The highlight of the week was the Bank of Japan’s (BoJ) monetary policy decision and comments from the Federal Reserve’s (Fed) Chairwoman, Janet Yellen.
The JPY ended the week on a stronger footing against the USD. The BoJ, in a widely expected move, decided to stand pat on monetary policy by keeping the key interest rate steady at -0.1% and maintained target for monetary base expansion at an annual pace of around ¥80.0 trillion. In a post meeting statement, the central bank offered a more upbeat view of the economy, stating that the economy continues to recover moderately as a trend, as exports have picked-up.
The greenback ended the week higher against the major currencies, after the US Fed Chair painted an upbeat picture of the US labor market, stating that the jobs market was more robust than it had been in almost a decade, indicating that wage growth is picking up.
On the data front, final annualized GDP in the US was revised up to 3.5% on a quarterly basis in the third quarter, pushing the economic growth to its fastest pace in two years, buoyed by stronger consumer spending. Moreover, the nation’s final consumer confidence surged to a nearly 13-year high in December, suggesting that consumers expressed much more positive economic outlook following Donald Trump’s election victory. Further, the nation’s new home sales climbed to its highest level since July 2016 in November, thus strengthening hopes that the world’s largest economy will gain further momentum next year. Also, the nation’s existing home sales unexpectedly jumped to a nearly ten-year high level in November, while housing price index came in weaker than forecasted in October.
In other economic news, the nation’s personal spending slowed in November, whereas personal income remained flat in the same month. On the other hand, the nation’s flash durable goods orders dropped for the first time in five months in November, dragged down by a decline in commercial aircraft. Moreover, the number of Americans filing for fresh jobless claims climbed to a six month high level in the week ended 17 December 2016. Further, activity in the nation’s services sector unexpectedly slowed in December, while the CB leading indicator surprisingly remained flat in November.
The Euro ended the week on a stronger footing, as the European Central Bank (ECB) struck a hawkish tone in its latest economic bulletin report. The ECB stated that it still expects inflation in the common currency region to rise significantly in the first quarter of 2017 and exceed 1.0%, while predicting global growth to accelerate in the next year. However, the central bank warned that policy uncertainty in the US due to Donald Trump’s victory in the Presidential election and unstable commodity prices may still place pressure on the global economic recovery.
EURUSD
The EUR traded 0.07% higher against the USD last week, with the pair closing at 1.0454, after the Eurozone’s preliminary consumer confidence index improved more than expected in December and the seasonally adjusted current account surplus expanded in October. Additionally, in Germany, the Ifo business climate index advanced more than estimated in December, while the Ifo business expectations index climbed in line with market expectations in the same month. Further, the nation’s GfK consumer confidence increased for January. Separately, the Bundesbank, in its monthly report indicated that it expects German economy to have accelerated significantly in the fourth quarter, whilst inflation may even exceed 1.0% in December, following higher oil prices. Additionally, Germany’s annual producer price index unexpectedly rebounded strongly in November. During the previous week, the pair traded at a high of 1.0499 and a low of 1.0352. Immediate downside, the first support level is seen at 1.0368, followed by 1.0286, while on the upside, the first resistance level situated in 1.0515, followed by 1.0580. This week, investors would focus on Germany’s retail sales data, the sole important release this week.
GBPUSD
The GBP traded 1.58% lower against the USD last week, with the pair closing at 1.2290, on growing concerns over Britain’s exit from the European Union (EU), after the UK’s Prime Minister, Theresa May, denied a Parliamentary vote on the final Brexit deal agreed with the EU. In other economic news, UK’s final GDP was revised higher to 0.6% on a quarterly basis in third quarter. Additionally, the nation’s public sector net borrowing posted a more than expected deficit in November, while the nation’s consumer confidence index surprisingly improved in December. The GBP hit a high of 1.2409 and a low of 1.2229 against the USD in the previous week. The pair is expected to find its first support at 1.2200 and first resistance at 1.2380. The second support is expected at 1.2124 and second resistance at 1.2484. Looking ahead, market participants would await the release of UK’s Nationwide house prices and BBA mortgage applications data, both due this week.
USDJPY
During the previous week, the USD traded 0.57% lower against the JPY and ended at 117.31. The BoJ, in its latest monetary policy meeting, opted to leave the key interest rate unchanged at -0.1% and maintained the target for monetary base expansion at an annual pace of around ¥80.0 trillion. Additionally, data showed that Japan’s all industry activity index advanced more than expected in October. Further, the nation’s adjusted merchandise trade surplus widened less than expected in November. On the other hand, annual exports and imports fell less than anticipated on an annual basis in November. The USD hit a high of 118.24 and a low of 117.00 against the JPY in the previous week. The pair is expected to find support at 116.83, and a fall through could take it to the next support level of 116.30. The pair is expected to find its first resistance at 118.07, and a rise through could take it to the next resistance level of 118.78. Ahead in the week, market participants look forward to minutes of the BoJ’s latest monetary policy meeting along with its summary of opinions report. Moreover, Japan’s jobless rate, consumer price inflation, small business confidence, flash industrial production, retail trade and large retailers’ sales, all scheduled this week would also garner a lot of market attention.
USDCHF
The USD traded 0.06% higher against the CHF last week, with the pair closing at 1.0260. According to the Swiss National Bank’s (SNB) quarterly bulletin report, the Swiss economy is likely to recover further in the coming quarters, as positive incoming economic data are pointing towards a brighter picture of the economic growth in the near term. Nonetheless, the SNB has confirmed that it will stick to its monetary course outlined at its monetary policy assessment in mid-September. On the data front, trade surplus in Switzerland expanded more than expected in November. On the other hand, the nation’s exports dropped on a monthly basis in November, hitting its lowest level since September 2015. Further, the nation’s imports fell on a monthly basis in November. The USD hit a high of 1.0321 and a low of 1.0219 against the CHF in the previous week. The pair is expected to find support at 1.0224, and a fall through could take it to the next support level of 1.0170. The pair is expected to find its first resistance at 1.0326, and a rise through could take it to the next resistance level of 1.0374. Moving ahead, investors will focus on Switzerland’s UBS consumption indicator data, the sole important release this week.
USDCAD
Last week, the USD traded 1.52% higher against the CAD and closed at 1.3534. The Canadian Dollar lost ground against the USD, after Canada’s consumer prices rose less than expected by 1.2% YoY in November. On the contrary, the nation’s retail sales climbed for the third straight month on a monthly basis in October. Also, wholesale sales rebounded on a monthly basis in October. During the previous week, the pair traded at a high of 1.3557 and a low of 1.3358. The pair is expected to find support at 1.3410, and a fall through could take it to the next support level of 1.3284. The pair is expected to find its first resistance at 1.3609, and a rise through could take it to the next resistance level of 1.3682. Going forward, Canada’s CFIB business barometer index, due to release this week would garner market attention.
AUDUSD
The AUD weakened against the USD last week, closing 1.7% lower at 0.7180. According to minutes of the Reserve Bank of Australia’s (RBA) recent meeting, policymakers expect economic growth to soften towards the year-end before regaining momentum in the next year. Further, it indicated that the central bank was trying to balance the benefits of lower interest rates against the risk of higher household debt. Other data revealed that Australia’s Westpac leading index climbed marginally on a monthly basis in November. The pair traded at a high of 0.7280 and a low of 0.7160 during the previous week. The pair is expected to witness its first support at 0.7130 and second support at 0.7085, while the first resistance is expected at 0.7250 and second resistance at 0.7325. Looking ahead, market participants await the release of Australia’s seasonally adjusted unemployment rate, employment change and the Westpac leading index.
Gold
Gold fell last week, closing 0.14% lower at USD1133.30 per ounce, amid strength in the greenback. The precious metal traded at a high of USD1141.70 per ounce and a low of USD1127.30 per ounce in the previous week. The precious metal is expected to find its first support at USD1126.57 per ounce and first resistance at USD1140.97 per ounce. The second support is expected at USD1119.73 per ounce and second resistance at USD1148.53 per ounce.
Crude Oil
Crude oil traded 2.16% higher in the previous week, closing at USD53.02 per barrel, as investor sentiment remained positive amid OPEC’s production cut deal. Separately, the Energy Information Administration (EIA) showed that US crude stockpiles surprisingly advanced 2.3 million barrels to 485.4 million barrels in the week ended 16 December 2016, while the American Petroleum Institute (API) indicated that US crude oil inventories narrowed more than expected by 4.2 million barrels last week. The commodity traded at a high of USD53.79 per barrel and a low of USD52.08 per barrel in the previous week. Crude oil is expected to its find support at USD52.15 per barrel, and a fall through could take it to the next support level of USD51.26 per barrel. The yellow metal is expected to find its first resistance at USD53.86 per barrel, and a rise through could take it to the next resistance level of USD54.68 per barrel.
That next year we have a lot of health, many personal achievements, because determination is a constant Traders, risk management the secret.
This space came from a dream, my dream that came true at the end of 10 years to spread charm in my own graphics, next year I will continue to say what I like and what gives me in the head, all first weekdays .
To all of us.
Cheers
