Forex Weekly Summary: April 13 – 17

Apr 13-17, 2015 Forex weekly summary features the following market events:

Yen, continues to trade mix on lack of policy

The Japanese Yen continued to march on with its mixed trading against its peers. With not much of market moving data and with the BoJ not easing its policy, the Yen was susceptible this mostly due to comments from various BoJ officials, which saw the currency trade a bit choppy with no clear directional bias. It is widely anticipated that the BoJ could ease its monetary policy around end of April or June, and in the run to this, the Yen could most possibly continue its sideways price action. Against the weaker Euro, the Yen was considerably stronger but gave up its gains against the Aussie and the British pound intra-week.

• Core machinery orders m/m -0.4% vs. -2.6%
• M2 money supply y/y 3.6% vs. 3.6%
• PPI y/y 0.7% vs. 0.4%
• Revised industrial production m/m -3.1% vs. -3.3%
• Consumer confidence 41.7 vs. 41.4

Australian Dollar, bullish on jobs report

The Australian dollar got an unexpected boost as jobs report showed a better than expected data along with an improvement in the unemployment rate. The positive jobs numbers now seem to take a bit of pressure off the RBA in the calls for a rate cut in May. The Aussie rallied erasing most of the losses from the previous weeks and continued its momentum after the RBA did not cut rates in April.

• NAB business confidence 3 vs. 0 previously
• Westpac consumer sentiment -3.2% vs. -1.2% previously
• MI inflation expectations 3.4% vs. 3.2% previously
• Employment change 37.7k vs. 14.9k
• Unemployment rate 6.1% vs. 6.3%
• New motor vehicle sales m/m 0.5% vs. 2.7% previously

Neutral tone of ECB sets the Euro rallying

The Euro was briefly flirting with the highs of 1.08 in early Friday morning as the week saw an overall neutral – positive tone from both the economic data as well as the ECB’s meeting this week. The ECB event turned out to be a non-event with Draghi being optimistic and confident about the QE program. With no subtle hints nor any reference to see the need for a ‘weaker Euro’ which was anyways trading at historic lows, the event saw the Euro pick up its bullish momentum ahead of Friday’s US CPI data release. Economic data from Eurozone remained mixed but overall was seen as positive for the single currency.

• Italian industrial production m/m 0.6% vs. 0.5%
• German WPI m/m 1% vs. 0.2%
• Industrial production m/m 1.1% vs. 0.3%
• German Final CPI m/m 0.5%, as expected
• French Final CPI m/m 0.7% as expected
• ECB interest rates, unchanged
• Eurozone final CPI -0.1% vs. -0.1%; Final core CPI y/y 0.6% vs. 0.6%

British Pound remains volatile

The British Pound continued to remain volatile with both the election uncertainty as well as conflicting economic data. While earlier in the weak, the British Pound was weaker on CPI data, the Pound managed to regain some of its losses primarily against a weaker Greenback and was boosted more recently by an overall positive jobs numbers. Although the unemployment rate remained unchanged and a slight dip in the claimant count change as well as a weaker than expected average earnings index, the Pound managed to hold its ground against the Greenback and the Yen in early Friday trading session.

• BRC retail sales monitor y/y 3.2% vs. 0.2%
• CPI y/y 0% as expected; Core CPI 1% vs. 1.2%
• PPI Input m/m 0.3% vs. -0.5%
• CB leading index m/m 0.6% vs. 0.2%
• RICS house price balance 21% vs. 15%
• Average earnings index 1.7% vs. 1.8%
• Claimant count change -20.7k vs. -29.1k
• Unemployment rate 5.6% vs. 5.6%

Canadian Dollar Upbeat on BoC Inaction

After last week’s labor market data beat estimates, the Canadian Dollar kept up its bullish momentum this week as the BoC left interest rates unchanged and the slightly hawkish tone from BoC Governor has put to rest any further speculation of any rate cuts in the near term. With Oil prices also showing signs of a rebound, the Canadian dollar continued to gain against its peers, including the Greenback and the British Pound. Latest inflation data managed to beat estimates, which is likely to turn positive for the Canadian dollar in the near term

• Manufacturing sales m/m -1.7% vs. 0.2%
• BoC interest rate, unchanged, 0.75%
• Core CPI m/m 0.6% vs. 0.3%
• Core retail sales m/m 2% vs. 0.7%
• CPI m/m 0.7% vs. 0.5%
• Retail sales m/m 1.7% vs. 0.5%

US Dollar – Slips but continues to hold

The US Dollar was visibly weaker this week as the pair failed to keep up its gains near the 100 level and investors saw a reason to cut USD long positions as economic data from the US continues to disappoint, marking a slowdown in the Q1 GDP for the US economy. Retail sales, PPI, housing data all disappointed against estimates, but there was a subtle pick-up in activity in the retail sales and CPI data. Investors are starting to get convinced that the US rate hike is more probable in September than June.

• Core retail sales m/m 0.4% vs. 0.7%
• PPI m/m 0.2% vs. 0.3%
• Retail sales m/m 0.9% vs. 1.1%
• Core PPI m/m 0.2% as expected
• NFIB small business index 95.2 vs. 98.4
• Business inventories m/m 0.3% vs. 0.2%
• Empire state manufacturing index -1.2 vs. 7.2
• Industrial production m/m -0.6% vs. -0.3%
• Philly Fed manufacturing index 7.5 vs. 6.5
• CPI m/m 0.2% vs. 0.2%; Core CPI m/m 0.2% vs. 0.2%