Weekly Forex Wrap Up: 16/10, 2015

Oct 16, 12:58 pm
23rd December

AUDUSD (0.72): The Australian dollar touched a new 7-week high this week; as prices were trading above 0.735 before the currency gave back some of its gains. The Australian dollar is enjoying a strong rally after the unemployment data released this week showed the unemployment rate unchanged at 6.2% while the number of employed declined -5.1k. The AUD shrugged off the data and continued to rally but a short term top looks to have formed after prices posted a lower high.

  • NAB business confidence 5 vs. 1 previously
  • Westpac Consumer sentiment 4.2% vs. -5.6%
  • MI Inflation expectations 3.5% vs. 3.2%
  • Employment change -5.1k vs. 7.2k
  • Unemployment rate 6.2% vs. 6.2%
  • New Motor vehicle sales m/m 5.5% vs. -1.7% previously

EURUSD (1.13): EURUSD failed to capitalize on its gains this week as the Single currency briefly tested the highs of 1.148 before retreating lower on ECB official’s comments highlighting concerns of disinflation in the Eurozone. Latest inflation figures put the Eurozone headline CPI at -0.1% and the core CPI at 0.9%, unchanged from previous month’s CPI figures. Data from other Eurozone countries including Germany and France CPI’s which were negative as well. The ECB is due to meet next week and the markets are cautious on the possible tone in the ECB’s language considering the recent appreciation of the single currency.

  • German Final CPI m/m -0.2% vs. -0.2%
  • German WPI m/m -0.6% vs. -0.3%
  • German ZEW economic sentiment 1.9 vs. 6.8
  • ZEW Economic sentiment 30.1 vs. 30.1
  • France CPI m/m -0.4% vs. -0.4%
  • Industrial production m/m -0.% vs. -0.4%
  • Eurozone final CPI y/y -0.1% vs. -0.1%; Core CPI y/y 0.9% vs. 0.9%

NZDUSD (0.67): The NZDUSD is at a 15 week high trading near 0.689 this week. The Kiwi maintained its strong rally as Fonterra was upgraded in its ratings outlook from negative to stable on account of rising dairy prices. This week, RBNZ Governor Wheeler in his speech highlighted that the Central Bank would stand by for another rate cut. However, a 25bps rate cut seems to have been factored in already in the NZDUSD. A pullback is however expected in the near term towards 0.6635 as the initial support. The quarterly CPI data from New Zealand was relatively better than expected, rising 0.3% above estimates of 0.2%.

  • RBNZ Governor Wheeler speech
  • Business Manufacturing index 55.4 vs. 55.1
  • Quarterly CPI 0.3% vs. 0.2%

USDJPY (119.1): USDJPY posted strong declines this week with prices briefly falling to a 6-week low at 118.4 level largely due to a weaker US economic data which kept the US Dollar subdued. The BoJ released its monetary policy meeting minutes which did not excite the markets a lot. Japan’s consumer confidence was soft at 40.6 while the preliminary machine tools orders fell -19.1%, from -16.5% previously. The producer price index was also weak, declining -3.9%.

  • BoJ releases monetary policy meeting minutes
  • Bank lending y/y 2.6% vs. 2.7% previously
  • Consumer confidence 40.6 vs. 41.6
  • Prelim machine tool orders y/y -19.1% vs. -16.5% previously
  • PPI y/y -3.9% vs. -3.9%
  • Revised industrial production m/m -1.2% vs. -0.5%
  • Tertiary industry activity m/m 0.1% vs. 0.0%

USDCAD (1.29): The Canadian dollar was choppy this week as USDCAD briefly posted a weekly high above 1.305 before easing back to decline to the lows of 1.285. USDCAD remains poised for a third weekly loss. There were no major events from Canada this week, besides a speech by BoC Governor Poloz. Manufacturing sales for the month fell less than expected by -0.2%.

  • BoC Gov. Poloz speech
  • Manufacturing sales m/m -0.2% vs. -0.8%

GBPUSD (1.54): The British Pound touched a two week high at 1.55 this week as economic data was largely supportive of the British Pound. Consumer inflation fell -0.1% and continues to plague the BoE on its plans for a rate hike, while on the other hand, UK unemployment data continued to post strong numbers. Unemployment rate in the UK fell to 5.4% from 5.5% in a surprise while the average earnings index increased to 3.0%, albeit falling short of median estimates of 3.1%. BoE members remain divided on the prospects of a rate hike with various members taking stand on both the hawkish and the dovish side of the debate.

  • CB leading index 0.2% vs. -0.2% previously
  • BRC retail sales monitor y/y 2.6% vs. -1.0% previously
  • CPI y/y -0.1% vs. 0.0%; Core CPI y/y 1.0% vs. 1.1%
  • Average earnings index 3.0% vs. 3.1%
  • Unemployment change 5.4% vs. 5.5%

USDCHF (0.95): USDCHF posted steep declines this week with the Greenback down -0.93% at the time of writing. There were no major economic releases from Switzerland this week with the exception of producer price index which declined -0.1% as expected. The Swiss economic expectations increased to 18.3 against estimates of 9.7. From a technical perspective, failure to rally above 0.955 could see USDCHF look to decline lower towards 0.9319 in the medium term.

  • PPI m/m -0.1% vs. -0.1%
  • ZEW Economic expectations 18.3 vs. 9.7

US Dollar Index (94.64): The US Dollar Index is down -0.29% at the time of writing as the index hit a 5-week low at 93.95 before recovering off the lows. Economic data from the US remained mixed with retail sales disappointing. The bright spot in the US economy was the weekly jobless claims which fell to decade lows. Inflation was mixed with the headline CPI falling -0.2% while the core CPI increased 0.2%. The weak economic data has put pressure on the US Dollar Index on fading speculation of a rate hike this year.

  • Core retail sales m/m -0.3% vs. -0.1%; retail sales m/m 0.1% vs. 0.2%
  • PPI m/m -0.5% vs. -0.2%
  • CPI m/m -0.2% vs. -0.2%; Core CPI m/m 0.2% vs. 0.1%
  • Weekly unemployment claims 255k vs. 269k
  • Empire state manufacturing index -11.4 vs. -7.3
  • Philly Fed manufacturing index -4.5 vs. -1.8
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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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