The highlight of the week was the Bank of Japan’s (BoJ) recent monetary policy meeting minutes. Minutes indicated that policymakers remained optimistic over the pace of the nation’s economic recovery, citing stabilization in global consumer demand. However, the board expressed disagreement on how much emphasis the central bank should place on the size of its bond purchases under its new policy framework targeting interest rates. Additionally, the BoJ, in its latest summary of opinions report, expressed confidence in the nation’s economy, stating that it is on a “moderate recovery” path, aided by stronger exports and industrial production. The central bank also noted that resilience in private consumption has increased. Further, it stated that the nation’s economic growth is likely to remain “relatively high”, due to government’s fiscal stimulus and recovery in overseas markets.
In other economic news, data revealed that Japan’s national consumer price inflation rose 0.5% on an annual basis in November, in line with market expectations and advancing for the second consecutive month. Moreover, the nation’s preliminary industrial production climbed the most in five months on a monthly basis in November, thus suggesting that activity in the world’s third-largest economy continues to gain traction. Further, the small business confidence index increased in December, while seasonally adjusted retail trade unexpectedly climbed on a monthly basis in November. On the contrary, the nation’s jobless rate surprisingly rose to 3.1% in November, whereas large retailer’s sales declined in November.
The US Dollar ended the week on a weaker footing. On the economic front, the US CB consumer confidence index unexpectedly climbed to its highest level in more than fifteen years in December, highlighting that Americans are more upbeat about the nation’s growth prospects, labor market and incomes following the victory of Donald Trump in the US Presidential election. Further, fewer Americans applied for fresh jobless benefits in the week ended 24 December 2016, pointing to a resilient labor market. Also, the nation’s preliminary wholesale inventories topped market expectations on a monthly basis in November. Moreover, the nation’s Dallas Fed manufacturing index surprisingly advanced in December, recording its sixth consecutive increase, while the Richmond Fed manufacturing index rose more than forecasted in December.
On the other hand, the nation’s advance goods trade deficit unexpectedly widened in November, as a stronger greenback weighed on the nation’s exports. Also, the nation’s pending home sales surprisingly dropped to its lowest level in nearly a year on a monthly basis in November, thus hinting that rising interest rates could be weighing on the nation’s housing market.
EURUSD
The EUR strengthened against the USD last week, closing 0.56% higher at 1.0513. The EUR hit a high of 1.0653 and a low of 1.0372 against the USD in the previous week. The pair is expected to find its first support at 1.0380 and first resistance at 1.0661. The second support is expected at 1.0236 and second resistance at 1.0798. This week, investors would focus on the final manufacturing and services PMIs and consumer price inflation data across the Eurozone along with the ECB’s recent meeting minutes, to get better insights into the nation’s economy. Additionally, Germany’s unemployment rate, construction PMI as well as factory orders data would also be keenly watched by investors’.
GBPUSD
Last week, the GBP traded 0.37% higher against the USD and closed at 1.2336. In economic news, UK’s BBA mortgage approvals unexpectedly dropped in November, suggesting that the nation’s housing market may struggle in 2017. On the other hand, the seasonally adjusted Nationwide house prices advanced more than expected on a monthly basis in December. During the previous week, the pair traded at a high of 1.2388 and a low of 1.2201. The pair is expected to find its first support at 1.2221 and first resistance at 1.2408. The second support is expected at 1.2117 and second resistance at 1.2491. Looking ahead, investors will closely monitor Britain’s manufacturing, services and construction PMIs, accompanied with the nation’s consumer credit data, all scheduled to release this week.
USDJPY
The USD traded 0.38% lower against the JPY last week, with the pair closing at 116.87. The Japanese Yen gained ground against the USD, after minutes of the BoJ’s latest monetary policy meeting indicated that policymakers remain upbeat over the economic recovery of the world’s third-largest economy. In other economic news, Japan’s national consumer price inflation advanced 0.5% on an annual basis in November, in line with market expectations. Moreover, the nation’s preliminary industrial production climbed on a monthly basis in November. Also, the small business confidence index increased in December, whereas seasonally adjusted retail trade surprisingly climbed on a monthly basis in November. On the contrary, the nation’s jobless rate unexpectedly rose to 3.1% in November, while large retailer’s sales declined in November. During the previous week, the pair traded at a high of 117.81 and a low of 116.05. The pair is expected to witness its first support at 116.02 and second support at 115.16, while the first resistance is expected at 117.78 and second resistance at 118.68. Moving ahead, market participants would concentrate on Japan’s final Nikkei manufacturing and services PMIs, both scheduled to release this week.
USDCHF
The USD fell against the CHF last week, closing 0.8% lower at 1.0178. On the economic front, Switzerland’s UBS consumption indicator unexpectedly fell in November. During the previous week, the pair traded at a high of 1.0321 and a low of 1.0064. The pair is expected to witness its first support at 1.0058 and second support at 0.9933, while the first resistance is expected at 1.0315 and second resistance at 1.0447. Ahead in the week, investors will keep a close watch on the release of Switzerland’s consumer price inflation and SVME-purchasing managers’ index.
USDCAD
The USD fell against the CAD last week, closing 0.77% lower at 1.3430. During the previous week, the pair traded at a high of 1.3599 and a low of 1.3401. Immediate downside, the first support level is seen at 1.3353, followed by 1.3278, while on the upside, the first resistance level situated in 1.3551, followed by 1.3674. Going forward, Canada’s unemployment rate and RBC manufacturing PMI figures, due to release this week, would garner lot of market attention.
AUDUSD
During the previous week, the AUD traded 0.49% higher against the USD and ended at 0.7215. Data indicated that Australia’s private sector credit climbed on a monthly basis in November, in line with market expectations. The pair traded at a high of 0.7246 and a low of 0.7164 during the previous week. The pair is expected to find its first support at 0.7171 and first resistance at 0.7253. The second support is expected at 0.7127 and second resistance at 0.7291. This week, market participants await the release of Australia’s AiG performance of manufacturing and services indices, coupled with the nation’s trade balance figures, to get better insights in the nation’s economy.
Gold
During the previous week, gold traded 1.25% higher and ended at USD1147.50 per ounce, amid a broad weakness in the greenback. The yellow metal hit a high of USD1164.30 per ounce and a low of USD1132.80 per ounce in the previous week. Gold is expected to its find support at USD1134.57 per ounce, and a fall through could take it to the next support level of USD1117.93 per ounce. The yellow metal is expected to find its first resistance at USD1166.07 per ounce, and a rise through could take it to the next resistance level of USD1180.93 per ounce.
Crude Oil
Last week, crude oil traded 1.32% higher and ended at USD53.72 per barrel, propelled by investors’ optimism as the OPEC production cut deal is set to kick start from January 2017. Meanwhile, Iraqi Oil Minister, Jabbar al-Luaibi, indicated that Iraq will cut crude production by up to 210,000 barrels per day (bpd) from January, while Venezuela committed to trim 95,000 bpd from this month. Separately, the Energy Information Administration (EIA) showed that US crude oil inventories unexpectedly rose 0.6 million barrels to 486.1 million barrels in the week ended 23 December 2016, while the American Petroleum Institute (API) indicated that US crude stockpiles surprisingly advanced 4.2 million barrels last week. Crude oil hit a high of USD54.37 per barrel and a low of USD53.03 per barrel in the previous week. The commodity is expected to find its first support at USD53.08 per barrel and first resistance at USD54.42 per barrel. The second support is expected at USD52.39 per barrel and second resistance at USD55.07 per barrel.
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