Last week, the forex market was dictated by a mixed batch of economic data from the US and robust economic data from the Eurozone and the UK.
The greenback ended mixed against its key counterparts, after non-farm payrolls in the US came in weaker-than-forecasted in August, while average hourly earnings posted a modest rise in the same month, thus suggesting that disappointing job gains and anemic wage growth could make the US Federal Reserve cautious about raising interest rates again this year. Moreover, the nation’s unemployment rate surprisingly edged up in August. Nevertheless, ADP’s private sector added jobs at its fastest pace in 5 months in August. Meanwhile, rating agency, Moody’s slashed US growth forecasts to 2.2% from 2.4% for 2017 and to 2.3% from 2.5% for 2018.
In other economic news, second estimate of the US annualized gross domestic product (GDP) showed that the economy expanded at its quickest pace in more than 2 years in 2Q 2017. Further, the nation’s ISM manufacturing index surged to a 6-year high in August, indicating that manufacturing sector will propel third quarter economic growth in the world’s largest economy. Moreover, the nation’s consumer confidence strengthened more-than-expected in August, notching a 5-month high level, amid optimism over the nation’s job market and current business conditions. Also, the nation’s personal spending grew weaker-than-anticipated in July, while personal income climbed above expectations in the same month. Also, the nation’s personal spending grew weaker-than-anticipated in July, while personal income climbed above expectations in the same month. On the other hand, the nation’s construction spending in the US unexpectedly dipped in July, while advance goods trade deficit widened more-than-expected in July, amid a sharp drop in exports. Meanwhile, the nation’s initial jobless claims slightly rose in the week ended 26 August 2017.
The Pound ended the week on a stronger footing against the USD, following hawkish remarks from the Bank of England (BoE) member, Michael Saunders who advocated for an immediate interest rate hike and warned a delay could lead to ‘a more abrupt and painful economic slowdown’. Further, Britain’s manufacturing sector unexpectedly accelerated to a 4-month high level in August.
The Euro ended the week lower against the USD. On the data front, the flash consumer prices in the Eurozone jumped to a 4-month high in August, while the region’s unemployment rate remained unchanged at an 8-year low in July. Separately, Moody’s sharply upgraded Eurozone’s growth forecast to 2.1% for 2017, citing robust momentum across the common currency region.
EURUSD
The EUR weakened against the USD last week, closing 0.54% lower at 1.1860. In economic news, the Eurozone’s flash consumer price index (CPI) climbed more-than-expected by 1.5% on an annual basis in August, while the region’s unemployment rate remained unchanged at 9.1% in July, meeting market consensus. Further, the region’s final consumer confidence index rose in August, confirming the flash estimate, while economic confidence index unexpectedly advanced in the same month. Also, the region’s final Markit manufacturing PMI climbed as initially estimated in August. Separately, Germany’s preliminary CPI climbed 1.8% on an annual basis in August, meeting market expectations, while the nation’s seasonally adjusted unemployment rate remained steady at 5.7% in August, in line with market expectations. Moreover, the nation’s GfK consumer confidence index surprisingly jumped in September. On the contrary, the nation’s retail sales fell more-than-anticipated in July. During the previous week, the pair traded at a high of 1.2070 and a low of 1.1823. The pair is expected to find its first support at 1.1765 and first resistance at 1.2012. The second support is expected at 1.1671 and second resistance at 1.2165. Going ahead, investors will draw their attention to the European Central Bank’s interest rate decision, due to be announced this week. Moreover, the final services PMIs across the Eurozone along with the region’s Sentix investor confidence, retail sales and final GDP data, will be on investors’ radar. Also, traders will eye German factory orders, industrial production and trade balance data.
GBPUSD
Last week, the GBP traded 0.54% higher against the USD and closed at 1.2951, following robust manufacturing sector data in the UK. The British Markit manufacturing PMI unexpectedly climbed in August. Other data indicated that UK’s GfK consumer confidence index unexpectedly improved in August. Further, the nation’s mortgage approvals jumped in July, while the nation’s net consumer credit rose less-than-anticipated in the same month. On the contrary, the nation’s seasonally adjusted Nationwide house prices recorded an unexpected drop in August. Separately, the third round of Brexit negotiations concluded with the European Union’s (EU) chief negotiator, Michel Barnier, warning that negotiations were lacking sufficient progress. During the previous week, the pair traded at a high of 1.2995 and a low of 1.2853. The pair is expected to witness its first support at 1.2872 and second support at 1.2792, while the first resistance is expected at 1.3014 and second resistance at 1.3076. Looking ahead, investors will anxiously await Britain’s Markit services and construction PMIs coupled with the nation’s industrial and manufacturing production, total trade balance as well as NIESR GDP estimate numbers, all slated to release this week.
USDJPY
Last week, the USD traded 0.81% higher against the JPY and closed at 110.25. Macroeconomic data revealed that Japan’s unemployment rate remained steady at 2.8% in July, in line with market expectations. Moreover, the nation’s retail trade advanced above market consensus in July, whereas large retailers’ sales dropped as expected in the same month. Also, the nation’s small business confidence index registered a drop in August and the flash industrial production fell more-than-expected in July. Other data showed that the nation’s final Nikkei manufacturing PMI rose less than initially estimated in August. During the previous week, the pair traded at a high of 110.67 and a low of 108.27. The pair is expected to witness its first support at 108.80 and second support at 107.33, while the first resistance is expected at 111.20 and second resistance at 112.13. Moving ahead, market participants will look forward to Japan’s final GDP numbers for 2Q 2017, trade balance (BOP basis), Eco-Watchers survey and Nikkei services PMI, all slated to release this week.
USDCHF
The USD traded 0.82% higher against the CHF last week, with the pair closing at 0.9648. On the macro front, Switzerland’s ZEW economic expectations index fell in August, while the nation’s KOF leading indicator eased in the same month. Additionally, the nation’s real retail sales declined on an annual basis in July. On the other hand, the nation’s UBS consumption indicator rose in July, while the nation’s SVME–manufacturing PMI unexpectedly rose in August. During the previous week, the pair traded at a high of 0.9680 and a low of 0.9429. The pair is expected to witness its first support at 0.9491 and second support at 0.9334, while the first resistance is expected at 0.9742 and second resistance at 0.9836. Ahead in the week, all eyes will be on Switzerland’s 2Q GDP, unemployment rate and consumer price inflation data.
USDCAD
The USD fell against the CAD last week, closing 0.7% lower at 1.2394. The Canadian Dollar gained ground, after Canada’s gross domestic product (GDP) advanced more-than-anticipated by 0.3% on a monthly basis in June. In contrast, the nation’s Markit manufacturing PMI fell in August. The USD hit a high of 1.2663 and a low of 1.2341 against the CAD in the previous week. The pair is expected to find its first support at 1.2270 and first resistance at 1.2592. The second support is expected at 1.2144 and second resistance at 1.2788. Going forward, the Bank of Canada’s interest rate decision followed by Canada’s building permits and unemployment rate data, scheduled to release this week, will garner lot of market attention.
AUDUSD
The AUD traded 0.54% higher against the USD last week, with the pair closing at 0.7975, on the back of robust manufacturing report from Australia. Data revealed that Australia’s AiG performance of manufacturing index sharply climbed in August. Further, the nation’s seasonally adjusted construction work done rebounded in 2Q 2017. On the other hand, the nation’s seasonally adjusted building approvals dropped less-than-anticipated in July, while the nation’s HIA new home sales eased in the same month. During the previous week, the pair traded at a high of 0.7996 and a low of 0.7871. Immediate downside, the first support level is seen at 0.7895, followed by 0.7820, while on the upside, the first resistance level situated in 0.8020, followed by 0.8070. Going ahead, investors will closely monitor the Reserve Bank of Australia’s (RBA) interest rate decision along with Australia’s 2Q GDP, retail sales, AiG performance of services as well as construction indices, all due this week.
Gold
During the previous week, gold traded 2.62% higher and ended at USD1325.23 per ounce, as investors piled into precious yellow metal, after the latest US jobs report clouded the Fed’s monetary policy outlook. Last week, the precious metal traded at a high of USD1334.50 per ounce and a low of USD1302.30 per ounce. Gold is expected to its find support at USD1309.97 per ounce, and a fall through could take it to the next support level of USD1290.03 per ounce. The yellow metal is expected to find its first resistance at USD1342.17 per ounce, and a rise through could take it to the next resistance level of USD1354.43 per ounce.
Crude Oil
Crude oil traded 1.21% lower in the previous week, closing at USD47.29 per barrel, pressured by concerns of rise in the US crude inventories and weaker crude demand after Hurricane Harvey, damaged nearly one fifth of the US refining capacity. However, losses in crude prices were limited, after the Energy Information Administration (EIA) showed that US crude oil stockpiles declined by 5.39 million barrels to 457.77 million barrels during the week ended 25 August, while the American Petroleum Institute (API) reported that US crude oil inventories fell by 5.78 million barrels during the same week. The commodity hit a high of USD47.47 per barrel and a low of USD45.58 per barrel in the previous week. The commodity is expected to find its first support at USD46.13 per barrel and first resistance at USD48.02 per barrel. The second support is expected at USD44.91 per barrel and second resistance at USD48.69 per barrel.
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