Last week, the forex market was dictated by comments of top officials from key central banks.
The Euro ended the week on a stronger footing. The European Central Bank (ECB) President, Mario Draghi, defended the ECB’s ultra-low monetary policy and aggressive bond buying program and shrugged off growing criticism that their aggressive actions to support economic growth had widened the gap between rich and poor. Further, he added that the central bank is aware of keeping interest rates lower for a prolonged period of time could pose risk to financial stability. However, he also hinted that the ECB would keep its policies in place until it reaches its inflation target.
In the US, the St. Louis Fed President, James Bullard, continued to promote one rate hike this year and added that interest rates were likely to remain low for the next two to three years. Meanwhile, the Chicago Fed President, Charles Evans, stated that the Fed is likely to tighten monetary policy three more times by the end of 2017. Further, he added that the central bank may need to keep interest rates lower for longer to show investors and public that it is committed to achieve its 2.0% inflation target.
In other economic news, flash GDP data indicated that US economy accelerated at the fastest pace in two years on a quarterly basis in 3Q 2016, aided by a surge in exports, thus reinforcing expectations that the US Fed may push ahead with an interest rate hike in December. Also, the nation’s preliminary Markit manufacturing PMI unexpectedly zoomed to its highest level in twelve-months in October, bolstering the case of a Fed interest rate hike in December. Additionally, activity in services sector surprisingly jumped to an eleven-month high level in October. Further, the nation’s pending home sales rebounded strongly in September while new home sales surprisingly advanced in the same month. Moreover, advance goods trade deficit unexpectedly narrowed in September. Additionally, fewer Americans filed for fresh unemployment benefits last week, recording its first drop in three weeks. On the contrary, the nation’s consumer confidence index deteriorated to a three-month low level in October, while the final Reuters/Michigan consumer sentiment index eased in the same month, following uncertainty regarding upcoming Presidential election. Further, preliminary durable goods orders unexpectedly eased in September, amid lower demand for military hardware and computers.
The Pound ended the week lower. The Bank of England (BoE) Governor, Mark Carney, defended the monetary policy pursued by the BoE in recent years and stated that measures taken by the central bank has had a positive impact on Britain’s economy that is “without parallel”. He also stated that monetary policy has been overburdened and added that there were limits to officials’ willingness to ignore the effects of depreciating pound on inflation.
EURUSD
The EUR strengthened against the USD last week, closing 0.93% higher at 1.0983, after the Eurozone’s flash Markit manufacturing PMI strengthened more than expected in October, while the preliminary Markit services PMI rose more than anticipated in the same month. Elsewhere, Germany’s manufacturing sector expanded more than expected in October, while the nation’s services sector jumped in the same month. Also, flash consumer price inflation advanced on a monthly basis in October, at par with market expectations. In other economic news, the nation’s Ifo business climate index climbed more than expected in October, whereas the GfK consumer confidence index unexpectedly eased in November. The EUR hit a high of 1.0992 and a low of 1.0851 against the USD in the previous week. The pair is expected to find support at 1.0893, and a fall through could take it to the next support level of 1.0802. The pair is expected to find its first resistance at 1.1034, and a rise through could take it to the next resistance level of 1.1084. Going ahead, investors would look forward to unemployment rate, final Markit manufacturing and services PMI data across the Eurozone along with the region’s flash GDP, consumer price inflation and economic bulletin report, all due to release this week.
GBPUSD
The GBP traded 0.43% lower against the USD last week, with the pair closing at 1.2180. On the data front, UK’s preliminary gross domestic product (GDP) expanded more than expected by 0.5% on a quarterly basis in 3Q 2016. Further, the nation’s BBA mortgage approvals rose more than anticipated in September. On the other hand, the GfK consumer confidence index dropped in October, in line with market estimates. During the previous week, the pair traded at a high of 1.2272 and a low of 1.2083. The pair is expected to witness its first support at 1.2088 and second support at 1.1991, while the first resistance is expected at 1.2277 and second resistance at 1.2369. Going ahead, this week market participants would focus on the BoE’s interest rate decision accompanied by its Governor, Mark Caney’s speech. Moreover, UK’s Markit manufacturing, services and construction PMIs, mortgage approvals and BoE’s inflation report all due to release this week, would also generate a lot of market attention.
USDJPY
The USD traded 0.86% higher against the JPY last week, with the pair closing at 104.69. The Japanese Yen lost ground, after Japan’s national consumer price index (CPI) dropped by 0.5% YoY in September, at par with market expectations. On the other hand, the nation’s unemployment rate surprisingly dropped to 3.0% in September. Moreover, the nation’s flash Nikkei manufacturing PMI advanced in October, expanding at the fastest pace in nine-months. Additionally, the nation’s total merchandise trade surplus widened in September. Meanwhile, the nation’s annual exports and imports declined less than expected in the same month. During the previous week, the pair traded at a high of 105.53 and a low of 103.72. The pair is expected to find support at 103.80, and a fall through could take it to the next support level of 102.85. The pair is expected to find its first resistance at 105.61, and a rise through could take it to the next resistance level of 106.47. Moving ahead, market participants would look forward to the BoJ’s interest rate decision accompanied by its Governor, Haruhiko Kuroda’s speech. Moreover, Japan’s industrial production, final Nikkei manufacturing and services PMIs, consumer confidence, retail trade and large retailers’ sales, all slated to release this week, would be on investors’ radar.
USDCHF
Last week, the USD traded 0.54% lower against the CHF and closed at 0.9880. The Swiss National Bank (SNB) Chairman, Thomas Jordan, stated that the central bank could cut its negative interest rates even more, if found necessary. He also added that negative interest rates are appropriate for now despite the risks associated with it, citing significant overvaluation of Swiss Franc and globally low interest rates. Another set of economic data showed that, Switzerland’s KOF leading indicator index rose more than anticipated to its highest level since January 2014 in October. Moreover, the nation’s UBS consumption indicator edged higher in September. The pair traded at a high of 0.9999 and a low of 0.9858 during the previous week. The pair is expected to find support at 0.9826, and a fall through could take it to the next support level of 0.9772. The pair is expected to find its first resistance at 0.9967, and a rise through could take it to the next resistance level of 1.0054. Moving ahead, investors would keep a close eye on Switzerland’s real retail sales, SVME-purchasing managers’ index and SECO consumer confidence, all due to release this week.
USDCAD
The USD rose against the CAD last week, closing 0.5% higher at 1.3397. In economic news, Canada’s wholesale sales advanced on a monthly basis in August. During the previous week, the pair traded at a high of 1.3433 and a low of 1.3278. Immediate downside, the first support level is seen at 1.3306, followed by 1.3215, while on the upside, the first resistance level situated in 1.3461, followed by 1.3525. Investors would focus on Canada’s GDP, unemployment rate, RBC manufacturing PMI and Ivey PMI, all scheduled to be released this week.
AUDUSD
The AUD weakened against the USD last week, closing 0.09% lower at 0.7595. Macroeconomic data revealed that Australia’s inflation accelerated by 0.7% on a quarterly basis in the third quarter, easing some pressure on the RBA to cut interest rate in the next meeting. Also, the nation’s new home sales advanced for the second consecutive month in September. The pair traded at a high of 0.7709 and a low of 0.7558 during the previous week. The pair is expected to find its first support at 0.7535 and first resistance at 0.7686. The second support is expected at 0.7471 and second resistance at 0.7773. Going ahead, RBA’s interest rate decision coupled with its meeting minutes, will keep investors on their toes. Further, Australia’s AiG performance of manufacturing and services indices, building permits, trade balance and retail sales data, all due to release this week, would garner market attention.
Gold
During the previous week, gold traded 0.71% higher and ended at USD1275.47 per ounce, as growing uncertainty ahead of the upcoming US Presidential election raised yellow-metal’s appeal as a safe-haven investment. Gold hit a high of USD1285.40 per ounce and a low of USD1260.10 per ounce during the previous week. The precious metal is expected to find its first support at USD1262.27 per ounce and first resistance at USD1287.57 per ounce. The second support is expected at USD1248.53 per ounce and second resistance at USD1299.13 per ounce.
Crude Oil
Crude oil traded 4.23% lower in the previous week, closing at USD48.70 per barrel, pressured by rising uncertainty regarding the outcome of the meeting of major oil producers over the weekend and as Iraq, the second largest producer in OPEC, showed its unwillingness to participate in a deal to freeze crude production. Meanwhile, the Energy Information Administration (EIA) showed that US crude oil inventories unexpectedly declined by 553,000 barrels during the week ended 21 October, while the American Petroleum Institute (API) indicated that US crude stockpiles rose by 4.8 million barrels last week. The black metal hit a high of USD50.98 per barrel and a low of USD48.42 per barrel in the previous week. Immediate downside, the first support level is seen at USD47.73 per barrel, followed by USD46.79 per barrel, while on the upside, the first resistance level situated in USD50.29 per barrel, followed by USD51.91 per barrel.
Good trades Traders.
