Last week, the forex market was dictated by robust US economic data and the official launch of Britain's divorce proceedings with the European Union (EU).
The greenback ended the week mixed against its major counterparts. In economic news, data revealed that the US annualized gross domestic product (GDP) grew stronger than initially estimated by 2.1% in the fourth quarter of 2016, boosted by robust consumer spending. Moreover, confidence among Americans unexpectedly leaped in March to its highest level in more than 16 years amid growing labor market optimism and brightened business outlook. Additionally, the nation’s goods trade deficit narrowed more-than-anticipated in February and flash wholesale inventories rebounded in the same month, thus indicating that the economy was regaining momentum after faltering at the start of the year. Further, the nation’s pending home sales sharply rebounded in February, notching its highest level in nearly a year, while initial jobless claims fell less than expected last week. Also, the nation’s personal spending edged up in February, while personal income increased in line with exp ectations in the same month. Meanwhile, the nation’s final Reuters/Michigan consumer sentiment index was revised down in March.
Separately, several Federal Reserve (Fed) officials indicated that they expect interest rate increases this year, but each portrayed a cautious tone about the US economy.
The Pound ended the week in the positive territory against the USD. Over the past week, the British Prime Minister, Theresa May, triggered Article 50 of the Lisbon Treaty, formally beginning UK’s exit from the EU nine months after the country shocked the world by voting to leave.
The Euro ended the week on a weaker footing, following downbeat inflation data from across the Eurozone. Consumer price inflation in the Eurozone rose at a slower than expected pace of 1.5% YoY in March, while Germany’s annual inflation advanced less than expected by 1.6% in the same month, indicating European Central Bank’s cautious policy stance as it faces pressure to wind down its massive monetary stimulus program.
Separately, data showed that Germany’s seasonally adjusted unemployment rate unexpectedly dropped in March and the nation’s retail sales rebounded to its strongest level since August 2014 in February. Moreover, the nation’s business climate surprisingly improved to a nearly 7 year high level in March, underscoring optimism over the health of the nation’s business sector, despite rumblings of protectionism across the Eurozone.
EURUSD
The EUR traded 1.37% lower against the USD last week, with the pair closing at 1.0649, after the release of disappointing inflation data across the Eurozone. Data showed that the Eurozone’s flash consumer price index (CPI) advanced less-than-anticipated by 1.5% on an annual basis in March. Further, the region’s final consumer confidence index improved in line with flash estimates in the same month. Separately, Germany’s flash annual inflation rose less-than-expected by 1.6% in March and the seasonally adjusted unemployment rate unexpectedly dropped in the same month. Further, the nation’s retail sales rebounded in February. Moreover, the nation’s Ifo business climate index surprisingly advanced in March, while the nation’s Ifo business expectations index climbed more-than-expected in the same month. The pair traded at a high of 1.0906 and a low of 1.0652 during the previous week. The pair is expected to find support at 1.0567, and a fall through co uld take it to the next support level of 1.0483. The pair is expected to find its first resistance at 1.0821, and a rise through could take it to the next resistance level of 1.0991. This week, investors will focus on the final manufacturing and services PMI data across the Eurozone coupled with a speech by the ECB President, Mario Draghi. Additionally, the Eurozone’s unemployment rate and retail sales data, as well as Germany's construction PMI, industrial production, trade balance and factory orders data, would also be keenly watched by investors’.
GBPUSD
Last week, the GBP traded 0.62% higher against the USD and closed at 1.2545, after Britain’s gross domestic product (GDP) was confirmed at 0.7% on a quarterly basis in 4Q 2016, at par with market expectations. Also, the nation’s net consumer credit rose more-than-expected in February, while the GfK consumer confidence index surprisingly remained steady in March. On the other hand, the nation’s seasonally adjusted house prices unexpectedly dropped in March, whereas mortgage approvals recorded a surprise drop in February. Meanwhile, the British Prime Minister, Theresa May, triggered Article 50 and formally began Britain’s exit from the European Union. During the previous week, the pair traded at a high of 1.2615 and a low of 1.2377. The pair is expected to find support at 1.2413, and a fall through could take it to the next support level of 1.2276. The pair is expected to find its first resistance at 1.2651, and a rise through could take it to the next resistanc e level of 1.2752. Looking ahead, investors’ will anxiously await the release of UK’s Markit manufacturing, construction and services PMIs, accompanied with the nation’s trade balance, NIESR GDP estimate, industrial and manufacturing production data, all scheduled to release this week. Also, a speech by the BoE Governor, Mark Carney, would generate a lot of market attention.
USDJPY
The USD advanced against the JPY last week, closing marginally higher at 111.38. In economic news, Japan’s national CPI advanced above market expectations by 0.3% on an annual basis in February and the jobless rate unexpectedly eased to 2.8% in the same month. Moreover, the nation’s flash industrial production sharply rebounded in February. Also, the nation’s seasonally adjusted retail trade rose less-than-anticipated in February, while large retailer’s sales eased beyond expectations in the same month. Separately, the Bank of Japan (BoJ), in its summary of opinions report from its March meeting, indicated that easy monetary policy will be in place for some time as consumer price growth is still distant from the central bank’s 2% inflation target. The USD hit a high of 112.20 and a low of 110.11 against the JPY in the previous week. The pair is expected to witness its first support at 110.27 and second support at 109.14, while the first resistance is exp ected at 112.36 and second resistance at 113.32. Moving ahead, market participants will look forward to Japan’s final Nikkei manufacturing and services PMIs, Tankan large manufacturing and non-manufacturing index as well as the consumer confidence index, all set to release this week.
USDCHF
The USD traded 1.18% higher against the CHF last week, with the pair closing at 1.0029. On the macro front, Switzerland’s KOF institute projected the nation to grow by 1.5% in 2017, down from its December 2016 forecast of 1.6%. For 2018, Swiss GDP is expected to rise by 1.9%, unchanged from its previous projection. Meanwhile, the nation’s UBS consumption indicator rose in February. Moreover, the nation’s ZEW economic expectations index for the next six months advanced in March and the KOF economic barometer unexpectedly rose in the same month. The USD hit a high of 1.0030 and a low of 0.9814 against the CHF in the previous week. The pair is expected to find support at 0.9883, and a fall through could take it to the next support level of 0.9741. The pair is expected to find its first resistance at 1.0099, and a rise through could take it to the next resistance level of 1.0173. Moving ahead, traders will closely monitor Switzerland’s consumer price inflation, re al retail sales and the SVME–PMI, all slated to release this week.
USDCAD
Last week, the USD traded 0.49% lower against the CAD and closed at 1.3311. The Canadian Dollar gained ground, after data showed that Canada’s gross domestic product (GDP) jumped 0.6% on a monthly basis in January, driven by robust activity in the manufacturing sector. On the contrary, the nation’s consumer price index (CPI) rose less-than-anticipated by 2.0% on an annual basis in February. Meanwhile, on a monthly basis, the CPI rose 0.2% in February, meeting market expectations. The USD hit a high of 1.3414 and a low of 1.3278 against the CAD in the previous week. The pair is expected to find support at 1.3259, and a fall through could take it to the next support level of 1.3201. The pair is expected to find its first resistance at 1.3395, and a rise through could take it to the next resistance level of 1.3473. Ahead in the week, Canada’s unemployment rate, RBC manufacturing PMI, business outlook survey report, building permits and Ivey–PMI data, would keep i nvestors’ on their toes.
AUDUSD
The AUD strengthened against the USD last week, closing 0.08% higher at 0.7628. On the data front, sales of new homes in Australia rebounded on a monthly basis in February. Moreover, the nation’s job vacancies advanced in February. Also, the nation’s private sector credit increased less than expected in the same month. The pair traded at a high of 0.7680 and a low of 0.7588 during the previous week. The pair is expected to find support at 0.7585, and a fall through could take it to the next support level of 0.7540. The pair is expected to find its first resistance at 0.7677, and a rise through could take it to the next resistance level of 0.7724. This week, traders will closely monitor the Reserve Bank of Australia’s (RBA) interest rate decision along with Australia’s AiG performance of manufacturing, services and construction PMI’s as well as retail sales and trade balance data.
Gold
Gold rose last week, closing 0.45% higher at USD1249.20 per ounce, as mounting geopolitical tensions across the world increased risk aversion amongst investors’ and boosted demand for the safe haven yellow metal. The precious metal traded at a high of USD1264.20 per ounce and a low of USD1241.50 per ounce in the previous week. Immediate downside, the first support level is seen at USD1240.67 per ounce, followed by USD1229.73 per ounce, while on the upside, the first resistance level situated in USD1263.37 per ounce, followed by USD1275.13 per ounce.
Crude Oil
Crude oil strengthened in the previous week, closing 5.48% higher at USD50.60 per barrel, after the Kuwait Oil Minister, Issam Almarzooq, reiterated support for prolonging a six-month deal to trim crude supply beyond June. Additionally, a severe disruption to Libyan crude oil supplies and speculations that major oil producers could extend its deal to cut global oil production, further boosted demand for crude oil. Moreover, the Energy Information Administration (EIA) reported that US crude oil inventories rose less-than-expected by 0.87 million barrels in the week ended 24 March, while the American Petroleum Institute (API) indicated that US crude oil stockpiles advanced 1.91 million barrels to 535.5 million barrels in the same week. Crude oil hit a high of USD50.85 per barrel and a low of USD47.08 per barrel in the previous week. Crude oil is expected to its find support at USD48.34 per barrel, and a fall through could take it to the next support level of USD45.82 per barrel. The co mmodity is expected to find its first resistance at USD52.11 per barrel, and a rise through could take it to the next resistance level of USD53.36 per barrel.
Good trades Traders.
