Weekly Forex Wrap Up: 13/11, 2015

AUDUSD (0.71): The Australian dollar is up 1.10% as the currency got a strong boost from better than expected unemployment data. Australia’s unemployment rate fell from 6.2% last month to 5.9% in October while the average number of jobs picked up by over 58k sending the Aussie higher across the board as the markets now expect the RBA to stand on the sidelines well into early next year as far as rate cuts are concerned.

• ANZ Job advertisements m/m 0.4% vs. 3.8%
• NAB Business confidence 2 vs. 5 previously
• Home loans m/m 2.0% vs. 0.1%
• Westpac consumer sentiment 3.9% vs. 4.2% previously
• MI Inflation expectations 3.5% vs. 3.5%
• Employment change 58.6k vs. 14.8k
• Unemployment rate 5.9% vs. 6.2%

EURUSD (1.07): The Euro remained weak to the dollar as monetary policy divergence was the highlight. While the Fed members sounded hawkish in their speeches, the ECB took many opportunities to talk about the QE plans in December. Mario Draghi noted that the Central Bank was monitoring inflation and growth and that it would look into expanding the scope and pace of its QE, reiterating that the December meeting will likely be very important. Economic data this week from the Eurozone was broadly mixed with GDP staying subdued and industrial production data remaining weak.

• Eurozone Sentix investor confidence 15.1 vs. 12.4
• France industrial production m/m 0.1% vs. 0.1%
• Italy industrial production m/m 0.1% vs. 0.1%
• ECB President Draghi speech
• Germany Final CPI m/m 0.0% vs. 0.0%
• France CPI m/m 0.1% vs. 0.1%
• Eurozone industrial production m/m -0.3% vs. -0.1%
• France preliminary GDP q/q 0.3% vs. 0.3%
• Germany preliminary GDP q/q 0.3% vs. 0.3%
• Italy preliminary GDP q/q 0.2% vs. 0.3%
• Eurozone Flash GDP q/q 0.3% vs. 0.4%

NZDUSD (0.65): The Kiwi is down -0.03% for the week as the currency remained range bound heading nowhere and remained within last week’s high and low. Economic data from New Zealand saw the RBNZ release the financial stability report which cited downside risks from China’s slowdown and the impact on the commodity prices while also pointing to further rate cuts.

• RBNZ Financial stability report
• Business NZ Manufacturing index 53.3 vs. 55.0 previously
• FPI m/m -1.2% vs. -0.5% previously

USDJPY (122.7): The Yen was stronger this week albeit trading in a tight range. Prices were flat during the start of the week and the Yen gained from BoJ’s officials comments who ruled out further monetary policy easing in the near term while remaining hopeful that the BoJ’s 2% inflation target would be reached. The hawkish talk from the Fed members managed to keep the Dollar stronger, but the ranging price action continued.

• Average cash earnings y/y 0.6% vs. 0.5%
• Bank lending y/y 2.5% vs. 2.6% previously
• Economy watchers sentiment 48.2 vs. 48.2
• Prelim machine tool orders y/y -23.1% vs. -19.1%
• Core machinery orders m/m 7.5% vs. 3.3%
• PPI y/y -3.8% vs. -3.5%
• Revised industrial production m/m 1.1% vs. 1.0%
• Tertiary industry activity m/m -0.4% vs. 0.2%

USDCAD (1.33): USDCAD is up 0.12% for the week as the currency struggled near the highs of 1.3336 posting a feeble attempt that was quickly rejected. Prices continue to hover near the highs of 1.3336 level with the possibility of a break out in the near term. Data from Canada this week was limited to housing starts which increased 198k but fell below estimates of 200k and the housing price index posted a soft rise of 0.1%.

• Housing starts 198k vs. 200k
• NHPI m/m 0.1% vs. 0.2%

GBPUSD (1.52): The GBPUSD is up 1.19% for the week, a surprise considering the Pound saw a sharp sell off last week. The Cable briefly posted weekly highs to 1.526 earlier this Friday. Data from the UK this week was broadly positive as the UK’s unemployment rate fell to 5.3% surprising the estimates. Average earnings continued to gain steadily, rising 3.0% for the second month in a row. We expect to see further upside in GBPUSD to test the main resistance at 1.5286 ahead of further declines.

• BRC Retail sales monitor y/y -0.2% vs. 2.6% previously
• Average earnings index 3m/y 3.0% vs. 3.2%
• Unemployment rate 5.3% vs. 5.4%
• RIC House price balance 49% vs. 45%
• Construction output m/m -0.2% vs. 1.5%

USDCHF (1.0): USDCHF is down -0.24% for the week as the currency remained largely flat albeit posting multiple test to the resistance at 1.008, which we had pointed out earlier this week in the technical analysis forecast. Economic data from Switzerland was limited with the unemployment rate coming in at 3.4% and producer prices index picking up 0.2%, beating estimates of -0.2%.

• Unemployment rate 3.4% vs. 3.4%
• PPI m/m 0.2% vs. -0.2%

US Dollar Index (99): The US Dollar is down -0.27% at the time of writing as the trade weighted index attempts to retest the support/resistance level near 99.31 – 99.1. For the most part of the week, the Dollar Index remained choppy and was largely supported by the hawkish Fed speak this week, which included many of the FOMC members such as Mester, Evans and Dudley taking turns at an economic event. Janet Yellen refrained to make any comments on monetary policy during her turn. Nonetheless, the Dollar remained well supported near the highs, but economic data continues to remain mixed. This week, the US import prices fell -0.5% for the month while the weekly unemployment claims increased 276k above estimates. Retail sales numbers were also weak with the core retail sales rising 0.2% and 0.1% on the headline. Producer prices remained subdued, falling -0.4% on the headline and -0.3% on the core. The Dollar remains flat into Friday’s session.

• NFIB Small business index 96.1 vs. 96.4
• Import prices m/m -0.5% vs. -0.1%
• Wholesale inventories m/m 0.5% vs. 0.0%
• Unemployment claims 276k vs. 270k
• Fed Chair Yellen and other FOMC members speeches
• Core retail sales m/m 0.2% vs. 0.4%; retail sales m/m 0.1% vs. 0.3%
• PPI m/m -0.4% vs. 0.2%; core PPI m/m -0.3% vs. 0.1%