The greenback ended the week on a strong footing, after the US annualized GDP grew faster than expected in 4Q 2015, thus raising the chances for a near-term Fed interest rate hike. Further, durable goods orders rebounded the most in 10 months in January, offering a ray of hope for the nation’s struggling manufacturing sector. On the other hand, the nation’s preliminary Markit manufacturing PMI unexpectedly declined in February, registering its lowest level since September 2009. Further, the nation’s services industry weakened in February, as the flash Markit services PMI surprisingly contracted for the first time since October 2013, emphasizing that growing economic uncertainty is affecting domestic demand. Moreover, the consumer confidence index slumped more-than-expected to a seven-month low level, as worries about a slowing economy and tumbling stock prices took a toll.
The Euro ended the week in the red. Data showed that the specter of deflation still hovers over the Eurozone as the region’s consumer price index fell on a monthly basis in January. Adding to the downbeat economic picture, the flash Markit manufacturing PMI dropped more-than-expected in February, thus increasing the odds of more stimulus from the European Central Bank (ECB) next month. Meanwhile, Germany’s seasonally adjusted final GDP indicated that the economy remained on a steady-yet-modest growth path on a quarterly basis in 4Q 2015, mainly led by gains in domestic demand. Further, a robust rise in the nation’s service sector activity was contradicted by the weakest rise in manufacturing output, as preliminary Markit manufacturing PMI dropped to its lowest level since November 2014, signaling that the Eurozone’s largest economy is being affected by a slowdown in emerging markets. Moreover, the nation’s consumer price inflation advanced less-than-expected on a monthly basis in February. On the other hand, the nation’s Gfk consumer confidence index unexpectedly advanced in March, indicating that private consumption will continue to drive the nation’s growth.
The British Pound ended the week on a weak footing, on prospects of “Brexit” after the London Mayor, Boris Johnson, expressed his support for UK’s exit from the European Union bloc. Separately, the Bank of England (BoE) Governor, Mark Carney, indicated that the central bank stands ready to slash interest rates to zero if UK’s economic outlook worsens, but would be unlikely to deploy negative rates. In other economic news, investors heaved a sigh of relief after Britain’s preliminary GDP rose in line with market expectations, on a quarterly basis in Q4 2015. In contrast, the nation’s consumer confidence deteriorated in February.
EURUSD
Last week, the EUR traded 1.7% lower against the USD and closed at 1.094, after disappointing inflation and manufacturing PMI data in the Euro-zone.
Data showed that the Euro-zone’s consumer price index declined on a monthly basis in January, in line with market expectations, hinting towards further stimulus measures from the ECB in next month to shore up the slowing economic growth. Additionally, the region’s flash Markit manufacturing PMI fell more-than-anticipated in February. Also, the region’s final consumer confidence index eased in February. Separately, Germany’s seasonally adjusted final GDP expanded on a quarterly basis in 4Q 2015. Moreover, the nation’s Gfk consumer confidence index unexpectedly rose in March, indicating that private consumption will continue to drive growth in Europe’s largest economy. In other economic news, the nation’s flash consumer price index rose less-than-anticipated on a monthly basis in February. Meanwhile, the nation’s annual preliminary inflation recorded a flat reading in February, thus giving more room to the ECB to ramp up its stimulus programmee.. Further, the nation’s preliminary Markit manufacturing PMI dropped to a fifteen-month low level in February. Also, the nation’s IFO business expectations index dropped to a four-year low level and the IFO business climate index eased more-than-expected in February. The EUR hit a high of 1.1124 and a low of 1.0912 against the USD in the previous week. The pair is expected to witness its first support at 1.0860 and second support at 1.0780, while the first resistance is expected at 1.1072 and second resistance at 1.1204. Moving ahead, market participants look forward to Eurozone’s preliminary annual consumer price index, unemployment rate, Markit manufacturing PMI data and Germany’s unemployment rate and Markit manufacturing PMI data, slated to release this week.
GBPUSD
During the previous week, the GBP traded 3.45% lower against the USD and ended at 1.3864, after the BoE Governor, Mark Carney, dropped hints about additional stimulus in the UK economy. The BoE Governor, Mark Carney, in a speech to the Treasury select committee, indicated that the central bank is ready to respond with an interest rate cut or engage in additional assets purchase program, if the economic outlook worsens in the nation. At the same time, he diminished the probability of introducing negative interest rates. In economic news, UK’s preliminary GDP rose on a quarterly basis in Q4 2015, in line with market expectations. On the other hand, the Gfk consumer confidence index recorded a flat reading in February, falling to its lowest level in a year, hurt by concerns over the nation’s economic outlook. In other economic news, the nation’s BBA mortgage approvals advanced to the highest level in almost two-years in January. The GBP hit a high of 1.4300 and a low of 1.3854 against the USD in the previous week. The pair is expected to find support at 1.3712, and a fall through could take it to the next support level of 1.3560. The pair is expected to find its first resistance at 1.4158, and a rise through could take it to the next resistance level of 1.4452. Going forward, UK’s Markit manufacturing and services as well as construction PMI and nationwide house price index data, slated to release this week, would garner a lot of market attention.
USDJPY
During the previous week, the USD traded 1.14% higher against the JPY and ended at 113.94.
The Japanese Yen weakened, after Japan’s national consumer price index (CPI) fell to zero on an annual basis in January, at par with investor expectations, suggesting that the BoJ might consider further easing of monetary policy next month. Additionally, the nation’s flash Nikkei manufacturing PMI declined more-than-expected to a record low reading since June 2015 in February, showing signs that the nation’s overseas demand is falling sharply. On the other hand, the nation’s final leading index rose slightly in December while the final coincident index fell in the same month. Separately, the BoJ board member, Takahide Kiuchi, stated that Japanese economy continues to recover at a moderate pace and warned that negative interest rates could destabilize Japan’s financial system while opposing to the central bank’s recent negative interest rate decision. The USD hit a high of 114.00 and a low of 111.04 against the JPY in the previous week. The pair is expected to find support at 111.99, and a fall through could take it to the next support level of 110.04. The pair is expected to find its first resistance at 114.95, and a rise through could take it to the next resistance level of 115.95. This week, investors would focus on Japan’s unemployment rate, industrial production and Nikkei manufacturing and services PMI.
USDCHF
Last week, the USD traded 0.59% higher against the CHF and closed at 0.9961. On the data front, Switzerland’s Q4 industrial production eased on an annual basis in 4Q 2015. On the other hand, the nation’s UBS consumption indicator rose in January. Another set of data showed that the EU harmonized consumer price index slid on a monthly basis in January. In other economic news, the Swiss National Bank Chairman, Thomas Jordan, warned that the central bank could not take “endless” steps to ease monetary policy conditions, pointing that the central bank may not cut interest rates further. The pair traded at a high of 1.0005 and a low of 0.9852 during the previous week. The pair is expected to witness its first support at 0.9874 and second support at 0.9786, while the first resistance is expected at 1.0027 and second resistance at 1.0092. Looking ahead, market participants await the release of Switzerland’s GDP, manufacturing PMI and KOF leading indicator data, due to be released this week.
USDCAD
The USD fell against the CAD last week, closing 1.85% lower at 1.3514. On the economic front, Canada’s Finance Minister, Bill Morneau, stated that the nation needs an aggressive fiscal policy to deal with global economic slowdown and kick-start growth. The USD hit a high of 1.3861 and a low of 1.3505 against the CAD in the previous week. The pair is expected to find its first support at 1.3392 and first resistance at 1.3748. The second support is expected at 1.3270 and second resistance at 1.3983. Looking ahead, this week investors anxiously await the release of Canada’s GDP and Ivey purchasing manager’s index data.
AUDUSD
The AUD weakened against the USD last week, closing 0.27% lower at 0.7130. In economic news, Australia’s wage cost index rose less-than-expected on a quarterly basis in 4Q 2015. Meanwhile, the nation’s private capital expenditure unexpectedly rebounded in 4Q 2015 on a quarterly basis. The AUD hit a high of 0.7261 and a low of 0.7118 against the USD in the previous week. The pair is expected to find support at 0.7078, and a fall through could take it to the next support level of 0.7026. The pair is expected to find its first resistance at 0.7222, and a rise through could take it to the next resistance level of 0.7313. Moving ahead, this week market participants will look forward to RBA’s interest rate decision, Q4 GDP, the AiG performance of manufacturing index and trade balance data.
Gold
During the previous week, gold traded 0.27% lower and ended at USD1223.46 per ounce, amid a stronger greenback, backed by robust US economic data dampening the demand of yellow metal. The yellow metal witnessed a high of USD1254.30 per ounce and a low of USD1202.50 per ounce in the previous week. The precious metal is expected to find its first support at USD1200.17 per ounce and first resistance at USD1251.97 per ounce. The second support is expected at USD1175.43 per ounce and second resistance at USD1279.03 per ounce.
Crude Oil
Last week, crude oil traded 10.59% higher and ended at USD32.78 per barrel, as investors look forward to an upcoming meeting of OPEC and non-OPEC members in mind-March to resolve the persistent global supply glut issue. Separately, the Energy Information Administration (EIA) reported that US crude stockpiles advanced by 3.5 million barrels to 507.6 million barrels in the week ended 19 February, while the American Petroleum Institute (API) disclosed that US oil inventories rose by 7.1 million barrels to 506.2 million barrels in the last week. The commodity traded at a high of USD34.69 per barrel and a low of USD30.56 per barrel in the previous week. Crude oil is expected to witness its first support at USD30.70 per barrel and second support at USD28.57 per barrel, while the first resistance is expected at USD34.83 per barrel and second resistance at USD36.83 per barrel.
Good trades.
