Last week, the forex market was dictated by dovish comments from the US President, Donald Trump as well as from the Federal Reserve (Fed) Chairwoman, Janet Yellen.
The greenback ended the week lower against a basket of major currencies, after the US President, claimed that the local currency was getting ‘too strong’ and added that he would prefer interest rates to remain lower. Moreover, the Fed Chief, Janet Yellen, struck a cautious tone, stating that it would be appropriate to raise interest rates gradually if the economy continues to perform well. Nevertheless, she also added that the US economy is healthy and the Fed is close to reaching its policy objectives.
The greenback weakened further, after data revealed that consumer prices in the US surprisingly dipped for the first time in 13 months on a monthly basis in March, while retail sales fell for a second consecutive month in March, hinting that the world’s largest economy lost some momentum in the first quarter of 2017. Also, the nation’s budget deficit widened more-than-anticipated in March. On the other hand, the number of Americans filing for initial jobless claims surprisingly fell last week. Additionally, the nation’s consumer sentiment unexpectedly jumped to its strongest level since January 2015 in April, on the back of continuous optimism over the nation’s current economic conditions.
The GBP ended the week higher against the USD, after the latest data indicated that annual inflation in Britain advanced 2.3% in March, remaining above the Bank of England’s 2.0% target, as cheaper airfares and falling petrol costs helped to offset a rise in food and clothing prices. Also, the nation’s ILO unemployment rate remained steady at an 11-year low level of 4.7% in the three months to February, in line with market expectations. However, the nation’s average earnings excluding bonus grew at its weakest pace in 7 months in the three months to February, indicating that consumer spending is unlikely to contribute to economic growth in the first quarter of 2017.
The Euro ended the week on a stronger footing, following upbeat ZEW survey data across the Eurozone. Data revealed that the Eurozone’s ZEW economic sentiment index surprisingly climbed in April. Further, the region’s Sentix investor confidence improved in April, pushing the index to its highest level in almost a decade, as investors emancipated themselves from uncertainty surrounding the French Presidential election.
EURUSD
The EUR strengthened against the USD last week, closing 0.2% higher at 1.0609, after the Eurozone’s ZEW economic sentiment index surprisingly climbed in April and the Sentix investor confidence index advanced in the same month. On the contrary, the region’s seasonally adjusted industrial production surprisingly eased in February. Separately, Germany’s final consumer price index advanced in line with preliminary estimates in March and the ZEW economic sentiment index sharply improved in April. Also, the nation’s wholesale price index remained flat in March. During the previous week, the pair traded at a high of 1.0678 and a low of 1.0570. The pair is expected to find its first support at 1.0566 and first resistance at 1.0674. The second support is expected at 1.0514 and second resistance at 1.0730. This week, investors would focus on the Markit manufacturing and services PMI data across the Eurozone as well as the Eurozone’s consumer price inflation, consumer confidence index, trade balance and construction output data, to gauge strength in the European economy.
GBPUSD
The GBP advanced against the USD last week, closing 1.21% higher at 1.2522, after Britain’s consumer price index (CPI) rose 2.3% on an annual basis in March, at par with market expectations. Moreover, the nation’s ILO unemployment rate remained steady at an 11-year low level of 4.7% in the three months to February, in line with market expectations. Meanwhile, the nation’s average earnings excluding bonus rose slightly in the three months to February. Also, the nation’s RICS house price balance remained steady in March, meeting market consensus, whereas the nation’s BRC like-for-like retail sales declined more-than-anticipated in the same month. During the previous week, the pair traded at a high of 1.2574 and a low of 1.2368. The pair is expected to find its first support at 1.2403 and first resistance at 1.2609. The second support is expected at 1.2282 and second resistance at 1.2694. Looking ahead, traders would look forward to the Bank of England Governor, Mark Carney’s speech along with UK’s retail sales data, due this week.
USDJPY
During the previous week, the USD traded 2.2% lower against the JPY and ended at 108.61. Last week, the Bank of Japan Governor, Haruhiko Kuroda, vowed that the central bank will continue with aggressive easing until achieving the central bank’s 2.0% inflation target. On the macro front, Japan posted a more-than-expected trade surplus (BOP basis) in February. Also, the nation’s flash machine tool orders rose in March, while machinery orders rebounded less-than-anticipated in February. In other economic news, Japan’s Eco-watchers survey for current situation index surprisingly dropped in March. Moreover, the nation’s Eco-watchers survey for future outlook index unexpectedly declined in the same month. The USD hit a high of 111.58 and a low of 108.55 against the JPY in the previous week. Immediate downside, the first support level is seen at 107.60, followed by 106.56, while on the upside, the first resistance level situated in 110.63, followed by 112.62. Moving ahead, market participants would look forward to comments from the Bank of Japan’s Governor, Haruhiko Kuroda, accompanied with Japan’s trade balance, flash Nikkei manufacturing PMI and tertiary industry index, all set to release this week.
USDCHF
The USD fell against the CHF last week, closing 0.36% lower at 1.0052. On the economic front, Switzerland’s producer and import prices rose in March, meeting market expectations. During the previous week, the pair traded at a high of 1.0107 and a low of 1.0009. Immediate downside, the first support level is seen at 1.0007, followed by 0.9959, while on the upside, the first resistance level situated in 1.0105, followed by 1.0155. Looking ahead, market participants will focus on Switzerland’s ZEW expectations index, the sole important release this week.
USDCAD
The USD fell against the CAD last week, closing 0.59% lower at 1.3325. Last week, the Bank of Canada (BoC), in its latest monetary policy meeting, left the benchmark interest rate unchanged at 0.50%, as widely expected. Further, the BoC Governor, Stephen Poloz, stated that it is too early to conclude that the economy is on a “sustainable growth path” despite a recent rebound that led it to bump up its 2017 outlook. However, the central bank disclosed that the nation’s economic growth in recent quarters has been stronger than it forecasted in January, but also mentioned that it was “uneven expansion”. On the data front, Canada’s housing starts climbed more-than-anticipated in March and the new house price index climbed higher-than-expected in February. During the previous week, the pair traded at a high of 1.3426 and a low of 1.3224. The pair is expected to find its first support at 1.3224 and first resistance at 1.3426. The second support is expected at 1.3123 and second resistance at 1.3527. Ahead in the week, Canada’s consumer price index (CPI) and existing home sales data, would garner a lot of market attention.
AUDUSD
During the previous week, the AUD traded 1.03% higher against the USD and ended at 0.7572, on the back of robust jobs report. Data indicated that the number of people employed in Australia increased more-than-expected in March. Additionally, the nation’s seasonally adjusted unemployment rate remained steady at 5.9% in March, in line with market expectations. Moreover, the nation’s consumer inflation expectations rose in April. Also, the nation’s NAB business conditions index jumped in March. In contrast, the nation’s NAB business confidence index eased in the same month. Additionally, the nation’s Westpac consumer confidence index dropped in April. The AUD hit a high of 0.7596 and a low of 0.7473 against the USD in the previous week. The pair is expected to find support at 0.7503, and a fall through could take it to the next support level of 0.7426. The pair is expected to find its first resistance at 0.7626, and a rise through could take it to the next resistance level of 0.7672. This week, market participants will keep a close watch on Reserve Bank of Australia’s recent meeting minutes coupled with Australia’s Westpac leading index and the NAB business confidence index.
Gold
Last week, gold rose 2.48% to close at USD1285.69 per ounce, as the US Dollar plunged following comments on the greenback by the US President, Donald Trump. The yellow metal hit a high of USD1290.70 per ounce and a low of USD1248.20 per ounce in the previous week. The precious metal is expected to find its first support at USD1261.97 per ounce and first resistance at USD1304.47 per ounce. The second support is expected at USD1233.83 per ounce and second resistance at USD1318.83 per ounce.
Crude Oil
Crude oil traded 1.8% higher in the previous week, closing at USD53.18 per barrel, after news emerged that Saudi Arabia, the world’s largest oil producer, wants to extend OPEC’s production cut agreement for another six months. Also, the Organization of the Petroleum Exporting Countries (OPEC) disclosed that its members had cut March crude output beyond measures they had promised. Crude prices were supported further, after the Energy Information Administration (EIA) reported that US crude stockpiles surprisingly dropped by 2.2 million barrels to 533.2 million barrels in the week ended 7 April 2017, while the American Petroleum Institute (API) reported a surprise draw of 1.3 million barrels in the US crude oil inventories in the same week, bringing the total to 532.4 million barrels. Last week, the commodity traded at a high of USD53.76 per barrel and a low of USD52.31 per barrel. Crude oil is expected to witness its first support at USD52.23 per barrel and second support at USD51.54 per barrel, while the first resistance is expected at USD53.68 per barrel and second resistance at USD54.44 per barrel.
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