Last week, the forex market was dictated by robust non-farm payrolls report in the US and the European Central Bank’s (ECB) monetary policy meeting.
The greenback ended the week higher against its key counterparts, after data showed that US employers hired workers at a robust pace in February, thus paving the way for the Federal Reserve (Fed) to raise interest rates. Additionally, the nation’s unemployment rate dropped to 4.7% in February. However, wage growth disappointed with a weaker than expected rise in the same month. Meanwhile, ADP’s private sector added the most number of jobs since December 2015 in February. Also, the nation’s final durable goods orders grew more than expected in January and factory orders advanced for a second straight month in the same month. Meanwhile, the Organization for Economic Cooperation and Development (OECD), in its latest economic outlook report, revised up its 2017 growth forecast for US as it expects economic growth to pick up this year on fiscal stimulus plans. It lifted its growth projections to 2.4% for this year, while the forecast for next year was trimmed to 2.8% from 3.0%. Additionally, the OECD projected that global economic growth is set to continue a “modest recovery” over the next two years, but warned that the recovery may be derailed by financial vulnerabilities and political uncertainties.
The Euro ended the week on a stronger footing against the USD, after the ECB President, Mario Draghi, struck a more optimistic tone on the Eurozone’s economic recovery. The ECB, in its latest monetary policy meeting, left the key interest rate unchanged at 0.00% and reaffirmed that it will maintain its asset purchase program at least until the end of the year. In a post meeting statement, the ECB President stated that the governing council is less likely to provide additional stimulus to the Eurozone’s economic recovery. Additionally, the central bank sharply revised up its inflation forecast, while issuing a modest upgrade to its growth forecasts.
The GBP ended the week in negative territory against the USD, after Britain’s manufacturing and construction output, both came in worse than expected in January, while industrial production dropped less than estimated in the same month, suggesting that the negative effects of the Brexit vote are beginning to bite the nation’s economic growth.
Separately, UK’s Finance Minister, Philip Hammond, in his Budget speech, stated that the Office for Budget Responsibility (OBR) expects UK economy to grow faster in 2017 than previously estimated, but warned that Britain’s economy is likely to feel the pain of Brexit more sharply in the coming years despite showing resilience so far.
EURUSD
The EUR traded 0.46% higher against the USD last week, with the pair closing at 1.0669, after the ECB Chief, Mario Draghi signaled that there was no longer a sense of urgency in taking further monetary policy actions. The ECB maintained the key interest rate unchanged at 0.00%, as widely expected. In economic news, the Euro-zone’ seasonally adjusted final GDP was confirmed at 0.4% on a quarterly basis in 4Q 2016, at par with market expectations. Moreover, the region’s Sentix investor confidence index jumped in March. Separately, Germany’s Markit construction PMI advanced in February. Also, the nation’s industrial production rebounded more than expected in January, while seasonally adjusted trade surplus surprisingly expanded in the same month. In contrast, the nation’s seasonally adjusted factory orders sharply dropped in January. During the previous week, the pair traded at a high of 1.0699 and a low of 1.0525. The pair is expected to find its first support at 1.0575 and first resistance at 1.0749. The second support is expected at 1.0463 and second resistance at 1.0811. This week, investors will look forward to the final consumer price inflation and ZEW survey data across the Eurozone. Additionally, a speech by the ECB President, Mario Draghi will be awaited by investors’.
GBPUSD
During the previous week, the GBP traded 0.98% lower against the USD and ended at 1.2169, after Britain’s manufacturing and construction output, both dropped more than anticipated in January. Further, the nation’s industrial production registered a less than expected drop in the same month. Meanwhile, the nation’s total trade deficit narrowed slightly in January. Another set of data showed that NIESR estimated that UK’s economy grew 0.6% in the three months to February, meeting market expectations. Meanwhile, the seasonally adjusted Halifax house price index rose less than estimated in February. Separately, the OECD sharply raised UK’s growth projection for this year to 1.6%, up by 0.4% from its earlier estimate, due to a less severe impact from the historic Brexit vote. The GBP hit a high of 1.2300 and a low of 1.2135 against the USD in the previous week. The pair is expected to find its first support at 1.2105 and first resistance at 1.2270. The second support is expected at 1.2038 and second resistance at 1.2368. Looking ahead, investors’ anxiously await the BoE’s interest rate decision and UK’s ILO unemployment rate data, scheduled to release this week.
USDJPY
Last week, the USD traded 0.66% higher against the JPY and closed at 114.74. Macroeconomic data revealed that Japan’s final GDP was revised up to 0.3% on a quarterly basis in 4Q 2016. Further, the nation’s flash leading economic index rose more than expected in January, whereas the preliminary coincident index surprisingly climbed in the same month. Meanwhile, the nation’s BSI large manufacturing industries index climbed less than expected on a quarterly basis in 1Q 2017. Additionally, the nation’s Eco-watchers survey for future outlook came in better than anticipated in February. On the contrary, the survey for current situation unexpectedly eased in the same month. Also, the nation’s (BOP basis) trade deficit widened more than expected in January. Separately, in OECD’s interim report, Japan's growth forecast for this year was raised to 1.2% and the outlook for next year was retained at 0.8%. The USD hit a high of 115.51 and a low of 113.56 against the JPY in the previous week. The pair is expected to find support at 113.70, and a fall through could take it to the next support level of 112.66. The pair is expected to find its first resistance at 115.65, and a rise through could take it to the next resistance level of 116.56. Investors’ would shift their attention to the Bank of Japan’s interest rate decision along with Japan’s tertiary industry index and industrial production data, all set to release this week.
USDCHF
The USD rose against the CHF last week, closing 0.32% higher at 1.0107. On the data front, Switzerland’s consumer price index (CPI) jumped more than anticipated by 0.5% on a monthly basis in February. Moreover, the nation’s seasonally adjusted unemployment rate remained unchanged at 3.3% in February, meeting market expectations. During the previous week, the pair traded at a high of 1.0171 and a low of 1.0073. Immediate downside, the first support level is seen at 1.0060, followed by 1.0017, while on the upside, the first resistance level situated in 1.0158, followed by 1.0213. Moving ahead, investors will keep a close watch on Swiss National Bank’s (SNB) interest rate decision, due to be announced later this week.
USDCAD
The USD rose against the CAD last week, closing 0.7% higher at 1.3469. On the macro front, Canada’s unemployment rate unexpectedly fell to 6.6% in February, while seasonally adjusted housing starts unexpectedly advanced in the same month. Moreover, the nation’s building permits climbed higher than expected in January. Also, the nation’s new housing price index rose in January, in line with market anticipations. On the other hand, the nation’s seasonally adjusted Ivey PMI unexpectedly eased in February. The USD hit a high of 1.3535 and a low of 1.3372 against the CAD in the previous week. The pair is expected to find support at 1.3378, and a fall through could take it to the next support level of 1.3293. The pair is expected to find its first resistance at 1.3541, and a rise through could take it to the next resistance level of 1.3619. Going forward, traders will focus on Canada’s existing home sales data, the sole important release this week.
AUDUSD
The AUD weakened against the USD last week, closing 0.71% lower at 0.7540. Last week, the Reserve Bank of Australia (RBA), in a widely expected move, opted to keep the official cash rate steady at a record low level of 1.5% for a sixth straight meeting. The RBA Governor, Philip Lowe stated that global economic conditions have improved over recent months and that the Australian economy continues its transition from the mining boom. He further added that while the nation’s headline inflation is expected to pick up over the course of 2017, there remains considerable variation across the nation’s jobs and housing markets. In other economic news, Australia’s AiG performance of construction index advanced in February, whereas retail sales rebounded in line with expectations in January. Further, the nation’s seasonally adjusted home loan approvals unexpectedly rose in the same month. The AUD hit a high of 0.7633 and a low of 0.7491 against the USD in the previous week. Immediate downside, the first support level is seen at 0.7481, followed by 0.7415, while on the upside, the first resistance level situated in 0.7623, followed by 0.7699. This week, investors will await the release of Australia’s unemployment rate, consumer inflation expectations, NAB business confidence and Westpac consumer confidence indices.
Gold
Gold fell last week, closing 2.44% lower at USD1204.64 per ounce, as concerns about an imminent rate hike by the US Fed at its upcoming meeting weighed on the precious yellow metal. The precious metal traded at a high of USD1237.20 per ounce and a low of USD1194.50 per ounce in the previous week. The precious metal is expected to find its first support at USD1186.73 per ounce and first resistance at USD1229.43 per ounce. The second support is expected at USD1169.27 per ounce and second resistance at USD1254.67 per ounce.
Crude Oil
Crude oil plummeted in the previous week, closing 9.08% lower at USD48.49 per barrel, amid persistent concerns that record levels of US crude oil inventories would offset efforts by other major oil producers to cut global oil output. Additionally, the International Energy Agency (IEA) forecasted that US shale output will likely grow by about 1.4 million barrels per day by 2022. Oil prices failed to find support, after the Energy Information Administration (EIA) recorded a build of 8.21 million barrels in US crude oil inventories to 528.4 million barrels in the week ended 03 March 2017, while the American Petroleum Institute (API) indicated that US crude stockpiles jumped 11.6 million barrels to 526.8 million barrels in the last week. The commodity traded at a high of USD53.80 per barrel and a low of USD48.31 per barrel in the previous week. Crude oil is expected to its find support at USD46.59 per barrel, and a fall through could take it to the next support level of USD44.71 per barrel. The commodity is expected to find its first resistance at USD52.08 per barrel, and a rise through could take it to the next resistance level of USD55.69 per barrel.
Good trades Traders.
