In a major development, the centrist candidate, Emmanuel Macron, decisively won the French presidential election, defeating far-right candidate, Marine Le Pen.
The greenback traded lower against a basket of currencies. The US Federal Reserve (Fed), at its latest monetary policy meeting, refrained from raising overnight interest rate and signaled that it was potentially teeing up a rate hike in June. In the statement accompanying the decision, the Fed described the US economy's tepid first-quarter growth as “transitory” and emphasized the strength of the nation’s labor market and consumer spending. Moreover, the central bank characterized inflation as “running close to the central bank’s 2.0% target.”
On the macro front, non-farm payrolls in the US showed that the economy added more-than-expected jobs in April, while the unemployment rate dipped to its lowest level in a decade in the same month, suggesting that the world’s largest economy is preparing for a stronger recovery in second quarter after a slow start to the year. Moreover, average hourly earnings grew in line with expectations in April. Also, ADP’s private sector employment surpassed market expectations in April and initial jobless claims fell to a 3 week low level in the week ended 29 April 2017. In other economic news, the nation’s ISM manufacturing PMI expanded at its weakest pace in 4 months in April, while the non-manufacturing PMI advanced more-than-anticipated in the same month. Additionally, the nation’s trade deficit surprisingly narrowed in March. Moreover, the nation’s final durable goods orders advanced for the third straight month in March, while factory orders grew at a softer-than-anticipated pace in March.
The Pound ended the week on a stronger footing against the USD, after Britain’s manufacturing, services as well as construction sectors surprised with a robust performance in April. Manufacturing activity in Britain expanded at its quickest pace in 3 years in April, buoyed by a strong global demand, while growth in the nation’s services sector accelerated to a 4-month high level in the same month, thus painting a largely bright picture of the economy and tempering worries about a Brexit-driven economic slowdown.
The Euro ended the week higher against the USD, after GDP data showed that the Eurozone’s economy expanded 0.5% on a quarterly basis in the first quarter of 2017, thus supporting the notion that the economy is getting firmly back on track.
EURUSD
During the previous week, the EUR traded 0.92% higher against the USD and ended at 1.0995, after the Eurozone’s seasonally adjusted flash gross domestic product (GDP) rose 0.5% on a quarterly basis in the first quarter of 2017, meeting market expectations. Further, the region’s seasonally adjusted retail sales advanced more-than-expected in March. Additionally, the region’s final Markit services PMI was revised higher in April, while the final manufacturing PMI was revised slightly lower in the same month. Meanwhile, the region’s unemployment rate remained steady at 9.5% in March. Elsewhere, in Germany, the seasonally adjusted unemployment rate remained steady at 5.8% in April. Meanwhile, the final Markit manufacturing PMI eased in April, confirming the flash estimates, while services sector activity fell less than initially estimated in the same month. During the previous week, the pair traded at a high of 1.1000 and a low of 1.0875. The pair is expected to find support at 1.0915, and a fall through could take it to the next support level of 1.0833. The pair is expected to find its first resistance at 1.1040, and a rise through could take it to the next resistance level of 1.1083. Ahead in the week, investors will closely monitor a speech by the ECB President, Mario Draghi along with ECB’s economic bulletin report. Moreover, the Eurozone’s Sentix investor confidence and Germany’s flash GDP numbers, trade balance, final consumer price inflation, industrial production as well as factory orders data would also be keenly watched by traders.
GBPUSD
Last week, the GBP traded 0.22% higher against the USD and closed at 1.2979, following upbeat economic data in the UK. Britain’s Markit manufacturing as well as services PMI surprisingly jumped in April. Also, the nation’s construction sector registered an unexpected rise in the same month. On the other hand, the number of mortgage approvals for house purchases in the UK declined more-than-anticipated in March. The pair traded at a high of 1.2984 and a low of 1.2831 during the previous week. Immediate downside, the first support level is seen at 1.2881, followed by 1.2779, while on the upside, the first resistance level situated in 1.3034, followed by 1.3085. Moving ahead, market participants will anxiously await BoE’s interest rate decision, scheduled later this week. Also, investors will look forward to Britain’s industrial and manufacturing production data along with the nation’s construction output, NIESR GDP estimate and trade balance figures, all set to release this week.
USDJPY
The USD advanced against the JPY last week, closing 1.09% higher at 112.71. Last week, minutes of the Bank of Japan’s (BoJ) March monetary policy meeting showed that policymakers agreed to keep a close watch on consumer prices. Further, they indicated that tighter labor conditions and rebounding energy prices are having a short-term effect on consumer prices. In other economic news, data indicated that Japan’s Nikkei services PMI fell in April. The USD hit a high of 113.05 and a low of 111.30 against the JPY in the previous week. Immediate downside, the first support level is seen at 111.66, followed by 110.60, while on the upside, the first resistance level situated in 113.41, followed by 114.10. Going ahead, market participants will look forward to BoJ’s summary of opinions report along with Japan’s trade balance, consumer confidence index and Eco-Watchers survey data, all slated to release this week.
USDCHF
During the previous week, the USD traded 0.78% lower against the CHF and ended at 0.9868. On the data front, Switzerland’s SVME–purchasing managers’ index (PMI) declined more-than-anticipated in April. Moreover, the nation’s SECO consumer confidence index unexpectedly fell in April. The pair traded at a high of 0.9967 and a low of 0.9859 during the previous week. The pair is expected to find its first support at 0.9835 and first resistance at 0.9943. The second support is expected at 0.9793 and second resistance at 1.0009. This week, market participants will closely monitor Switzerland’s unemployment rate and consumer price inflation data.
USDCAD
The USD fell against the CAD last week, closing marginally lower at 1.3650. On the economic front, data revealed that Canada’s unemployment rate surprisingly fell to 6.5% in April. However, the nation’s net number of people employed increased less-than-anticipated in April. On the contrary, the nation’s Markit manufacturing PMI rose in April and the international merchandise trade deficit narrowed more-than-anticipated in March. The USD hit a high of 1.3793 and a low of 1.3639 against the CAD in the previous week. The pair is expected to find its first support at 1.3596 and first resistance at 1.3750. The second support is expected at 1.3541 and second resistance at 1.3849. Going forward, Canada’s housing starts and building permits data, scheduled to release this week, will garner a lot of market attention.
AUDUSD
During the previous week, the AUD traded 0.93% lower against the USD and ended at 0.7418. Last week, the Reserve Bank of Australia (RBA), at its latest monetary policy meeting, maintained the key interest rate at 1.50%, as widely expected. The RBA Governor, Philip Lowe reiterated Australia’s housing market concerns, stating that housing prices continue to vary considerably around the country. Meanwhile, the RBA, in its quarterly statement on monetary policy, forecasted that Australian economy would grow between 2.75% to 3.75% in 2018. The central bank further indicated that it had no plan to shift the cash rate from a record low of 1.50% for the rest of 2017. On the macro front, Australia’s AIG performance of manufacturing and services indices, both advanced in April. Moreover, the nation’s AIG performance of construction index climbed in the same month. In contrast, the nation’s trade surplus narrowed more-than-expected in March and the HIA new home sales dropped in the same month. During the previous week, the pair traded at a high of 0.7556 and a low of 0.7368. The pair is expected to find its first support at 0.7343 and first resistance at 0.7531. The second support is expected at 0.7261 and second resistance at 0.7637. Looking ahead, Australia’s building approvals, NAB business confidence, retail sales and Westpac consumer confidence data, all slated to release this week, will be on investors’ radar.
Gold
Gold fell last week, closing 3.18% lower at USD1228.01 per ounce, as increased odds of a June interest rate hike by the Fed dented demand for the precious yellow metal. The precious metal traded at a high of USD1271.60 per ounce and a low of USD1225.70 per ounce in the previous week. The yellow metal is expected to witness its first support at USD1212.20 per ounce and second support at USD1196.00 per ounce, while the first resistance is expected at USD1258.10 per ounce and second resistance at USD1287.80 per ounce.
Crude Oil
Crude oil weakened in the previous week, closing 6.3% lower at USD46.22 per barrel, pressured by enduring concerns over global supply glut and reports of lower output-cut compliance among OPEC members in April. Oil prices failed to find support, after the Energy Information Administration (EIA) disclosed that US crude oil inventories fell less-than-expected by 0.9 million barrels to 527.8 million barrels in the week ended 28 April, while the American Petroleum Institute (API) reported that US crude oil inventories fell 4.2 million barrels to 528.7 million barrels in the same week. Crude oil witnessed a high of USD49.32 per barrel and a low of USD43.76 per barrel last week. Immediate downside, the first support level is seen at USD43.71 per barrel, followed by USD40.96 per barrel, while on the upside, the first resistance level situated in USD49.27 per barrel, followed by USD52.08 per barrel.
The volatility in the French elections was small, like the tender age of its leader.
Goal concentration, always traders. ;)
