The highlight of the week was the British Prime Minister, Theresa May’s snap election announcement and robust manufacturing and services PMIs in the Eurozone.
The GBP ended the week on a stronger footing against the USD, after the British Prime Minister stunned investors by calling for an early parliamentary election on 8th June in order to strengthen her hand in divorce talks with the European Union. Additionally, UK’s lawmakers assented to May’s plan to hold an early general election. On the macro front, Britain’s retail sales declined more-than-expected on a monthly basis in March, adding to signs of a slowdown in the nation’s consumer spending that had propped up the economy since the historic Brexit vote.
The greenback ended the week mixed against its key counterparts, after the flash print of US manufacturing and services sector activity surprised with a poor performance in April, offering evidence that the world’s largest economy lost further momentum at the start of the second quarter. Manufacturing as well as services sector in the US expanded at its weakest pace in 7 months in April. Further, the nation’s housing starts tumbled in March, while manufacturing production dipped for the first time since August 2016 in the same month, as auto production dropped sharply. Also, first-time claims for US unemployment benefits advanced more-than-anticipated last week.
In contrast, the nation’s industrial production grew as expected in March, driven by a record rebound in utility output. Moreover, the nation’s building permits surpassed market expectations in March, buoyed by unseasonably warm weather. Meanwhile, the Federal Reserve (Fed) Beige Book revealed that the US economy expanded at a modest-to-moderate pace during mid-February to the end of March as a tighter labor market helped broaden wage gains, but inflation pressures remained modest. Moreover, a large number of firms reported high turnover rates and challenges in retaining staff.
The Euro ended the week higher against the USD, after robust manufacturing and services sector data in the Eurozone highlighted a strong start to the second quarter, amid buoyant demand and strong growth in the region’s employment. Data showed that growth in the Eurozone’s manufacturing and services sector surged to a 6-year high level in April. Moreover, consumer confidence in the common currency bloc surged to its highest level in nearly 9 years in April, thus pointing to a continued pickup in consumer optimism, despite political uncertainties ahead of French presidential elections.
EURUSD
Last week, the EUR traded 1.1% higher against the USD and closed at 1.0726, after the Eurozone’s flash Markit manufacturing as well as services PMI unexpectedly advanced in April. Moreover, the region’s final consumer price index (CPI) climbed 1.5% on an annual basis in March, confirming the preliminary print. Also, the region’s flash consumer confidence index improved more-than-expected in April, while seasonally adjusted construction output climbed in February. Elsewhere, activity in Germany’s manufacturing sector slowed less-than-anticipated in April, whereas the services sector growth eased more-than-expected in the same month. The EUR hit a high of 1.0778 and a low of 1.0609 against the USD in the previous week. The pair is expected to find its first support at 1.0632 and first resistance at 1.0801. The second support is expected at 1.0536 and second resistance at 1.0874. This week, market participants would closely monitor the European Central Bank’s (ECB) interest rate decision, scheduled later in the week. Also, the flash inflation figures across the Eurozone along with Germany’s Ifo expectations and business climate indices, GfK consumer confidence index and retail sales data would also be keenly watched by investors.
GBPUSD
The GBP advanced against the USD last week, closing 2.32% higher at 1.2812, after Britain Prime Minister, Theresa May announced a snap general election on 08 June and was backed by UK’s lawmakers. On the data front, UK’s retail sales declined more-than-expected on a monthly basis in March, recording it largest decline in seven years. The GBP hit a high of 1.2905 and a low of 1.2516 against the USD in the previous week. The pair is expected to find its first support at 1.2587 and first resistance at 1.2976. The second support is expected at 1.2357 and second resistance at 1.3135. Looking ahead, traders anxiously await UK’s GfK consumer confidence index, Nationwide house prices, Rightmove house prices and public sector net borrowings data, all slated to release this week, will be on investors’ radar.
USDJPY
During the previous week, the USD traded 0.42% higher against the JPY and ended at 109.07. On the economic front, Japan’s flash Nikkei manufacturing PMI advanced in April. Moreover, the nation’s adjusted merchandise trade surplus narrowed less-than-anticipated in March. Additionally, the nation’s annual exports and imports, both climbed more-than-expected in March. Meanwhile, the nation’s tertiary industry index rose less-than-anticipated in February. The USD hit a high of 109.49 and a low of 108.13 against the JPY in the previous week. The pair is expected to witness its first support at 108.32 and second support at 107.54, while the first resistance is expected at 109.68 and second resistance at 110.26. Going ahead, market participants will look forward to Bank of Japan’s interest rate decision, coupled with Japan’s inflation, jobless rate, small business confidence, industrial production and retail trade data, all set to release this week.
USDCHF
During the previous week, the USD traded 0.94% lower against the CHF and ended at 0.9958. The USD hit a high of 1.0053 and a low of 0.9941 against the CHF in the previous week. The pair is expected to witness its first support at 0.9918 and second support at 0.9874, while the first resistance is expected at 1.0030 and second resistance at 1.0098. Moving ahead, traders will concentrate on Switzerland’s UBS consumption indicator, ZEW expectations index and trade balance data, all due to release this week.
USDCAD
The USD traded 1.29% higher against the CAD last week, with the pair closing at 1.3497. The Canadian Dollar lost ground, after Canada’s consumer price index (CPI) advanced less-than-anticipated by 1.6% YoY in March. Meanwhile, the nation’s existing home sales climbed in March. During the previous week, the pair traded at a high of 1.3525 and a low of 1.3262. The pair is expected to find its first support at 1.3332 and first resistance at 1.3595. The second support is expected at 1.3165 and second resistance at 1.3691. Ahead in the week, Canada’s GDP numbers and retail sales data, would garner a significant amount of market attention.
AUDUSD
During the previous week, the AUD traded 0.4% lower against the USD and ended at 0.7542, after minutes of the Reserve Bank of Australia’s (RBA) recent meeting underpinned concerns over developments in Australia's labor and housing market. According to minutes, policymakers stated that Australia’s labor market is somewhat weaker than expected and warned that the domestic labor and housing markets warranted “careful monitoring” over coming months. However, board members also noted that the Australian economy likely made steady progress in the first quarter of 2017. In other economic news, Australia’s Westpac leading index rebounded in March, while the nation’s NAB business confidence index remained unchanged in 1Q 2017. During the previous week, the pair traded at a high of 0.7611 and a low of 0.7492. Immediate downside, the first support level is seen at 0.7485, followed by 0.7429, while on the upside, the first resistance level situated in 0.7604, followed by 0.7667. This week, investors will closely monitor a speech by the Reserve Bank of Australia (RBA) Governor, Philip Lowe, along with Australia’s consumer price index and private sector credit data.
Gold
Gold traded 0.1% lower during the previous week, closing at USD1284.44 per ounce, after the US President, Donald Trump, promised to make an announcement about much anticipated tax reform this week. Last week, the precious metal traded at a high of USD1297.00 per ounce and a low of USD1275.40 per ounce. The yellow metal is expected to witness its first support at USD1275.27 per ounce and second support at USD1264.53 per ounce, while the first resistance is expected at USD1296.87 per ounce and second resistance at USD1307.73 per ounce.
Crude Oil
Crude oil weakened in the previous week, closing 6.69% lower at USD49.62 per barrel, after the Energy Information Administration (EIA) indicated that US shale production is likely to post the biggest monthly gain in more than two years in May, intensifying concerns over rising crude production in the US. The EIA, in its monthly report, forecasted a rise of 124,000 barrels per day (bpd) to 5.193 million bpd in seven major US shale-oil plays. Separately, world’s largest oil producer, Saudi Arabia, tightened February crude oil exports to the lowest since mid-2015. However, losses in crude prices were kept in check, after the Energy Information Administration (EIA) showed that US crude oil inventories fell by 1.0 million barrels to 532.3 million barrels in the week ended 14 April, while the American Petroleum Institute (API) indicated that US crude oil stockpiles dropped less-than-anticipated by 0.84 million barrels to 531.6 million barrels in the same week. Crude oil witnessed a high of USD53.63 per barrel and a low of USD49.20 per barrel last week. Crude oil is expected to witness its first support at USD48.01 per barrel and second support at USD46.39 per barrel, while the first resistance is expected at USD52.44 per barrel and second resistance at USD55.25 per barrel.
Good trades Traders.
