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Weekly Forex Wrap Up: 22/01, 2016

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AUDUSD (0.70): The Australian Dollar is up nearly 2.18% for the week in a late-week rally. Prices were initially weaker with AUDUSD testing the lows near 0.682 on risk aversion sentiment which kept the commodity risk asset weaker. Economic data from Australia this week included new home sales which declined -2.70% while inflation expectations remained soft falling 3.60% against 4.0% previously. The gains made in the Aussie this week are retracing part of the losses from the previous two week’s decline.

  • MI inflation gauge m/m 0.20% vs. 0.10% previously
  • New Motor vehicle sales m/m -0.50% vs. 1.30% previously
  • Westpac Consumer sentiment -3.50% vs. -0.80% previously
  • CB leading index m/m 0.30% vs. -0.10% previously
  • MI inflation expectations 3.60% vs. 4.0% previously
  • HIA New home sales m/m -2.70% vs. -3.0%

EURUSD (1.09): The Euro is down -0.89% for the week against the US Dollar after EURUSD posted an intraday week high above 1.095 earlier. The main event this week from Eurozone was the ECB’s monetary policy where ECB Chief, Mario Draghi noted that the Central Bank would decide on its monetary policy at the next meeting in March but committed that the central bank was going to defend its inflation target. The comment gave rise to hopes of more stimulus bets from the ECB leading to a widespread rally after nearly three weeks of decline in the equity markets.

  • Germany final CPI m/m -0.10% vs. -0.10%
  • Eurozone current account 26.4bn vs. 19.3bn
  • Germany ZEW economic sentiment 10.2 vs. 8.2
  • Eurozone final CPI y/y 0.20% vs. 0.20%; Core CPI y/y 0.90% vs. 0.90%
  • Eurozone ZEW economic sentiment 22.7 vs. 27.9
  • Germany PPI m/m -0.50% vs. -0.30%
  • ECB leaves minimum bid rate unchanged at 0.05%
  • ECB press conference
  • French flash manufacturing PMI 50.0 vs. 51.6; flash services PMI 50.6 vs. 50.4
  • Germany flash manufacturing PMI 52.1 53.0; flash services PMI 55.4 vs. 55.6
  • Eurozone flashes manufacturing PMO 52.3 53.0; flash services PMI 53.6 vs. 54.2

NZDUSD (0.64): The Kiwi is also posting a modest rally this week, with NZDUSD currently up 0.50% for the week. Prices initially tested a new low at 0.637 before posting a rally. Economic data from New Zealand this week saw the Global dairy trade index fall -1.40%, from -1.60% previously. New Zealand’s quarterly inflation was also weak, falling -0.50% with markets expecting to see further rate cuts from the RBNZ next week.

  • NZIER Business confidence 15 vs. -14 previously
  • GDT Price index -1.40% vs. -1.60%
  • CPI q/q -0.50% vs. -0.20%
  • Business NZ Manufacturing Index 56.7 vs. 54.9 previously

USDJPY (118.1): The Yen is finally pulling back lower as USDJPY is currently up 0.85% for the week after an initial dip to 116.3 briefly. The Yen gave back its three straight weeks of gains ahead of the BoJ’s meeting next week with some expectations of further easing announcement from the Japanese Central Bank. The Dollar is currently trading at 118Yen. Economic data from Japan this week was limited to flash manufacturing PMI which was soft at 52.4 while the revised industrial production was down -0.90% against expectations of 1.40% increase.

  • Revised industrial production m/m -0.90% vs. 1.40%
  • Tertiary industry activity m/m -0.80% vs. -0.60%
  • All industries activity m/m -1.0% vs. -0.70%
  • Flash manufacturing PMI 52.4 vs. 52.8

USDCAD (1.41): The Canadian dollar is enjoying a strong run this week with USDCAD down -2.39%. The Greenback weakened against the CAD after the Bank of Canada left interest rates unchanged at its policy meeting this week. BoC Governor Poloz cited the strong depreciation of the Canadian Dollar and with inflation strongly anchored to the BoC’s target rate, the Central Bank saw no need for cutting rates. The CAD also got a boost from a jump in Oil prices earlier today. Economic data was however mixed with manufacturing sales rising 1.80% against expectations of 0.40% while retail sales also posted strong gains, rising 1.70% on the headline and 1.10% on the core. However, monthly inflation was weak, with the core CPI falling -0.40% while the headline CPI fell -0.50%.

  • Foreign securities purchase 2.58bn vs. 12.10bn
  • Manufacturing sales m/m 1.0% vs. 0.50%
  • Wholesale sales m/m 1.80% vs. 0.40%
  • BoC leaves rates unchanged at 0.50%
  • Core CPI m/m -0.40% vs. -0.30%; CPI m/m -0.50% vs. -0.40%
  • Retail sales m/m 1.70% vs. 0.30%; core retail sales m/m 1.10% vs. 0.40%

GBPUSD (1.43): The British Pound is up 0.46% to the US Dollar in a late Friday rally. GBPUSD bounced off the lows near 1.413 to trade currently at 1.432. The Pound was weaker for the most part as BoE’s Governor Carney, in his speech earlier this week noted that UK’s interest rates were likely to remain low in the medium term. Despite inflation numbers released this week ticking higher with the core CPI rising 1.40%, BoE was of the view that inflation is likely to stay low on the Oil slump. Other data this week from the UK included the monthly jobs report which was a mixed bag. UK’s unemployment rate fell from 5.20% to 5.10% but average earnings remained weak at 2.0%. Retail sales numbers released on Friday showed a slowdown as sales fell -1.0%.CPI y/y 0.20% vs. 0.10%; Core CPI y/y 1.40% vs. 1.20%

  • PPI Input m/m -0.80% vs. -1.40%; PPI Output m/m -0.20% vs. -0.20%
  • BoE Governor Carney speech
  • Average earnings index 2.0% vs. 2.10%
  • Unemployment rate 5.10% vs. 5.20%
  • Claimant count change -4.3k vs. 4.1k
  • Retail sales m/m -1.0% vs. -0.10%
  • Public sector net borrowing 6.9bn vs. 10.bn

USDCHF (1.01): The Greenback is stronger against the Swiss Franc this week as USDCHF rallied 1.17% for the week, trading briefly near 1.0149 at the time of writing. The Franc, which was trading mostly stronger on risk aversion during early part of the week sent USDCHF to 0.999 before pulling higher. Data from Switzerland this week was limited to the producer’s price index which declined -0.40% for the month.

  • PPI m/m -0.40% vs. 0.20%
  • ZEW Economic expectations -3.0 vs. 16.6 previously

US Dollar Index (99.4): The US Dollar Index is up 0.46% for the week with prices pulling back after a test to 99.85 during the week. Data from the US included the NSHB housing market index which fell to 60 against estimates of 61 while building permits and housing starts remained weak, falling -3.90% and -2.50% respectively. Weekly unemployment claims also continued to tick higher than expectations. The Dollar is likely to come under risk ahead of next week’s FOMC meeting.

  • NAHB housing market index 60 vs. 61
  • Building permits 1.23Mn vs. 1.20Mn; m/m -3.90% vs. -6.40%
  • Housing starts 1.15Mn vs. 1.19Mn; m/m -2.50% vs. 2.30%
  • US CPI m/m -0.10% vs. 0.0%; Core CPI m/m 0.10% vs. 0.20%
  • Philly Fed manufacturing index -3.5 vs. -5.8
  • US Weekly unemployment claims 293k vs. 279k
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