Last week, the forex market was dictated by dovish minutes of the Federal Reserve’s (Fed) and the European Central Bank’s July monetary policy meeting.
The greenback ended mixed against its key peers last week, after minutes of the Fed’s latest meeting indicated that the central bank could demur on additional interest rate hike this year. According to minutes, policymakers appeared divided over another interest rate increase this year as some members opposed further hikes until there was more concrete evidence that the recent softness in inflation is transitory. However, others argued that such a delay could cause an eventual overshooting in inflation.
On the macro front, advance retail sales in the US posted its sharpest increase in 7 months in July, suggesting that consumer spending was off to a good start in the third quarter. Moreover, confidence amongst Americans surged to a 7-month high in August. Further, the nation’s business inventories jumped to a 7-month high in June, while the NAHB housing market index recorded an unexpected rise in August. Additionally, the number of Americans filing for initial jobless claims dropped to a 6-month low in the week ended 12 August. Also, the nation’s industrial production climbed less-than-expected in July. On the contrary, manufacturing production recorded an unexpected drop in July.
The Euro ended the week lower against the USD, after minutes of the ECB’s July meeting revealed that policymakers expressed concerns over stubbornly low inflation. Further, officials remained wary over the strength in the Euro and warned that the recent surge in the currency could hamper the central bank’s efforts to get inflation to its target.
The Pound ended the week on a weaker footing against the USD, after annual inflation in Britain came in softer-then-expected in July. On the contrary, the nation’s ILO unemployment rate unexpectedly dropped in the three months to June, highlighting robust jobs market despite an overall slowdown in economic growth.
EURUSD
Last week, the EUR traded 0.51% lower against the USD and closed at 1.1761, after minutes of the ECB’s July meeting highlighted some nervousness among committee members about the strength in the Euro. On the macro front, second estimate of the Eurozone’s seasonally adjusted gross domestic product (GDP) advanced 0.6% on a quarterly basis in the second quarter of 2017, confirming the preliminary print. Further, the region’s final consumer price index (CPI) rose 1.3% on an annual basis in July, in line with the flash estimate, while seasonally adjusted trade surplus expanded more-than-anticipated in June. On the contrary, the region’s seasonally adjusted industrial production eased more-than-expected in June, while seasonally adjusted current account surplus sharply narrowed in the same month. Moreover, the region’s seasonally adjusted construction output declined in June. Separately, Germany’s seasonally adjusted GDP advanced less-than-expected by 0.6% on a quarterly basis in the second quarter of 2017. The EUR hit a high of 1.1838 and a low of 1.1662 against the USD in the previous week. The pair is expected to find its first support at 1.1669 and first resistance at 1.1845. The second support is expected at 1.1577 and second resistance at 1.1929. This week, investors will focus on the Markit manufacturing and services PMIs as well as the ZEW economic sentiment data across the Eurozone. Additionally, the Eurozone’s consumer confidence coupled with Germany’s Ifo expectations index, would also be keenly watched by traders.
GBPUSD
During the previous week, the GBP traded 1.11% lower against the USD and ended at 1.2870, following the release of weaker-than-expected inflation data in the UK. Data indicated that Britain’s consumer price index (CPI) climbed less-than-anticipated by 2.6% on an annual basis in July. Nevertheless, the nation’s retail sales topped market consensus in July. Moreover, the nation’s ILO unemployment rate unexpectedly dropped in the three months to June, while annual average earnings including bonus climbed above market expectations in the same period. The GBP hit a high of 1.3022 and a low of 1.2832 against the USD in the previous week. The pair is expected to find its first support at 1.2796 and first resistance at 1.2986. The second support is expected at 1.2719 and second resistance at 1.3099. Investors will keep a close watch on Britain’s 2Q GDP report, BBA mortgage approvals and public sector net borrowing data, all slated to release this week.
USDJPY
The USD traded marginally lower against the JPY last week, with the pair closing at 109.18. Macroeconomic data revealed that Japan’s preliminary GDP expanded higher-than-expected by 1.0% on a quarterly basis in the second quarter of 2017, while the nation’s final industrial production was revised higher in June. Additionally, the nation’s adjusted merchandise trade surplus widened more-than-anticipated in July. The pair traded at a high of 110.95 and a low of 108.60 during the previous week. Immediate downside, the first support level is seen at 108.22, followed by 107.24, while on the upside, the first resistance level situated in 110.57, followed by 111.94. This week, traders will focus on Japan’s national consumer price index and flash Nikkei manufacturing PMI data.
USDCHF
The USD traded 0.29% higher against the CHF last week, with the pair closing at 0.9646. On the data front, Switzerland’s producer and import price index remained flat on a monthly basis in July, at par with market expectations. The USD hit a high of 0.9766 and a low of 0.9586 against the CHF in the previous week. Immediate downside, the first support level is seen at 0.9567, followed by 0.9487, while on the upside, the first resistance level situated in 0.9747, followed by 0.9847. Going forward, Switzerland’s trade balance and industrial production data, set to release this week, will attract a lot of investor attention.
USDCAD
During the previous week, the USD traded 0.73% lower against the CAD and ended at 1.2585. The Canadian dollar rose against the USD, after Canada’s consumer price index advanced 1.2% on an annual basis in July, meeting market expectations. Moreover, the nation’s Teranet/National Bank house price index climbed in July. On the other hand, existing home sales eased in July, while manufacturing shipments sharply fell in June. During the previous week, the pair traded at a high of 1.2778 and a low of 1.2557. The pair is expected to witness its first support at 1.2502 and second support at 1.2419, while the first resistance is expected at 1.2723 and second resistance at 1.2861. Looking ahead, traders will closely monitor Canada’s retail sales data, the sole important release this week.
AUDUSD
Last week, the AUD traded 0.44% higher against the USD and closed at 0.7929, on the back of hawkish minutes of the Reserve Bank of Australia’s (RBA) August meeting. Minutes indicated that officials expressed confidence that Australian economic growth is likely to pick up pace in the coming months. However, the central bank reiterated its view that the housing market as well as household debt warrants “careful monitoring” and that any further rise in the local currency could lead to slower growth and subdued inflation. Gains in Aussie were boosted further, after data showed that Australia’s seasonally adjusted unemployment rate fell to 5.6% in July, in line with market expectations. Also, the nation’s Westpac leading index rebounded in July. The AUD hit a high of 0.7963 and a low of 0.7808 against the USD in the previous week. The pair is expected to witness its first support at 0.7838 and second support at 0.7745, while the first resistance is expected at 0.7993 and second resistance at 0.8055. With no major economic releases in Australia this week, investor sentiment will be governed by global macroeconomic events.
Gold
Gold fell last week, closing 0.4% lower at USD1284.13 per ounce, as fading concerns of a possible war between the US and North Korea increased risk appetite among investors. Gold hit a high of USD1306.90 per ounce and a low of USD1272.70 per ounce during the previous week. The yellow metal is expected to witness its first support at USD1273.03 per ounce and second support at USD1255.77 per ounce, while the first resistance is expected at USD1307.23 per ounce and second resistance at USD1324.17 per ounce.
Crude Oil
Crude oil traded 0.63% lower in the previous week, closing at USD48.51 per barrel, after the Energy Information Administration (EIA) reported that US crude production jumped by 79,000 barrels per day (bpd) to 9.502 million bpd in the week ended 11 August, hitting its highest level in over 2 years. However, losses in crude prices were limited, after the EIA reported that US crude oil stockpiles declined by 8.95 million barrels to 466.50 million barrels in the week ended 11 August, while the American Petroleum Institute (API) indicated a massive draw of 9.20 million barrels in the US crude oil inventories in the same week. The commodity hit a high of USD49.16 per barrel and a low of USD46.46 per barrel in the previous week. Immediate downside, the first support level is seen at USD47.07 per barrel, followed by USD45.42 per barrel, while on the upside, the first resistance level situated in USD49.77 per barrel, followed by USD50.82 per barrel.
Good trades Traders. ⤊
