Last week, the forex market was dictated by minutes of the Federal Reserve’s (Fed) recent monetary policy meeting and a host of upbeat US economic data.
The greenback gained ground, after minutes of the FOMC’s November monetary policy meeting confirmed that Fed officials were creeping closer to their first interest rate increase in this year. Minutes indicated that policymakers felt it appropriate to raise interest rates “relatively soon”, provided that incoming economic data remains encouraging.
The greenback received an additional boost from upbeat US economic reports which further tilted the scales towards a Fed interest rate hike in December. Data indicated that flash durable goods orders in the US rebounded at the fastest pace in a year in October, pointing to a tentative pickup in business investment. Additionally, activity in the nation’s manufacturing PMI recorded its strongest reading in thirteen months in November, suggesting that manufacturing sector will continue to remain one of the bright spots for the economy. Further, the nation’s final Reuters/Michigan consumer sentiment index hovered to a six-month high in November, highlighting that economic outlook is brightening. Moreover, the nation’s existing home sales unexpectedly surged to its highest level since February 2007 in October, whereas the Richmond Fed manufacturing index strengthened to its highest level in four months in November. Meanwhile, the nation’s services sector expanded in November, albeit at a slower pace, while the number of Americans filing for fresh unemployment benefits came in slightly more than estimated in the week ended 19 November. On the contrary, the nation’s new home sales surprisingly fell in October, while goods trade deficit widened more than expected in the same month.
The Euro ended the week slightly lower. In economic news, data revealed that activity in the Eurozone’s services PMI surged to its highest level in eleven months in November, highlighting that the region’s services sector is on the growth-path. Moreover, growth in the region’s manufacturing sector unexpectedly advanced in November, while flash consumer confidence index improved to its highest level since December 2015 in the same month.
Macroeconomic data released during the week showed that Germany’s economic growth slowed to 0.2% on a quarterly basis in the third quarter, confirming the preliminary print, amid weak overseas trade. Meanwhile, the nation’s services sector surprised with an acceleration to a six-month high in November. Further, the nation’s GfK consumer confidence index unexpectedly edged higher in December. On the other hand, the nation’s manufacturing sector disappointed with a slower rate of expansion in November, whereas the Ifo business expectations index unexpectedly eased in the same month.
EURUSD
Last week, the EUR traded marginally lower against the USD and closed at 1.0584. On the economic front, data revealed that the Eurozone’s flash Markit manufacturing PMI unexpectedly advanced in November, while the preliminary services PMI jumped more than expected in the same month. Additionally, the region’s flash consumer confidence index improved more than expected in November. Moreover, Germany’s preliminary Markit services sector surprisingly advanced in November, whereas the flash Markit manufacturing PMI expanded at a slower pace than anticipated in the same month. Further, the nation’s final gross domestic product (GDP) grew 0.2% on a quarterly basis in 3Q 2016, meeting preliminary figures. Moreover, the nation’s consumer confidence index unexpectedly edged up in December. On the other hand, the nation’s Ifo business expectations index unexpectedly eased in November. During the previous week, the pair traded at a high of 1.0658 and a low of 1.0518. The pair is expected to witness its first support at 1.0521 and second support at 1.0450, while the first resistance is expected at 1.0661 and second resistance at 1.0730. This week, investors would focus on a speech by the ECB President, Mario Draghi, along with the unemployment rate and final Markit manufacturing PMI across the Eurozone, to gauge the strength in the European economy.
GBPUSD
The GBP advanced against the USD last week, closing 1.06% higher at 1.2474, after the UK’s Chancellor, Philip Hammond, in his Autumn Statement, slightly revised up UK’s growth outlook for this year and introduced plans to increased spending on those areas of the economy that can help boost productivity in the nation. Philip Hammond stated that Office for Budget Responsibility (OBR) revised up UK’s growth forecast to 2.1% for 2016, from 2.0% estimated earlier, but slashed its growth projection for 2017 to 1.4%, down from 2.2% previously estimated. Additionally, he confirmed that the government is no longer seeking a budget surplus in 2019-20 and is committed to returning public finances to balance “as soon as practicable”. In other economic news, second estimate of UK’s GDP came in line with preliminary print. Meanwhile, the nation’s public sector net borrowing narrowed more than expected in October. The pair traded at a high of 1.2513 and a low of 1.2313 during the previous week. The pair is expected to witness its first support at 1.2348 and second support at 1.2230, while the first resistance is expected at 1.2548 and second resistance at 1.2630. Looking ahead, investors anxiously await Britain’s Markit manufacturing and construction PMI, financial stability report, Nationwide house prices, mortgage approvals and GfK consumer confidence data, all scheduled to release this week.
USDJPY
The USD traded 1.94% higher against the JPY last week, with the pair closing at 113.06. Macroeconomic data showed that, Japan’s national consumer price index (CPI) rose 0.1% YoY in October. Also, the nation’s preliminary Nikkei manufacturing PMI expanded at a slower pace in November. Further, the nation’s adjusted merchandise trade surplus widened more than expected in October. Moreover, all industry activity index unexpectedly rose in September. On the contrary, the nation’s annual exports and imports, both dropped in October. The USD hit a high of 113.90 and a low of 110.27 against the JPY in the previous week. The pair is expected to find support at 110.92, and a fall through could take it to the next support level of 108.78. The pair is expected to find its first resistance at 114.55, and a rise through could take it to the next resistance level of 116.04. Moving ahead, market participants look forward to Japan’s unemployment rate, retail trade, large retailers’ sales, industrial production and final Nikkei manufacturing PMI, all due to release this week.
USDCHF
Last week, the USD traded 0.37% higher against the CHF and closed at 1.0130. On the data front, Switzerland’s annual industrial production rose in the third quarter of 2016. Meanwhile, the nation’s trade surplus narrowed more than expected in October, whereas exports slid in the same month. The pair traded at a high of 1.0192 and a low of 1.0068 during the previous week. The pair is expected to find its first support at 1.0076 and first resistance at 1.0200. The second support is expected at 1.0010 and second resistance at 1.0258. Moving ahead, investors will look forward to Switzerland’s GDP, UBS consumption indicator, KOF leading indicator, real retail sales and SVME purchasing managers’ index data, all slated to release this week.
USDCAD
The USD traded 0.21% higher against the CAD last week, with the pair closing at 1.3528. On the economic front, data revealed that Canada’s retail sales recorded its biggest gain since April 2016 in September. The USD hit a high of 1.3536 and a low of 1.3378 against the CAD in the previous week. Immediate downside, the first support level is seen at 1.3422, followed by 1.3321, while on the upside, the first resistance level situated in 1.3580, followed by 1.3637. Going forward, a speech by the Bank of Canada’s Governor, Stephen Poloz along with the nation’s GDP, unemployment rate and RBC manufacturing PMI data, all slated to release this week, would garner lot of market attention.
AUDUSD
The AUD strengthened against the USD last week, closing 1.34% higher at 0.7430. Data released during the week indicated that, construction work done in Australia declined on a quarterly basis in 3Q 2016. On the other hand, the nation’s CB leading indicator rose in September. The AUD hit a high of 0.7468 and a low of 0.7311 against the USD in the previous week. The pair is expected to witness its first support at 0.7349 and second support at 0.7251, while the first resistance is expected at 0.7506 and second resistance at 0.7565. Looking ahead, market participants await the release of Australia’s HIA new home sales, AiG performance of manufacturing index and retail sales data, all scheduled to release this week.
Gold
Last week, gold fell 2.01% to close at USD1183.56 per ounce, after largely upbeat economic data in the US and hawkish tone of the US Fed minutes, boosted the case for an interest rate hike in December. Last week, the precious metal traded at a high of USD1223.50 per ounce and a low of USD1172.80 per ounce. The yellow metal is expected to witness its first support at USD1164.77 per ounce and second support at USD1143.43 per ounce, while the first resistance is expected at USD1215.47 per ounce and second resistance at USD1244.83 per ounce.
Crude Oil
Last week, crude oil strengthened 0.81% to close at USD46.06 per barrel, lifted by rising conviction that major oil producers would come to an agreement to curb output in an upcoming meeting on 30 November. Additionally, Russian President, Vladimir Putin, voiced confidence that a deal to freeze production will be reached in a proposed meeting in Vienna. Further, Iraq’s Prime Minister, Haider al-Abadi, expressed willingness to cut its crude output as part of OPEC’s plan to reduce global supply and boost crude prices. Oil prices were supported further, after the Energy Information Administration (EIA) showed that US crude oil stocks fell by 1.3 million barrels to 489.0 million barrels in the week ended 18 November, while the American Petroleum Institute (API) also indicated that US oil inventories narrowed by 1.3 million barrels to 487.5 million barrels. The black commodity hit a high of USD49.20 per barrel and a low of USD45.88 per barrel in the previous week. Crude oil is expected to witness its first support at USD44.83 per barrel and second support at USD43.69 per barrel, while the first resistance is expected at USD48.15 per barrel and second resistance at USD50.33 per barrel.
Good trades Traders.
