Last week, the forex market was dictated by political turmoil in the US and the robust economic data in the UK.
The greenback ended the week lower against a basket of major currencies, dragged down by fears that heightened controversy concerning the US President, Donald Trump could prevent lawmakers from pushing through his tax and spending reforms. Meanwhile, the Cleveland Fed President, Loretta Mester, reiterated her call for further interest rate hikes, as the economy is about to reach its dual mandate of full employment and 2.0% inflation. Separately, St. Louis Fed President, James Bullard, expressed worries about June rate hike stating that the economic data has been "relatively weak" since the March meeting.
On the macro front, manufacturing as well as industrial production in the US surged to a more than 3-year high level in April. Moreover, the number of Americans filing for fresh jobless claims surprisingly fell to a nearly 3-month low level in the week ended 13 May 2017. Additionally, the nation’s Philadelphia Fed manufacturing index unexpectedly advanced in May. Moreover, the nation’s leading indicator rose less-than-anticipated in April. In contrast, the nation’s housing starts and building permits disappointed with an unexpected drop in April, with housing starts hitting its lowest level in 5 months, led by a big drop in construction of apartments.
The Pound ended the week on a stronger footing against the USD, on the back of robust economic data in the UK. Annual inflation in Britain surged 2.7% in April, notching its highest level since September 2013, thus increasing threat to the nation’s households as wages fail to keep pace with rising inflation. Also, the nation’s ILO unemployment rate unexpectedly fell to 4.6% in the first three months of 2017, marking its lowest level in 42 years. However, the nation’s average earnings excluding bonus rose at its weakest pace since July 2016 in the same period, suggesting that household budgets would be squeezed further in the coming months. Further, the nation’s retail sales sharply rebounded in April, suggesting that consumer spending, the driving force of the nation’s economic growth, is coping up well despite a rapid increase in inflation.
The Euro ended the week higher against the USD. According to minutes of the European Central Bank’s (ECB) latest meeting, board members generally agreed that June would be a better timing to start considering shifting towards an exit from the stimulus efforts and review the sustainability of the recovery and the outlook for inflation.
EURUSD
The EUR strengthened against the USD last week, closing 2.53% higher at 1.1204, on the back of upbeat economic data in the Eurozone. The Eurozone’s ZEW economic sentiment index jumped in May, while the region’s final gross domestic product (GDP) advanced 0.5% on a quarterly basis in 1Q 2017, confirming the flash estimate. Further, the region’s final consumer price index (CPI) advanced as initially estimated by 1.9% on an annual basis in April, while seasonally adjusted trade surplus expanded in March. On the contrary, the region’s seasonally adjusted construction output fell in March. Separately, Germany’s ZEW economic sentiment index climbed less-than-expected in May and the current situation index rose more-than-anticipated in the same month. During the previous week, the pair traded at a high of 1.1212 and a low of 1.0923. The pair is expected to find its first support at 1.1015 and first resistance at 1.1304. The second support is expected at 1.0825 and second resistance at 1.1403. Moving ahead, investors will closely monitor the flash Markit manufacturing and services PMIs across the Eurozone along with Germany’s final 1Q GDP and Ifo expectations and business climate indices, all scheduled to release next week.
GBPUSD
During the previous week, the GBP traded 1.12% higher against the USD and ended at 1.3034, following robust economic data in the UK. Britain’s CPI advanced more-than-anticipated by 2.7% on an annual basis in April, while the nation’s ILO unemployment rate unexpectedly fell to 4.6% in the first three months of 2017. Also, the nation’s average earnings excluding bonus rose as expected in the January-March 2017 period. In other economic news, UK’s retail sales rebounded more-than-anticipated in April. The GBP hit a high of 1.3048 and a low of 1.2866 against the USD in the previous week. Immediate downside, the first support level is seen at 1.2919, followed by 1.2801, while on the upside, the first resistance level situated in 1.3101, followed by 1.3165. Looking ahead, investors will anxiously await Britain’s flash 1Q GDP, public sector net borrowings and BBA mortgage applications data.
USDJPY
The USD declined against the JPY last week, closing 1.83% lower at 111.26. On the data front, Japan’s preliminary GDP climbed 0.5% on a quarterly basis in 1Q 2017. Moreover, the nation’s preliminary machine tool orders climbed in April, while machinery orders rose in March. On the other hand, the nation’s tertiary industry index surprisingly fell in March and final industrial production dropped in the same month. During the previous week, the pair traded at a high of 113.85 and a low of 110.24. The pair is expected to find its first support at 109.72 and first resistance at 113.33. The second support is expected at 108.17 and second resistance at 115.39. Next week, market participants will closely monitor comments from the BoJ Governor, Haruhiko Kuroda, along with the release of Japan’s flash Nikkei manufacturing PMI, all industry activity index and trade balance figures.
USDCHF
The USD traded 2.83% lower against the CHF last week, with the pair closing at 0.9722. On the economic front, Switzerland’s producer and import prices unexpectedly dropped in April. The USD hit a high of 1.0019 and a low of 0.9726 against the CHF in the previous week. Immediate downside, the first support level is seen at 0.9630, followed by 0.9532, while on the upside, the first resistance level situated in 0.9923, followed by 1.0118. Moving ahead, Switzerland’s trade balance and industrial production data, both set to be released next week, will generate a lot of market attention.
USDCAD
The USD traded 1.43% lower against the CAD last week, with the pair closing at 1.3512. Macroeconomic data indicated that Canada’s existing home sales slid in April, while manufacturing shipments rebounded in March. Moreover, the nation’s retail sales advanced more-than-expected on a monthly basis in March and annual consumer price inflation rose as expected in April. During the previous week, the pair traded at a high of 1.3723 and a low of 1.3509. Immediate downside, the first support level is seen at 1.3439, followed by 1.3367, while on the upside, the first resistance level situated in 1.3653, followed by 1.3795. Going forward, traders will await Bank of Canada’s interest rate decision, slated to be announced next week.
AUDUSD
The AUD strengthened against the USD last week, closing 1.0% higher at 0.7459, after Australia’s jobs report surprised with an unexpected drop in April. Australia’s seasonally adjusted unemployment rate surprisingly dropped to 5.7% in April. On the contrary, the nation’s consumer inflation expectations dropped in May, while the nation’s Westpac consumer confidence index eased in the same month. Further, the nation’s seasonally adjusted home loan approvals unexpectedly eased in March. Separately, the minutes of the Reserve Bank of Australia’s (RBA) recent meeting, policy makers expressed the need to carefully monitor developments in Australia’s labor and housing markets.
The AUD hit a high of 0.7470 and a low of 0.7388 against the USD in the previous week. Immediate downside, the first support level is seen at 0.7408, followed by 0.7357, while on the upside, the first resistance level situated in 0.7490, followed by 0.7521. Moving ahead, traders will look forward to Australia’s Westpac leading index, the sole important release next week.
Gold
Gold traded 2.24% higher during the previous week, closing at USD1255.93 per ounce, as a broad decline in the greenback increased demand for the safe haven yellow metal. The yellow metal hit a high of USD1265.00 per ounce and a low of USD1226.80 per ounce in the previous week. The yellow metal is expected to witness its first support at USD1233.33 per ounce and second support at USD1210.97 per ounce, while the first resistance is expected at USD1271.53 per ounce and second resistance at USD1287.37 per ounce.
Crude Oil
Last week, crude oil traded 5.2% higher and ended at USD50.33 per barrel, amid optimism that top crude producers will agree to extend an OPEC deal to curb crude production at its upcoming meeting. Gains in oil prices were boosted further, after the Energy Information Administration (EIA) reported that US crude oil stockpiles declined by 1.8 million barrels to 520.8 million barrels in the week ended 12 May, while the American Petroleum Institute (API) indicated that that US crude oil stockpiles surprisingly rose by 0.9 million barrels to 523.4 million barrels in the same week. Crude oil witnessed a high of USD50.53 per barrel and a low of USD47.77 per barrel last week. Crude oil is expected to witness its first support at USD48.69 per barrel and second support at USD46.85 per barrel, while the first resistance is expected at USD51.45 per barrel and second resistance at USD52.37 per barrel.
The dedication and discipline makes us stronger, resilient and constant Traders
