Last week, the forex market was dictated by the US non-farm payrolls report, minutes of the European Central Bank’s (ECB) latest monetary policy meeting and the Reserve Bank of Australia’s (RBA) interest rate decision.
Data released showed that US nonfarm payrolls in September came in weaker than forecasted, but pointed towards a steady growth in the nation’s labor market, thus supporting the case for a Fed rate hike by the year end. Additionally, the nation’s unemployment rate unexpectedly rose to 5.0% in September. Meanwhile, the average hourly earnings inched up on a monthly basis in the same month.
Another set of economic data indicated that the US ISM manufacturing index climbed more than expected in September, creeping out of the contraction territory. Further, the nation’s ISM non-manufacturing PMI zoomed to its highest level in eleven-months in September, thus hinting that the economy is growing at a steady pace. Also, the number of Americans filing for fresh unemployment benefits surprisingly plummeted to its lowest level in nearly 43-years last week, strengthening the odds of a US Fed interest rate hike by the year end. Moreover, the nation’s factory orders surprisingly gained in August while the final durable goods orders climbed in the same month.
On the other hand, the nation’s construction spending unexpectedly dropped for the second straight month in August, declining to its lowest level in eight months. Additionally, the nation’s final Markit manufacturing PMI eased in September. Moreover, the private sector added the lowest number of jobs since April 2016 in the same month. Additionally, the nation’s trade deficit unexpectedly widened in August.
Meanwhile, the International Monetary Fund (IMF) reduced its US economic growth forecast to 1.6% in 2016 from 2.2% forecasted in July, while it retained its global growth forecasts at 3.1% and 3.4% for 2016 and 2017, respectively. Further, it warned that political discontent in advanced economies threatens global growth and urged major central banks to maintain easy monetary policies to support growth.
The Euro ended the week on a stronger footing. Minutes of the ECB’s recent monetary policy meeting showed that the central bank is committed to maintaining its massive bond-buying program until its conclusion next year and stands ready to extend it, if necessary, in order to recuperate economic growth in the common currency region.
The AUD ended the week lower. The RBA, in a widely expected move, stood pat on interest rate, keeping it steady at 1.50%, in its latest monetary policy meeting.
EURUSD
During the previous week, the EUR traded 0.3% lower against the USD and ended at 1.1201, after the Euro-zone’s final Markit services PMI eased in September. Further, the region’s retail sales fell less than expected on a monthly basis in August. On the contrary, the final Markit manufacturing PMI advanced in September, in line with market expectations. Meanwhile, the IMF revised Euro-zone’s growth forecast for this year and next to 1.7% and 1.5% respectively, up from an earlier projection of 1.6% and 1.4%. Separately, Germany’s seasonally adjusted industrial production rebounded more than expected on a monthly basis in August. Moreover, the nation’s seasonally adjusted factory orders rose more than anticipated on a monthly basis in the same month. Additionally, the construction PMI advanced in September. The pair traded at a high of 1.1242 and a low of 1.1104 during the previous week. The pair is expected to witness its first support at 1.1123 and second support at 1.1044, while the first resistance is expected at 1.1261 and second resistance at 1.1320. Moving ahead, investors will look forward to ZEW survey of economic sentiment index and trade balance data across the Eurozone along with the region’s Sentix investor confidence and industrial production data, all slated to release this week, to gauge the strength in the European economy. Additionally, Germany’s final consumer price inflation data would also be keenly watched by investors’.
GBPUSD
Last week, the GBP traded 4.15% lower against the USD and closed at 1.2434, after UK’s Prime Minister, Theresa May, announced that the process of leaving the EU would begin in the first quarter of 2017. In other economic news, UK’s industrial production unexpectedly fell on a monthly basis in August. Also, the nation’s total trade deficit widened more than expected in the same month. Further, the Markit services PMI fell less than anticipated in September. Meanwhile, the nation’s manufacturing production rebounded on a monthly basis in August. Moreover, the NIESR estimated that UK’s GDP grew on a quarterly basis in the July-September 2016 period. Further, the Halifax house price index unexpectedly advanced on a monthly basis in September. Another set of economic data showed that the nation’s seasonally adjusted Markit manufacturing PMI unexpectedly climbed in September. Also, the construction PMI unexpectedly expanded in September. Separately, the IMF revised up UK’s growth estimate this year, but lowered its forecast for 2017, citing the eventual impact of Brexit vote. It now expects the economy to grow by 1.8% in 2016, from 1.7% estimated in July and 1.1% in 2017, from an earlier prediction of 1.3%. The GBP hit a high of 1.2946 and a low of 1.1841 against the USD in the previous week. The pair is expected to find its first support at 1.1868 and first resistance at 1.2973. The second support is expected at 1.1302 and second resistance at 1.3512. Looking ahead, investors anxiously await Britain’s BRC retail sales, RICS house price balance and CB leading economic index data, due to release this week.
USDJPY
Last week, the USD traded 1.61% higher against the JPY and closed at 102.98. The JPY lost ground against the USD, after Japan’s Nikkei services PMI fell in September, indicating that the nation is struggling to gain momentum. Meanwhile, the nation’s Tankan large manufacturing index unexpectedly remained steady in 3Q 2016. Further, the non-manufacturing index dropped in 3Q 2016, in line with market expectations, highlighting a fragile economic recovery. On the contrary, the nation’s final Nikkei manufacturing PMI rose in September. Separately, the IMF revised its growth outlook for Japan, pointing to huge government stimulus spending, but also warned that the nation’s longer-term prospects were discouraging. The Fund now expects the Japanese economy to expand by 0.5% and 0.6% in 2016 and 2017 respectively, up from 0.3% and 0.1% respectively. The pair traded at a high of 104.16 and a low of 101.21 during the previous week. The pair is expected to witness its first support at 101.41 and second support at 99.83, while the first resistance is expected at 104.36 and second resistance at 105.73. This week, Japan’s Eco-watchers survey, trade balance, machine orders, flash machine tool orders and tertiary industry index would pique a lot of investor attention.
USDCHF
The USD rose against the CHF last week, closing 0.63% higher at 0.9775. The Swiss Franc lost ground, after Switzerland’s consumer price index (CPI) unexpectedly fell by 0.2% on an annual basis in September. Moreover, the nation’s real retail sales eased on an annual basis in August. On the contrary, the nation’s SVME-purchasing managers index rose in September. Separately, the KOF Swiss Economic Institute, upgraded Switzerland’s growth projection for this year, as the economy showed signs of pick up. It now projects the Swiss economy to expand by 1.6% from 1.0% estimated earlier. It also forecasted the nation’s economic growth to grow to 1.8% and 1.9% in 2017 and 2018, respectively. The pair traded at a high of 0.9839 and a low of 0.9704 during the previous week. The pair is expected to find its first support at 0.9706 and first resistance at 0.9841. The second support is expected at 0.9638 and second resistance at 0.9908. This week, investors would focus on Switzerland’s unemployment rate and ZEW survey for expectations data.
USDCAD
The USD rose against the CAD last week, closing 1.29% higher at 1.3296. On the data front, Canada’s unemployment rate remained steady at 7.0% in September, in line with market expectations. Further, the nation’s net number of people employed surprisingly surged in September, adding the most number of jobs in more than four years. Further, building permits jumped on a monthly basis in August, rising at the fastest pace in six months. Also, the nation’s seasonally adjusted Ivey PMI advanced in September. Meanwhile, the nation’s international merchandise trade deficit narrowed to its lowest level in eight months in August. Additionally, the RBC manufacturing PMI eased to its lowest level in seven months in September. Separately, the IMF lowered Canada’s growth forecast for this year and next to 1.2% and 1.9%, respectively from 1.4% and 2.1% predicted earlier. During the previous week, the pair traded at a high of 1.3313 and a low of 1.3068. The pair is expected to witness its first support at 1.3138 and second support at 1.2981, while the first resistance is expected at 1.3383 and second resistance at 1.3471. Going forward, Canada’s housing starts and new housing price index data, scheduled to release this week, would be keenly watched by investors.
AUDUSD
Last week, the AUD traded 1.07% lower against the USD and closed at 0.7582. The Reserve Bank of Australia (RBA), in its monetary policy meeting, opted to hold the key interest rate at a record low level of 1.50% for a second straight month, as the board decided to wait for fresh information on the pace of inflation until later this month. The RBA reiterated that holding interest rate steady would be appropriate, as the current stance would be consistent with sustainable growth in the economy and achieving the inflation target over time. Further, the bank noted that the Australian economy is continuing to grow at a moderate rate and labor market conditions in the advanced economies have improved over the past year while the global economy is expanding at a lower than average pace. In other economic news, Australia’s AIG performance of services index advanced in September whereas the AIG performance of construction index expanded in the same month. Additionally, the nation’s seasonally adjusted retail sales rose in August. Meanwhile, the nation’s AiG performance of manufacturing index climbed in September, but remained in the contraction territory. On the other hand, the nation’s seasonally adjusted building permits dropped in August while trade deficit narrowed in the same month. During the previous week, the pair traded at a high of 0.7691 and a low of 0.7553. Immediate downside, the first support level is seen at 0.7526, followed by 0.7471, while on the upside, the first resistance level situated in 0.7664, followed by 0.7747. Looking ahead, market participants would concentrate on the release of Australia’s NAB business confidence, Westpac consumer confidence, consumer inflation expectations, mid-year economic and fiscal outlook report, all due this week.
Gold
During the previous week, gold traded 4.47% lower and ended at USD1257.08 per ounce, amid strength in the greenback coupled with rising expectations of a Fed interest rate hike by year end. The yellow metal witnessed a high of USD1322.60 per ounce and a low of USD1243.20 per ounce in the previous week. Immediate downside, the first support level is seen at USD1227.00 per ounce, followed by USD1195.40 per ounce, while on the upside, the first resistance level situated in USD1306.40 per ounce, followed by USD1354.20 per ounce.
Crude Oil
Last week, crude oil strengthened 3.25% to close at USD49.81 per barrel, lifted by news of another informal meeting of the OPEC members on output cuts and after Iranian President, Hassan Rouhani, urged other oil producers to join OPEC to stabilize oil market. Oil prices were boosted further, after the Energy Information Administration (EIA) reported that US crude stockpiles surprisingly dropped by 3.0 million barrels to 499.7 million barrels in the week ended 30 September, while the American Petroleum Institute (API) indicated that US crude oil inventories unexpectedly fell by 7.6 million barrels to 498.8 million barrels during the last week. Last week, the commodity traded at a high of USD50.74 per barrel and a low of USD47.79 per barrel. Crude oil is expected to witness its first support at USD47.98 per barrel and second support at USD46.41 per barrel, while the first resistance is expected at USD50.93 per barrel and second resistance at USD52.31 per barrel.
Good trades Traders.
