Last week, the forex market was dictated by robust US non-farm payrolls report and the Bank of England’s (BoE) monetary policy meeting.
The greenback gained ground against its key peers, after non-farm payrolls data showed that US economy added more-than-expected jobs in July, suggesting that job growth would continue to remain strong enough in the country to warrant another Federal Reserve (Fed) interest rate hike later this year. Additionally, the nation’s unemployment rate dropped in July, touching a 16-year low, while average hourly earnings grew by the most in 5 months in July. Meanwhile, ADP’s private sector added less-than-expected jobs in July. Separately, the St. Louis Fed President, James Bullard, stated that he would not favor another interest rate hike this year, while the San Francisco Fed President, John Williams, signaled that the central bank could start rolling back its $4.5 trillion balance sheet this autumn.
Other economic data showed that the US ISM manufacturing PMI dropped more-than-expected in July, amid a slowdown in new orders, while the non-manufacturing PMI declined to an 11-month low in the same month, thus highlighting a loss of momentum in the nation’s economic activity. Meanwhile, the nation’s pending home sales rebounded for the first time in 4 months in June, while initial jobless claims fell more-than-anticipated in the week ended 29 July. Moreover, the nation’s factory orders rebounded in June, meeting market expectations, while final durable goods orders climbed less than initially estimated in June.
The Pound ended the week on a weaker footing, after the BoE lowered Britain’s economic growth forecast. The BoE opted to leave the key interest rate unchanged at 0.25% and left unchanged the size of its asset purchase program at £435.0 billion. Further, the central bank slashed UK’s economic growth forecast for this year and next, arguing that the economy is expected to remain sluggish because of the damage Brexit is already doing to the economy.
The Euro ended the week higher, after the Eurozone’s economy expanded 0.6% on a quarterly basis in the second quarter of 2017, meeting market expectations, painting a bright picture of the region’s economy that could allow the European Central Bank (ECB) to start paring back its monetary stimulus program before the year-end. Additionally, the nation’s unemployment rate surprisingly declined to an 8-year low in June, while the region’s annual inflation advanced as expected in July.
EURUSD
The EUR strengthened against the USD last week, closing 0.19% higher at 1.1773, following robust economic data in the Eurozone. The Eurozone’s seasonally adjusted flash gross domestic product (GDP) advanced 0.6% on a quarterly basis in the second quarter of 2017, meeting market expectations, while the region’s unemployment rate surprisingly declined to 9.1% in June. Moreover, the region’s seasonally adjusted retail sales unexpectedly advanced in June. Meanwhile, the region’s final Markit services PMI remained unchanged in July, whereas the final Markit manufacturing PMI was revised lower in the same month. Separately, Germany’s seasonally adjusted unemployment rate remained steady at 5.7% in July, at par with market consensus, while retail sales grew more-than-expected in June. On the contrary, the nation’s Markit manufacturing as well as services PMI, both fell more than initially estimated in July. The pair traded at a high of 1.1910 and a low of 1.1723 during the previous week. The pair is expected to find support at 1.1694, and a fall through could take it to the next support level of 1.1615. The pair is expected to find its first resistance at 1.1881, and a rise through could take it to the next resistance level of 1.1989. This week, investors will keep a close watch on the Eurozone’s Sentix investor confidence index along with Germany’s final consumer price index, industrial production and trade balance data.
GBPUSD
The GBP traded 0.73% lower against the USD last week, with the pair closing at 1.3040, after the Bank of England (BoE) voted 6-2 to keep the key interest rate unchanged at 0.25% and downgraded UK’s economic growth forecast. The central bank now expects the economy to grow by 1.7% this year and by 1.6% in 2018. On the economic front, Britain’s Markit manufacturing as well as services PMI, both expanded more-than-expected in July. In contrast, the nation’s Markit construction PMI fell more-than-anticipated in the same month. Also, the nation’s mortgage approvals for house purchases dropped in June. In other economic news, Britain’s net consumer credit registered a rise in June and the seasonally adjusted Nationwide house prices unexpectedly rose in July. The pair traded at a high of 1.3267 and a low of 1.3024 during the previous week. Immediate downside, the first support level is seen at 1.2954, followed by 1.2867, while on the upside, the first resistance level situated in 1.3197, followed by 1.3353. Moving ahead, investors will look forward to Britain’s trade balance, manufacturing as well as industrial production and NIESR GDP estimate data, all due to release this week.
USDJPY
During the previous week, the USD traded marginally higher against the JPY and ended at 110.69. On the macro front, Japan’s flash industrial production rebounded more-than-anticipated in June, while the nation’s consumer confidence index advanced in July. On the other hand, the nation’s final Nikkei manufacturing PMI declined more than initially estimated in July, while the nation’s Markit services PMI fell in the same month. During the previous week, the pair traded at a high of 111.05 and a low of 109.85. Immediate downside, the first support level is seen at 110.01, followed by 109.33, while on the upside, the first resistance level situated in 111.21, followed by 111.73. This week, traders will keep an eye on Japan’s trade balance figures and Eco-Watchers survey data.
USDCHF
The USD traded 0.41% higher against the CHF last week, with the pair closing at 0.9727. On the data front, Switzerland’s SECO consumer confidence index improved in July, meeting market expectations. Additionally, the nation’s real retail sales rebounded on an annual basis in June. Other data showed that the nation’s SVME manufacturing PMI recorded an unexpected rise in July. During the previous week, the pair traded at a high of 0.9764 and a low of 0.9631. The pair is expected to find its first support at 0.9651 and first resistance at 0.9784. The second support is expected at 0.9574 and second resistance at 0.9840. Going ahead, investors will eye Switzerland’s inflation and jobs data, both set to release this week.
USDCAD
Last week, the USD traded 1.71% higher against the CAD and closed at 1.2645. In economic news, data showed that Canada’s unemployment rate unexpectedly fell to 6.3% in July, while the nation’s Markit manufacturing PMI advanced in the same month. On the other hand, the nation’s seasonally adjusted Ivey PMI fell in July. Also, the nation’s international merchandise trade deficit surprisingly expanded in June. The pair traded at a high of 1.2668 and a low of 1.2446 during the previous week. The pair is expected to find its first support at 1.2505 and first resistance at 1.2727. The second support is expected at 1.2364 and second resistance at 1.2808. Going forward, Canada’s housing starts, building permits and the new house price index data, all slated to release this week, will garner lot of market attention.
AUDUSD
The AUD traded 0.81% lower against the USD last week, with the pair closing at 0.7922. Last week, the Reserve Bank of Australia (RBA), at its latest monetary policy meeting, kept its benchmark interest rate steady at 1.5%, in line with market expectations. Meanwhile, the central bank trimmed Australia’s economic growth forecast for 2017 by half a percentage point to 2.0%-3.0%, citing the impact of a stronger Australian dollar on economic growth. Macroeconomic data revealed that Australia’s AiG performance of services index as well as manufacturing index, both registered a rise in July. Also, the nation’s seasonally adjusted retail sales climbed in June, while seasonally adjusted building approvals rebounded more-than-expected in the same month. On the contrary, the nation’s HIA new home sales fell in June, while seasonally adjusted trade surplus narrowed more-than-expected in the same month. The pair traded at a high of 0.8043 and a low of 0.7891 during the previous week. Immediate downside, the first support level is seen at 0.7861, followed by 0.7800, while on the upside, the first resistance level situated in 0.8013, followed by 0.8104. Ahead in the week, a speech by the RBA Governor, Philip Lowe, will be keenly watched by market participants. Also, the release of Australia’s AiG performance of construction index, NAB business confidence, Westpac consumer confidence and consumer inflation expectations data, will keep investors on their toes.
Gold
During the previous week, gold traded 0.85% lower and ended at USD1258.88 per ounce, after better-than-expected US employment report boosted gains in the US Dollar. Last week, the precious metal traded at a high of USD1280.30 per ounce and a low of USD1259.80 per ounce. The precious metal is expected to find its first support at USD1255.97 per ounce and first resistance at USD1276.47 per ounce. The second support is expected at USD1247.63 per ounce and second resistance at USD1288.63 per ounce.
Crude Oil
Last week, crude oil traded 0.26% lower and ended at USD49.58 per barrel, on the back of reports that OPEC’s crude production advanced to 33.0 million barrels per day (bpd) in July, despite the group’s pledge to freeze production. However, losses in crude prices were capped after news emerged that US is considering imposing sanctions against Venezuela’s vital oil sector, in response to the nation’s controversial vote. Separately, the Energy Information Administration (EIA) disclosed that US crude oil inventories fell by 1.5 million barrels to 481.9 million barrels in the week ended 28 July, while the American Petroleum Institute (API) reported that US crude oil stockpiles surprisingly rose by 1.8 million barrels to 488.8 million in the same week. Crude oil hit a high of USD50.43 per barrel and a low of USD48.37 per barrel in the previous week. The commodity is expected to find its first support at USD48.45 per barrel and first resistance at USD50.51 per barrel. The second support is expected at USD47.38 per barrel and second resistance at USD51.50 per barrel.
Traders we have to breathe if not, we die. 😜
