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Weekly Market Watch - Tuesday, 7 February 2012
Subscribe to our weekly "Market Watch" newsletter. Last Week RecapEUR/USD lost some ground last week as positive economic news worldwide eclipsed the uncertainty for a solution to the Greek sovereign debt debacle. The week began with the rate trading lower after making its weekly high of 1.3221 on Monday after French President Sarkozy announced it would unilaterally impose a 0.1% tax on bank transactions beginning in August. Also on Monday, Greek Finance Minister Evangelos Venizelos rejected a proposal by Germany for the EU to take over Greece’s budget for national sovereignty. On Tuesday, the rate continued falling as 25 of 27 EZ countries agreed to a fiscal compact at the EU summit in Brussels. The compact, which requires signing nations to add balanced budget rules into their constitutions, would cap annual structural deficits to 0.5% of GDP upon which an automatic correction mechanism would be triggered. Economic data for Tuesday included U.S. CB Consumer Confidence, at 61.1, versus an expected print of 68.2, and German Unemployment Change, declining by -34K, significantly higher than the -8K that was expected, also the EZ Unemployment Rate held steady at 10.4%. Wednesday saw the rate trade higher after making its weekly low of 1.3025 after U.S. ADP Non-Farm Employment Change came out showing the U.S. economy had added 170K new private sector jobs, versus 189K expected, with the previous number significantly revised lower from 325K to 292K, also out was U.S. ISM Manufacturing PMI, which came out at 54.1, versus 54.6 expected. The pair consolidated somewhat lower on Thursday after U.S. Initial Jobless Claims came in at 367K versus 373K expected, and in testimony to the House by the Fed’s Bernanke, who stated, “Globally, economic activity appears to be slowing, restrained in part by spillovers from fiscal and financial developments in Europe. The combination of high debt levels and weak growth prospects in a number of European countries has raised significant concerns about their fiscal situations,” On Friday, the rate was largely unchanged from Thursday, after U.S. Non-Farm Payrolls came out showing the economy had added 243K jobs in January, versus 150K that was expected, and the U.S. Unemployment Rate dropping to 8.3% from 8.5%. EUR/USD went on to close the week at 1.3145, showing an overall loss of -0.4% from its previous weekly close.USD/JPY lost marginally last week as Japan reported mixed economic data and Japan’s finance minister Azumi urged the BOJ to “respond by taking firm measures” to stem the rise in the Yen. The week began with the rate trading lower after making its weekly high of 76.77 after Japanese Manufacturing PMI came out at 50.7, versus a previous reading of 50.2, and Japanese Household Spending increasing by +0.5% y/y versus an expected decline of -0.1%. Also out on Monday was Japanese Preliminary Industrial Production showing a gain of +4.0% m/m, versus an expected rise of +2.8%. On Tuesday, the pair continued its decline after a lower than expected U.S. CB Consumer Confidence number and despite Japanese Housing Starts dropping -7.3% y/y, versus a decline of -1.4% that was expected. Wednesday saw the rate consolidate after making its weekly low of 76.03 as the United States reported a lower than expected ADP Non-Farm Employment Change number and Japanese Average Cash Earnings declined by only -0.2% y/y, edging the consensus of a -0.3% drop. On Thursday, the pair consolidated slightly higher after Japanese finance minister Jun Azumi stated that, “Yen buying has strengthened, led by short-term and speculative moves on the back of expectations for low interest rates in the U.S. until 2014,” he added that, “I would like the BOJ to take account of economic conditions and various factors in deciding policy, including quantitative easing.” The rate then traded sharply higher on Friday after a positive U.S. Non-Farm Payrolls number, bring the rate to close at 76.55, showing an overall loss of -0.2% for the week. GBP/USD gained ground last week as the UK reported better than expected economic numbers. The rate began the week trading higher after making its weekly low of 1.5653 on Monday as the United States reported Personal Income had risen more than expected in December, rising by +0.5% m/m, versus +0.4% expected, while U.S. Personal Spending came out with a flat reading, versus +0.2% expected. On Tuesday, Cable traded higher after the UK GfK Consumer Confidence Survey came out at -29, versus an expected reading of -31, while UK Net Lending to Individuals rose only +0.4B, versus a rise of +1.2B expected. Wednesday saw the pair make its weekly high of 1.5881 as the UK reported Manufacturing PMI had increased to 52.1 from 49.7, with a consensus for a 50.1 print. Also out was UK Nationwide HPI, which declined by -0.2% m/m as anticipated. On Thursday, the rate dropped somewhat after UK Construction PMI came out at 51.4, versus an expected 52.8, and the United States reported a positive Initial Jobless Claims number. The rate consolidated slightly higher on Friday after the release of a positive U.S. Non-Farm Payrolls number and lower U.S. Unemployment rate, bringing Cable to close at 1.5814, showing a gain of +0.5% overall for the week. AUD/USD had substantial gains last week as risk assets were strongly favoured over the Greenback and Australia reported mixed economic news. The week began with the pair trading higher after making its weekly low of 1.0596 on Monday after the United States reported a higher than expected Personal Income number. The rate reversed and began trading higher on Tuesday after the Australian NAB Business Confidence Survey showed a reading of 3, versus a previous reading of 2, while Australian Private Sector Credit increased by +0.3% m/m as was widely expected. The pair continued trading higher on Wednesday as commodities prices firmed and despite Australian HIA New Home Sales dropping by -4.9% m/m, versus a previous increase of +4.4%, and the Australian HPI, declining by -1.0% q/q, versus a decline of -0.7% that was expected. The rate continued gaining on Thursday after the Australian Trade Balance came out showing a surplus of +1.71B, significantly wider than the +1.22B consensus. Also out Thursday were Australian Building Approvals, which dropped by -1.0% m/m, versus an expected increase of +2.1%. On Friday, the pair made its weekly high of 1.0792 after the Australian AIG Services Index came out at 51.9, versus a previous reading of 49.0, and despite a positive U.S. Non-Farm Employment number. AUD/USD went on to close the week at 1.0775, showing an overall gain of +1.1% for the week. USD/CAD lost some ground last week as the commodity currencies were favoured over the Greenback and despite less than positive economic data out of Canada. The pair began the week trading lower after making its weekly high of 1.0069 on Monday as risk appetite increased in the market. Tuesday saw the rate edge higher after Canadian GDP came out at -0.1% m/m, versus an expected increase of +0.2% that was expected, also out was Canadian RMPI, which declined by -2.4% m/m, versus an expected decline of only -0.1%. On Wednesday, the pair sold off after lower than expected U.S. ISM Manufacturing PMI and ADP Non-Farm Employment numbers. The pair then consolidated on Thursday as the United States reported a favourable Initial Jobless Claims number. On Friday, the pair continued heading south despite Canadian Employment Change showing the Canadian economy had added only +2.3K jobs in January, versus an expected increase of +23.3K, while the Canadian Unemployment Rate edged up to 7.6% from 7.5%. USD/CAD went on to close the week at 0.9935, showing a decline of -0.7% overall for the week. NZD/USD extended its previous week’s gains last week as asset flows favoured risk assets over the Greenback. The week began on a soft note with the rate trading higher after making its weekly low of 0.8154 as the United States reported positive Personal Spending and Income numbers. On Tuesday, the pair began trading higher after New Zealand Building Consents came out showing an increase of +2.1% m/m, significantly higher than the previous reading of -6.2%. The rate continued trading higher on Wednesday as the United States reported lower than expected ADP Non-Farm Employment Change and ISM Manufacturing PMI numbers. Thursday saw the pair consolidate as the ANZ Commodity Prices increased by +1.2% m/m, versus a previous reading of -0.8%. On Friday, the pair made its weekly high of 0.8378 after New Zealand Visitor Arrivals increased by +4.5% m/m, versus a previous reading of -11.1%. NZD/USD went on to close at 0.8358, showing an overall gain of +1.4% from its previous weekly close. The Week AheadUSD: The upcoming U.S. economic calendar is considerably quieter than last week, featuring the U.S. Trade Balance on Friday. Monday is quiet, so Tuesday starts the week’s highlights off with testimony by Fed Chairman Bernanke, and Wednesday’s key events include Crude Oil Inventories (4.2M). Thursday then features Weekly Initial Jobless Claims (390K), and Friday’s data concludes the week with the Trade Balance (-48.2B), Preliminary University of Michigan Consumer Sentiment (74.3), a speech by Fed Chairman Bernanke, a speech by FOMC Member Pianalto and the Federal Budget Balance (-65.2B).AUD: The upcoming Australian economic calendar is about as active as last week, featuring the RBA Rate Decision on Tuesday with a 25 basis point rate cut to 4.00% expected. Monday starts the week’s highlights off with Retail Sales (0.2%) and ANZ Job Advertisements (last -0.9%), and Tuesday’s key events include the RBA Cash Rate Decision (4.00%, down from 4.25%) and the RBA Rate Statement. Wednesday then features Westpac Consumer Sentiment (last 2.4%), while Thursday offers little of note. Friday’s data concludes the week with the RBA Monetary Policy Statement. Resistance for AUD/USD is seen at 1.0792 and 1.1079, with support noted at 1.0686, 1.0571 and 1.0376/84. To view live charts follow these links: AUD/USDNZD: The upcoming New Zealand economic calendar is a bit busier than last week, featuring the Employment Report on Thursday. Monday is a Bank Holiday in New Zealand, so Tuesday starts the week’s highlights off with the Labor Cost Index (0.5%). Wednesday is quiet, while Thursday offers the Employment Change (0.4%) and Unemployment Rate (6.5%). That concludes the week’s data since Friday is quiet. The chart for NZD/USD shows resistance at 0.8571 and 0.8841. On the downside, technical support is expected at 0.8242/48, 0.8040 and 0.7979/96. To view live charts follow these links: NZD/USDGBP: The upcoming UK economic calendar is a bit busier than last week, featuring the MPC Rate Decision on Thursday, with a GBP 50B increase in the Asset Purchase Facility to 325B expected. Monday starts the week’s highlights off with the Halifax HPI (0.1%), and Tuesday’s key events include the BRC Retail Sales Monitor (last 2.2%). Wednesday offers little of note, while Thursday features Manufacturing Production (0.3%), Trade Balance (-8.4B), Asset Purchase Facility (325B from 275B), Official Bank Rate (0.50%), the tentatively scheduled MPC Rate Statement and the NIESR GDP Estimate (last 0.1%). Friday’s data concludes the week with PPI Input (0.4%). Resistance to the topside for GBP/USD shows at 1.5881, 1.6091 and 1.6164, while support for the pair is expected at 1.5733/79, 1.5499/1.5527 and 1.5360. To view live charts follow these links: GBP/USDEUR: The upcoming Eurozone economic calendar is about as active as last week, featuring the ECB) Rate Decision on Thursday. Monday starts the week’s highlights off with Sentix Investor Confidence (-14.8) and German Factory Orders (0.7%), and Tuesday’s key events include German Industrial Production (-0.1%). Wednesday then features the ECB Minimum Bid Rate Decision (1.00%) and the associated ECB Press Conference, while Thursday offers little of note. Friday’s data concludes the week with French Industrial Production (-0.8%). Resistance for EUR/USD is seen at 1.3226, 1.3421 and 1.3546, with support showing at 1.3025/76, 1.2875/1.2930 and 1.2623. To view live charts follow these links: EUR/USDJPY: The upcoming Japanese economic calendar is about as active as last week, featuring Core Machinery Orders on Thursday. Monday is quiet, so Tuesday starts the week’s highlights off with Leading Indicators (93.9%). Wednesday then features the Current Account (0.63T) and the Economy Watchers Sentiment survey (47.6), while Thursday offers Core Machinery Orders (-4.6%) and M2 Money Stock (3.1%). Friday’s data concludes the week with the CGPI (0.9%). Resistance for USD/JPY currently shows up at 76.73, 77.06/68 and 78.15/28, with support indicated at 76.02, 75.94 and 75.56. To view live charts follow these links: JPY/USDCAD: The upcoming Canadian economic calendar is about as active as last week, featuring the Canadian Trade Balance on Friday. Monday starts the week’s highlights off with the Ivey PMI (58.6), and Tuesday’s key events include Building Permits (0.8%). Wednesday then features Housing Starts (192K), while Thursday offers the NHPI (0.5%). Friday’s data concludes the week with the Canadian Trade Balance (0.7B). Resistance for USD/CAD is seen at 1.0051/78, 1.0160 and 1.0282/1.0318, while support shows at 0.9927, 0.9891 and 0.9724. To view live charts follow these links: CAD/USD Subscribe to RSS commentary feed
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