The forex market was dictated by the monetary policy meetings of the US Federal Reserve (Fed), Bank of England (BoE) and Bank of Japan (BoJ) and the appointment of Jerome Powell as the next Fed chair.
The greenback gained ground against its major counterparts last week, after the Fed left its key interest rates unchanged but signaled that a rate hike in December remains on track. Moreover, Jerome Powell was appointed as the next Fed chair, who is considered to be as dovish as the current Fed chair, Janet Yellen. Meanwhile, the Republicans unveiled their tax cut proposal in the House of Representatives, intensifying concerns that the plan would raise huge federal deficits.
Macroeconomic data indicated that the US non-farm payrolls rose less-than-expected in October, while the nation’s unemployment rate fell to a record low of 17 years in the same month, adding to signs of robust labor market in the world’s largest economy. On the contrary, the US manufacturing sector cooled more-than-expected in October, whereas the nation’s trade deficit widened in September.
The Euro ended the week flat against the USD. Data showed that consumer prices in the Eurozone rose at a weaker-than-expected pace in October, suggesting that the European Central Bank (ECB) was right to adopt a cautious approach to interest rate hike and delaying of its bond purchase programme at their October policy meeting. On the flipside, the Eurozone economy rose at a faster-than-expected pace in the third quarter at an annual rate of 2.50%. Moreover, the region’s jobless rate fell to a 9-year low in September, highlighting that the economy is adding jobs at a healthy pace. Additionally, the region’s manufacturing purchasing managers’ index (PMI) rose at its quickest pace since 2011 in October, suggesting that manufacturing sector will remain a key pillar of growth. Separately, consumer prices in Germany rose at a weaker-than-expected pace in October, whereas the nation’s unemployment rate remained steady as expected in October.
The Pound ended the week on a weaker footing against the USD, after the BoE raised its benchmark interest rates for the first time in a decade however, hinted that there will be only two more rate hikes till 2020, as uncertainties associated with Brexit are weighing on domestic activity.
The Yen lost ground against the USD last week, after the BoJ kept its key interest rates steady at -0.10% and pledged to carry on buying assets at a pace of ¥80 trillion a year. However, the central bank slightly trimmed its inflation forecast for the current year, and expects the inflation to reach 2.0% by 2020.
EURUSD
Last week, the EUR traded flat against the USD and closed at 1.1608.
Data indicated that the Eurozone’s gross domestic product (GDP) advanced more-than-expected in the third quarter, whereas the region’s consumer price index (CPI) grew at a slower-than-anticipated pace in October. Moreover, the region’s unemployment rate surprisingly declined in September.
On the macro front, Eurozone’s industrial confidence rose above expectations in October, while the region’s consumer confidence remained steady in the same month.
Separately, Germany’s CPI grew less-than expected in October, whereas the nation’s unemployment rate remained steady as anticipated in the same month. Meanwhile, the nation’s manufacturing sector surprisingly improved in October, while the nation’s retail sales advanced in September.
The pair traded at a high of 1.1690 and a low of 1.1598 during the previous week. Immediate downside, the first support level is seen at 1.1574, followed by 1.1540, while on the upside, the first resistance level situated in 1.1666, followed by 1.1724.
This week, traders will closely monitor the services and retail PMI across the Eurozone. Additionally, the Eurozone’s producer’s price index (PPI) and investor confidence along with Germany’s industrial production and trade balance data, would be keenly watched by market participants.
GBPUSD
The GBP traded 0.39% lower against the USD last week, with the pair closing at 1.3077, after data revealed that the BoE hiked its interest rate for the first time in a decade, but signaled that the future interest rate hikes will be gradual.
In economic news, Britain’s mortgage approvals fell more than expected in September, while the nation’s consumer credit contracted in the same month. Moreover, Britain’s manufacturing sector surprisingly advanced in October. On the contrary, the nation’s consumer confidence deteriorated in October.
The pair traded at a high of 1.3321 and a low of 1.3040 during the previous week. The pair is expected to find support at 1.2971, and a fall through could take it to the next support level of 1.2865. The pair is expected to find its first resistance at 1.3252, and a rise through could take it to the next resistance level of 1.3427.
Going ahead, investors would focus on Britain’s industrial production, manufacturing production, along with the nation’s trade balance data, scheduled this week.
USDJPY
During the previous week, the USD traded 0.35% higher against the JPY and ended at 114.07, after the BoJ left its key interest rates steady as expected.
On the data front, Japan’s manufacturing PMI surprisingly rose in October, whereas the nation’s industrial production dropped less-than-expected on a monthly basis in September. Further, the nation’s unemployment rate remained steady as expected in September. Meanwhile, the nation’s consumer confidence unexpectedly advanced in October.
During the previous week, the pair traded at a high of 114.43 and a low of 112.96. The pair is expected to witness its first support at 113.20 and second support at 112.35, while the first resistance is expected at 114.67 and second resistance at 115.29.
Going forward, BoJ monetary policy meeting minutes along with Japan’s services PMI, trade balance, machine orders and eco watchers survey, all slated to release this week, would be on investor’s radar.
USDCHF
The USD traded 0.26% higher against the CHF last week, with the pair closing at 1.0007.
Data revealed that, Switzerland’s PMI surprisingly rose in October, whereas the nation’s real retail sales unexpectedly cooled in September. On the contrary, Switzerland’s KOF leading indicator rose more-than-expected in October.
The USD hit a high of 1.0038 and a low of 0.9939 against the CHF in the previous week. The pair is expected to find its first support at 0.9951 and first resistance at 1.0050. The second support is expected at 0.9896 and second resistance at 1.0094.
Ahead in the week, investors would keep a close watch on Switzerland’s CPI and unemployment rate data, slated to release this week.
USDCAD
During the previous week, the USD traded 0.34% lower against the CAD and ended at 1.2764.
In economic news, Canada’s GDP surprisingly narrowed in August. Further, the nation’s unemployment rate unexpectedly rose in October. Additionally, the nation’s manufacturing sector slightly eased in October, while international merchandise trade remained unchanged in September.
During the previous week, the pair traded at a high of 1.2915 and a low of 1.2715. Immediate downside, the first support level is seen at 1.2681, followed by 1.2598, while on the upside, the first resistance level situated in 1.2881, followed by 1.2998.
Moving ahead, speech and press conference by the Bank of Canada (BoC) Governor Stephen Poloz, along with the release of Canada’s PMI data, would gather a lot of market attention.
AUDUSD
During the previous week, the AUD traded 0.35% lower against the USD and ended at 0.7650.
On the macro front, Australia’s trade surplus widened more-than-anticipated in September. In contrast, the nation’s private sector credit growth surprisingly dropped in September. Moreover, the nation’s retail sales remained unchanged in September.
The pair traded at a high of 0.7730 and a low of 0.7639 during the previous week. The pair is expected to find support at 0.7616, and a fall through could take it to the next support level of 0.7582. The pair is expected to find its first resistance at 0.7707, and a rise through could take it to the next resistance level of 0.7764.
Looking ahead, market participants await the release of Reserve Bank of Australia’s (RBA) statement on monetary policy along with inflation and consumer confidence data, scheduled this week.
Gold
Last week, gold weakened 0.27% to close at USD1269.91 per ounce, amid strengthening of the US dollar, after the US Fed left the door open for a third interest rate hike in December.
The yellow metal hit a high of USD1285.10 per ounce and a low of USD1265.90 per ounce in the previous week. Gold is expected to its find support at USD1262.37 per ounce, and a fall through could take it to the next support level of USD1254.53 per ounce. The yellow metal is expected to find its first resistance at USD1281.57 per ounce, and a rise through could take it to the next resistance level of USD1292.93 per ounce.
Crude Oil
Last week, crude oil traded 3.23% higher and ended at USD55.64 per barrel, after the OPEC and other leading oil producers including Russia agreed to cut their combined oil production by almost 1.8 million barrels per day until the end of March 2018.
Oil prices gained further support, after the Energy Information Administration (EIA) showed that US crude oil stocks fell by 2.4 million barrels to 454.9 million barrels in the week ended 27 October 2017, while the American Petroleum Institute (API) indicated that US oil inventories dropped by 5.1 million barrels to 456.8 million barrels in the week ended 27 October 2017.
The commodity hit a high of USD55.76 per barrel and a low of USD53.75 per barrel in the previous week. The commodity is expected to find its first support at USD54.38 per barrel and first resistance at USD56.39 per barrel. The second support is expected at USD53.06 per barrel and second resistance at USD57.08 per barrel.
Happy trading Traders.
