Last week, the forex market was dictated by the outcome of the US Presidential election.
The greenback ended the week higher, as investors digested the shock of Donald Trump pulling off a stunning victory in the US Presidential election. Meanwhile, the Federal Reserve (Fed) Vice Chair, Stanley Fisher, in his first remarks since the Presidential election, stated that the central bank is close to achieving its dual mandate of 2.0% longer-run inflation target and maximization of employment. Further, he noted that economic growth prospects appear “strong enough” for the central bank to proceed with a gradual increase in interest rates. Separately, the Chicago Fed President, Charles Evans, expressed concerns that even though inflation has picked up and is close to the Fed’s 2.0% target, the central bank may not be able to reach that goal. He also added that it would be reasonable to hike interest rates in December, citing strength in the US economy. Additionally, the St. Louis Fed President, James Bullard, continued to endorse another rate hike next month and reiterated his call for monetary policy to remain accommodative with just a single 0.25% rate hike over the next two to three years.
In other economic news, the flash Reuters/Michigan consumer sentiment index in the US surged to a five-month high in November, indicating that Americans became more upbeat about the nation’s economic outlook. Moreover, the number of Americans filing for fresh unemployment benefits dropped more than anticipated in the week ended 05 November, pointing towards healthy momentum in the nation’s labor market. Additionally, the NFIB small business optimism index surprisingly notched its highest level since December 2015 in October.
The Euro ended the week on a weaker footing. The European Commission, in its first economic forecast since the Brexit vote, raised the Euro-zone’s growth projection for this year but slashed it for 2017, citing increased political uncertainty, including Britain’s decision to leave the European Union and weakening global trade. The Commission projected the region to grow by a modest 1.7% this year, from 1.6% estimated earlier in May, while the growth projection for next year was trimmed to 1.5% from 1.8%. Further, the commission forecasted that inflation in the common currency region would hit 1.4% in both 2017 and 2018, after rising to 0.3% this year, thus offering some signs of relief to the European Central Bank (ECB), which is struggling to spur inflation in the region.
The Yen ended the week lower. Minutes of the Bank of Japan’s (BoJ) recent monetary policy meeting disclosed that most policymakers believed it could take time for inflation expectations to firm and noted that the nation’s economic rebound was continuing at an acceptable pace.
EURUSD
Last week, the EUR traded 2.56% lower against the USD and closed at 1.0850, after the Eurozone’s Sentix investor confidence index jumped in November. Meanwhile, the region’s seasonally adjusted retail sales eased less than expected on a monthly basis in September. Elsewhere, in Germany, the final consumer price index accelerated on an annual basis in October. Moreover, the nation’s Markit construction PMI expanded in the same month. On the contrary, the nation’s seasonally adjusted factory orders unexpectedly declined in September. Also, the nation’s seasonally adjusted industrial production dropped more than expected in the same month. Further, the nation’s seasonally adjusted trade surplus unexpectedly narrowed in September, while exports fell less than expected in the same month. During the previous week, the pair traded at a high of 1.1300 and a low of 1.0830. Immediate downside, the first support level is seen at 1.0685, followed by 1.0522, while on the upside, the first resistance level situated in 1.1155, followed by 1.1462. This week, investors would focus on gross domestic product (GDP) and ZEW survey of economic sentiment across the Eurozone along with the region’s industrial production and consumer price inflation data and a speech by the ECB President, Mario Draghi.
GBPUSD
During the previous week, the GBP traded 0.66% higher against the USD and ended at 1.2599. The European Commission projected that the UK economy to pick up pace this year, growing by 1.9% from an earlier forecast of 1.8%, but nearly halved its economic growth outlook for 2017, due to the impact of the Brexit vote. It now expects the UK economy to grow by 1.0% in 2017, much lower than 1.9% projected earlier. Meanwhile, UK’s inflation is expected to rise rapidly to 2.5% next year, much higher than the 1.7% forecast made in May, mostly driven by the depreciation of the domestic currency. In other economic news, UK’s industrial production unexpectedly dropped in September. On the contrary, the nation’s manufacturing production jumped in the same month. Additionally, the NIESR estimated UK economy to grow by 0.4% in the three months to October. Further, the nation’s BRC retail sales advanced in October, while the RICS house price balance unexpectedly rose in the same month. The GBP hit a high of 1.2674 and a low of 1.2354 against the USD in the previous week. Immediate downside, the first support level is seen at 1.2410, followed by 1.2222, while on the upside, the first resistance level situated in 1.2730, followed by 1.2862. Looking ahead, investors anxiously await the release of UK’s consumer price inflation, ILO unemployment rate and retail sales data, all due to release this week.
USDJPY
Last week, the USD traded 3.44% higher against the JPY and closed at 106.67. According to the Bank of Japan’s (BoJ) latest summary of opinions report, not all policymakers doubted that inflation would reach its 2.0% target within its projection period, partially because of a vigilant outlook on inflation expectations. Further, the BoJ has predicted the year-on-year consumer price index to reach its 2.0% target around fiscal 2018. Another set of economic data showed that, Japan’s trade surplus (BOP basis) widened less than expected in September. Additionally, the nation’s Eco Watchers survey for the current situation surprisingly climbed in October, whereas Eco Watchers survey for the future outlook unexpectedly advanced in the same month. Also, the nation’s flash machinery orders eased more than expected in September. Meanwhile, the tertiary industry index eased in September. The USD hit a high of 106.95 and a low of 101.20 against the JPY in the previous week. The pair is expected to witness its first support at 102.98 and second support at 99.21, while the first resistance is expected at 108.73 and second resistance at 110.71. Moving ahead, market participants look forward to a speech by the BoJ Governor, Haruhiko Kuroda, along with Japan’s GDP and industrial production data, scheduled to release this week.
USDCHF
The USD traded 2.01% higher against the CHF last week, with the pair closing at 0.9875. Macroeconomic data indicated that, Switzerland’s consumer price index advanced less than anticipated in October. Further, the nation’s seasonally adjusted unemployment rate remained steady at 3.3% in October, meeting market expectations. The pair traded at a high of 0.9897 and a low of 0.9550 during the previous week. The pair is expected to witness its first support at 0.9655 and second support at 0.9429, while the first resistance is expected at 1.0002 and second resistance at 1.0123. Moving ahead, investors will look forward to Switzerland’s ZEW economic survey, the sole important release this week.
USDCAD
During the previous week, the USD traded 1.03% higher against the CAD and ended at 1.3540. On the economic front, Canada’s seasonally adjusted housing starts dropped in October. Further, the nation’s building permits dropped more than expected in September. On the contrary, the nation’s new housing price index rose in the same month, meeting market expectations. During the previous week, the pair traded at a high of 1.3548 and a low of 1.3265. The pair is expected to witness its first support at 1.3358 and second support at 1.3170, while the first resistance is expected at 1.3641 and second resistance at 1.3736. Going forward, Canada’s consumer price index and existing home sales data, slated to release this week would garner a lot of market attention.
AUDUSD
During the previous week, the AUD traded 1.56% lower against the USD and ended at 0.7550. Data indicated that Australia’s consumer inflation expectations dropped in November. Additionally, the nation’s business confidence index eased in October, while the business conditions index dropped in the same month. Moreover, the nation’s Westpac consumer confidence index declined in November. During the previous week, the pair traded at a high of 0.7778 and a low of 0.7525. Immediate downside, the first support level is seen at 0.7453, followed by 0.7363, while on the upside, the first resistance level situated in 0.7706, followed by 0.7869. Looking ahead, Reserve Bank of Australia’s latest meeting minutes accompanied with Australia’s unemployment rate and Westpac leading index data, all scheduled to release this week, would generate a lot of market attention.
Gold
Gold traded 5.93% lower during the previous week, closing at USD1227.64 per ounce, amid strength in the greenback and global equities, as investors shrugged off uncertainty due to an unexpected victory of Donald Trump in the US Presidential election. The yellow metal witnessed a high of USD1338.30 per ounce and a low of USD1218.70 per ounce in the previous week. Gold is expected to its find support at USD1184.70 per ounce, and a fall through could take it to the next support level of USD1141.90 per ounce. The yellow metal is expected to find its first resistance at USD1304.30 per ounce, and a rise through could take it to the next resistance level of USD1381.10 per ounce.
Crude Oil
Crude oil traded 1.5% lower in the previous week, closing at USD43.41 per barrel, after the IEA and Organization of the Petroleum Exporting Countries (OPEC) reported that OPEC pumped record high crude oil in October, resurfacing supply glut concerns. The IEA also warned that if the supply glut persists in 2017 and if some individual members continue to expand their crude production, it could lead to “relentless supply growth”. Oil prices failed to find support, after the Energy Information Administration (EIA) showed that US crude stockpiles rose more than estimated by 2.4 million barrels to 485.1 million barrels during week ended 04 November, while the American Petroleum Institute (API) disclosed that US crude oil inventories rose more than expected by 4.4 million barrels during the last week. Crude oil hit a high of USD45.95 per barrel and a low of USD43.03 per barrel in the previous week. Crude oil is expected to its find support at USD42.14 per barrel, and a fall through could take it to the next support level of USD41.12 per barrel. The yellow metal is expected to find its first resistance at USD45.06 per barrel, and a rise through could take it to the next resistance level of USD46.96 per barrel.
Traders, how the operations run!?? Always watchful. Happy pips.
