The highlights of the week were comments from few top global central bank officials.
The US Dollar gained ground against its major peers last week, after the US Federal Reserve (Fed) Chair, Janet Yellen, proffered an upbeat assessment of future rate hikes. The Fed Chief admitted that officials may have misjudged the labor market strength and inflation projections. However, Yellen rooted for gradual interest rate hikes and warned that policymakers should also be wary of moving too gradual to avoid the risk of economy overheating. The US Dollar extended gains, after the US President, Donald Trump, proposed to lower corporate income tax rate and reduce number of personal income tax brackets.
In other economic news, the final print of annualized gross domestic product (GDP) showed that the US economy expanded at its quickest pace in more than 2 years in 2Q 2017, suggesting that the economy’s sluggish first-quarter performance was probably a blip. Additionally, the nation’s advance goods trade deficit surprisingly narrowed in August, while flash durable goods orders rebounded more-than-expected in the same month. On the contrary, the nation’s pending home sales dropped to its lowest level in nearly 2 years in August, while new home sales unexpectedly slid to an 8-month low in the same month, as a pair of hurricanes affected the nation’s housing market. Additionally, the nation’s CB consumer confidence index dropped more-than-expected in September, while initial jobless claims came in higher-than-anticipated in the week ended 23 September.
The Euro ended the week on a weaker footing, after the European Central Bank (ECB) Chief, Mario Draghi, voiced confidence that inflation will gradually achieve the central bank’s target, but argued that “ample” monetary policy accommodation was still needed to bring inflation to the target in a sustainable way. Further, Draghi highlighted that volatile Euro poses risks to the medium-term inflation outlook. On the macro front, the Eurozone’s economic confidence zoomed to a more than 10-year high in September, offering hints that businesses and households are growing upbeat about their growth prospects.
The Pound ended the week lower against the USD, after final GDP showed that Britain’s economy suffered its weakest annual growth in 4 years in the three months to June, thus stoking concerns over the likelihood of an interest rate hike by the Bank of England (BoE) in the near-term. Separately, the BoE Governor, Mark Carney stated that it may be appropriate to raise interest rates “in the relatively near-term”, if the British economy continues to strengthen.
EURUSD
The EUR traded 1.15% lower against the USD last week, with the pair closing at 1.1814, after the Eurozone’s consumer price index (CPI) registered a weaker-than-expected rise of 1.5% on an annual basis in September. On the contrary, the region’s final consumer confidence index climbed as initially estimated in September, while the economic confidence index jumped in the same month. Separately, Germany’s seasonally adjusted unemployment rate unexpectedly declined to a new record low of 5.6% in September, while annual inflation climbed 1.8% in the same month, meeting market expectations. On the other hand, the nation’s GfK consumer confidence index unexpectedly eased in October, while monthly retail sales posted an unexpected drop in August. Moreover, the nation’s Ifo business climate as well as business expectations indices unexpectedly eased in September. During the previous week, the pair traded at a high of 1.1937 and a low of 1.1717. Immediate downside, the first support level is seen at 1.1708, followed by 1.1603, while on the upside, the first resistance level situated in 1.1928, followed by 1.2043. This week, investors would focus on the ECB’s latest meeting minutes along with the final Markit manufacturing and services PMIs across the Eurozone. Moreover, the Eurozone’s unemployment rate and retail sales data as well as Germany’s factory orders and construction PMI data, all slated to release this week, will be eyed by traders.
GBPUSD
During the previous week, the GBP traded 0.78% lower against the USD and ended at 1.3398, following disappointing UK GDP figures. Data showed that Britain’s final gross domestic product (GDP) was sharply revised lower to 1.5% on an annual basis in the three months to June. Moreover, the nation’s mortgage approvals fell more-than-expected in August. In contrast, the nation’s GfK consumer confidence index unexpectedly climbed in September, while net consumer credit topped market expectations in August. Meanwhile, Michel Barnier and David Davis wrapped up the fourth round of Brexit negotiations with a constructive tone. The pair traded at a high of 1.3571 and a low of 1.3343 during the previous week. Immediate downside, the first support level is seen at 1.3304, followed by 1.3209, while on the upside, the first resistance level situated in 1.3532, followed by 1.3665. Going ahead, market participants await the release of UK’s Markit manufacturing, services and construction PMIs, all due to release this week.
USDJPY
Last week, the USD traded 0.46% higher against the JPY and closed at 112.51. Minutes of the Bank of Japan’s (BoJ) July meeting showed that policymakers expressed confidence over achieving the central bank’s inflation target and reiterated the need to stick with their current policy framework despite the recent weakness in inflation. Separately, the BoJ summary of opinions report from its September meeting showed that one policymaker called for loosening monetary policy further to boost demand, while most officials remained in favor of maintaining the current stimulus programme. In other economic news, data indicated that Japan’s national CPI rose more-than-anticipated by 0.7% on an annual basis in August, while the unemployment rate remained steady at 2.8% in the same month. Moreover, the nation’s flash Nikkei manufacturing PMI climbed in September, while preliminary industrial production rebounded more-than-anticipated on a monthly basis in August. Additionally, the nation’s large retailers’ sales rebounded in August, whereas retail trade registered a more-than-expected drop in the same month. The pair traded at a high of 113.26 and a low of 111.48 during the previous week. Immediate downside, the first support level is seen at 111.57, followed by 110.64, while on the upside, the first resistance level situated in 113.35, followed by 114.20. Moving ahead, traders will look forward to Japan’s final Nikkei manufacturing as well as services PMIs, Tankan large manufacturing and non-manufacturing indices and the consumer confidence index, all set to release this week.
USDCHF
Last week, the USD traded 0.1% lower against the CHF and closed at 0.9683. Macroeconomic data indicated that Switzerland’s ZEW economic expectations index rose in September. Further, the nation’s UBS consumption indicator climbed in August, while the KOF leading indicator advanced above market expectations in September. During the previous week, the pair traded at a high of 0.9770 and a low of 0.9643. The pair is expected to find support at 0.9627, and a fall through could take it to the next support level of 0.9572. The pair is expected to find its first resistance at 0.9754, and a rise through could take it to the next resistance level of 0.9826. Moving ahead, investors will focus on Switzerland’s inflation figures along with retail sales and SVME–PMI data, all due to release this week.
USDCAD
During the previous week, the USD traded 1.08% higher against the CAD and ended at 1.2472. The Canadian Dollar lost ground against the USD, after the Bank of Canada (BoC) Governor, Stephen Poloz, reduced the odds of further interest rate hikes this year. The BoC Governor indicated that the central bank will be cautious in its approach to monetary policy and stressed that there is no predetermined path for interest rate hikes, while adding that any move will be data-dependent. The Canadian Dollar extended losses later in the week, after data showed that Canada’s GDP surprisingly remained flat on a monthly basis in July. The USD hit a high of 1.2532 and a low of 1.2313 against the CAD in the previous week. The pair is expected to find support at 1.2344, and a fall through could take it to the next support level of 1.2219. The pair is expected to find its first resistance at 1.2563, and a rise through could take it to the next resistance level of 1.2657. Ahead in the week, Canada’s unemployment rate and Markit manufacturing PMI data, would garner a lot of market attention.
AUDUSD
Last week, the AUD traded 1.61% lower against the USD and closed at 0.7834. On the data front, Australia’s private sector credit advanced on a monthly basis in August, meeting market expectations. The pair traded at a high of 0.7974 and a low of 0.7800 during the previous week. The pair is expected to find its first support at 0.7765 and first resistance at 0.7939. The second support is expected at 0.7695 and second resistance at 0.8043. This week, traders will closely monitor the Reserve Bank of Australia’s interest rate decision. Moreover, Australia’s AIG performance of manufacturing, services as well as construction indices along with the nation’s HIA new home sales, building approvals and retail sales data, will be on investors’ radar.
Gold
Last week, gold fell 1.35% to close at USD1279.75 per ounce, as the greenback strengthened after the US President, Donald Trump, proposed the biggest US tax overhaul in three decades. The yellow metal witnessed a high of USD1317.10 per ounce and a low of USD1278.20 per ounce in the previous week. The precious metal is expected to find its first support at USD1268.10 per ounce and first resistance at USD1307.00 per ounce. The second support is expected at USD1253.70 per ounce and second resistance at USD1331.50 per ounce.
Crude Oil
Crude oil strengthened in the previous week, closing 1.99% higher at USD51.67 per barrel, after Turkey threatened to close a pipeline that carries Kurdish oil exports through its territory. Gains in crude prices were boosted further, after the Energy Information Administration (EIA) showed that US crude oil stocks fell by 1.8 million barrels to 471.0 million barrels in the week ended 22 September, while the American Petroleum Institute (API) indicated that US crude oil inventories surprisingly fell by 761,000 barrels to 469.5 million barrels in the same week. Last week, the commodity traded at a high of USD52.86 per barrel and a low of USD50.39 per barrel. Immediate downside, the first support level is seen at USD50.40 per barrel, followed by USD49.16 per barrel, while on the upside, the first resistance level situated in USD52.87 per barrel, followed by USD54.10 per barrel.
Good trades, Traders.❝❞
