Week in Forex: Orbex Weekly Forex Wrap Up
Markets were back in full strength as the first trading week of the year kicked off with some key released across the Eurozone, UK, US and Canada. Asian currencies, the Yen, Kiwi and Aussie dollar were seen trading based off the broader market themes.
US Dollar ends the year on a bullish note
The US Dollar was trading mixed across the board this week. FOMC meeting minutes showed that the Fed members ruled out interest rate hikes before April this year, while stating that low inflation does not pose a threat to interest rate hikes. The Greenback was stronger against a fundamentally weaker Euro and British Pound. US labor market for the month of December posted better than expected numbers but the main negative was the average hourly earnings which eased to 1.7% annualized, while on the monthly, hourly earnings declined -0.2%. However considering the larger theme, the temporary setbacks to the US Dollar is likely to be limited.
- Final services PMI 53.3 vs. 53.8
- ISM non-manufacturing PMI 56.2 vs. 58.2
- Factory orders m/m declined -0.7% vs. -0.3% forecast
- ADP Nonfarm payroll change rises 241k vs. 227k
- Weekly unemployment claims 294k vs. 291k
- Nonfarm employment change 252k vs. 241k
- Unemployment rate 5.6% vs. 5.7%
Euro seen at its weakest levels
The Euro single currency continued its declines with data coming out mixed. Headline CPI for Eurozone dipped into negative territory which fuelled comments from different ECB members, but consensus continues to show dissenters in the likes of Jens Weidmann and Coeure who continue to remain staunch opponents to QE plans.
- Germany preliminary CPI m/m 0% vs. 0.1%
- Eurozone final services PMI 51.6 vs. 51.9
- German retail sales m/m 1% vs. 0.2%
- Eurozone CPI flash estimate y/y -0.2% vs. 0%; Core CPI 0.8% vs. 0.7%
- German factory orders m/m -2.4% vs. -0.6%
- Eurozone retail sales m/m 0.6% vs. 0.3%
- German industrial production m/m -0.1% vs. 0.4%
Yen, the silent spectator
With lack of any market moving fundamental releases from Japan, the Yen was trading off the general theme in the forex markets although it was seen to be stronger against most of its peers this week, especially against the weaker Canadian Dollar and the Euro.
- Final manufacturing PMI 52 vs. 52.1 previously
- Monetary base y/y 38.2% vs. 34.3%
- Leading indicators 103.8% vs. 104.9%
Sterling pressured by weaker growth
The British Pound was weak heading into this week as continued data showed deteriorating market conditions. PMI’s fell across the board and the Bank of England decided to keep interest rates unchanged as widely expected. Market sentiment has now pushed out interest rate hikes into 2016, which puts the British Pound at a disadvantage against the Greenback, where interest rate speculation continues to build. The only positive data to come out this week was manufacturing production, which beat estimates and one that is likely to push the PMI manufacturing data for the month higher during the next release. Although the Pound was weak against the Greenback and the Euro, the currency remained mixed against rest of its peers and stronger against the Canadian dollar.
- Construction PMI 57.6 vs. 59.2
- Services PMI 55.8 vs. 58.9
- Halifax HPI m/m 0.9% vs. 0.3%
- BoE official bank rate 0.5%
- Manufacturing production m/m 0.7% vs. 0.4%