Last week, the forex market was dictated by the US non-farm payroll report. Data released showed that the US non-farm payrolls in August came in weaker than forecasted, after two straight months of robust gains, thus diminishing the odds of a Federal Reserve (Fed) rate hike anytime soon. Additionally, the nation’s unemployment rate remained unchanged at 4.9% in August. Meanwhile, the average hourly earnings inched up on a monthly basis in the same month. Further, the nation’s factory orders rose by the most in nine months in July, while final durable goods orders remained steady in the same month.
Separately, the US Fed Vice Chairman, Stanley Fischer, indicated that the US job market has nearly reached its full strength. However, he stopped short of commenting on the timing of the next rate hike and stated that further moves on the monetary policy will be data dependent. Meanwhile, the Boston Fed President, Eric Rosengren, stated that the central bank is heading towards its dual target of full employment and 2.0% inflation and warned that keeping interest rate low for too long could hamper the nation’s economy in the future.
Another set of economic data indicated that the US ISM manufacturing index unexpectedly contracted for the first time in six months, thus casting fresh doubts on the strength of the world’s largest economy. Moreover, the final Markit manufacturing PMI was revised down in August. Further, the nation’s construction spending surprisingly remained flat on a monthly basis in July. On the other hand, initial jobless claims rose less than anticipated during the week ended 27 August 2016. Also, then nation’s consumer confidence index zoomed to its highest level in eleven-months, indicating that consumers are getting optimistic in the second half of the year. Further, the US private employers added more than expected jobs in August, indicating that job growth would continue to remain strong enough in the country. Moreover, the nation’s pending home sales climbed on a monthly basis in July.
The Euro ended the week on a stronger footing, after the Euro zone’s unemployment rate remained steady at a level of 10.1% in July, its lowest level since July 2011. Further, the region’s preliminary consumer price index (CPI) rose less than expected on an annual basis in August, thus piling pressure on the European Central Bank (ECB) to unleash additional monetary policy measures in order to recuperate economic growth in the common currency region.
Elsewhere, in Germany, the preliminary consumer prices unexpectedly remained flat on a monthly basis in August. Moreover, the nation’s seasonally adjusted unemployment rate remained steady at a record low level of 6.1% in August.
EURUSD
During the previous week, the EUR traded 0.38% lower against the USD and ended at 1.1156, after the Euro-zone’s final Markit manufacturing PMI was revised down in August. Additionally, the region’s economic sentiment indicator deteriorated in August. Moreover, the final consumer confidence index eased in August, in line with market expectations. Separately, Germany’s preliminary consumer price index unexpectedly remained flat on a monthly basis in August. Moreover, Germany’s final Markit manufacturing PMI came in line with market expectations. Also, import price index unexpectedly climbed on a monthly basis in July. Meanwhile, the nation’s seasonally adjusted unemployment rate remained steady at a record low level of 6.1% in August, in-line with market expectations. Further, the nation’s retail sales rebounded on a monthly basis in July. During the previous week, the pair traded at a high of 1.1252 and a low of 1.1123. The pair is expected to witness its first support at 1.1102 and second support at 1.1048, while the first resistance is expected at 1.1231 and second resistance at 1.1306. Looking ahead, investors anxiously await the release of final GDP data and Markit services PMI data across the Eurozone along with Eurozone’s Sentix investor confidence data, slated to release this week. Meanwhile, Germany’s consumer price index, industrial production and trade balance data, due to release this week, would also generate lot of market attention.
GBPUSD
During the previous week, the GBP traded 1.2% higher against the USD and ended at 1.3294, after UK’s seasonally adjusted Markit manufacturing PMI entered into the expansion territory, notching its highest level in ten-months. Moreover, the nation’s GfK consumer confidence index improved in August. In other economic news, the nation’s Markit construction PMI rose more than forecasted in August. Also, number of mortgage approvals for house purchases eased more than expected in July. Further, the nation’s net consumer credit advanced at the slowest pace since August 2015 in July. Moreover, seasonally adjusted nationwide house prices unexpectedly rose on a monthly basis in August. Meanwhile, the nation’s Lloyds business barometer index dropped in August. The GBP hit a high of 1.3352 and a low of 1.3060 against the USD in the previous week. The pair is expected to find its first support at 1.3119 and first resistance at 1.3411. The second support is expected at 1.2943 and second resistance at 1.3527. This week, investors would focus on the release of UK’s NIESR GDP estimate, industrial and manufacturing production, total trade balance, construction output and RICS house price balance data.
USDJPY
Last week, the USD traded 2.04% higher against the JPY and closed at 103.92. Data indicated that Japan’s unemployment rate unexpectedly dropped to a twenty-one-year low level of 3.0% in July. Additionally, the nation’s retail trade climbed on a monthly basis in July. Meanwhile, household spending declined less than anticipated on an annual basis in the same month. Additionally, the flash industrial production surprisingly remained flat on a monthly basis in July. In other economic news, the nation’s final Nikkei manufacturing PMI rose in August. Also, the nation’s construction orders declined further on an annual basis in July. On the other hand, housing starts rebounded above expectations on an annual basis in July. The pair traded at a high of 104.32 and a low of 101.76 during the previous week. Immediate downside, the first support level is seen at 102.35, followed by 100.77, while on the upside, the first resistance level situated in 104.91, followed by 105.89. Moving ahead, investors will look forward to Japan’s Eco-Watchers survey, machine tool orders, machine orders and tertiary industry index data, all slated to be released this week.
USDCHF
The USD traded 0.28% higher against the CHF last week, with the pair closing at 0.9809. On the data front, Switzerland’s real retail sales fell on an annual basis in July. Further, the nation’s KOF leading indicator fell to an eight-month low level in August. Also, the UBS consumption indicator climbed in July. Additionally, the nation’s SVME manufacturing PMI climbed in August. During the previous week, the pair traded at a high of 0.9885 and a low of 0.9739. Immediate downside, the first support level is seen at 0.9737, followed by 0.9665, while on the upside, the first resistance level situated in 0.9883, followed by 0.9957. Moving ahead, Switzerland’s consumer price index and unemployment rate data, scheduled to release this week, will garner a lot of market attention.
USDCAD
The USD traded 0.08% lower against the CAD last week, with the pair closing at 1.2993. Macroeconomic data indicated that, Canada’s annualized gross domestic product (GDP) dropped by 1.6% on a quarterly basis in 2Q 2016, recording its largest quarterly decline since the second quarter of 2009, mainly due to the wildfires in Alberta. Meanwhile, on a monthly basis, the GDP rose by 0.6% in June. Further, the international merchandise trade deficit narrowed more than expected in July. Also, current account deficit advanced less than anticipated in 2Q 2016. On the other hand, the nation’s RBC manufacturing PMI declined in August, hitting its lowest level in six-months. During the previous week, the pair traded at a high of 1.3148 and a low of 1.2982. The pair is expected to find support at 1.2934, and a fall through could take it to the next support level of 1.2875. The pair is expected to find its first resistance at 1.3100, and a rise through could take it to the next resistance level of 1.3207. Looking ahead, market participants await the release of Canada’s building permits, data.
AUDUSD
The AUD traded 0.12% higher against the USD last week, with the pair closing at 0.7573. On the data front, Australia’s AIG performance of manufacturing index contracted for the first time in fourteen months in August. Further, the nation’s HIA new home sales eased its lowest level in ten years on a monthly basis in July. On the contrary, seasonally adjusted building approvals jumped by the most in nearly three years on a monthly basis in the same month. Moreover, private sector credit rose on a monthly basis in July, at par with market consensus. Meanwhile, the nation’s seasonally adjusted retail sales remained flat on a monthly basis in July. During the previous week, the pair traded at a high of 0.7616 and a low of 0.7490. The pair is expected to find its first support at 0.7503 and first resistance at 0.7629. The second support is expected at 0.7434 and second resistance at 0.7686. Going forward, RBA’s interest rate decision would garner lot of market attention.
Gold
Gold rose last week, closing 0.31% higher at USD1325.21 per ounce, after US non-farm payrolls came in below market expectations for August. The yellow metal hit a high of USD1334.00 per ounce and a low of USD1305.50 per ounce in the previous week. Immediate downside, the first support level is seen at USD1311.53 per ounce, followed by USD1294.27 per ounce, while on the upside, the first resistance level situated in USD1340.03 per ounce, followed by USD1351.27 per ounce.
Crude Oil
Last week, crude oil traded 6.72% lower and ended at USD44.44 per barrel, after the American Petroleum Institute (API) showed that US crude oil stocks rose by 0.94 million barrels to 525.4 million barrels in the week ended 26 August 2016, while the Energy Information Administration (EIA) indicated that US oil inventories advanced more than expected by 2.3 million barrels to 525.9 million barrels last week. Last week, the commodity traded at a high of USD47.49 per barrel and a low of USD43.00 per barrel. Immediate downside, the first support level is seen at USD42.30 per barrel, followed by USD40.41 per barrel, while on the upside, the first resistance level situated in USD46.79 per barrel, followed by USD49.39 per barrel.
