The highlight of the week was the comments from the US Federal Reserve Chairwoman, Janet Yellen, as she gave an upbeat assessment on the US economic outlook and mentioned that interest rate hikes are coming, yet refrained from providing guidance on the timing of a rate hike.
Macroeconomic data released during the week indicated that Americans applying for the new unemployment benefits declined unexpectedly last week, pointing towards a robust labor market. Another employment report indicated that Job openings advanced higher than market expectations in April, yet the speed of hiring by the US employers slowed to near a two-year low during the same period. Moreover, wholesale inventories advanced more-than-expected in April, rising at its fastest pace in 10 months. Meanwhile, consumer borrowing slowed in April from March. Moreover, the nation posted a budget deficit in May, amid a rise in spending and a decline in corporate profits. Further, consumer sentiment declined less than expected in June.
The Euro ended the week in the red, after Eurozone’s economic growth was revised up 0.6% in the first three months of 2016, recording its highest rate for 12 months, backed by stronger household spending and business investment. Moreover, investor confidence index advanced higher than market expectations, notching its highest level since last December, indicating optimism amongst investors about the economic conditions in the region. Separately, ECB’s President, Mario Draghi urged governments in the Euro region to play their role in boosting growth and inflation and further warned that the region could not solely rely on central bank’s efforts.
Separately, in Germany, consumer prices rose in line with market expectations in May. Moreover, industrial output growth rebounded more-than-expected in April. Additionally, the wholesale price index advanced on a monthly basis in May from April. On the other hand, factory orders registered a larger than expected drop in April, its largest monthly drop since July 2015, due to sluggish foreign demand. Moreover, trade surplus declined slightly in April, beating market expectations of bigger decline.
The Pound ended the week lower, despite UK’s economic growth gaining momentum in the three months to May, as the NIESR GDP estimate expanded 0.5%, the fastest pace since January. Further, manufacturing production increased beating market expectations in April, as output grew at the fastest pace in nearly four years, while the industrial output growth advanced in April, marking its biggest monthly increase since July 2012, easing fears that upcoming EU referendum is weighing on the economy. Additionally, BoE’s survey projected that the UK consumers expected inflation rate in the next 12 months was 2.0% and anticipations of a rate hike increased in the same period. Separately, the nation’s trade deficit declined in April, as exports advanced at its fastest pace since 2010.
EURUSD
Last week, the EUR traded 1.02% lower against the USD and closed at 1.1251, after Eurozone’s final gross domestic product advanced 0.6% on a quarterly basis as well as annual basis in the first quarter of 2016. Moreover, the region’s investor confidence index advanced more-than-expected in June. In Germany, consumer prices advanced on an annual and monthly basis at par with market expectations in May. Moreover, the industrial production advanced higher than expected on a monthly basis in April. Additionally, the wholesale price index surged on a monthly basis in May. Meanwhile, the nation’s trade surplus narrowed less-than-expected in April. Further, seasonally adjusted factory orders dropped more-than-expected in April. The EUR hit a high of 1.1416 and a low of 1.1246 against the USD in the previous week. The pair is expected to find support at 1.1193, and a fall through could take it to the next support level of 1.1134. The pair is expected to find its first resistance at 1.1363, and a rise through could take it to the next resistance level of 1.1474. This week, investors would focus on Eurozone’s economic bulletin and ECB President, Mario Draghi’s speech scheduled in the week. Moreover, industrial production, trade balance data and consumer price inflation data will be on investors’ radar.
GBPUSD
The GBP traded 1.8% lower against the USD last week, with the pair closing at 1.4257, despite NIESR GDP estimate showed that UK’s economy expanded 0.5% for the three months ending May, compared with the three months ending April. Moreover, a BoE’s survey showed that median expectations of consumer inflation over the coming 12 months was 2.0%. Further, the manufacturing production advanced more-than-expected in April, while the industrial production increased higher than market expectations in the same month. Additionally, UK’s BRC retail sales rebounded on an annual basis in May. Separately, the nation’s goods trade deficit narrowed in April, amid a surge in the exports. During the previous week, the pair traded at a high of 1.4660 and a low of 1.4181. The pair is expected to find support at 1.4072, and a fall through could take it to the next support level of 1.3887. The pair is expected to find its first resistance at 1.4551, and a rise through could take it to the next resistance level of 1.4845. Looking ahead, investors will closely monitor BoE’s interest rate decision and meeting minutes along with the quarterly bulletin for further direction. Moreover, UK’s retail sales, ILO unemployment rate, consumer price index and CB leading economic index will generate a lot of market attention.
USDJPY
The USD traded 0.41% higher against the JPY last week, with the pair closing at 106.97. On the data front, Japan’s annualized economic growth accelerated 1.9% during the first three months of 2016, up from the preliminary reading of 1.7%. Meanwhile, the nation’s trade surplus narrowed more than expected in April, while the current account surplus also shrank in the same month. Further, the leading economic index advanced less than expected in April, while the coincident index increased in the same month. Additionally, the machinery orders dropped more-than-expected on a monthly basis in April. The USD hit a high of 107.90 and a low of 106.26 against the JPY in the previous week. The pair is expected to witness its first support at 106.19 and second support at 105.40, while the first resistance is expected at 107.83 and second resistance at 108.68. Moving ahead, market participants will look forward to Bank of Japan’s monetary policy meeting and industrial production and BSI large manufacturing index for further cues.
USDCHF
Last week, the USD traded 1.13% lower against the CHF and closed at 0.9649. In economic news, Switzerland’s unemployment rate remained steady at 3.5% in May. Moreover, the consumer prices grew at a slower pace than expected on monthly basis in May. During the previous week, the pair traded at a high of 0.9776 and a low of 0.9578. The pair is expected to find its first support at 0.9559 and first resistance at 0.9757. The second support is expected at 0.9470 and second resistance at 0.9866. Going forward, investors this week would closely monitor Swiss National Bank’s interest rate decision and the financial stability report along with the producer and import prices for further direction in the Swiss Franc.
USDCAD
Last week, the USD traded 1.19% lower against the CAD and closed at 1.2783. On the economic front, Canada’s unemployment rate declined to 6.9% in May, registering its lowest level since July 2015. Moreover, the IVEY purchasing managers’ index slipped into the contraction territory in May, registering its worst level since March 2015. Further, the building permits dropped on a monthly basis in April, while the housing starts declined more than expected on an annual basis in May. Meanwhile, the nation’s new home prices advanced at its quickest pace in six months in April. The USD hit a high of 1.2983 and a low of 1.2655 against the CAD in the previous week. The pair is expected to find its first support at 1.2631 and first resistance at 1.2959. The second support is expected at 1.2479 and second resistance at 1.3135. Moving ahead, market participants would concentrate on Canada’s consumer price index, Bank of Canada’s consumer inflation rate and manufacturing shipments for further direction.
AUDUSD
The AUD traded 0.10% higher against the USD last week, with the pair closing at 0.7373. The Reserve Bank of Australia (RBA) maintained the key interest rate at 1.75%, during its recent monetary policy meeting. Moreover, the central bank was seen in no rush to slash interest rate again. Further, RBA governor, Glenn Stevens announced that policymakers’ decision keeping the monetary policy unchanged would be consistent with sustainable growth in the economy and inflation returning to its target. On the economic front, Australia’s new home loans rebounded in April, but rose less than expectations. Moreover, the AIG performance of construction index contracted in May. The pair traded at a high of 0.7505 and a low of 0.7315 during the previous week. The pair is expected to find support at 0.7290, and a fall through could take it to the next support level of 0.7208. The pair is expected to find its first resistance at 0.7480, and a rise through could take it to the next resistance level of 0.7588. Moving ahead, market participants will keep a close watch on Australia’s unemployment rate, consumer inflation expectations, Westpac consumer confidence, NAB’s business conditions all scheduled for the week. Moreover, traders will also eye the RBA’s bulletin report for further cues.
Gold
Gold rose last week, closing 2.41% higher at USD1274.24 per ounce, amid a broad decline in global equity markets. The precious metal traded at a high of USD1280.90 per ounce and a low of USD1236.90 per ounce in the previous week. Immediate downside, the first support level is seen at USD1248.50 per ounce, followed by USD1220.70 per ounce, while on the upside, the first resistance level situated in USD1292.50 per ounce, followed by USD1308.70 per ounce.
Crude Oil
Crude oil strengthened in the previous week, closing 0.93% higher at USD49.07 per barrel, amid persistent oil supply disruptions in Nigeria and Canada. Moreover, the US Energy Department reported that the crude oil inventories fell by 3.2mn bls last week and the American Petroleum Institute reported that the crude oil stockpiles declined by 3.6mn bls last week, marking a third straight week of declines. Crude oil hit a high of USD51.67 per barrel and a low of USD48.77 per barrel in the previous week. The commodity is expected to find its first support at USD47.88 per barrel and first resistance at USD50.78 per barrel. The second support is expected at USD46.87 per barrel and second resistance at USD52.67 per barrel.
Good trades.
