Weekly Forex Wrap Up: August 28, 2015

Aug 28, 1:20 pm

AUDUSD (0.712): The Australian dollar is down -2.65% for the week as the currency briefly dipping to 6-year lows, trading at 0.7128. There was no major economic data from Australia this week but the weakness in the Aussie was set as a result of concerns of a slowdown from China which could inadvertently affect the commodity prices as well as the Australia, China’s trading partner. The few economic releases were weaker with the CB leading index falling -0.2% and the private capital expenditure falling -4% below -2.5% expectations. The only positive data was the quarterly construction work done which increased 1.6%.

  • CB Leading index m/m -0.2% vs. 0.2% previously
  • Construction work done q/q 1.6% vs. -1.5%
  • Private capital expenditure q/q -4.0% vs. -2.5%

EURUSD (1.12): The Single currency fell -1.1% against the Greenback this week after an initial gain early on Monday. EURUSD tested the highs of 1.17 this week but fell back sharply from the highs to trade back near 1.12 region. Economic data was largely overshadowed this week by the fallout from China which saw the Euro surge across the board. However, once markets settled back, the economic data showed a mixed bag this week. While Germany’s Ifo business climate rose 108.3 beating estimates, the quarterly GDP came in unchanged at 0.4%. Flash CPI estimates for Spain showed inflation falling back -0.4%.

  • German final GDP q/q 0.4% vs. 0.4%
  • German Ifo business climate 108.3 vs. 107.6
  • German import prices m/m -0.7% vs. -0.3%
  • M3 Money supply y/y 5.3% vs. 4.9%
  • Private loans y/y 0.9% vs. 0.7%
  • Spain flash CPI y/y -0.4% vs. -0.1%

NZDUSD (0.644): The Kiwi was also under pressure this week with the currency losing -3.5% to the Greenback. Economic data was largely flat with inflation expectations at 1.9% for the quarter, posting no change from the previous quarter. NZDUSD briefly dipped to the lows of 0.606 before retracing back sharply earlier this week to trade at 0.644 at the time of writing.

  • Inflation expectations 1.9% vs. 1.9% previously
  • Trade balance -649Mn vs. -665Mn

USDJPY (120.8): The Yen is set to close the week on a strong note with the USDJPY down -1.1% at the time of writing. The risk aversion sentiment saw a flight to safe haven assets leading to the Yen gaining ground strongly. USDJPY tested the lows of 116.5 this week before retracing back towards 121.25. Data from Japan this week saw the house hold spending easing to -0.2% falling below the median consensus forecasts of 0.9%. The retail sales data for the year was up 1.6% above the 1.1% forecasts.

  • SPPI y/y 0.6% vs. 0.4%
  • Household spending y/y -0.2% vs. 0.9%
  • Tokyo Core CPI y/y -0.1% vs. -0.1%
  • National Core CPI y/y 0.0% vs. -0.2%
  • Unemployment rate 3.3% vs. 3.4%
  • Retail sales y/y 1.6% vs. 1.1%

USDCAD (1.32): USDCAD has been largely flat this week with the early part seeing the Canadian dollar decline against the Greenback only to trim its losses led by volatility in Crude oil prices. For the week, USDCAD was up 0.9% after testing the lows of 1.314. There were no major market moving events from Canada this week leaving most of the trading off to the general market sentiment.

  • Corporate profits q/q 12.9% vs. -6% previously
  • RMPI m/m -5.9% vs. -4%
  • IPPI m/m0.7% vs. 0.1%

GBPUSD (1.56): The GBPUSD was on track to post sharp losses this week as the Cable was down -2.23%. While the British Pound stayed muted to the market turmoil earlier in the week the currency collapsed since Thursday off the highs of 1.58 to trade at 1.53 at the time of writing. Economic data from the UK this saw the quarterly GDP unchanged at 0.7% but a pickup in the preliminary business investment which was up 2.9% beating estimates of 1.6%.

  • BBA Mortgage approvals 46k vs. 46k
  • CBI realized sales 24 vs. 19
  • Nationwide HPI m/m 0.3% vs. 0.4%
  • Gfk consumer confidence 7 vs. 4
  • Second estimate GDP q/q 0.7% vs. 0.7%
  • Prelim business investment q/q 2.9% vs. 1.6%
  • Index of services 3m/3m 0.7% vs. 0.7%

USDCHF (0.96): The USDCHF managed to ease back from the lows of 0.925 this week to post gains of 1.39% trading after hitting weekly highs of 0.966. The Swiss Franc had initially surged on the risk aversion sentiment which gained alongside a rally in the Yen. The only main economic event from Switzerland this week was the quarterly GDP which came out at a soft 0.2%.

  • UBS consumption indicator 1/64 vs. 1.61 previously
  • GDP q/q 0.2% vs. -0.1%

US Dollar Index (95.8): The Dollar Index is poised to close the week on a high note gaining 0.8%. The Greenback came under strong selling pressure early on Monday after declining strong last week but managed to stabilize early on to rise steadily. Data from the US this week saw the quarterly GDP being revised higher to 3.7%, posting a stellar GDP print which brought back some optimism into the currency.  The Core PCE price index came in unchanged at 0.1% for the month and remains stuck at 1.8% for the year.

  • HPI m/m 0.2% vs. 0.4%
  • S&P/CS Composite-20 HPI y/y 5% vs. 5.1%
  • Flash services PMI 55.2 vs. 54.1
  • CB Consumer confidence 101.5 vs. 92.8
  • New home sales 507k vs. 512k
  • Core durable goods orders m/m 0.6% vs. 0.3%; durable goods m/m 2.0% vs. -0.4%
  • Prelim GDP q/q 3.7% vs. 3.2%
  • Prelim GDP price index q/q 2.1% vs. 2%
  • Pending home sales 0.5% vs. 1.3%
  • Core PCE Price index m/m 0.1% vs. 0.1%
  • Personal Income m/m 0.3% vs. 0.4%
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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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