Last week, the forex market was dictated by the Bank of England’s (BoE) monetary policy meeting as well as robust inflation figures from the US and the UK.
The greenback gained ground against a basket of major currencies, after the US consumer prices surged to a 7-montgh high in August, reinvigorating hopes of another Federal Reserve interest rate hike before the year-end. Moreover, first time claims for the US unemployment benefits unexpectedly declined in the week ended 09 September, pointing to a strengthening labor market. Moreover, the nation’s mortgage applications advanced to its highest level in 10 months in the week ended 08 September. Meanwhile, the nation’s producer prices grew weaker-than-expected in August and the nation’s budget deficit widened less-than-anticipated in the same month. Gains in the greenback were boosted further, after Hurricane Irma was downgraded to a tropical storm, lowering the potential of further damage to the nation’s economy.
The Pound ended the week on a stronger footing against the USD, after the BoE dropped strong hints that it was approaching towards increasing interest rates for the first time in a decade. The BoE, at its latest monetary policy meeting, opted to leave the benchmark interest rate unchanged at a record low of 0.25% and its asset purchase facility at £435.0 billion, with 2 policymakers voting for an immediate rate rise. According to minutes, most officials judged that interest rates are likely to rise at a faster pace in the coming months, if the economy evolves as expected and to combat inflation. Meanwhile, UK’s lawmakers voted in favor of Brexit bill in Parliament.
Earlier in the week, the Pound surged to a 1-year high level, after Britain’s annual inflation posted a larger-than-expected rise in August, matching a 5-year high level recorded in May 2017 and amplifying pressure on the BoE to make moves with interest rates to try and limit soaring inflation. Additionally, the nation’s ILO unemployment rate unexpectedly dipped to a 42-year low in the three months to July, while the number of people employed in the nation advanced by the most since the end of 2015 in the same period. On the contrary, the nation’s average earnings including bonus grew softer-than-expected in the May-July period, placing further squeeze on household incomes as tightening labor market is still failing to spur wage growth.
The Aussie ended the week lower against the USD. In economic news, Australia’s seasonally adjusted unemployment rate remained unchanged at 5.6% in August, meeting market expectations, while the number of people employed in Australia posted the biggest jump since October 2015 in the same month.
EURUSD
During the previous week, the EUR traded 0.76% lower against the USD and ended at 1.1945. In economic news, the Eurozone’s seasonally adjusted industrial production rebounded on a monthly basis in July, meeting market expectations. On the other hand, the region’s seasonally adjusted trade surplus narrowed more-than-expected in July. Separately, Germany’s final consumer price index (CPI) registered a rise of 1.8% on an annual basis in August, confirming the preliminary print. The EUR hit a high of 1.2030 and a low of 1.1838 against the USD in the previous week. The pair is expected to find its first support at 1.1847 and first resistance at 1.2039. The second support is expected at 1.1747 and second resistance at 1.2131. This week, investors will look forward to a speech by the European Central Bank President, Mario Draghi along with the release of ZEW expectations survey as well as the flash manufacturing and services PMIs across the Eurozone. Also, the region’s flash consumer confidence data, slated to release later this week, will garner significant amount of market attention.
GBPUSD
The GBP advanced against the USD last week, closing 2.98% higher at 1.3594, after the BoE struck a hawkish tone at its latest monetary policy meeting. The BoE, as widely expected, left the benchmark interest rate unchanged at a record low of 0.25%. Additionally, the BoE committee member, Gertjan Vlieghe, indicated his support for a near-term interest rate hike. Gains in the Pound were boosted further, after Britain’s CPI climbed more-than-expected by 2.9% on a yearly basis in August. Moreover, the nation’s ILO unemployment rate unexpectedly eased to 4.3% in the May-July period, while the number of people employed in the nation advanced more-than-anticipated in the same period. In contrast, the nation’s average earnings including bonus rose less-than-expected on an annual basis in the three months to July. The pair traded at a high of 1.3616 and a low of 1.3155 during the previous week. The pair is expected to find support at 1.3293, and a fall through could take it to the next support level of 1.2994. The pair is expected to find its first resistance at 1.3754, and a rise through could take it to the next resistance level of 1.3916. Looking ahead, investors will keep a close eye on a speech by the BoE Governor, Mark Carney along with the release of UK’s retail sales, BBA mortgage applications and public sector net borrowing data, all scheduled this week.
USDJPY
The USD advanced against the JPY last week, closing 2.77% higher at 110.83. On the data front, Japan’s machinery orders rebounded above market expectations in July, while the nation’s tertiary industry index rebounded as expected in the same month. Further, the nation’s preliminary machine tool orders rose on a yearly basis in August. Other economic data showed that the nation’s business survey index (BSI) of large manufacturing industries climbed more-than-anticipated on a quarterly basis in 3Q 2017. On the other hand, the nation’s final industrial production slid in July, confirming the flash estimate. The USD hit a high of 111.33 and a low of 108.22 against the JPY in the previous week. Immediate downside, the first support level is seen at 108.93, followed by 107.02, while on the upside, the first resistance level situated in 112.04, followed by 113.24. Ahead in the week, market participants will focus on the Bank of Japan’s (BoJ) monetary policy meeting as well as comments from the BoJ Governor, Haruhiko Kuroda.
USDCHF
The USD rose against the CHF last week, closing 1.71% higher at 0.9603. Last week, the Swiss National Bank (SNB), at its latest monetary policy meeting, maintained its key interest rate unchanged at -0.75%, as widely expected. Additionally, the central bank reiterated its commitment to “intervene in the foreign exchange market as necessary”. On the data front, Switzerland’s producer and import price index rose more-than-expected on a monthly basis in August. During the previous week, the pair traded at a high of 0.9705 and a low of 0.9476. The pair is expected to find support at 0.9481, and a fall through could take it to the next support level of 0.9364. The pair is expected to find its first resistance at 0.9710, and a rise through could take it to the next resistance level of 0.9822. Looking ahead, traders will keep a close watch on Switzerland’s SECO economic forecasts report and the nation’s trade balance data, both set to release this week.
USDCAD
During the previous week, the USD traded 0.32% higher against the CAD and ended at 1.2198. Macroeconomic data indicated that Canada’s seasonally adjusted housing starts surprisingly climbed in August, while existing home sales sharply rebounded on a monthly basis in the same month. Additionally, the nation’s Teranet/National Bank house price index increased in August, while the new house price index rose on a monthly basis in July, in line with market expectations. The USD hit a high of 1.2239 and a low of 1.2083 against the CAD in the previous week. Immediate downside, the first support level is seen at 1.2107, followed by 1.2017, while on the upside, the first resistance level situated in 1.2263, followed by 1.2329. Going forward, Canada’s consumer price index and retail sales data, both due to release this week, would keep investors on their toes.
AUDUSD
During the previous week, the AUD traded 0.72% lower against the USD and ended at 0.8002. Data indicated that Australia’s seasonally adjusted unemployment rate remained unchanged at 5.6% in August, meeting market expectations, while the number of people employed sharply climbed in the same month. Also, the nation’s NAB business conditions index edged up in August, while the Westpac consumer confidence index increased in September. On the other hand, the nation’s NAB business confidence index sharply declined in August, while the nation’s consumer inflation expectations declined in September. The AUD hit a high of 0.8058 and a low of 0.7956 against the USD in the previous week. The pair is expected to find support at 0.7953, and a fall through could take it to the next support level of 0.7903. The pair is expected to find its first resistance at 0.8055, and a rise through could take it to the next resistance level of 0.8107. This week, traders will await comments from the Reserve Bank of Australia (RBA) Governor, Philip Lowe as well as the latest RBA meeting minutes.
Gold
Last week, gold fell 1.96% to close at USD1320.18 per ounce, amid strength in the greenback following robust US inflation report. Last week, the precious metal traded at a high of USD1343.30 per ounce and a low of USD1319.50 per ounce. Gold is expected to its find support at USD1314.23 per ounce, and a fall through could take it to the next support level of USD1304.97 per ounce. The yellow metal is expected to find its first resistance at USD1338.03 per ounce, and a rise through could take it to the next resistance level of USD1352.57 per ounce.
Crude Oil
Last week, crude oil traded 5.08% higher and ended at USD49.89 per barrel, on the back of positive monthly reports from the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC). The IEA upgraded its 2017 global oil demand growth projection by 1.6 million barrels per day (bpd) to 97.7 million bpd. Additionally, the OPEC reported that its oil output declined by 79,000 bpd to 32.76 million bpd in August. However, gains in crude prices were capped, after the Energy Information Administration (EIA) indicated that US crude oil stockpiles rose by 5.9 million barrels to 468.2 million barrels in the week ended 08 September, while the American Petroleum Institute (API) indicated that US crude oil inventories rose by 6.2 million barrels to 468.8 million barrels in the same week. The commodity traded at a high of USD50.50 per barrel and a low of USD47.00 per barrel in the previous week. Crude oil is expected to witness its first support at USD47.72 per barrel and second support at USD45.61 per barrel, while the first resistance is expected at USD51.22 per barrel and second resistance at USD52.61 per barrel.
Traders, that the trades are always in the middle, on the side, on the top, on the bottom of us.☮
