The highlight of the week was the Bank of England’s (BoE) monetary policy decision.
The BoE left the key interest rate steady at a record low level of 0.25%, in line with market expectations. However, the central bank did not rule out the possibility of another interest rate cut later this year. Further, the bank stated that policymakers were unanimous in their decision to keep the key interest rate at a record low and to keep the size of its quantitative easing program unchanged at £435.0 billion and to continue with the plan to purchase up to £10.0 billion worth of corporate bonds. Meanwhile, the central bank’s summary report indicated that the recent economic data is encouraging and mentioned that the committee will closely monitor the probable longer-term repercussions of the historic Brexit vote and added that a rate cut could be introduced to support a weakening economy, if the bank’s August forecast did not improve by that time.
The US Dollar gained ground, after data indicated that the consumer prices in the US advanced more than expected on a monthly basis in August, offering fresh signs that inflation in the world’s largest economy is gradually picking up in the second half of this year. Further, the number of Americans filing for fresh unemployment benefits rose less than expected in the week ended 10 September 2016. On the contrary, the nation’s advance retail sales showed a poor performance in August, declining for the first time in five-months. Further, the nation’s industrial production fell more than expected in August, while manufacturing production eased more than anticipated on a monthly basis in August. Also, the NFIB small business optimism index unexpectedly dropped in August. Meanwhile, the nation’s flash Reuters/Michigan consumer sentiment index unexpectedly remained steady in September, while business inventories remained flat on a monthly basis in July.
Separately, the Federal Reserve Governor, Lael Brainard, struck a dovish tone by stating that the case for a tighter monetary policy has become less compelling and that the improvement in the US labor market had been slow to spark inflation.
The Euro ended the week on a weaker footing, after the Eurozone’s industrial production dropped on a monthly basis in July, indicating sluggish economic recovery in the common currency region. Also, the region’s seasonally adjusted trade surplus narrowed for the third straight month in July, amid a drop in exports. On the other hand, the consumer price index climbed 0.1% on a monthly basis in August.
Separately, Germany’s final consumer price inflation remained flat on a monthly basis in August. Moreover, the nation’s ZEW economic sentiment index surprisingly remained unchanged in September, highlighting that investors remained cautious about the nation’s growth prospects.
EURUSD
The EUR weakened against the USD last week, closing 0.69% lower at 1.1155, after the Eurozone’s seasonally adjusted industrial production fell on a monthly basis in July. Also, the region’s seasonally adjusted trade surplus narrowed in July. In other economic news, Eurozone’s consumer price index (CPI) climbed 0.1% on a monthly basis in August, meeting market expectations. Meanwhile, the final CPI was confirmed at 0.2% on an annual basis in August. Further, the region’s ZEW economic sentiment index rose in September. Separately, in Germany, the final consumer price index remained flat on a monthly basis in August. Additionally, the nation’s ZEW economic sentiment index surprisingly remained unchanged in September. Further, the current situation index fell more than expected in the same month. During the previous week, the pair traded at a high of 1.1284 and a low of 1.1150. The pair is expected to witness its first support at 1.1109 and second support at 1.1062, while the first resistance is expected at 1.1243 and second resistance at 1.1330. This week will bring some crucial data releases, consisting of the flash Markit manufacturing and services PMI across the Eurozone along with consumer confidence data. Additionally, German Buba monthly report would also be keenly watched by investors’.
GBPUSD
The GBP traded 2% lower against the USD last week, with the pair closing at 1.3002, after the Bank of England (BoE), in its latest monetary policy meeting, maintained the benchmark interest rate steady at 0.25%. In other economic news, UK’s consumer price index (CPI) advanced less than anticipated on a monthly basis in August. Meanwhile, the CPI held steady at 0.6% on an annual basis in the same month. Also, the ILO unemployment rate remained unchanged at an eleven-year low level of 4.9% during the three months to July, in line with market expectations. On the contrary, the nation’s retail sales fell less than expected on a monthly basis in August. The pair traded at a high of 1.3347 and a low of 1.2998 during the previous week. The pair is expected to witness its first support at 1.2884 and second support at 1.2767, while the first resistance is expected at 1.3233 and second resistance at 1.3465. Going forward, UK’s Rightmove house price index, public sector net borrowings and CBI industrial trends survey, slated to release this week, would garner market attention.
USDJPY
Last week, the USD traded 0.39% lower against the JPY and closed at 102.29. Macroeconomic data indicated that, Japan’s final industrial production unexpectedly fell on a monthly basis in July. Further, the nation’s flash machine tool orders declined on an annual basis in August. On the other hand, machinery orders surprisingly rose for the second straight month on a monthly basis in July. Additionally, the BSI large manufacturing index rebounded on a quarterly basis in 3Q 2016. The pair traded at a high of 103.36 and a low of 101.42 during the previous week. The pair is expected to witness its first support at 101.35 and second support at 100.42, while the first resistance is expected at 103.29 and second resistance at 104.30. Moving ahead, market participants look forward to the BoJ’s interest rate decision accompanied by its Governor, Haruhiko Kuroda’s speech. Moreover, the nation’s total merchandise trade balance, machine tool orders, flash Nikkei manufacturing PMI and all industry activity index, all scheduled to release this week.
USDCHF
During the previous week, the USD traded 0.49% higher against the CHF and ended at 0.9804. The Swiss Franc lost ground, after data indicated that Switzerland’s seasonally adjusted unemployment rate surprisingly rose to a three-month high level of 3.4% in August, its first increase since May. On the other hand, the ZEW survey of economic expectations index rebounded for the first time in three months in September. During the previous week, the pair traded at a high of 0.9818 and a low of 0.9691. The pair is expected to witness its first support at 0.9724 and second support at 0.9644, while the first resistance is expected at 0.9851 and second resistance at 0.9898. This week, investors would focus on Switzerland’s SECO economic forecasts, trade balance and SNB’s 3Q bulletin report.
USDCAD
The USD rose against the CAD last week, closing 1.25% higher at 1.3212. On the economic front, the Teranet/National Bank house price index in Canada advanced on a monthly basis in August. Also, the nation’s manufacturing shipments rose on a monthly basis in July. The USD hit a high of 1.3248 and a low of 1.3030 against the CAD in the previous week. The pair is expected to find its first support at 1.3079 and first resistance at 1.3297. The second support is expected at 1.2945 and second resistance at 1.3381. Going ahead, investors anxiously await Canada’s consumer price index and retail sales data, due to release this week.
AUDUSD
Last week, the AUD traded 0.66% lower against the USD and closed at 0.7491. The Reserve Bank of Australia’s Assistant Governor, Christopher Kent, painted a positive outlook of the Australian economy and stated that recent economic growth has been stronger than what the central bank had expected. He also indicated that prospects for a pickup in wages growth and inflation look good. In other economic news, Australia’s unemployment rate unexpectedly fell to 5.6% in August, hitting its lowest level in almost three years. Additionally, the nation’s NAB business confidence index rose in August. Also, the Westpac consumer confidence index nudged higher in September. Meanwhile, the nation’s NAB business conditions index eased in August. Further, consumer inflation expectations fell for the second consecutive month in September. The AUD hit a high of 0.7568 and a low of 0.7442 against the USD in the previous week. The pair is expected to find support at 0.7433, and a fall through could take it to the next support level of 0.7374. The pair is expected to find its first resistance at 0.7559, and a rise through could take it to the next resistance level of 0.7626. Looking ahead, market participants would closely monitor RBA’s September meeting minutes along with the nation’s house price index and Westpac leading index data, all due to release this week.
Gold
Gold fell last week, closing 1.32% lower at USD1310.35 per ounce, amid rising expectations that the Fed might increase the benchmark interest rate this year, after data indicated that the US consumer price index rose faster than expected in August. The yellow metal witnessed a high of USD1335.90 per ounce and a low of USD1309.20 per ounce in the previous week. Immediate downside, the first support level is seen at USD1302.97 per ounce, followed by USD1292.73 per ounce, while on the upside, the first resistance level situated in USD1329.67 per ounce, followed by USD1346.13 per ounce.
Crude Oil
Last week, crude oil traded 6.21% lower and ended at USD43.03 per barrel, after the International Energy Agency (IEA) reduced the global oil demand forecast for 2016 and 2017, signaling that global crude glut could persist for a much longer period than anticipated. Meanwhile, the Energy Information Administration (EIA) showed that US crude oil stocks surprisingly fell by 559,000 barrels to 510.8 million barrels in the week ended 09 September 2016, while the American Petroleum Institute (API) indicated that US oil inventories rose less than expected by 1.4 million barrels to 514.7 million barrels last week. The commodity hit a high of USD46.51 per barrel and a low of USD42.74 per barrel in the previous week. Crude oil is expected to witness its first support at USD41.78 per barrel and second support at USD40.38 per barrel, while the first resistance is expected at USD45.55 per barrel and second resistance at USD47.92 per barrel.
Good trades Traders.
