Last week, the forex market was dictated by lingering concerns over the implementation of a landmark US tax bill and a string of bullish economic releases from the UK.
The greenback declined against a basket of major currencies, after the Senate Republicans forged a plan that would push the implementation of long-awaited US corporate tax cuts to 2019. Additionally, the Federal Reserve (Fed) Bank of New York confirmed that William Dudley will step down as its President in the middle of next year, around six months earlier than scheduled. On the economic front, the US flash Michigan consumer sentiment index unexpectedly dropped from a 13-year high in November. Moreover, first time claims for the US unemployment benefits climbed more-than-anticipated in the week ended 04 November, whereas JOLTs job openings unexpectedly rose in September. Moreover, the nation’s consumer credit rose in September.
The Pound ended the week on a stronger footing against the USD, after a string of upbeat economic reports from the UK painted a healthy picture of the nation’s economy. Data showed that monthly industrial production in Britain topped expectations in September, advancing at its quickest pace since December 2016, while manufacturing production posted its largest increase in 9 months in the same month, suggesting that the nation’s industrial sector will likely continue its strong performance in the fourth quarter. However, the nation’s construction output sharply retreated in September. Also, NIESR estimated that UK’s economy expanded 0.5% in the three months to October. Moreover, the nation’s total trade deficit surprisingly narrowed in September.
Meanwhile, political turmoil engulfing the UK Government intensified last week, after its International Development Secretary, Priti Patel resigned following controversy over her unauthorized meetings. Moreover, sixth round of Brexit negotiations produced little progress.
The Euro ended the week higher against the USD. Last week, the European Central Bank (ECB) President, Mario Draghi, stated that there is hardly any evidence that the central bank’s ultra-low monetary policy is undermining profitability of banks and added that various measures undertaken by the European banks has strengthened the EU banking sector. Separately, the ECB’s latest economic bulletin showed that the solid and broad-based economic recovery in the single currency region is likely to continue unabated into the second half of this year. Meanwhile, the European Commission predicted that economic growth in the Eurozone would accelerate at its fastest pace in a decade this year.
EURUSD
The EUR strengthened against the USD last week, closing 0.49% higher at 1.1665, after the Eurozone’s retail sales grew above market expectations on a monthly basis in September, while the region’s Sentix investor confidence index climbed more-than-anticipated in November. Meanwhile, the region’s final Markit services purchasing managers’ index (PMI) slid less than previously estimated in October. Separately, Germany’s seasonally adjusted factory orders showed an unexpected rise on a monthly basis in September, while seasonally adjusted trade surplus widened more-than-expected in the same month. However, the nation’s final services PMI was downwardly revised in October, while industrial production fell more-than-anticipated in September. Moreover, the nation’s construction PMI slightly dropped in October. The EUR hit a high of 1.1678 and a low of 1.1554 against the USD in the previous week. The pair is expected to find support at 1.1587, and a fall through could take it to the next support level of 1.1508. The pair is expected to find its first resistance at 1.1711, and a rise through could take it to the next resistance level of 1.1756. Going ahead, market participants would focus on a speech by the ECB President, Mario Draghi, scheduled early this week. Further, the release of flash 3Q gross domestic product (GDP) numbers, final inflation figures as well as the ZEW economic sentiment index across the Eurozone, will garner significant amount of investor attention.
GBPUSD
During the previous week, the GBP traded 0.91% higher against the USD and ended at 1.3196, on the back of robust economic releases in Britain. Data revealed that UK’s monthly industrial as well as manufacturing production climbed above market consensus in September. On the contrary, the nation’s construction output retreated more-than-estimated on a monthly basis in September. Another set of data revealed that the nation’s total trade deficit surprisingly narrowed in September. Further, leading think tanker, NIESR estimated that UK’s GDP rose 0.5% in the three months to October. Also, the nation’s Halifax house price index rose above market expectations in October. Meanwhile, the nation’s RICS house price balance rose less-than-expected in October, whereas the BRC like-for-like sales surprisingly fell in the same month. The pair traded at a high of 1.3230 and a low of 1.3059 during the previous week. Immediate downside, the first support level is seen at 1.3094, followed by 1.2991, while on the upside, the first resistance level situated in 1.3265, followed by 1.3333. This week, investors would closely monitor Britain’s crucial inflation and retail sales numbers coupled with the ILO unemployment rate data. Moreover, a speech by the Bank of England (BoE) Governor, Mark Carney, would also attract market attention.
USDJPY
During the previous week, the USD traded 0.47% lower against the JPY and ended at 113.53. Macroeconomic data showed that Japan’s Nikkei services PMI jumped in October. Further, the nation’s Eco-Watchers Survey for the current situation unexpectedly rose in October, while the Survey for the future outlook climbed above market consensus in the same month. Additionally, the nation’s trade surplus (BOP basis) widened more-than-anticipated in September. On the contrary, the nation’s tertiary industry index sharply dropped in September, while machinery orders fell more-than-expected in the same month. Meanwhile, minutes of the Bank of Japan’s (BoJ) September policy meeting revealed that policymakers remained confident that Japan’s economy continued to proceed at an acceptable pace. Separately, according to the BoJ’s summary of opinions report of its October meeting, board members debated calls from one of its board members to target the longer end of the yield curve. Also, officials showed reluctance to loosen monetary conditions further, despite sluggish inflation. During the previous week, the pair traded at a high of 114.73 and a low of 113.09. The pair is expected to find support at 112.84, and a fall through could take it to the next support level of 112.14. The pair is expected to find its first resistance at 114.48, and a rise through could take it to the next resistance level of 115.42. Looking forward, investors would closely monitor Japan’s flash 3Q GDP numbers, set to release this week, to gauge strength in the Japanese economy.
USDCHF
The USD fell against the CHF last week, closing 0.46% lower at 0.9961. Macroeconomic data showed that the consumer price index (CPI) in Switzerland rose 0.7% on a yearly basis in October, meeting analysts’ expectations. Meanwhile, the nation’s seasonally adjusted unemployment rate remained steady at 3.1% in October, in line with market expectations. The pair traded at a high of 1.0029 and a low of 0.9922 during the previous week. The pair is expected to find support at 0.9910, and a fall through could take it to the next support level of 0.9863. The pair is expected to find its first resistance at 1.0017, and a rise through could take it to the next resistance level of 1.0077. Moving ahead, investors will eye Switzerland’s producer and import price index, set to release this week.
USDCAD
The USD fell against the CAD last week, closing 0.64% lower at 1.2682. The Canadian Dollar gained ground against the USD, following a series of upbeat Canadian economic reports. Data showed that Canada’s seasonally adjusted housing starts registered an unexpected rise in October, while the nation’s building permits rose for the first time in three months in September. Also, the nation’s seasonally adjusted Ivey PMI rose more-than-expected in October, while the new house price index rose as expected in September. Separately, the Bank of Canada (BoC) Governor, Stephen Poloz, expressed confidence that inflation will return to the central bank’s 2.0% target, as fundamental factors are continuing to support price growth. During the previous week, the pair traded at a high of 1.2820 and a low of 1.2666. The pair is expected to find its first support at 1.2623 and first resistance at 1.2777. The second support is expected at 1.2567 and second resistance at 1.2875. Ahead in the week, investors would direct their attention to Canada’s crucial inflation figures.
AUDUSD
Last week, the AUD traded 0.14% higher against the USD and closed at 0.7661. Last week, the Reserve Bank of Australia (RBA), at its latest policy meeting, decided to keep its cash rate steady at 1.50%, citing weakness in inflation and slowdown in the housing market. The central bank kept its forecast for the nation’s economic growth largely unchanged, while expecting a gradual rise in consumer prices in the coming months. However, the central bank remained concerned about the outlook for household spending. Separately, the RBA, in its monetary policy statement, slightly lowered Australia’s economic growth outlook, expecting the Australian economy to post a growth of 2.75% in mid-2018, from an earlier projection of 3.0%. Further, inflation is estimated to rise to 2.0% by June 2018 and 2.25% by the end of 2019. On the macro front, Australia’s AiG performance of construction index eased in October, while seasonally adjusted home loan approvals unexpectedly declined on a monthly basis in September. The pair traded at a high of 0.7701 and a low of 0.7627 during the previous week. Immediate downside, the first support level is seen at 0.7626, followed by 0.7589, while on the upside, the first resistance level situated in 0.7700, followed by 0.7737. Going ahead, traders would focus on Australia’s unemployment rate, NAB business confidence and Westpac consumer confidence data, all scheduled to release this week.
Gold
Gold traded 0.41% higher during the previous week, closing at USD1275.07 per ounce, as disappointment that a landmark US tax overhaul may be delayed until 2019 led to a broad decline in the US Dollar. Last week, the precious metal traded at a high of USD1289.50 per ounce and a low of USD1266.40 per ounce. The precious metal is expected to find its first support at USD1265.10 per ounce and first resistance at USD1288.20 per ounce. The second support is expected at USD1254.20 per ounce and second resistance at USD1300.40 per ounce.
Crude Oil
Crude oil traded 1.98% higher in the previous week, closing at USD56.74 per barrel, after recent political developments in Saudi Arabia raised concerns over the nation’s crude supply. However, gains in crude oil prices were limited, after the Energy Information Administration (EIA) showed that US crude oil stockpiles unexpectedly rose 2.2 million barrels to 457.1 million barrels in the week ended 03 November, while the American Petroleum Institute (API) indicated that US crude oil inventories declined by 1.6 million barrels in the same week. Meanwhile, the OPEC, in its 2017 World Oil Outlook, raised its projection for US shale oil production to 5.1 million barrels per day (bpd) for 2017 from a previous estimate of 4.1 million bpd. Moreover, the EIA projected that US crude oil production would likely increase by 720,000 bpd to 9.95 million bpd in 2018. The commodity hit a high of USD57.92 per barrel and a low of USD55.66 per barrel in the previous week. Crude oil is expected to its find support at USD55.69 per barrel, and a fall through could take it to the next support level of USD54.55 per barrel. The commodity is expected to find its first resistance at USD57.95 per barrel, and a rise through could take it to the next resistance level of USD59.07 per barrel.
Traders , here are some excerpts from my bible, candlsticks analysis secret, happy trading.
"X - O Pára-quedista tem os olhos bem abertos e sabe utilizar ao máximo todos os recursos. Ágil como uma gazela, duro como aço, quando necessário, embora não o sendo, é capaz de agir como pirata, ou terrorista. Nada há que lhe seja impossível."
