The highlight of the week was robust US GDP data and the minutes of Bank of Japan’s (BOJ) latest monetary policy meeting.
In economic news, the second estimate of annualized GDP indicated that economic growth in the US was revised upwards to 1.4% on a quarterly basis in the second quarter. Moreover, the flash Markit services PMI expanded at the fastest pace since April 2016 in September. Further, the nation’s consumer confidence surprisingly jumped to a nine-years high level in September, thus reinforcing optimism over the health of the world’s largest economy. Further, the final Reuters/Michigan consumer confidence index climbed for the first time in four months in September, as consumers grew more upbeat about the nation’s growth prospects. Additionally, the nation’s personal income edged up in August. Also, advance goods trade deficit unexpectedly narrowed in the same month. On the contrary, the nation’s personal spending unexpectedly remained flat in August. Meanwhile, initial jobless claims came in weaker than forecasted in the last week.
Other economic data showed that the nation’s new home sales dropped less than expected in August, while pending home sales surprisingly eased to its lowest level since January 2016 in the same month. Further, the flash durable goods orders surprisingly remained flat in August, suggesting that the economy is struggling with sluggish business spending.
The Euro ended the week on a stronger footing. The European Central Bank (ECB) Chief, Mario Draghi, stated that pursuing accommodative monetary policy will continue to provide effective support to the economic growth potential and the upward path to inflation. Further, he stated that the region’s economy appeared “resilient” to global and political uncertainty created by Britain’s decision to leave the EU and that "adequate preparation" by the ECB and Bank of England had helped to contain the initial impact of the Brexit vote on the common currency region. He also warned that UK should not be granted any special favors on single-market access during negotiations over Brexit.
Meanwhile, the ECB President shrugged off criticism that the central bank’s ultra-loose monetary policies had hindered the German economy while stating that these policies were a necessity to improve the growth prospects and to revive inflation in the region and have countered the threat of a new ‘Great Depression’. He also warned that if the ECB’s decisions continue to be constantly attacked, the bank might be forced to take more extensive measures to be effective.
The JPY lost ground against the USD. Minutes of the BoJ’s latest monetary policy meeting indicated that Japan’s economic recovery remains on track and inflation would probably accelerate towards the 2.0% target in fiscal year 2017. However, it also warned that the outlook was marked by “considerably uncertainties,” which could demand further policy accommodation.
EURUSD
Last week, the EUR traded 0.08% higher against the USD and closed at 1.1235, after the Euro-zone’s preliminary consumer price index (CPI) rose by 0.4% on an annual basis in September, in line with market expectations. Additionally, the region’s final consumer confidence index rose in September. Meanwhile, the region’s unemployment rate surprisingly remained steady at a five-year low level of 10.1% in August. Separately, Germany’s flash consumer price index unexpectedly advanced by 0.1% on a monthly basis in September. Moreover, the nation’s seasonally adjusted unemployment rate remained steady at 6.1% in the same month, meeting market expectations. On the contrary, retail sales fell more than expected on a monthly basis in August. During the previous week, the pair traded at a high of 1.1279 and a low of 1.1153. The pair is expected to find support at 1.1166, and a fall through could take it to the next support level of 1.1096. The pair is expected to find its first resistance at 1.1292, and a rise through could take it to the next resistance level of 1.1348. This week, investors would focus on the final manufacturing and services PMI across the Euro-zone along with the region’s retail sales data, to gauge strength in the European economy. Additionally, Germany’s factory orders, construction PMI and industrial production data would also be keenly watched by investors.
GBPUSD
The GBP advanced against the USD last week, closing marginally higher at 1.2972, after UK’s final gross domestic product (GDP) rose more than expected 0.7% on a quarterly basis in 2Q 2016. Additionally, the nation’s seasonally adjusted Nationwide house prices gained on a monthly basis in September, while the GfK consumer confidence index improved more than forecasted in the same month. Also, net consumer credit advanced in August. Meanwhile, current account deficit rose less than expected in 2Q 2016. In other economic news, UK’s BBA mortgage approvals dropped more than expected in August. Also, the number of mortgage approvals for house purchases eased in the same month. During the previous week, the pair traded at a high of 1.3059 and a low of 1.2917. Immediate downside, the first support level is seen at 1.2906, followed by 1.2841, while on the upside, the first resistance level situated in 1.3048, followed by 1.3125. Looking ahead, investors anxiously await the release of Britain’s Markit manufacturing, services and construction PMI along with industrial and manufacturing production, NIESR GDP estimate, total trade balance and Halifax house prices data, all due this week.
USDJPY
Last week, the USD traded 0.33% higher against the JPY and closed at 101.35. The Bank of Japan (BoJ) Governor, Haruhiko Kuroda, stated that the central bank would do everything necessary to spur inflation in the nation, including cutting interest rates further into negative territory. Separately, minutes of the BoJ’s latest monetary policy meeting indicated that Japan’s economy continues to rebound and inflation is likely to accelerate towards the 2.0% target in fiscal year 2017. However, it also noted that the outlook remains fretted by “considerably uncertainties,” which could call for further monetary policy accommodation. In other economic news, Japan’s unemployment rate unexpectedly rose to 3.1% in August. Additionally, the nation’s national consumer price index slid 0.5% on an annual basis in the same month. Also, seasonally adjusted retail trade declined more than expected in August, while large retailer’s sales eased more than anticipated in the same month. On the other hand, the nation’s flash industrial production rebounded more than anticipated on a monthly basis in August, rising at the fastest pace in more than two-years. Also, small business confidence index rose in September. During the previous week, the pair traded at a high of 101.84 and a low of 100.09. The pair is expected to find its first support at 100.35 and first resistance at 102.10. The second support is expected at 99.34 and second resistance at 102.84. Moving ahead, market participants look forward to Japan’s Tankan large manufacturers index for 3Q, consumer confidence index, final Nikkei manufacturing PMI and Nikkei services PMI data.
USDCHF
Last week, the USD traded 0.1% higher against the CHF and closed at 0.9714. On the economic front, Switzerland’s UBS consumption indicator advanced in August, whereas the nation’s KOF economic indicator index rose in September. The pair traded at a high of 0.9755 and a low of 0.9640 during the previous week. The pair is expected to find its first support at 0.9651 and first resistance at 0.9766. The second support is expected at 0.9588 and second resistance at 0.9818. Moving ahead, investors will focus on Switzerland’s consumer price index, real retail sales and SVME-purchasing manager’s index, all slated to release this week.
USDCAD
The USD fell against the CAD last week, closing 0.34% lower at 1.3127. The Canadian Dollar gained ground, after data indicated that Canada’s economy grew faster than expected by 0.5% on a monthly basis in July, bolstering hopes that the economy recovered in the third quarter. The USD hit a high of 1.3281 and a low of 1.3048 against the CAD in the previous week. The pair is expected to find its first support at 1.3023 and first resistance at 1.3256. The second support is expected at 1.2919 and second resistance at 1.3385. Going forward, Canada’s unemployment rate, RBC manufacturing PMI, building permits and Ivey purchasing manager’s index data, all scheduled to release this week, would pique lot of market attention.
AUDUSD
During the previous week, the AUD traded 0.54% higher against the USD and ended at 0.7664.
Macroeconomic data revealed that Australia’s HIA new home sales rebounded on a monthly basis in August. Also, the nation’s private sector credit advanced less than expected on a monthly basis in the same month. The AUD hit a high of 0.7710 and a low of 0.7590 against the USD in the previous week. The pair is expected to find its first support at 0.7599 and first resistance at 0.7719. The second support is expected at 0.7535 and second resistance at 0.7775. Market participants would await the announcement of RBA’s interest rate decision accompanied with the nation’s AiG performance of manufacturing, services and construction indices, building approvals, retail sales and trade balance data, all due to release this week.
Gold
During the previous week, gold traded 1.62% lower and ended at USD1315.87 per ounce, as gains in US equities, reduced safe-haven allure of the precious yellow metal. The precious metal traded at a high of USD1346.10 per ounce and a low of USD1316.00 per ounce in the previous week. The precious metal is expected to find its first support at USD1307.83 per ounce and first resistance at USD1337.93 per ounce. The second support is expected at USD1296.87 per ounce and second resistance at USD1357.07 per ounce.
Crude Oil
Last week, crude oil traded 8.45% higher and ended at USD48.24 per barrel, after the Organization of the Petroleum Exporting Countries (OPEC) struck an agreement to limit crude production for the first time in eight-years to reduce global supply glut. Crude prices were boosted further, after the Energy Information Administration (EIA) reported that US crude stockpiles surprisingly fell by 1.9 million barrels to 502.7 million barrels during the week ended 23 September 2016, while the American Petroleum Institute (API) disclosed that US crude oil inventories unexpectedly dropped by 0.75 million barrels to 506.4 million barrels during the last week. Last week, the commodity traded at a high of USD48.32 per barrel and a low of USD44.19 per barrel. Immediate downside, the first support level is seen at USD45.39 per barrel, followed by USD42.72 per barrel, while on the upside, the first resistance level situated in USD49.52 per barrel, followed by USD50.98 per barrel.
Good trades Traders.
