Last week, the minutes of the Federal Reserve’s (Fed) recent monetary policy meeting indicated that an interest rate hike in April was unlikely because of global risks such as weaker growth in China and financial market volatility. There was a noticeable disagreement between members as some liked to keep open the possibility for a hike in April, while others argued that the central bank should proceed cautiously until the economy picks up steam. Separately, the Fed Chair, Janet Yellen, defended her decision of raising interest rates late last year, stating that the nation’s economic growth was making “substantial progress”. She further stated that the US labor market has strengthened and the nation’s inflation has moved up despite strong dollar and lower oil prices. Macroeconomic data released during the week indicated that factory orders in the US slipped more than expected for a third time in the last four months, amid weak global demand and a stronger local currency. Meanwhile, the ISM showed that growth at US services firm expanded at a faster than anticipated pace in March after a slowdown in the nation’s service activity in the prior two months. Also, the number of mortgage application in the US rebounded for the first time in four weeks in the week ended April 01. Moreover, the number of Americans filing for fresh jobless benefits increased less than forecast in the week ended April 02, indicating that the nation’s labor market continues to remain sound despite tepid economic growth.
The Euro ended the week on a stronger footing, on the back of stronger than expected retail sales data on a yearly basis, notching its fourth consecutive month increase in February, led by lower oil prices and a slowly falling unemployment rate. However, gains in the common-currency were kept in check, after the final estimate of the manufacturing as well as the services PMI fell short of consensus estimates in March. Additionally, German factory orders unexpectedly dipped on a monthly basis in February, highlighting that the region’s top economy is suffering from a cooling of global activity. Separately, the minutes of the European Central Bank’s (ECB) latest policy meeting showed that board members discussed the possibility of a sharper interest rate cut but eventually decided that a smaller one was appropriate, given the current economic assessment. However, future rate cuts also remain on the table.
The British Pound ended the week in red, following dismal industrial and manufacturing output data in the UK. The nation’s manufacturing production eased more than expected on a monthly basis in February and the industrial production also contracted in the same period. The weaker figures have raised concerns over the performance of the UK economy. Meanwhile, the UK think tanker, NIESR estimated that the nation’s economic growth slowed considerably in the first quarter amid Brexit fears.
EURUSD
Last week, the EUR traded marginally higher against the USD and closed at 1.1397, after Euro-zone’s retail sales grew for a consecutive fourth month in February. Also, Germany’s trade surplus increased more than anticipated in February, as exports rebounded strongly, indicating that Germany’s economic growth could accelerate in the first quarter. In other economic news, Eurozone’s Sentix investor confidence advanced marginally, but came in less than market expectations in April. Moreover, the region’s unemployment rate improved slightly to 10.3% in February, from 10.4% recorded in the prior month. Additionally, final estimate showed that services sector in the Euro-zone and in its peripheries expanded less-than-expected in March, highlighting an uphill task for the ECB to prop up the Euro economy. Meanwhile, German industrial output dipped in February, dragged down by weak manufacturing output. The pair traded at a high of 1.1455 and a low of 1.1327 during the previous week. The pair is expected to witness its first support at 1.1331 and second support at 1.1265, while the first resistance is expected at 1.1460 and second resistance at 1.1522. This week, investors would keep a watch on Eurozone’s industrial production, consumer price index and trade balance data for further cues. Additionally, Germany’s consumer price index will also attract market attention.
GBPUSD
During the previous week, the GBP traded 0.68% lower against the USD and ended at 1.4127, on the back disappointing manufacturing and industrial production data. The manufacturing production dropped more-than expected and the industrial activity eased unexpectedly on a monthly basis in February, thus both acting as a drag on the UK economy. Another set of data showed that UK’s construction activity remained unchanged in March from February, staying at its slowest rate for growth output since June 2013. Meanwhile, the services sector PMI edged up in March, after reaching its lowest level in nearly three years in the previous month. However, the sector still remained sluggish, due to slowing global economy as well as uncertainty over the upcoming EU membership referendum. The pair traded at a high of 1.4324 and a low of 1.4006 during the previous week. The pair is expected to find support at 1.3979, and a fall through could take it to the next support level of 1.3833. The pair is expected to find its first resistance at 1.4297, and a rise through could take it to the next resistance level of 1.4469. Looking ahead, investors will focus on UK’s consumer price inflation data, and the CB leading economic index for further direction. Moreover, the BoE’s interest rate decision will keep investors on their toes.
USDJPY
The USD traded 3.24% lower against the JPY last week, with the pair closing at 108.09. On the data front, Japan’s leading index eased for a fourth straight month in February, at par with market expectations and the coincident index fell at its fastest pace since March 2011 in the same month. Moreover, the Nikkei services PMI declined and recorded a nine-month low level in March. In other economic news, the nation’s trade balance on a BOP basis posted a surplus in February while the consumer confidence in Japan rose more-than-expected in March, indicating growing optimism in consumers regarding Japan’s economy. During the previous week, the pair traded at a high of 111.77 and a low of 107.67. The pair is expected to find its first support at 106.57 and first resistance at 110.67. The second support is expected at 105.07 and second resistance at 113.26. Moving ahead, market participants look forward to Japan’s machine tool order, industrial production data all scheduled for release this week.
USDCHF
Last week, the USD traded 0.53% lower against the CHF and closed at 0.9528. In economic news, Switzerland’s seasonally adjusted unemployment rate rose to 3.5%in March, from a level of 3.4% recorded in the previous month. Meanwhile, the consumer price inflation rose 0.3%, on a monthly basis in March, in line with market expectations It followed an advance of 0.2% in February. Additionally, foreign currency reserves also increased in March. During the previous week, the pair traded at a high of 0.9623 and a low of 0.9521. Immediate downside, the first support level is seen at 0.9496, followed by 0.9457, while on the upside, the first resistance level situated in 0.9598, followed by 0.9661. Going forward, investors this week would keep a watch on Switzerland’s producer and import prices data for further cues.
USDCAD
During the previous week, the USD traded 0.18% lower against the CAD and ended at 1.2988, In economic news, Canada’s international merchandise trade deficit widened sharply in February, growing three times from its previous month’s level. Moreover, the Ivey purchasing managers’ index dipped again in March, casting doubts on the nation’s manufacturing prospects. Meanwhile, unemployment rate in Canada unexpectedly fell to 7.1% in March, following a surge in job gain in the labor market. Additionally, housing starts in Canada eased less-than-expected in March and building permits jumped more than market forecasts in February. The USD hit a high of 1.3220 and a low of 1.2952 against the CAD in the previous week. The pair is expected to find support at 1.2887, and a fall through could take it to the next support level of 1.2786. The pair is expected to find its first resistance at 1.3155, and a rise through could take it to the next resistance level of 1.3322. Moving ahead, market participants this week would closely monitor the Bank of Canada’s interest rate decision and monetary policy report, to get better insights in the Canadian economy.
AUDUSD
The AUD traded 1.64% lower against the USD last week, with the pair closing at 0.7554. The Reserve Bank of Australia (RBA) kept interest rate unchanged at 2.0% for the straight eleventh month. Meanwhile, the RBA Governor, Glenn Stevens, indicated that an appreciation in the Aussie could complicate the adjustment currently under way in the nation’s economy. On the macroeconomic front, Australia’s retail sales came in below expectations ending flat on a monthly basis in February, casting doubt over the ability of household spending to boost economic growth in the year ahead. Moreover, the nation’s trade deficit expanded surprisingly in February. Additionally, the services sector activity slid towards contraction in March and the construction activity eased further in the same month. The pair traded at a high of 0.7675 and a low of 0.7492 during the previous week. The pair is expected to witness its first support at 0.7473 and second support at 0.7391, while the first resistance is expected at 0.7656 and second resistance at 0.7757. Moving ahead, market participants will keep a close watch on Australia’s unemployment rate and consumer inflation expectation. Further, traders will watch National Australia Bank’s business conditions, Westpac consumer confidence and financial stability review all scheduled for the week.
Gold
Gold traded 1.48% higher during the previous week, closing at USD1240.69 per ounce, as a broad weakness in the US Dollar, soft global macroeconomic data and the Fed’s cautious stance towards hiking interest rate increased demand for the precious yellow metal. Gold hit a high of USD1245.00 per ounce and a low of USD1215.70 per ounce during the previous week. Gold is expected to its find support at USD1222.20 per ounce, and a fall through could take it to the next support level of USD1204.30 per ounce. The yellow metal is expected to find its first resistance at USD1251.50 per ounce, and a rise through could take it to the next resistance level of USD1262.90 per ounce.
Crude Oil
Last week, crude oil strengthened 7.96% to close at USD39.72 per barrel, amid renewed hopes of a freeze in oil production, as producers from within and outside the OPEC will meet in Doha on April 17. Moreover, oil prices further strengthened the US Energy Department reported that US crude oil inventories unexpectedly fell by 4.9mn bls during the last week to 529.9mn bls and the American Petroleum Institute (API) reported that crude oil inventories declined by 4.3mn bls last week. Additionally, Baker Hughes reported that the US oil rig count declined by 8 to a level of 354, reaching its lowest level since November in the week ended 08 April. Last week, the commodity traded at a high of USD39.84 per barrel and a low of USD35.24 per barrel. Crude oil is expected to witness its first support at USD36.65 per barrel and second support at USD33.65 per barrel, while the first resistance is expected at USD41.25 per barrel and second resistance at USD42.85 per barrel.
Good trades.
