The highlight of the week was the US unemployment and non-farm payrolls data. Macroeconomic data released in the US showed that unemployment rate remained steady at an eight-year low level in February from January while the nation’s non-farm payrolls advanced more than expected in February, heightening the possibility that the US Federal Reserve would hike interest rates gradually this year. Another set of data indicated that the US ADP employment change advanced more-than-expected in February, suggesting that the nation’s job market is showing strong growth despite market turmoil and downturn in global economy. Further, the nation’s construction spending zoomed to the highest level in more than 8 years on a monthly basis in January, showing signs that the nation’s economy is regaining lost momentum. Also, the nation’s final Markit manufacturing PMI rose more-than-expected in February. On the other hand, the nation’s ISM manufacturing PMI remained in contraction territory for the fifth straight month in February, while the final Markit services PMI contracted for the first time since October 2013 during the same month, highlighting growth concerns in the world’s largest economy. Moreover, the US initial jobless claims unexpectedly advanced in the week ended 27 February.
Separately, the US Fed’s Beige Book report indicated a mixed picture of the US economy as growth was modest in half of the districts. It also reported that the economic activity continued to expand in most districts but with varied conditions. In addition, most Fed districts reported modest improvement in labor market conditions but wage growth was mixed from flat to strong across the country.
The Euro ended the week in the green, after the Euro-zone’s unemployment rate surprisingly fell to its lowest level since August 2011 in January. On the other hand, the region’s final Markit manufacturing PMI registered its lowest reading in a year in February, thus raising concerns that the region is facing yet another year of sluggish growth. Additionally, the Euro-zone’s preliminary consumer price index entered into negative territory for the first time since September 2015, thus adding to speculation that the ECB would announce further monetary stimulus this week.
Meanwhile, Germany’s seasonally adjusted unemployment rate remained steady in February. Further, the nation’s final Markit manufacturing PMI surprisingly advanced during the same month.
The GBP ended the week on a strong footing. In economic news, UK’s seasonally adjusted Markit manufacturing PMI declined to nearly a 3-year low level in February. Moreover, the nation’s construction PMI unexpectedly fell to the lowest level in 10-months in February.
EURUSD
During the previous week, the EUR traded 0.56% higher against the USD and ended at 1.1002. In macroeconomic news, the Eurozone’s unemployment rate surprisingly fell to 10.3% in January, touching its lowest level since August 2011. Additionally, the region’s final Markit manufacturing and services PMI unexpectedly rose in February. Further, the region’s retail sales advanced more-than-anticipated for the third straight month in January. On the other hand, the Euro-zone’s preliminary annual consumer price index fell into negative territory in February. Meanwhile in Germany, seasonally adjusted unemployment rate remained steady in February, in line with market expectations. Further, the nation’s final Markit manufacturing PMI surprisingly advanced in February while the services PMI unexpectedly rose to a two-month high level during the same month. Moreover, retail sales rose on a monthly basis in January. Also, the nation’s construction PMI advanced to a 5-year high level in February. During the previous week, the pair traded at a high of 1.1044 and a low of 1.0826. The pair is expected to find its first support at 1.0871 and first resistance at 1.1090. The second support is expected at 1.0739 and second resistance at 1.1176. Moving ahead, investors will look forward to the ECB’s interest rate decision along with the Eurozone’s flash Q4 GDP and Sentix investor confidence data, for further cues. Additionally, Germany’s consumer price index, trade balance and industrial production data, will also be keenly watched by investors.
GBPUSD
The GBP traded 2.59% higher against the USD last week, with the pair closing at 1.4223. In economic news, UK’s Markit manufacturing and services PMI fell to nearly a 3-year low level in February, thus adding to concerns of a slowdown in the nation’s economy. Moreover, construction PMI unexpectedly fell to the lowest level in 10-months in February. Also, the seasonally adjusted Nationwide house price index rose less-than-anticipated on a monthly basis in February. On the other hand, the nation’s mortgage approvals advanced more-than-anticipated to a two-year high level and net consumer credit expanded at the fastest pace in a decade in January. The pair traded at a high of 1.4250 and a low of 1.3836 during the previous week. The pair is expected to find support at 1.3957, and a fall through could take it to the next support level of 1.3690. The pair is expected to find its first resistance at 1.4370, and a rise through could take it to the next resistance level of 1.4517. Looking ahead, along with the release of the BoE’s quarterly report, market participants also await UK’s NIESR GDP estimate, industrial and manufacturing production data.
USDJPY
The USD traded marginally higher against the JPY last week, with the pair closing at 113.95. On the data front, Japan’s unemployment rate unexpectedly fell to 3.2% in January, thus showing that the nation’s labor market continues to be one of the bright spots for the economy. Moreover, the nation’s flash industrial production rebounded at the fastest pace in a year on a monthly basis in January. In contrast, the nation’s final Nikkei manufacturing PMI dropped in February and the Nikkei services PMI declined to a seven-month low level during the same month. Additionally, the nation’s seasonally adjusted retail trade unexpectedly fell on a monthly basis in January. In other economic news, the BoJ Governor, Haruhiko Kuroda, ruled out the possibility of further interest rate cuts into negative territory for now. He also reiterated that the central bank is closely monitoring global risks, and won’t hesitate to take necessary actions to achieve the inflation target. During the previous week, the pair traded at a high of 114.57 and a low of 112.16. The pair is expected to find support at 112.56, and a fall through could take it to the next support level of 111.15. The pair is expected to find its first resistance at 114.97, and a rise through could take it to the next resistance level of 115.97. Going forward, Japan’s Q4 GDP, Eco watchers survey, consumer confidence and trade balance data would garner a lot of market attention.
USDCHF
The USD fell against the CHF last week, closing 0.26% lower at 0.9934. The Swiss Franc gained ground, after Switzerland’s GDP topped market expectations and rose by 0.4% QoQ in Q4 2015. Further, the nation’s manufacturing PMI unexpectedly rose in February, Additionally, the nation’s real retail sales advanced in January, while the KOF leading indicator index surprisingly rose in February. During the previous week, the pair traded at a high of 1.0040 and a low of 0.9879. The pair is expected to find support at 0.9862, and a fall through could take it to the next support level of 0.9790. The pair is expected to find its first resistance at 1.0023, and a rise through could take it to the next resistance level of 1.0111. This week, investors would focus on Switzerland’s unemployment rate and consumer price index data, to gauge the strength in the nation’s economy.
USDCAD
The USD fell against the CAD last week, closing 1.41% lower at 1.3323. The Canadian dollar gained ground, after Canada’s GDP expanded more-than-anticipated by 0.2% on a monthly basis in December. Meanwhile, the nation’s annualized GDP expanded on a quarterly basis in Q4 2015, while markets expected it to stagnate. In other economic news, Canada’s current account deficit rose less-than-expected on a quarterly basis in 4Q 2015. Additionally, the nation’s seasonally adjusted Ivey purchasing managers index declined in February. The USD hit a high of 1.3589 and a low of 1.3317 against the CAD in the previous week. The pair is expected to find support at 1.3230, and a fall through could take it to the next support level of 1.3138. The pair is expected to find its first resistance at 1.3502, and a rise through could take it to the next resistance level of 1.3682. Moving ahead, this week market participants would look forward to the Bank of Canada’s (BoC) interest rate decision, in addition to Canada’s unemployment rate, housing starts and building permits data.
AUDUSD
Last week, the AUD traded 4.24% higher against the USD and closed at 0.7432, after the Reserve Bank of Australia (RBA) kept official interest rate unchanged at 2.0%, in line with market expectations. In a statement issued after the meeting, the central bank Governor, Glenn Stevens, reiterated that low inflation would provide more room to ease the monetary policy further. He also added that the central bank will keep a watch on the nation’s labor market and volatility in global financial markets. In economic news, Australia’s GDP expanded more-than-anticipated by 0.6% on a quarterly basis in Q4 2015, reducing the odds that the RBA will cut interest rates this year. Additionally, the nation’s AiG performance of manufacturing index advanced in February, while the services index entered into expansionary territory during the same month. In other economic news, Australia’s seasonally adjusted trade deficit narrowed more-than-expected in January. Further, the nation’s HIA new home sales index advanced for the second consecutive month on a monthly basis in January. On the other hand, the nation’s building permits declined and retail sales advanced less-than-expected on a monthly basis in January. The pair traded at a high of 0.7445 and a low of 0.7109 during the previous week. The pair is expected to find its first support at 0.7213 and first resistance at 0.7549. The second support is expected at 0.6992 and second resistance at 0.7665. Looking ahead, investors anxiously await the release of Australia’s AiG performance of construction index, NAB business confidence, Westpac consumer confidence and consumer inflation expectations data, all scheduled this week.
Gold
Last week, gold rose 2.9% to close at USD1258.95 per ounce, boosted by a weaker US Dollar and mounting concerns about global economic growth. The yellow metal hit a high of USD1280.70 per ounce and a low of USD1220.50 per ounce in the previous week. Immediate downside, the first support level is seen at USD1227.83 per ounce, followed by USD1194.07 per ounce, while on the upside, the first resistance level situated in USD1288.03 per ounce, followed by USD1314.47 per ounce.
Crude Oil
Crude oil strengthened in the previous week, closing 9.58% higher at USD35.92 per barrel, as plans to freeze output by the OPEC members spurred optimism among the investors.
Separately, the Energy Information Administration (EIA) reported that US crude inventories rose by 10.4 million barrels to 518 million barrels in the week ended 26 February while the American Petroleum Institute (API) reported that US oil inventories rose more-than-expected by 9.9 million barrels to 516.1 million barrels during the last week. The commodity traded at a high of USD36.24 per barrel and a low of USD32.32 per barrel in the previous week. Immediate downside, the first support level is seen at USD33.61 per barrel, followed by USD31.01 per barrel, while on the upside, the first resistance level situated in USD37.53 per barrel, followed by USD38.85 per barrel.
Good trades.
