Weekly Market Watch

Released 09 February 2015 - Weekly Newsletter

Last week recap

Extended its previous week’s gains, gaining a fraction after the Greenback recovered most of its earlier losses in the wake of a strong Non-Farm Payrolls number. The week began with the rate consolidating at a slightly higher level after making its weekly low of 1.1291 on Monday as Spanish Manufacturing PMI printed at 54.7 versus 52.2 expected, while Italian PMI showed a reading of 49.9 compared to an anticipated print of 49.3. Also out was U.S. ISM Manufacturing PMI, which showed a reading of 53.5 versus 54.9 expected. The pair then made its weekly high of 1.1533 on Tuesday after news that Greek PM Alexis Tsipras would not demand a debt writedown from international creditors. Economic data had Spanish Unemployment Change come out at +78.0K versus +83.4 expected and U.S. Factory Orders, which showed a decline of -3.4% m/m compared to an anticipated decline of -1.8%. On Wednesday, the rate declined after Greece began debt restructuring negotiations with the IMF, in addition, the ECB said it would not continue waiving its collateral rule for Greek government debt. Economic numbers had U.S. ISM Non-Manufacturing PMI print at 56.7, in line with expectations, while ADP Non-Farm Employment Change showed an increase of +213K versus +224K expected. The pair then gained ground on Thursday after EU Economic Forecasts upgraded their outlook for the Eurozone, raising their GDP projection to +1.3% in 2015 and +1.9% in 2016 compared to its November forecast of +1.1% in 2015 and +1.7% in 2016. Thursday’s data had the U.S. Trade Balance show a deficit of -46.6B compared to an expected deficit of -38.2B while German Factory Orders grew +4.2% m/m versus +1.2% anticipated. The pair then dropped on Friday after U.S. Non-Farm Payrolls showed an increase to +257K versus +236K expected, with the previous number upwardly revised to +329K, nevertheless, the U.S. Unemployment Rate increased to 5.7% from 5.6%. EUR/USD went on to close at 1.1313, with an overall gain of +0.3% for the week. Late Friday, Greece was notified by Eurogroup chairman Djesselbloem that Greece must apply for a bailout extension by February 16th to continue receiving Eurozone financial backing. In response to the Eurogroup, Greek PM Tsipras said on Sunday that he would give the Greek jobless priority over international creditors that have extended over $300 billion in loans to Greece.
Gained ground last week as the United States reported a better than expected Non-Farm Payrolls number and with mixed economic numbers out of Japan. The week began with the pair gaining on Monday as Japanese Final Manufacturing PMI came out with a reading of 52.2, in line with expectations. The rate then made its weekly low of 116.87 on Tuesday after a lower than expected U.S. Factory Orders number. On Wednesday, the pair continued losing ground after the United States reported a lower than expected ADP Non-Farm Employment Change number and Japanese Average Cash Earnings showed an increase of +1.6%, in line with expectations. The rate gained fractionally on Thursday despite a lower than expected U.S. Trade Balance number. On Friday, the pair made its weekly high of 119.21 after a strong U.S. Non-Farm Payrolls number. USD/JPY closed at 119.12, with an overall gain of +1.3%.
Extended its previous week’s gains last week as the BOE left rates and stimulus measures unchanged and the United States reported mixed economic and employment data. The week began with Cable losing ground on Monday despite UK Manufacturing PMI, which came out at 53.0 compared to an expected reading of 52.9. The rate then gained ground on Tuesday after making its weekly low of 1.4988 as UK Construction PMI showed a reading of 59.1 versus an expected 56.9 print. Cable continued higher on Wednesday as UK Services PMI showed a reading of 57.2 compared to a consensus of 56.6. The pair moved sharply higher on Thursday as the BOE left its benchmark Official Bank Rate at 0.50% and the Asset Purchase Facility at 375B as widely anticipated. Also out was UK Halifax HPI, which showed a +2.0% increase m/m, significantly higher than the +0.1% gain that was expected. Cable made its weekly high on Friday, before declining after the UK Trade Balance showed a deficit of -10.2B compared to -9.0B expected, and a strong U.S. Non-Farm payrolls number. GBP/USD went on to close at 1.5237, with an overall gain of +1.2% from its previous weekly close.
Reversed direction, gaining ground last week as the RBA lowered rates and the United States reported mixed economic data. The rate started the week gaining on Monday after a lower than expected U.S. ISM Manufacturing PMI number. The pair made its weekly low of 0.7612 on Tuesday after the RBA cut its benchmark Cash Rate by 25 bps from 2.50% to 2.25%, the first time since September of 2013. In his statement RBA Governor Glenn Stevens said that, “For the past year and a half, the cash rate has been stable, as the Board has taken time to assess the effects of the substantial easing in policy that had already been put in place and monitored developments in Australia and abroad. At today''s meeting, taking into account the flow of recent information and updated forecasts, the Board judged that, on balance, a further reduction in the cash rate was appropriate.” Also out on Tuesday, the Australian Trade Balance showed a deficit of -0.44B versus -0.85B expected, while Australian Building Approvals dropped -3.3% compared to an expected decline of -4.8%. On Wednesday, the pair consolidated at a slightly lower level after the Australian NAB Quarterly Business Confidence index showed a reading of 2 compared to a previous reading of 6. The rate then rallied on Thursday despite Australian Retail Sales increasing +0.2% m/m, missing expectations of a +0.3% increase. Friday saw the pair make its weekly high of 0.7875 after the RBA Statement, which said that, “Commodity prices have fallen in the past three months. These price declines, particularly for oil, largely reflect supply-side factors, although weaker-than-expected growth of global demand for commodities has contributed.” AUD/USD went on to close at 0.7792, with a weekly gain of +0.6%.
Lost ground last week as Canada reported mostly better than expected economic data, while U.S. numbers were mixed. The rate began the week selling off after making its weekly high of 1.2772 on Monday as the U.S. reported a weaker than expected ISM Manufacturing PMI number. The pair continued lower on Tuesday, making its weekly low of 1.2350 after Canadian RMPI declined by -7.6% m/m compared to an expected -8.8% drop. The rate then rallied on Wednesday after Canadian Ivey PMI printed at 45.4, significantly lower than the expected reading of 53.8. The pair traded lower on Thursday after the Canadian Trade Balance showed a deficit of -0.6B compared to an expected deficit of -1.2B. On Friday, the rate gained ground despite Canadian Employment Change, which showed an increase of +35.4K, significantly higher than the +4.7K expected. USD/CAD went on to close at 1.2520, with an overall loss of -1.7% for the week.
Reversed direction, gaining ground last week as New Zealand reported better than expected numbers with mixed data out of the United States. The pair began the week trading higher after a lower than expected U.S. Non-Manufacturing PMI number. The rate continued higher after making its weekly low of 0.7174 on Tuesday after New Zealand Employment Change increased +1.2% q/q compared to an expected increase of +0.8%, nevertheless, the New Zealand Unemployment Rate increased to 5.7% from 5.4%. Also out was the NZ GDT Price Index, which showed a reading of +9.4% compared to a previous +1.0% print. The pair continued higher, making its weekly high of 0.7447 on Wednesday after a disappointing U.S. employment number. Thursday saw the rate extend its gains after a higher than expected U.S. Trade deficit. The rate then lost ground on Friday after a better than anticipated U.S. Non-Farm Payrolls number. NZD/USD went on to close at 0.7338, with an overall weekly gain of +1.2%.

The week ahead

AUD The Australian economic calendar busier than usual is this coming week, featuring key jobs data on Thursday. Monday starts the week’s highlights off with a speech by RBA Governor Stevens, ANZ Job Advertisements (1.8%) and the G20 Meetings, while Tuesday’s key events include the NAB Business Confidence survey (2), the HPI (2.0%), the G20 Meetings and Westpac Consumer Sentiment (last 2.4%). Wednesday then offers Home Loans (2.3%) and a speech by RBA Assistant Governor Debelle, while Thursday features MI Inflation Expectations (last 3.2%), the Employment Change (-4.7K), the Unemployment Rate (6.2%), and a speech by RBA Governor Stevens. Resistance for AUD/USD is seen at 0.7875/80, 0.8024/67 and 0.8105, with support noted at 0.7719, 0.7684/0.7700 and 0.7625.

CAD The Canadian economic calendar is characteristically rather quiet this coming week, only featuring a speech by Governing Council Member Wilkins on Tuesday, NHPI (0.2%) on Thursday and Manufacturing Sales (-0.9%) on Friday, as well as the G20 Meetings on Monday and Tuesday. Resistance for USD/CAD is seen at 1.2676, 1.2735 and 1.2797/1.3062, while support shows at 1.2591, 1.2456 and 1.2351/78.

EUR The Eurozone economic calendar is moderately active this coming week, featuring the Eurogroup Meetings on Wednesday. Monday starts the week’s highlights off with the G20 Meetings, and Tuesday’s key events include French Industrial Production (0.3%) and the conclusion of the G20 Meetings. Wednesday then offers the Eurogroup Meetings, while Thursday features the EU Economic Summit. Friday’s important data then concludes the week with French Preliminary GDP (0.1%), German Preliminary GDP (0.3%), French Preliminary Non-Farm Payrolls (-0.1%), Italian Preliminary GDP (0.0%) and EZ Flash GDP (0.2%). Resistance for EUR/USD is seen at 1.1533, 1.1422/59 and 1.1375, with support showing at 1.1261/97, 1.1097/1.1114 and 1.0917.

GBP The UK economic calendar is relatively quiet this coming week, featuring the BOE Inflation report on Thursday. Monday starts the week’s highlights off with the G20 Meetings, and Tuesday’s key events include the G20 Meetings, Manufacturing Production (0.3%), and the NIESR GDP Estimate (last 0.6%). Wednesday then offers nothing notable, while Thursday features a speech by BOE Governor Carney, the BOE Inflation Report and the BOE Inflation Letter. That concludes the week’s important data since Friday offers nothing of note. Resistance to the topside for GBP/USD shows at 1.5351, 1.5485 and 1.5540, while support for the pair is expected at 1.5222, 1.5033/1.5101 and 1.4950/88.

JPY The Japanese economic calendar is not very busy this coming week, featuring Current Account data (0.95T) to start the week off on Sunday. Monday then offers the G20 Meetings and Tertiary Industry Activity (0.1%), and Tuesday’s key events include the G20 Meetings. Wednesday is a Bank Holiday and has Core Machinery Orders (2.4%) scheduled for release. That concludes the week’s highlights since Thursday and Friday offer nothing notable. Resistance for USD/JPY currently shows up at 119.21, 119.62 and 120.64/82, with support indicated at 118.45/97, 117.17/118.04 and 115.56/89.

NZD The New Zealand economic calendar is quiet this coming week, only featuring the Business NZ Manufacturing Index (57.7) on Wednesday and the G20 Meetings on Monday and Tuesday. The chart for NZD/USD shows resistance at 0.7607/59, 0.7430/92 and 0.7368/96. On the downside, technical support is expected at 0.7323/25, 0.7174/0.7213 and 0.7112.

USD The U.S. economic calendar is this moderately active coming week, featuring Retails Sales data on Thursday. Monday starts the week’s highlights off with the G20 Meetings and a speech by FOMC Member Powell, and Tuesday’s key events include the G20 Meetings, a speech by FOMC Member Lacker, JOLTS Job Openings (5.03M), and Mortgage Delinquencies (10th-13th, last 5.85%). Wednesday then offers Crude Oil Inventories (last 6.3M) and the 10-year Bond Auction (last average yield 1.93%, with a 2.6 bid-to-cover ratio), while Thursday features Core Retail Sales (-0.4%), Retail Sales (-0.3%), Weekly Initial Jobless Claims (279K), and Business Inventories (0.2%). Friday’s important data then concludes the week with Import Prices (-3.1%) and the Preliminary University of Michigan Consumer Sentiment survey (98.2).


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