March 30 to Apr 3, 2015 Forex weekly summary features the following market events:
Aussie weakens on RBA rate cut bets next week
The Australian dollar took center stage as mid week the currency collapsed on weaker Iron Ore prices as markets start to position itself ahead of next week’s RBA meeting. With expectations riding high for a 25bps rate cut, the Aussie declined across the board showing no respite. Economic data was relatively better than expected and the declines seem to be somewhat overreaction from the markets..
- HIA new home sales 1.1% vs. 1.8% previously
- Private sector credit m/m 0.5%, unchanged
- Building approvals m/m -3.2% vs. -3.8%
- Commodity prices y/y -19.7% vs. -21.6%
- MI Inflation gauge 0.4% vs. 0% previously
- Trade balance -1.26bn vs. -1.28bn
UK elections weighs on the Pound
The British Sterling was practically unchanged this week especially against the Greenback. While the Pound managed to rally against weaker currencies such as the Australian dollar, the currency was trading mixed against other peers such as the Yen and the Canadian dollar. With the general elections fast approaching, the GBPUSD currency pair looks more imminent for a breakout after its third week of trading sideways for the most part. Economic data from the UK included an upward revised GDP and a better than expected business investment, but the currency clearly shrugged off the news with a clear focus on the election outcome in May.
- M4 money supply m/m -0.2% vs. -0.2%
- Gfk consumer confidence 4 vs. 1
- Current account -25.3bn vs. -21.2bn
- Final GDP q/q 0.6% vs. 0.5%
- Index of services 3m/3m 0.8% vs. 0.7%
- Revised business investment q/q -0.9% vs. -1.4%
Yen posts another week of gains
The Japanese Yen continued to remain on a strong footing across the board while trading sideways against the US Dollar. Economic data from Japan remained mixed with comments from various BoJ officials talking about inflation and with the falling Oil prices being the main reason for the slump. The BoJ will be meeting next week as well with the markets divided whether the BoJ will surprise the markets with another stimulus package or if it will put policy on hold.
- Prelim industrial production m/m -3.4% vs. -1.8%
- Housing starts y/y -3.1% vs. -7%
- Tankan manufacturing index 12 vs. 14
- Tankan non-manufacturing index 19 vs. 17
- Final manufacturing PMI 50.3 vs. 50.4
Euro rises on short covering and better economic data
The Single Currency managed to rise against the Greenback for most part of the week while strengthening strongly against weaker currencies including the Australia and Canadian dollars and the British Pound. Economic data, although largely mixed was showing signs of revival in growth. Inflation data was also showing signs of stabilizing although the core yearly CPI remained unchanged at 0.6%. Greece however continues to be the dominant theme with the debt negotiations still ongoing with no clear outcome as of yet.
- German prelim CPI m/m 0.5% vs. 0.4%
- Spain flash CPI y/y -0.7% vs. -1%
- German retail sales -0.5% vs. -0.9%
- Eurozone CPI flash estimates -0.1% vs. -0.3%; Core CPI y/y 0.6% vs. 0.6%
Greenback slows down its bullish momentum
The US Dollar Index saw a full week of trading sideways, showing signs that the bullish momentum was starting to slow down. The US Dollar traded mixed across the board, weakening against the Swiss Franc and partly to the Euro and the Canadian dollar, but managed to hold its ground against the British Pound. The Core PCE, released earlier this week showed signs of a rebound, rising above expectations of 1.3% to 1.4%. However economic data was mostly weak which has started the markets to question a June rate hike. The main event of the week was the NFP data, which was released earlier today.
- Core PCE Price Index y/y 1.4% vs. 1.3%
- Pending home sales m/m 3.1% vs. 0.4%
- Chicago PMI 46.3 vs. 52.4
- Consumer confidence 101.3 vs. 96.6
- ADP employment change 189k vs. 225k
- PMI manufacturing 55.7 vs. 55.3
- ISM manufacturing 51.5 vs. 52.5
- Factory orders m/m 0.2% vs. 0%
- Nonfarm payroll change 126k k vs. 245k
- Unemployment rate 5.5% vs. 5.5%
- Average hourly earnings m/m 0.3% vs. 0.2%; y/y 2.1%vs. 2%
