions in the coming three months due to soft overseas demand, which in turn could cause business firms to pull-back on their capital spending plans. Meanwhile, industrial production in Japan climbed for the second straight month in October, as initially estimated. The USD hit a high of 123.49 and a low of 120.58 against the JPY in the previous week. Immediate downside, the first support level is seen at 119.80, followed by 118.74, while on the upside, the first resistance level situated in 122.71, followed by 124.56. Moving ahead, market participants look forward to the BoJ’s interest rate decision, scheduled to be announced later this week.
USDCHF
The USD fell against the CHF last week, closing 1.33% lower at 0.9837. In economic news, Switzerland’s unemployment rate remained steady at 3.4% in November, as expected. Also, the nation’s foreign currency reserves exceeded investor expectations and reached an all-time high in November. Separately, the SNB kept benchmark interest rate steady at -0.75%, in a bid to prevent the “overvalued” franc from further appreciating and is also likely to continue intervening in currency markets in order to influence the exchange rate situation, if necessary. Further, the central bank expects consumer prices to fall by 0.5% next year before rising in 2017, however less than its September forecast. The USD hit a high of 1.0035 and a low of 0.9803 against the CHF in the previous week. The pair is expected to find its first support at 0.9748 and first resistance at 0.9981. The second support is expected at 0.9659 and second resistance at 1.0124. Going forward, investors this week would closely monitor Switzerland’s ZEW expectations survey and the SECO economic forecast for further cues in the Swiss Franc.
USDCAD
Last week, the USD traded 2.73% higher against the CAD and closed at 1.3742. On the economic front, Canadian housing starts rose unexpectedly in November and building permits surged in October, indicating a growing housing market, despite a tepid economy. Added to this, the nation’s new housing price index advanced more-than-expected on a monthly basis in October. Separately, the BoC Governor, Stephen Poloz, indicated that the central bank might follow the lead of other countries and introduce negative interest rates in order to stimulate the economy. However, he quickly stressed that such a plan is not on the anvil at present. The pair traded at a high of 1.3758 and a low of 1.3385 during the previous week. Immediate downside, the first support level is seen at 1.3498, followed by 1.3255, while on the upside, the first resistance level situated in 1.3872, followed by 1.4002. Moving ahead, market participants would concentrate on Canada’s existing home sales and consumer price inflation data, both for the month of November, for further direction in the CAD.
AUDUSD
The AUD traded 2.05% lower against the USD last week, with the pair closing at 0.7188. In economic news, Australia’s unemployment rate dropped to 5.8% in November, recording its lowest level in more than 18 months, from 5.9% in October. Contrary to market expectations, the economy added 71,400 new jobs, indicating that the nation’s job market continues to plough ahead. Other economic data showed that Australia’s AiG performance of construction index dropped in November while home loans growth dropped in October. Additionally, the Westpac consumer confidence index also edged down in December and the NAB business confidence index improved in November. During the previous week, the pair traded at a high of 0.7341 and a low of 0.7172. Immediate downside, the first support level is seen at 0.7126, followed by 0.7064, while on the upside, the first resistance level situated in 0.7296, followed by 0.7403. Moving ahead, investors would keep a close eye on the RBA minutes of its recent monetary policy meeting along with the new house price index data.
Gold
Gold fell last week, closing 1.07% lower at USD1074.77 per ounce, amid rising expectations that the Fed might increase its benchmark interest rates for the first time in nine years next week. The precious metal traded at a high of USD1086.10 per ounce and a low of USD1061.70 per ounce in the previous week. Gold is expected to its find support at USD1063.70 per ounce, and a fall through could take it to the next support level of USD1050.50 per ounce. The yellow metal is expected to find its first resistance at USD1088.10 per ounce, and a rise through could take it to the next resistance level of USD1099.30 per ounce.
Crude Oil
Crude oil traded 10.88% lower in the previous week, closing at USD35.62 per barrel, after the International Energy Agency (IEA) in its report indicated that the oil market will remain oversupplied for another year. Oil prices remained under pressure, after the OPEC in its monthly report highlighted an increase in its per day production output. Separately, the Energy Information Administration (EIA) showed that US crude oil stocks fell for the first time in 10-week by 3.6 million barrels to 485.8 million barrels in the week ended 04 December, while the American Petroleum Institute (API) indicated that US oil inventories narrowed by 1.9 million barrels last week. Last week, the commodity traded at a high of USD39.76 per barrel and a low of USD35.35 per barrel. Immediate downside, the first support level is seen at USD33.96 per barrel, followed by USD32.45 per barrel, while on the upside, the first resistance level situated in USD38.37 per barrel, followed by USD41.27 per barrel.
Weekly Forex Update
Last week, macroeconomic data released in the US showed that the nation’s final estimate of annualized GDP expanded 2.0% in 3Q 2015, down from 2.1% reported last month, continuing a sluggish trend in economic recovery. Also, the US Chicago Fed national activity index unexpectedly dropped to its lowest level since May 2015 in November. Meanwhile, the US preliminary durable goods orders remained steady in November, as the accelerated demand for autos, electronic products and fabricated metals were offset by weak demand for machinery and non-defense aircraft. Further, initial jobless claims in the week ended 19 December dropped more-than-expected to reach its lowest level in decades.EURUSD
GBPUSD
USDJPY
USDCHF
USDCAD
AUDUSD
Gold
Crude Oil
The highlight of the week was the Bank of Japan’s (BoJ) interest rate decision, as it took global financial markets by surprise after it introduced negative interest rate for the first time and trimmed the interest rate down to -0.1%, thus illustrating the central bank’s goal to end deflation and shore up the nation’s economy.
Last week, the US Federal Reserve kept benchmark interest rate steady at 0.5% and signaled that it was concerned about the ongoing global economic turbulence, but stopped short of ruling out a rate hike in March. It further pointed out that the US labor market conditions are improving and assured that inflation will pick up. It also reiterated its earlier stance that the oil price plunge is transitory.
In other economic news, the US preliminary annualized GDP advanced less-than-expected at an anaemic annual rate of 0.7% on a quarterly basis in 4Q 2015. Also, preliminary durable goods orders declined more-than-expected in December, indicating that economic growth weakened significantly at the end of 2015. Further, the nation’s flash Markit services PMI for January marked an inauspicious start to the New Year, as the service sector expanded at its slowest pace since December 2014. On the other hand, the consumer confidence index surprisingly rose to a 4-month high level in January, indicating that Americans remain upbeat about the economy’s future prospects.
The Euro ended the week on a stronger footing, after the Eurozone’s consumer price inflation advanced in line with investor expectations on an annual basis in January. Meanwhile, in Germany, the flash consumer price index fell in line with market expectations on a monthly basis in January. Further, the nation’s IFO business climate index eased to a 11-month low level during the same period, as German business firms look forward to this year with some anxiety.
The British Pound ended the week in the red. Macroeconomic data released showed that UK’s GDP expanded in line with market expectations on a quarterly basis in Q4 2015 but marked the weakest increase in almost three years, as construction and production output declined during the final quarter. Further, the nation’s seasonally adjusted nationwide house price index slowed more-than-expected in January, while BBA mortgage approvals declined to a seven-month low at the end of last year.
Elsewhere, in China, industrial profits dropped for the seventh consecutive month on an annual basis in December, mainly due to sluggish domestic demand.
EURUSD
During the previous week, the EUR traded 0.34% higher against the USD and ended at 1.0833. In economic news, Eurozone’s consumer price inflation advanced 0.4% in line with market expectations on an annual basis in January. However, the region’s economic sentiment indicator dropped to a five-month low level during the same month, as the slowdown in China weighed on sentiment across the region. Meanwhile, Germany’s GfK consumer confidence index remained steady in February. On the other hand, retail sales surprisingly declined on a monthly basis in December and the nation’s IFO business climate index declined more than expected to a 11-month low in January. Further, the sub-index measuring current business conditions slipped slightly, while the outlook sub-index slumped more than anticipated during the same period. The EUR hit a high of 1.0969 and a low of 1.0790 against the USD in the previous week. The pair is expected to find support at 1.0759, and a fall through could take it to the next support level of 1.0685. The pair is expected to find its first resistance at 1.0938, and a rise through could take it to the next resistance level of 1.1043. This week, investors would focus on the manufacturing and services PMI along with the unemployment rate data across the Euro-zone to gauge the strength in the European economy. Additionally, Germany’s construction PMI as well as factory orders data would also be keenly watched by investors.
GBPUSD
The GBP declined against the USD last week, closing 0.19% lower at 1.4251. On the macroeconomic front, UK’s GDP growth expanded in line with market expectations by 0.5% on a quarterly basis in Q4 2015. However, the nation’s annual pace of growth was the weakest in nearly three years, mainly due to global economic slowdown. Additionally, the nation’s seasonally adjusted nationwide house price index advanced less than expected on a monthly basis in January, while BBA mortgage approvals unexpectedly declined in December. In contrast, the GfK consumer confidence index unexpectedly rose in January, recording its highest level since August 2015. The pair traded at a high of 1.4415 and a low of 1.4149 during the previous week. The pair is expected to witness its first support at 1.4129 and second support at 1.4006, while the first resistance is expected at 1.4394 and second resistance at 1.4537. Looking ahead, investors anxiously await the BoE’s interest rate decision, scheduled to be announced this week. Meanwhile, Britain’s manufacturing, services and construction PMI data would also generate lot of market attention.
USDJPY
During the previous week, the USD traded 1.88% higher against the JPY and ended at 121.08. The Japanese Yen weakened, after the Bank of Japan (BoJ) surprisingly cut interest rate down to -0.1%, buckling under pressure to revive growth in the world's third-largest economy. Further, the central bank added that it will not hesitate to put the interest rate further into negative territory if deemed necessary. In other economic news, Japan’s national consumer price index advanced in line with market expectations by 0.2% on an annual basis, while the unemployment rate remained steady at 3.3% in December. On the other hand, the nation’s final Nikkei manufacturing PMI dropped in January, while flash industrial production index declined more than expected on a monthly basis in December. Additionally, the small business confidence index unexpectedly weakened for the second consecutive month in January, recording its lowest level since June 2015. The USD hit a high of 121.70 and a low of 117.66 against the JPY in the previous week. Immediate downside, the first support level is seen at 118.58, followed by 116.10, while on the upside, the first resistance level situated in 122.63, followed by 124.19. Moving ahead, market participants look forward to Japan’s manufacturing and services PMI, in addition to consumer confidence data, due this week.
USDCHF
The USD rose against the CHF last week, closing 0.82% higher at 1.0245. In economic news, Switzerland’s KOF leading indicator surprisingly advanced in January. Also, the UBS consumption indicator rose in December while trade surplus narrowed more than expected during the same month. During the previous week, the pair traded at a high of 1.0258 and a low of 1.0111. The pair is expected to find support at 1.0150, and a fall through could take it to the next support level of 1.0057. The pair is expected to find its first resistance at 1.0297, and a rise through could take it to the next resistance level of 1.0351. Going forward, investors this week would closely monitor Switzerland’s SVME purchasing managers' index and real retail sales data for further cues in the Swiss Franc. Additionally, the SECO consumer confidence index data would also grab significant amount of market attention.
USDCAD
Last week, the USD traded 1.0% lower against the CAD and closed at 1.4007. The CAD gained ground, after Canada’s GDP growth expanded for the first time in three months, in line with investor expectations by 0.3% on a monthly basis in November, suggesting that the economy rebounded from its slump in recent months. Also, the nation’s industrial product price index fell at a less-than-expected pace on a monthly basis in December. On the other hand, the raw material price index declined more-than-anticipated on a monthly basis during the same period. The USD hit a high of 1.4327 and a low of 1.3948 against the CAD in the previous week. The pair is expected to find support at 1.3862, and a fall through could take it to the next support level of 1.3715. The pair is expected to find its first resistance at 1.4241, and a rise through could take it to the next resistance level of 1.4474. Moving ahead, market participants would concentrate on Canada’s unemployment rate as well as the RBC manufacturing PMI data for further direction in the CAD.
AUDUSD
Last week, the AUD traded 1.03% higher against the USD and closed at 0.7079. In economic news, Australia painted a strong economic picture as the nation’s consumer price index rose more-than-anticipated by 0.4% QoQ in the December quarter, thus reducing the likelihood of an interest rate cut by the RBA next month. On the other hand, the nation’s Westpac leading index declined and private sector credit growth advanced less than expected on a monthly basis in December. Moreover, the AiG performance of manufacturing index registered a drop in January. The pair traded at a high of 0.7143 and a low of 0.6919 during the previous week. The pair is expected to find support at 0.6951, and a fall through could take it to the next support level of 0.6823. The pair is expected to find its first resistance at 0.7175, and a rise through could take it to the next resistance level of 0.7271. Moving ahead, along with the release of RBA’s interest rate decision, market participants would also keep a close eye on Australia’s trade balance and retail sales coupled with the AiG performance of construction and services indices data slated to release this week.
Gold
Gold rose last week, closing 1.85% higher at USD1118.21 per ounce, after the release of downbeat US fourth quarter GDP growth data raised expectations that the Fed will slow on further interest rate cuts. The precious metal traded at a high of USD1128.70 per ounce and a low of USD1098.20 per ounce in the previous week. The yellow metal is expected to witness its first support at USD1101.10 per ounce and second support at USD1084.40 per ounce, while the first resistance is expected at USD1131.60 per ounce and second resistance at USD1145.40 per ounce.
Crude Oil
Crude oil strengthened in the previous week, closing 4.44% higher at USD33.62 per barrel, on prospects of co-operation between the OPEC and non-OPEC members to cut production and curb the ongoing global supply glut. Separately, the Energy Information Administration (EIA) showed that that US crude stockpiles increased by 8.4 million barrels in the week ended 22 January to 494.9 million barrels, while the American Petroleum Institute (API) disclosed that US oil inventories rose by 11.4 million barrels last week. The black metal hit a high of USD34.82 per barrel and a low of USD29.25 per barrel in the previous week. Immediate downside, the first support level is seen at USD30.31 per barrel, followed by USD26.99 per barrel, while on the upside, the first resistance level situated in USD35.88 per barrel, followed by USD38.13 per barrel.
Good trades.
Forex Market Update 29Fev16
The greenback ended the week on a strong footing, after the US annualized GDP grew faster than expected in 4Q 2015, thus raising the chances for a near-term Fed interest rate hike. Further, durable goods orders rebounded the most in 10 months in January, offering a ray of hope for the nation’s struggling manufacturing sector. On the other hand, the nation’s preliminary Markit manufacturing PMI unexpectedly declined in February, registering its lowest level since September 2009. Further, the nation’s services industry weakened in February, as the flash Markit services PMI surprisingly contracted for the first time since October 2013, emphasizing that growing economic uncertainty is affecting domestic demand. Moreover, the consumer confidence index slumped more-than-expected to a seven-month low level, as worries about a slowing economy and tumbling stock prices took a toll.
The Euro ended the week in the red. Data showed that the specter of deflation still hovers over the Eurozone as the region’s consumer price index fell on a monthly basis in January. Adding to the downbeat economic picture, the flash Markit manufacturing PMI dropped more-than-expected in February, thus increasing the odds of more stimulus from the European Central Bank (ECB) next month. Meanwhile, Germany’s seasonally adjusted final GDP indicated that the economy remained on a steady-yet-modest growth path on a quarterly basis in 4Q 2015, mainly led by gains in domestic demand. Further, a robust rise in the nation’s service sector activity was contradicted by the weakest rise in manufacturing output, as preliminary Markit manufacturing PMI dropped to its lowest level since November 2014, signaling that the Eurozone’s largest economy is being affected by a slowdown in emerging markets. Moreover, the nation’s consumer price inflation advanced less-than-expected on a monthly basis in February. On the other hand, the nation’s Gfk consumer confidence index unexpectedly advanced in March, indicating that private consumption will continue to drive the nation’s growth.
The British Pound ended the week on a weak footing, on prospects of “Brexit” after the London Mayor, Boris Johnson, expressed his support for UK’s exit from the European Union bloc. Separately, the Bank of England (BoE) Governor, Mark Carney, indicated that the central bank stands ready to slash interest rates to zero if UK’s economic outlook worsens, but would be unlikely to deploy negative rates. In other economic news, investors heaved a sigh of relief after Britain’s preliminary GDP rose in line with market expectations, on a quarterly basis in Q4 2015. In contrast, the nation’s consumer confidence deteriorated in February.
EURUSD
Last week, the EUR traded 1.7% lower against the USD and closed at 1.094, after disappointing inflation and manufacturing PMI data in the Euro-zone.
Data showed that the Euro-zone’s consumer price index declined on a monthly basis in January, in line with market expectations, hinting towards further stimulus measures from the ECB in next month to shore up the slowing economic growth. Additionally, the region’s flash Markit manufacturing PMI fell more-than-anticipated in February. Also, the region’s final consumer confidence index eased in February. Separately, Germany’s seasonally adjusted final GDP expanded on a quarterly basis in 4Q 2015. Moreover, the nation’s Gfk consumer confidence index unexpectedly rose in March, indicating that private consumption will continue to drive growth in Europe’s largest economy. In other economic news, the nation’s flash consumer price index rose less-than-anticipated on a monthly basis in February. Meanwhile, the nation’s annual preliminary inflation recorded a flat reading in February, thus giving more room to the ECB to ramp up its stimulus programmee.. Further, the nation’s preliminary Markit manufacturing PMI dropped to a fifteen-month low level in February. Also, the nation’s IFO business expectations index dropped to a four-year low level and the IFO business climate index eased more-than-expected in February. The EUR hit a high of 1.1124 and a low of 1.0912 against the USD in the previous week. The pair is expected to witness its first support at 1.0860 and second support at 1.0780, while the first resistance is expected at 1.1072 and second resistance at 1.1204. Moving ahead, market participants look forward to Eurozone’s preliminary annual consumer price index, unemployment rate, Markit manufacturing PMI data and Germany’s unemployment rate and Markit manufacturing PMI data, slated to release this week.
GBPUSD
During the previous week, the GBP traded 3.45% lower against the USD and ended at 1.3864, after the BoE Governor, Mark Carney, dropped hints about additional stimulus in the UK economy. The BoE Governor, Mark Carney, in a speech to the Treasury select committee, indicated that the central bank is ready to respond with an interest rate cut or engage in additional assets purchase program, if the economic outlook worsens in the nation. At the same time, he diminished the probability of introducing negative interest rates. In economic news, UK’s preliminary GDP rose on a quarterly basis in Q4 2015, in line with market expectations. On the other hand, the Gfk consumer confidence index recorded a flat reading in February, falling to its lowest level in a year, hurt by concerns over the nation’s economic outlook. In other economic news, the nation’s BBA mortgage approvals advanced to the highest level in almost two-years in January. The GBP hit a high of 1.4300 and a low of 1.3854 against the USD in the previous week. The pair is expected to find support at 1.3712, and a fall through could take it to the next support level of 1.3560. The pair is expected to find its first resistance at 1.4158, and a rise through could take it to the next resistance level of 1.4452. Going forward, UK’s Markit manufacturing and services as well as construction PMI and nationwide house price index data, slated to release this week, would garner a lot of market attention.
USDJPY
During the previous week, the USD traded 1.14% higher against the JPY and ended at 113.94.
The Japanese Yen weakened, after Japan’s national consumer price index (CPI) fell to zero on an annual basis in January, at par with investor expectations, suggesting that the BoJ might consider further easing of monetary policy next month. Additionally, the nation’s flash Nikkei manufacturing PMI declined more-than-expected to a record low reading since June 2015 in February, showing signs that the nation’s overseas demand is falling sharply. On the other hand, the nation’s final leading index rose slightly in December while the final coincident index fell in the same month. Separately, the BoJ board member, Takahide Kiuchi, stated that Japanese economy continues to recover at a moderate pace and warned that negative interest rates could destabilize Japan’s financial system while opposing to the central bank’s recent negative interest rate decision. The USD hit a high of 114.00 and a low of 111.04 against the JPY in the previous week. The pair is expected to find support at 111.99, and a fall through could take it to the next support level of 110.04. The pair is expected to find its first resistance at 114.95, and a rise through could take it to the next resistance level of 115.95. This week, investors would focus on Japan’s unemployment rate, industrial production and Nikkei manufacturing and services PMI.
USDCHF
Last week, the USD traded 0.59% higher against the CHF and closed at 0.9961. On the data front, Switzerland’s Q4 industrial production eased on an annual basis in 4Q 2015. On the other hand, the nation’s UBS consumption indicator rose in January. Another set of data showed that the EU harmonized consumer price index slid on a monthly basis in January. In other economic news, the Swiss National Bank Chairman, Thomas Jordan, warned that the central bank could not take “endless” steps to ease monetary policy conditions, pointing that the central bank may not cut interest rates further. The pair traded at a high of 1.0005 and a low of 0.9852 during the previous week. The pair is expected to witness its first support at 0.9874 and second support at 0.9786, while the first resistance is expected at 1.0027 and second resistance at 1.0092. Looking ahead, market participants await the release of Switzerland’s GDP, manufacturing PMI and KOF leading indicator data, due to be released this week.
USDCAD
The USD fell against the CAD last week, closing 1.85% lower at 1.3514. On the economic front, Canada’s Finance Minister, Bill Morneau, stated that the nation needs an aggressive fiscal policy to deal with global economic slowdown and kick-start growth. The USD hit a high of 1.3861 and a low of 1.3505 against the CAD in the previous week. The pair is expected to find its first support at 1.3392 and first resistance at 1.3748. The second support is expected at 1.3270 and second resistance at 1.3983. Looking ahead, this week investors anxiously await the release of Canada’s GDP and Ivey purchasing manager’s index data.
AUDUSD
The AUD weakened against the USD last week, closing 0.27% lower at 0.7130. In economic news, Australia’s wage cost index rose less-than-expected on a quarterly basis in 4Q 2015. Meanwhile, the nation’s private capital expenditure unexpectedly rebounded in 4Q 2015 on a quarterly basis. The AUD hit a high of 0.7261 and a low of 0.7118 against the USD in the previous week. The pair is expected to find support at 0.7078, and a fall through could take it to the next support level of 0.7026. The pair is expected to find its first resistance at 0.7222, and a rise through could take it to the next resistance level of 0.7313. Moving ahead, this week market participants will look forward to RBA’s interest rate decision, Q4 GDP, the AiG performance of manufacturing index and trade balance data.
Gold
During the previous week, gold traded 0.27% lower and ended at USD1223.46 per ounce, amid a stronger greenback, backed by robust US economic data dampening the demand of yellow metal. The yellow metal witnessed a high of USD1254.30 per ounce and a low of USD1202.50 per ounce in the previous week. The precious metal is expected to find its first support at USD1200.17 per ounce and first resistance at USD1251.97 per ounce. The second support is expected at USD1175.43 per ounce and second resistance at USD1279.03 per ounce.
Crude Oil
Last week, crude oil traded 10.59% higher and ended at USD32.78 per barrel, as investors look forward to an upcoming meeting of OPEC and non-OPEC members in mind-March to resolve the persistent global supply glut issue. Separately, the Energy Information Administration (EIA) reported that US crude stockpiles advanced by 3.5 million barrels to 507.6 million barrels in the week ended 19 February, while the American Petroleum Institute (API) disclosed that US oil inventories rose by 7.1 million barrels to 506.2 million barrels in the last week. The commodity traded at a high of USD34.69 per barrel and a low of USD30.56 per barrel in the previous week. Crude oil is expected to witness its first support at USD30.70 per barrel and second support at USD28.57 per barrel, while the first resistance is expected at USD34.83 per barrel and second resistance at USD36.83 per barrel.
Good trades.
Weekly Forex Update
The highlight of the week was the US unemployment and non-farm payrolls data. Macroeconomic data released in the US showed that unemployment rate remained steady at an eight-year low level in February from January while the nation’s non-farm payrolls advanced more than expected in February, heightening the possibility that the US Federal Reserve would hike interest rates gradually this year. Another set of data indicated that the US ADP employment change advanced more-than-expected in February, suggesting that the nation’s job market is showing strong growth despite market turmoil and downturn in global economy. Further, the nation’s construction spending zoomed to the highest level in more than 8 years on a monthly basis in January, showing signs that the nation’s economy is regaining lost momentum. Also, the nation’s final Markit manufacturing PMI rose more-than-expected in February. On the other hand, the nation’s ISM manufacturing PMI remained in contraction territory for the fifth straight month in February, while the final Markit services PMI contracted for the first time since October 2013 during the same month, highlighting growth concerns in the world’s largest economy. Moreover, the US initial jobless claims unexpectedly advanced in the week ended 27 February.
Separately, the US Fed’s Beige Book report indicated a mixed picture of the US economy as growth was modest in half of the districts. It also reported that the economic activity continued to expand in most districts but with varied conditions. In addition, most Fed districts reported modest improvement in labor market conditions but wage growth was mixed from flat to strong across the country.
The Euro ended the week in the green, after the Euro-zone’s unemployment rate surprisingly fell to its lowest level since August 2011 in January. On the other hand, the region’s final Markit manufacturing PMI registered its lowest reading in a year in February, thus raising concerns that the region is facing yet another year of sluggish growth. Additionally, the Euro-zone’s preliminary consumer price index entered into negative territory for the first time since September 2015, thus adding to speculation that the ECB would announce further monetary stimulus this week.
Meanwhile, Germany’s seasonally adjusted unemployment rate remained steady in February. Further, the nation’s final Markit manufacturing PMI surprisingly advanced during the same month.
The GBP ended the week on a strong footing. In economic news, UK’s seasonally adjusted Markit manufacturing PMI declined to nearly a 3-year low level in February. Moreover, the nation’s construction PMI unexpectedly fell to the lowest level in 10-months in February.
EURUSD
During the previous week, the EUR traded 0.56% higher against the USD and ended at 1.1002. In macroeconomic news, the Eurozone’s unemployment rate surprisingly fell to 10.3% in January, touching its lowest level since August 2011. Additionally, the region’s final Markit manufacturing and services PMI unexpectedly rose in February. Further, the region’s retail sales advanced more-than-anticipated for the third straight month in January. On the other hand, the Euro-zone’s preliminary annual consumer price index fell into negative territory in February. Meanwhile in Germany, seasonally adjusted unemployment rate remained steady in February, in line with market expectations. Further, the nation’s final Markit manufacturing PMI surprisingly advanced in February while the services PMI unexpectedly rose to a two-month high level during the same month. Moreover, retail sales rose on a monthly basis in January. Also, the nation’s construction PMI advanced to a 5-year high level in February. During the previous week, the pair traded at a high of 1.1044 and a low of 1.0826. The pair is expected to find its first support at 1.0871 and first resistance at 1.1090. The second support is expected at 1.0739 and second resistance at 1.1176. Moving ahead, investors will look forward to the ECB’s interest rate decision along with the Eurozone’s flash Q4 GDP and Sentix investor confidence data, for further cues. Additionally, Germany’s consumer price index, trade balance and industrial production data, will also be keenly watched by investors.
GBPUSD
The GBP traded 2.59% higher against the USD last week, with the pair closing at 1.4223. In economic news, UK’s Markit manufacturing and services PMI fell to nearly a 3-year low level in February, thus adding to concerns of a slowdown in the nation’s economy. Moreover, construction PMI unexpectedly fell to the lowest level in 10-months in February. Also, the seasonally adjusted Nationwide house price index rose less-than-anticipated on a monthly basis in February. On the other hand, the nation’s mortgage approvals advanced more-than-anticipated to a two-year high level and net consumer credit expanded at the fastest pace in a decade in January. The pair traded at a high of 1.4250 and a low of 1.3836 during the previous week. The pair is expected to find support at 1.3957, and a fall through could take it to the next support level of 1.3690. The pair is expected to find its first resistance at 1.4370, and a rise through could take it to the next resistance level of 1.4517. Looking ahead, along with the release of the BoE’s quarterly report, market participants also await UK’s NIESR GDP estimate, industrial and manufacturing production data.
USDJPY
The USD traded marginally higher against the JPY last week, with the pair closing at 113.95. On the data front, Japan’s unemployment rate unexpectedly fell to 3.2% in January, thus showing that the nation’s labor market continues to be one of the bright spots for the economy. Moreover, the nation’s flash industrial production rebounded at the fastest pace in a year on a monthly basis in January. In contrast, the nation’s final Nikkei manufacturing PMI dropped in February and the Nikkei services PMI declined to a seven-month low level during the same month. Additionally, the nation’s seasonally adjusted retail trade unexpectedly fell on a monthly basis in January. In other economic news, the BoJ Governor, Haruhiko Kuroda, ruled out the possibility of further interest rate cuts into negative territory for now. He also reiterated that the central bank is closely monitoring global risks, and won’t hesitate to take necessary actions to achieve the inflation target. During the previous week, the pair traded at a high of 114.57 and a low of 112.16. The pair is expected to find support at 112.56, and a fall through could take it to the next support level of 111.15. The pair is expected to find its first resistance at 114.97, and a rise through could take it to the next resistance level of 115.97. Going forward, Japan’s Q4 GDP, Eco watchers survey, consumer confidence and trade balance data would garner a lot of market attention.
USDCHF
The USD fell against the CHF last week, closing 0.26% lower at 0.9934. The Swiss Franc gained ground, after Switzerland’s GDP topped market expectations and rose by 0.4% QoQ in Q4 2015. Further, the nation’s manufacturing PMI unexpectedly rose in February, Additionally, the nation’s real retail sales advanced in January, while the KOF leading indicator index surprisingly rose in February. During the previous week, the pair traded at a high of 1.0040 and a low of 0.9879. The pair is expected to find support at 0.9862, and a fall through could take it to the next support level of 0.9790. The pair is expected to find its first resistance at 1.0023, and a rise through could take it to the next resistance level of 1.0111. This week, investors would focus on Switzerland’s unemployment rate and consumer price index data, to gauge the strength in the nation’s economy.
USDCAD
The USD fell against the CAD last week, closing 1.41% lower at 1.3323. The Canadian dollar gained ground, after Canada’s GDP expanded more-than-anticipated by 0.2% on a monthly basis in December. Meanwhile, the nation’s annualized GDP expanded on a quarterly basis in Q4 2015, while markets expected it to stagnate. In other economic news, Canada’s current account deficit rose less-than-expected on a quarterly basis in 4Q 2015. Additionally, the nation’s seasonally adjusted Ivey purchasing managers index declined in February. The USD hit a high of 1.3589 and a low of 1.3317 against the CAD in the previous week. The pair is expected to find support at 1.3230, and a fall through could take it to the next support level of 1.3138. The pair is expected to find its first resistance at 1.3502, and a rise through could take it to the next resistance level of 1.3682. Moving ahead, this week market participants would look forward to the Bank of Canada’s (BoC) interest rate decision, in addition to Canada’s unemployment rate, housing starts and building permits data.
AUDUSD
Last week, the AUD traded 4.24% higher against the USD and closed at 0.7432, after the Reserve Bank of Australia (RBA) kept official interest rate unchanged at 2.0%, in line with market expectations. In a statement issued after the meeting, the central bank Governor, Glenn Stevens, reiterated that low inflation would provide more room to ease the monetary policy further. He also added that the central bank will keep a watch on the nation’s labor market and volatility in global financial markets. In economic news, Australia’s GDP expanded more-than-anticipated by 0.6% on a quarterly basis in Q4 2015, reducing the odds that the RBA will cut interest rates this year. Additionally, the nation’s AiG performance of manufacturing index advanced in February, while the services index entered into expansionary territory during the same month. In other economic news, Australia’s seasonally adjusted trade deficit narrowed more-than-expected in January. Further, the nation’s HIA new home sales index advanced for the second consecutive month on a monthly basis in January. On the other hand, the nation’s building permits declined and retail sales advanced less-than-expected on a monthly basis in January. The pair traded at a high of 0.7445 and a low of 0.7109 during the previous week. The pair is expected to find its first support at 0.7213 and first resistance at 0.7549. The second support is expected at 0.6992 and second resistance at 0.7665. Looking ahead, investors anxiously await the release of Australia’s AiG performance of construction index, NAB business confidence, Westpac consumer confidence and consumer inflation expectations data, all scheduled this week.
Gold
Last week, gold rose 2.9% to close at USD1258.95 per ounce, boosted by a weaker US Dollar and mounting concerns about global economic growth. The yellow metal hit a high of USD1280.70 per ounce and a low of USD1220.50 per ounce in the previous week. Immediate downside, the first support level is seen at USD1227.83 per ounce, followed by USD1194.07 per ounce, while on the upside, the first resistance level situated in USD1288.03 per ounce, followed by USD1314.47 per ounce.
Crude Oil
Crude oil strengthened in the previous week, closing 9.58% higher at USD35.92 per barrel, as plans to freeze output by the OPEC members spurred optimism among the investors.
Separately, the Energy Information Administration (EIA) reported that US crude inventories rose by 10.4 million barrels to 518 million barrels in the week ended 26 February while the American Petroleum Institute (API) reported that US oil inventories rose more-than-expected by 9.9 million barrels to 516.1 million barrels during the last week. The commodity traded at a high of USD36.24 per barrel and a low of USD32.32 per barrel in the previous week. Immediate downside, the first support level is seen at USD33.61 per barrel, followed by USD31.01 per barrel, while on the upside, the first resistance level situated in USD37.53 per barrel, followed by USD38.85 per barrel.
Good trades.
Weekly Forex Update
The highlight of the week was the European Central Bank (ECB) and the Bank of Canada’s (BoC) interest rate decision. The ECB injected fresh stimulus measures, in a bid to boost sluggish inflation rates and to lift the sagging Euro-zone’s economy. The central bank slashed benchmark interest rate to zero and expanded the quantitative easing program to €80.0 billion a month from €60.0 billion and deposit rate was reduced to -0.4% from -0.3%. Further, the ECB President, Mario Draghi, hinted that the central bank would reduce interest rates again only in the most extreme of circumstances.
On the macroeconomic front, the Eurozone’s preliminary GDP grew in line with investor expectations on a quarterly basis in 4Q 2015, mainly driven by robust investment spending. In contrast, the region’s Sentix investor confidence index dropped for the third consecutive month in March and reached its lowest level since April 2015, as prolonged low inflation weighed on investor sentiment. Meanwhile, in Germany, industrial production rebounded above expectations to a six-year high level on a monthly basis in January, indicating that robust domestic demand may be helping to underpin output even as external trade cools.
The BoC, in a widely expected move, kept benchmark interest rate steady at 0.5%. In a statement accompanying the decision, the central bank indicated that the global economy has progressed largely as it had projected in its January policy report. However, the BoC also expressed concerns that the nation’s financial vulnerabilities have crept higher and that the ongoing commodity-price slump has left the overall business investment in the country “very weak.”
The greenback ended the week in the red. Data released showed that the US consumer credit rose less-than-expected in January. On the other hand, initial jobless claims declined to a five-month low level in the week ended 05 March 2016, signifying that the nation’s labor market remains on a steady footing. Separately, the US Fed Vice Chairman, Stanley Fischer, indicated that US inflation is likely to pick-up pace and vouched for a near-term interest rate hike. On the other hand, the Fed Governor, Lael Brainard, suggested adopting a more cautious approach before considering another rate hike.
The British Pound ended the week on a strong footing. In economic news, UK’s manufacturing production rebounded in January after three straight months of declines, boosting optimism over the country's economic outlook. Further, British think-tank, the NIESR estimated that the nation’s economic growth slowed in the three months to February 2016.
EURUSD
The EUR strengthened against the USD last week, closing 1.35% higher at 1.1151. The ECB cut its main refinancing rate to zero, and expanded its asset-purchase program to €80 billion a month in an effort to combat persistent weakness in the Eurozone growth and inflation. Further, the ECB Chief, Mario Draghi, indicated that he doesn’t anticipate the need to cut rates further. On the economic front, the Eurozone’s preliminary GDP expanded by 0.3% QoQ, in line with market expectations in 4Q 2015. On the other hand, the region’s Sentix investor confidence index fell unexpectedly to its lowest level since April 2015. Meanwhile, in Germany, the seasonally adjusted industrial production advanced above expectations to a six-year high level on a monthly basis in January, mainly led by increased activity in the nation’s construction sector. Further, the nation’s final consumer price index rose in line with investor expectations on a monthly basis in February. In contrast, trade surplus narrowed in January, dragged down by falling exports. During the previous week, the pair traded at a high of 1.1218 and a low of 1.0822. The pair is expected to find support at 1.0910, and a fall through could take it to the next support level of 1.0668. The pair is expected to find its first resistance at 1.1305, and a rise through could take it to the next resistance level of 1.1460. This week, investors would focus on the Eurozone’s industrial production, trade balance, consumer price inflation and construction output data, to gauge the strength in the European economy.
GBPUSD
The GBP advanced against the USD last week, closing 1.05% higher at 1.4373. In macroeconomic news, UK’s manufacturing production rebounded above expectations, while the nation’s industrial production rose less-than-expected on a monthly basis in January. Further, NIESR estimated that Britain's economy grew at a quarterly rate of 0.3% in the three months to February, down from 0.4% in the three months to January. Additionally, UK’s BRC retail sales across all sectors rose less-than-expected on an annual basis in February, indicating that uncertainty over “Brexit” and concerns about the nation’s economic outlook has affected consumer confidence. On the other hand, UK’s total trade deficit narrowed in January. Separately, the BoE Governor, Mark Carney, warned that the possibility of Britain leaving the European Union represents the biggest domestic risk to the nation’s financial system and that the central bank will do everything in its capacity to achieve monetary and financial stability in the country. The pair traded at a high of 1.4439 and a low of 1.4118 during the previous week. Immediate downside, the first support level is seen at 1.4181, followed by 1.3989, while on the upside, the first resistance level situated in 1.4502, followed by 1.4630. Looking ahead, investors anxiously await the BoE’s interest rate decision and quarterly bulletin. Additionally, Britain’s ILO unemployment rate and budget report would also generate lot of market attention.
USDJPY
The USD traded 0.12% lower against the JPY last week, with the pair closing at 113.81. Last week, the Bank of Japan (BoJ) Governor, Haruhiko Kuroda, ruled out the possibility of further interest rate cuts into negative territory at this point and reiterated that the central bank is closely monitoring global risks, and stands ready to ease "without hesitation" if necessary. In macroeconomic news, Japan’s final GDP contracted less than initially estimated on a quarterly basis in 4Q 2015, as corporate spending in the nation picked up. Data showed that the nation’s consumer confidence index declined more-than-expected to its weakest level in more than a year, an unwelcome development for the BoJ’s policymakers, who are attempting to boost consumption and growth in the world’s third-largest economy. In other economic news, Japan’s preliminary leading index declined for the third consecutive month to its lowest level in four years, while the nation’s flash coincident index rose in line with investor expectations in January. The USD hit a high of 114.46 and a low of 112.23 against the JPY in the previous week. The pair is expected to find support at 112.54, and a fall through could take it to the next support level of 111.26. The pair is expected to find its first resistance at 114.77, and a rise through could take it to the next resistance level of 115.73. Moving ahead, market participants look forward to the BoJ’s interest rate decision, along with Japan’s industrial production, adjusted merchandise trade balance and tertiary industry index data, all schedule to be released this week.
USDCHF
Last week, the USD traded 1.08% lower against the CHF and closed at 0.9827. The Swiss Franc gained ground, after the nation’s consumer price inflation unexpectedly advanced for the first time in four months on a monthly basis in February. Additionally, the nation’s seasonally adjusted unemployment rate surprisingly held steady at 3.4% during the same month. On the other hand, the nation’s foreign currency reserves dropped in February. The pair traded at a high of 1.0093 and a low of 0.9803 during the previous week. The pair is expected to find its first support at 0.9722 and first resistance at 1.0012. The second support is expected at 0.9617 and second resistance at 1.0198. Going forward, investors this week would closely monitor the Swiss National Bank’s interest rate decision, along with Switzerland’s SECO economic forecasts, for further cues.
USDCAD
Last week, the USD traded 0.69% lower against the CAD and closed at 1.3232. The Bank of Canada (BoC) held key interest rate steady at 0.5%. Further, the central bank was generally upbeat about Canada’s near-term economic conditions and added that recent inflationary pressures will likely unwind in the coming months. On the data front, Canada’s unemployment rate unexpectedly rose to a three-year high level of 7.3% in February. Further, Canadian building permits declined more-than-expected, marking its second sharp retreat in three months on a monthly basis in January. Moreover, the nation’s new housing price index rose less-than-anticipated on a monthly basis during the same period. Bucking the trend, housing starts rose above expectations in February. During the previous week, the pair traded at a high of 1.3448 and a low of 1.3168. The pair is expected to find its first support at 1.3117 and first resistance at 1.3398. The second support is expected at 1.3002 and second resistance at 1.3563. Moving ahead, market participants would concentrate on Canada’s consumer price inflation and retail sales data for further direction in the CAD.
AUDUSD
During the previous week, the AUD traded 1.73% higher against the USD and ended at 0.7561. On the economic front, Australia’s AiG performance of construction index slid further to a one-year low level in February. Further, the Westpac consumer confidence index declined, while consumer inflation expectations eased in March. In other economic news, Australia’s NAB business conditions index advanced, while the NAB business confidence index held steady in February, providing reassurance that the nation’s non-mining recovery remains resilient in the face of global economic challenges. In contrast, home loan approvals slumped more-than-expected to a seven-month low level in January. The pair traded at a high of 0.7585 and a low of 0.7393 during the previous week. The pair is expected to find support at 0.7441, and a fall through could take it to the next support level of 0.7320. The pair is expected to find its first resistance at 0.7633, and a rise through could take it to the next resistance level of 0.7705. Moving ahead, along with the release of RBA’s March meeting minutes, market participants would also keep a close eye on Australia’s unemployment rate as well as the Westpac leading index data.
Gold
During the previous week, gold traded 0.75% lower and ended at USD1249.45 per ounce, as a broad rally in global equity markets dented the demand for the safe haven yellow metal. The precious metal traded at a high of USD1287.80 per ounce and a low of USD1237.50 per ounce in the previous week. Immediate downside, the first support level is seen at USD1229.40 per ounce, followed by USD1208.30 per ounce, while on the upside, the first resistance level situated in USD1279.70 per ounce, followed by USD1308.90 per ounce.
Crude Oil
Crude oil traded 7.18% higher in the previous week, closing at USD38.50 per barrel, on speculation that that the world’s top oil producers would soon agree to an output freeze and help reduce the persistent global supply glut. Further, the International Energy Agency (IEA) indicated that output in the US and other non-OPEC countries has started to fall and that Iran did not pump as much new oil into the market as expected. Moreover, Baker Hughes reported that the US oil rig count fell by 6 to a level of 386 in the week ended 11 March. Separately, the Energy Information Administration (EIA) reported that that US crude inventories rose by 3.9 million barrels to 521.9 million barrels in the week ended 04 March, while the American Petroleum Institute (API) indicated that US oil inventories rose more-than-expected by 4.4 million barrels to a record high level of 520.5 million barrels last week. Last week, the commodity traded at a high of USD39.02 per barrel and a low of USD36.09 per barrel. Immediate downside, the first support level is seen at USD36.75 per barrel, followed by USD34.95 per barrel, while on the upside, the first resistance level situated in USD39.68 per barrel, followed by USD40.81 per barrel.
Happy pips.