The highlights of the week were the monetary policy meetings of the European Central Bank (ECB) as well as the Bank of Japan (BoJ) and dismal GDP numbers from US and UK.
The greenback ended the week mixed against its major peers, after the GDP report indicated the US economic growth slowed sharply in the first quarter of 2017, reducing the nation’s economic growth to its lowest level in 3 years, as consumers pulled back sharply on spending. Additionally, confidence amongst Americans deteriorated in April, as optimism about the economy dwindled, while flash durable goods orders increased at its weakest pace since December 2016 in March. Also, the nation’s initial jobless claims advanced more-than-expected last week, while pending home sales eased in March. Another set of economic data revealed that new home sales in the US surged at its fastest pace in 8 months in March.
The Euro ended the week higher against the USD, following better-than-expected annual inflation data across the Eurozone. Separately, the ECB, at its latest monetary policy meeting, maintained the ultra-loose monetary policy unchanged. In a post-meeting statement, the ECB President, Mario Draghi, left the door open to extend the size or duration of its asset-buying program if inflation looks set to fall far back below its target of near 2.0%. Nevertheless, Draghi acknowledged that the region has been experiencing strong economic recovery, but stated that inflation pressures remain subdued and showed no signs of turning convincingly upward.
Separately, Germany’s Ifo business confidence surprisingly jumped in April, pushing the index to its highest level in nearly 6 years, indicating that businesses are brushing off concerns about the threat of rising protectionism and uncertainties linked to Brexit as well as major European elections. In contrast, the Ifo business expectations index unexpectedly eased in April.
The Japanese Yen ended the week on a weaker footing against the USD. Last week, the Bank of Japan (BoJ), at its latest monetary policy meeting, held the key interest rate steady at -0.1% and kept the yield target for 10-year Japanese government bonds around 0%. In its quarterly economic outlook report, the central bank offered a more upbeat outlook on the economy, raising Japan’s GDP forecast for the 2017-18 fiscal year to 1.6%, from the 1.5% projected in January, amid optimism that a pick-up in overseas demand will help sustain an export-driven economic recovery. However, the BoJ lowered its inflation forecast to 1.4% from 1.5% for the same period.
EURUSD
The EUR traded 1.58% higher against the USD last week, with the pair closing at 1.0895, after the flash consumer price inflation across the Eurozone rose more-than-expected on an annual basis in April. Also, the Eurozone’s final consumer confidence index was improved as initially estimated in the same month. Separately, Germany’s Ifo business climate and current assessment indices, both surprisingly increased in April, while the Ifo business expectations index unexpectedly eased in the same month. Meanwhile, the German Bundesbank indicated that high industrial orders, exceptionally optimistic manufacturing sentiment and a rebound in exports supported German economic growth during the first quarter. However, the bank warned that German GDP potential is likely to fall to 0.75% per year by 2025 from around 1.25% at present due to the nation’s aging labor force. The pair traded at a high of 1.0951 and a low of 1.0821 during the previous week. The pair is expected to find its first support at 1.0827 and first resistance at 1.0957. The second support is expected at 1.0759 and second resistance at 1.1019. This week, investors will focus on the final manufacturing and services PMIs as well as the unemployment rate data across the Eurozone. Additionally, the Eurozone’s flash GDP figures, retail sales data and a speech by the ECB President Mario Draghi, will be on investors’ radar.
GBPUSD
The GBP advanced against the USD last week, closing 1.08% higher at 1.2951, brushing off data indicating a sharp slowdown in UK’s economic growth. Data showed that Britain’s GDP expanded less-than-expected by 0.3% on a quarterly basis in the first quarter of 2017. Further, the nation’s GfK consumer confidence fell in April, meeting market expectations. Moreover, the nation’s public sector net borrowing posted a more-than-expected deficit in March. On the other hand, the nation’s Rightmove house prices rose in April, whereas the Lloyds business barometer climbed in the same month. During the previous week, the pair traded at a high of 1.2965 and a low of 1.2773. The pair is expected to find support at 1.2828, and a fall through could take it to the next support level of 1.2704. The pair is expected to find its first resistance at 1.3020, and a rise through could take it to the next resistance level of 1.3088. Looking ahead, investors anxiously will await UK’s Markit manufacturing, services and construction PMIs data, all slated to release this week.
USDJPY
The USD advanced against the JPY last week, closing 2.22% higher at 111.49. Last week, the Bank of Japan (BoJ) maintained the benchmark interest rate steady at -0.1%. On the macro front, data indicated that Japan’s jobless rate surprisingly remained unchanged at 2.8% in March. Meanwhile, the nation’s national consumer price index climbed less-than-anticipated on an annual basis in March. Further, the nation’s all industry activity index surpassed market expectations in February, while seasonally adjusted retail trade unexpectedly climbed in March. In contrast, the nation’s large retailers’ sales fell in the same month. Additionally, the nation’s flash industrial production slid more-than-expected in March, whereas small business confidence index came in worse-than-anticipated in April. During the previous week, the pair traded at a high of 111.78 and a low of 109.60. The pair is expected to find support at 110.13, and a fall through could take it to the next support level of 108.78. The pair is expected to find its first resistance at 112.31, and a rise through could take it to the next resistance level of 113.14. Moving ahead, market participants will look forward to Japan’s final Nikkei manufacturing and services PMIs along with minutes of the BoJ’s recent meeting, scheduled to be released this week.
USDCHF
During the previous week, the USD traded 0.12% lower against the CHF and ended at 0.9946. Macroeconomic data showed that Switzerland’s ZEW economic expectations index fell in April. Meanwhile, the nation’s trade surplus slightly narrowed in March, whereas the UBS consumption indicator climbed in the same month. The pair traded at a high of 0.9981 and a low of 0.9894 during the previous week. The pair is expected to find support at 0.9900, and a fall through could take it to the next support level of 0.9853. The pair is expected to find its first resistance at 0.9987, and a rise through could take it to the next resistance level of 1.0027. Moving ahead, investors will closely monitor Switzerland’s real retail sales, SVME–PMI and the SECO consumer confidence index, all set to release this week.
USDCAD
The USD traded 1.16% higher against the CAD last week, with the pair closing at 1.3653. The Canadian Dollar lost ground after the US announced its first batch of duties on imported wood from Canada. The US Commerce Secretary, Wilbur Ross, stated that his agency will impose new anti-subsidy tariffs averaging 20.0% on Canadian softwood lumber imports, thus intensifying the long-running trade dispute between the two nations. Also, losses in Canadian Dollar were extended on reports that US is considering withdrawal from the North American Free Trade Agreement (NAFTA) between the US, Canada and Mexico, but were trimmed after the US President, Donald Trump, pledged to keep US in the North American Free Trade Agreement (NAFTA). On the data front, Canada’s GDP remained flat on a monthly basis in February, while retail sales unexpectedly dropped in the same month. The pair traded at a high of 1.3697 and a low of 1.3411 during the previous week. The pair is expected to witness its first support at 1.3477 and second support at 1.3301, while the first resistance is expected at 1.3763 and second resistance at 1.3873. Ahead in the week, Canada’s RBC manufacturing PMI, unemployment rate and a speech by the BoC Governor, Stephen Poloz, will garner a lot of market attention.
AUDUSD
Last week, the AUD traded 0.72% lower against the USD and closed at 0.7488, following the release of softer-than-expected inflation data. Data revealed that Australia’s consumer price index (CPI) climbed less-than-anticipated by 0.5% on a quarterly basis in 1Q 2017. Meanwhile, on an annual basis, the CPI breached the 2.0% mark for the first time since 2014 in the first quarter of 2017. Further, the nation’s private sector credit rose in March. During the previous week, the pair traded at a high of 0.7584 and a low of 0.7440. The pair is expected to find support at 0.7424, and a fall through could take it to the next support level of 0.7360. The pair is expected to find its first resistance at 0.7568, and a rise through could take it to the next resistance level of 0.7648. Looking ahead, traders will keep a close watch on the Reserve Bank of Australia’s interest rate decision. Additionally, Australia’s AiG performance of manufacturing, services and construction indices as well as the HIA new home sales and trade balance data, will keep investors on their toes.
Gold
During the previous week, gold traded 1.26% lower and ended at USD1268.28 per ounce, as a rally in global equity markets dented demand for the safe haven metal as an alternative investment. Last week, the precious metal traded at a high of USD1279.90 per ounce and a low of USD1260.70 per ounce. Immediate downside, the first support level is seen at USD1260.17 per ounce, followed by USD1250.83 per ounce, while on the upside, the first resistance level situated in USD1279.37 per ounce, followed by USD1289.23 per ounce.
Crude Oil
Last week, crude oil weakened 0.58% to close at USD49.33 per barrel, after news emerged that two key oilfields in Libya had restarted, thus intensifying supply glut concerns. Additionally, Russia indicated that it can boost oil output to its highest level in 30 years, if OPEC fails to extend crude production cuts beyond June. Meanwhile, losses in crude prices were trimmed after the Energy Information Administration (EIA) showed that US crude oil inventories fell more-than-anticipated by 3.64 million barrels to 528.70 million barrels in the week ended 21 April. However, the American Petroleum Institute (API) disclosed that US crude oil stockpiles surprisingly advanced 0.90 million barrels to 532.90 million barrels in the same week. The commodity hit a high of USD50.22 per barrel and a low of USD48.20 per barrel in the previous week. The commodity is expected to find its first support at USD48.19 per barrel and first resistance at USD50.21 per barrel. The second support is expected at USD47.18 per barrel and second resistance at USD51.22 per barrel.
Good Work.;)
