The highlight of the week was the dovish comments by the Federal Reserve chair, Janet Yellen, after she emphasized that the US central bank should proceed carefully towards higher interest rates against the backdrop of global economic uncertainty including the slowdown in China and collapsing oil prices. Although, she admitted that the US economy remained resilient despite a rough start to the year, but suggested that chances of a rate hike in April are very dim. Meanwhile, Yellen’s remarks contrasted with the stance of some Fed officials, who in recent time have opined that the US economy was strong enough to warrant further rate hikes. Macroeconomic data released during the week indicated that the US non-farm payrolls beat market expectations in March and wages rebounded, shrugging off concerns of a global economic slowdown. However, the nation’s unemployment rate unexpectedly edged up to 5.0% in March, highlighting that slack remains in some corners of the US labor market. On the other hand, the US ISM manufacturing activity swung back to expansion territory for the first time in seven months at a better-than-expected pace in March. Meanwhile, the number of Americans applying for new unemployment benefits rose last week, but remained below a level that is associated with an improving labor market. On the contrary, US companies added more than expected in jobs March, supported by strong gains in construction, retail and shipping. The Euro ended the week on a stronger footing, after Germany’s inflation on a yearly basis climbed above zero in March, indicating that domestic demand as well as the ECB stimulus measures may be starting to boost price gains. However, inflation numbers remained far below the 2% inflation rate desired by the ECB. Meanwhile, core consumer prices in the Euro-region slightly edged up but the headline inflation rate remained negative on a yearly basis in March, suggesting that the ECB may unleash a new round of stimulus measures in the single-currency area. The British Pound ended the week in red, on continued fears of a possible UK exit from the European Union. Data released during last week showed that the UK economic growth unexpectedly quickened on an annual basis in the final quarter of 2015, pointing that the nation’s economy ended the year with a better than estimated outlook. Meanwhile, UK’s current account deficit sharply widened in the fourth quarter to hit a record high, underlining pressures from the global economic downturn. Also, UK’s manufacturing PMI remained subdued in March, as global growth continues to weigh on UK manufactures, indicating that the nation’s economic growth may run out of steam in the first quarter after showing a slight expansion in the previous quarter.
EURUSD
The EUR traded 2.03% higher against the USD last week, with the pair closing at 1.1395, after German consumer prices rose at a faster-than-expected pace on a monthly basis in March after remaining unchanged in the previous month. Other economic data showed that inflation in the Eurozone fell on an annual basis in March, thus remaining in the deflation territory. Meanwhile, the overall economic sentiment in the Eurozone fell to its lowest level in March since February 2015, amid lower confidence in construction and financial services sectors. Moreover, the consumer confidence remained steady at its lowest level in March since December 2014. Further, the sentiment in the services sector dropped in March and the industrial confidence fell to a thirteenth-month low in the same month. Other economic data indicated that manufacturing output in the Eurozone and in its peripheries rose higher than market expectations in March. Meanwhile, German retail sales unexpectedly dipped on a monthly basis in February. During the previous week, the pair traded at a high of 1.1439 and a low of 1.1153. Immediate downside, the first support level is seen at 1.1216, followed by 1.1041, while on the upside, the first resistance level situated in 1.1502, followed by 1.1613. This week, investors would focus on the Markit’s survey of services PMI across the Eurozone and Sentix investor confidence for further cues. Additionally, Germany’s industrial production, factory orders and trade balance will attract market attention.
GBPUSD
The GBP advanced against the USD last week, closing 0.62% higher at 1.4224, after UK’s economy expanded more-than-expected in the fourth quarter of 2015, marking the 12th consecutive quarter of positive growth since the first quarter of 2013. Moreover, the manufacturing activity rose slightly in the month of March, but is close to moving back into a state of contraction. In other economic news, UK’s GfK consumer confidence remained flat, staying at the lowest level in more than a year, amid fears that Britain might opt to leave the European Union. Further, the current account deficit widened more-than-expected in 4Q 2015, led by rising imports of goods, and declining goods exports. Moreover, the BoE Governor, Mark Carney warned of the challenges faced by global policymakers in low-nominal growth situations and further stated that loose monetary policy is not the alone solution. During the previous week, the pair traded at a high of 1.4461 and a low of 1.4121. Immediate downside, the first support level is seen at 1.4079, followed by 1.3930, while on the upside, the first resistance level situated in 1.4419, followed by 1.4610. Looking ahead, investors will look forward to UK’s NIESR gross domestic product estimate and Markit’s construction and services PMI for further direction. Moreover, UK’s official reserves, industrial, manufacturing production and total trade balance data will generate a lot of market attention.
USDJPY
The USD traded 1.26% lower against the JPY last week, with the pair closing at 111.71. On the data front, Japan’s unemployment rate rose in February, rising for the first time in three months. Further, industrial production declined the most on a monthly basis in February since 2011, underscoring Japan’s struggle to rebound from a negative growth at the end of last year. Other economic data showed that Japan’s manufacturing output contracted at the fastest pace in three years in March, due to new export orders shrinking sharply. During the previous week, the pair traded at a high of 113.82 and a low of 111.59. The pair is expected to find its first support at 110.93 and first resistance at 113.16. The second support is expected at 110.15 and second resistance at 114.61. Moving ahead, market participants look forward to Japan’s Nikkei services PMI, leading index, trade balance and consumer confidence index, all scheduled for release this week.
USDCHF
During the previous week, the USD traded 2.00% lower against the CHF and ended at 0.9578. In economic news, Switzerland’s UBS consumption indicator advanced in February, on the back of persistent and strong growth in private consumption. Moreover, the nation’s SVME Purchasing managers’ index climbed surprisingly in March. Meanwhile, the KOF leading indicator indicated eased less-than-expected in March. Additionally, real retail sales dropped for a consecutive seventh month on a yearly basis in February. During the previous week, the pair traded at a high of 0.9788 and a low of 0.9555. Immediate downside, the first support level is seen at 0.9495, followed by 0.9409, while on the upside, the first resistance level situated in 0.9727, followed by 0.9874. Going forward, investors this week would closely monitor Switzerland’s consumer price inflation data, foreign currency reserves and unemployment rate for further direction in the Swiss Franc.
USDCAD
The USD fell against the CAD last week, closing 1.88% lower at 1.3011. The CAD gained ground, after Canada’s GDP figure indicated that the nation’s economy expanded for a fourth consecutive month in January, following strong manufacturing output. Moreover, manufacturing activity in Canada rose for the first time in eight months in March. Meanwhile, the industrial product price index dropped more-than-expected in February. During the previous week, the pair traded at a high of 1.3287 and a low of 1.2857. Immediate downside, the first support level is seen at 1.2817, followed by 1.2622, while on the upside, the first resistance level situated in 1.3247, followed by 1.3482. Moving ahead, market participants would concentrate on Canada’s unemployment rate, international merchandise trade as well as building permits and housing starts data.
AUDUSD
Last week, the AUD traded 2.29% higher against the USD and closed at 0.768. On the economic front, Australia’s private sector credit growth climbed on a monthly basis in February. Moreover, manufacturing activity expanded in March notching its fastest pace of expansion in twelve years. The AUD hit a high of 0.7725 and a low of 0.7493 against the USD in the previous week. The pair is expected to find its first support at 0.7539 and first resistance at 0.7771. The second support is expected at 0.7400 and second resistance at 0.7864. Moving ahead, market participants will keep a close watch on the RBA’s interest rate decision, and retail sales as well as trade balance data. Further, traders will watch the AiG performance of construction and services indices data scheduled for the week.
Gold
Gold rose last week, closing 0.46% higher at USD1222.60 per ounce, amid a broad weakness in the greenback, as the Fed Chairwoman, Janet Yellen, remained dovish on future rate hikes in the US, increased demand for the precious yellow metal. However, gains in gold prices were kept in check, after a better-than-expected US jobs report signaled strength in the economy and bolstered speculation that the Fed could raise interest rates soon. Gold hit a high of USD1246.80 per ounce and a low of USD1207.70 per ounce during the previous week. The yellow metal is expected to witness its first support at USD1205.27 per ounce and second support at USD1186.93 per ounce, while the first resistance is expected at USD1244.37 per ounce and second resistance at USD1265.13 per ounce.
Crude Oil
Last week, crude oil traded 6.77% lower and ended at USD36.79 per barrel, amid persistent concerns over the crude supply glut after Kuwait and Saudi Arabia announced that they will resume oil production of 300,000 bpd at the jointly operated Khafji field. Oil prices remained in red, after the Saudi deputy crown prince, Mohammed bin Salman, stated that the kingdom will not freeze output unless Iran and other major producers do so, thus jeopardizing a production freeze agreement. Moreover, the US Energy Department reported that US crude oil inventories rose by 2.3mn bls last week to reach a new record high of 534.8mn bls and the American Petroleum Institute (API) reported that US crude inventories rose smaller than anticipated by 2.6mn bls last week. Crude oil hit a high of USD40.14 per barrel and a low of USD36.63 per barrel in the previous week. Crude oil is expected to witness its first support at USD35.46 per barrel and second support at USD34.29 per barrel, while the first resistance is expected at USD38.97 per barrel and second resistance at USD41.31 per barrel.
Happy pips.
