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Weekly Market Commentary

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UK Forex

Released Tuesday, 02 April 2013

Last week recap

USD/JPY continued declining last week as both countries reported mixed economic data and BOJ Governor Kuroda presented his plans for achieving 2% inflation to the Japanese parliament. The week began with the rate making its weekly low of 93.52 and its weekly high of 94.95 on Monday as Japanese CSPI came out showing an increase of +0.1% y/y, versus an expected flat reading. The pair then gained ground on Tuesday after comments from BOJ Governor Kuroda, in which he stated that, “There remains a high degree of uncertainty concerning Japan''s economy, including the prospects for the European debt problem, the momentum toward recovery for the U.S. economy, the possibility of emerging and commodity-exporting economies making a smooth transition to the sustainable growth path, and the effects of the recent bilateral relationship between Japan and China.” On Wednesday, the rate lost ground despite Japanese Retail Sales declining by -2.3% y/y versus an expected increase of +0.9%. The pair then consolidated at a slightly lower level on Thursday after Japanese Household Spending increased +0.8% y/y, versus +0.4% expected, while Tokyo Core CPI declined -0.5% y/y, versus -0.6% expected, and Japanese Preliminary Industrial Production, which declined -0.1% m/m, versus an expected increase of +2.6%. The pair continued slightly lower on Friday after Japanese Housing Starts increased by +3.0% y/y versus an expected decline of -1.0%, bringing USD/JPY to close the week at 94.17, with an overall decline of -0.3%.

GBP/USD lost fractionally last week as both countries reported mixed economic data. The week began with Cable trading lower after making its weekly high of 1.5260 on Monday after UK BBA Mortgage Approvals came out at 30.5K, versus 33.6K expected. The rate continued weakening on Tuesday after UK CBI Realized Sales came out with a reading of 0, versus an expected 12 print. On Wednesday, Cable made its weekly low of 1.5092 after the UK Current Account showed a deficit of -14.0B, versus -12.8B expected, while UK Final GDP showed a decline of -0.3% q/q as widely anticipated. The pair then began rising on Thursday after UK GfK Consumer Confidence came out with a reading of -26, versus an expected print of -27, and UK Nationwide HPI showing a flat reading, versus an expected increase of +0.2% expected. The rate then consolidated at a slightly higher level on Friday after the United States reported better than expected Personal Income and Spending numbers, which brought GBP/USD to close at 1.5199, with an overall drop of -0.2% from its previous weekly close.

AUD/USD lost some ground last week as the United States reported mixed economic numbers and with very little economic data out of Australia. The week began with the rate rising on Monday in the absence of any significant economic numbers out of either country. The pair continued higher on Tuesday, making its weekly high of 1.0496 after a speech by RBA Governor Stevens in which he stated that, “As a ‘global citizen’, Australia has the responsibilities and rights of that ‘citizenship’. The responsibilities are to uphold and play by the rules that are globally agreed, which include implementing global standards in regulation and oversight, and encouraging others to do so. The rights we have are the same as those of others: to have our say and to play our own part, however modest and small, in the development of those standards.” The pair then began sliding on Wednesday after the RBA’s Financial Stability Review indicated that, “Given the unresolved vulnerabilities, it is too early to say whether the improved market sentiment over the past six months is the beginning of a sustained recovery, or merely a temporary upswing.” The rate then made its weekly low of 1.0395 on Thursday after Australian Private Sector Credit increased only +0.2% m/m, versus +0.3% expected. Friday saw the rate continue lower after positive U.S. eco-data, bringing AUD/USD to close the week at 1.0404, showing an overall decline of -0.4%.

USD/CAD lost ground last week as Canada reported better than expected economic data, while the United States reported mixed numbers. The week began on a soft note with the rate dropping on Monday after making its weekly high of 1.0232 in the absence of any significant economic data out of either country. The pair continued its decline on Tuesday as the United States reported mixed Durable Goods Orders. On Wednesday, the rate consolidated after making its weekly low of 1.0142 as Canada reported Core CPI had risen +0.8% m/m, versus +0.3% that was expected, while CPI increased by +1.2% m/m, versus +0.6% expected. The pair continued treading water on Thursday, showing very little change after Canadian GDP increased by +0.2% m/m, versus +0.1% expected, and Canadian RMPI, which rose +2.2% m/m, versus +1.9% expected. The rate then rose on Friday as the United States reported favourable economic numbers, bringing USD/CAD to close at 1.0173, showing an overall decline of -0.5% for the week .

NZD/USD gained fractionally last week as the United States reported mixed economic data and with very little eco-data out of New Zealand. The week began with the rate making its weekly low of 0.8333 on Monday in the absence of any significant economic data out of either country. The pair then rose sharply on Tuesday as the United States reported mixed Durable Goods Orders. On Wednesday, the rate made its weekly high of 0.8395 after New Zealand ANZ Business Confidence printed at 34.6, versus a previous reading of 39.4, and New Zealand Building Consents, which increased by +1.9% m/m versus a previous reading of -0.2%. The pair then consolidated at a slightly lower level on Thursday as the United States reported a lower than expected Final GDP number. The rate continued consolidating on Friday, bringing NZD/USD to close at 0.8366, showing an overall gain of +0.2% from its previous weekly close.



The week ahead

AUD The upcoming Australian economic calendar is busier than last week, featuring the RBA Rate Decision on Tuesday. Monday is a Bank Holiday, so Tuesday starts the week’s highlights off with the AIG Manufacturing Index (last 45.6), the RBA’s Cash Rate Decision (3.00%), the RBA Rate Statement and Commodity Prices (last -7.2%). Wednesday’s key events include the tentatively scheduled HIA New Home Sales data (4.2%), as well as the Trade Balance (-1.00B). Thursday then features the AIG Services Index (48.5), Building Approvals (2.4%) and Retail Sales (0.3%). That concludes the week’s important data since Friday is quiet. Resistance for AUD/USD is seen at 1.0457/96, 1.0526 and 1.0612/23, with support noted at 1.0396/1.0400, 1.0333/41 and 1.0203/1.0300.

CAD The upcoming Canadian economic calendar is a bit more active than last week, featuring jobs data on Friday. Monday is quiet, so Tuesday starts the week’s highlights off a speech by Governing Council Member Murray, and Wednesday and Thursday offer little of note. Friday’s important data then concludes the week with the Employment Change (7.6K), Trade Balance (0.2B), Unemployment Rate (7.0%) and Ivey PMI (52.3). Resistance for USD/CAD is seen at 1.0179/97, 1.0231/55 and 1.0283/1.0301, while support shows at 1.0142, 1.0033/99 and 0.9902/63.

EUR The upcoming Eurozone economic calendar is more active than last week, featuring the ECB Rate Decision on Thursday. Sunday is the Daylight Saving Time Shift, and Monday is a French, German and Italian Bank Holiday, so Tuesday starts the week’s highlights off with German Prelim CPI (0.4%), the Spanish Unemployment Change (30.2K), Spanish Manufacturing PMI (46.2), Italian Manufacturing PMI (45.4), and the EZ Unemployment Rate (12.0%). Wednesday’s key events then include the EZ CPI Flash Estimate (1.6%), while Thursday features Spanish Services PMI (44.3), Italian Services PMI (43.4), the tentatively scheduled Spanish and French 10-year Bond Auctions (last average yields 4.90 percent and 2.10 percent, with bid to cover ratios of 1.9 and 2.2 respectively), the ECB Minimum Bid Rate Decision (0.75%), and the ECB Press Conference. Friday’s important data then concludes the week with EZ Retail Sales (-0.3%) and German Factory Orders (1.2%). Resistance for EUR/USD is seen at 1.2981/1.3009, 1.3047 and 1.3134/61, with support showing at 1.2750, 1.2661 and 1.2625.

GBP The upcoming UK economic calendar is busier than last week, featuring the BOE Rate Decision on Thursday. Sunday is the UK Daylight Saving Time Shift, and Monday is a UK Bank Holiday, so Tuesday starts the week’s data highlights off with the Halifax HPI (2nd-4th, 0.2%), Manufacturing PMI (48.9) and Net Lending to Individuals (0.9B). Wednesday’s key events then include Construction PMI (47.7) and the BOE Credit Conditions Survey. Thursday features Services PMI (51.4), the Asset Purchase Facility (375B), the BOE’s Official Bank Rate Decision (0.50%) and the tentatively scheduled MPC Rate Statement. Friday’s important data then concludes the week with a speech by MPC Member Dale. Resistance to the topside for GBP/USD shows at 1.5247, 1.5260 and 1.5323, while support for the pair is expected at 1.5092, 1.5025 and 1.4830/84.

JPY The upcoming Japanese economic calendar is somewhat busier than last week, featuring the BOJ Rate Decision on Thursday. Monday starts the week’s highlights off with the Tankan Manufacturing Index (-7) and the Tankan Non-Manufacturing Index (8), and Tuesday’s key events include Average Cash Earnings (-0.1%). Wednesday then offers little noteworthy data, while Thursday features the tentatively scheduled BOJ Monetary Policy Statement, Overnight Call Rate Decision (<0.10%) and BOJ Press Conference. That concludes the week’s important data since Friday is quiet. Resistance for USD/JPY currently shows up at 94.90/95.07, 96.12 and 96.55/70, with support indicated at 94.05/21, 93.52 and 92.14/95.

NZD The upcoming New Zealand economic calendar is quieter than last week, only featuring ANZ Commodity Prices data (last 1.0%) on Tuesday. Monday is also a Bank Holiday in New Zealand. The chart for NZD/USD shows resistance at 0.8361/96 and 0.8438/87. On the downside, technical support is expected at 0.8278/95, 0.8153/0.8208 and 0.8050.

USD The upcoming U.S. economic calendar is about as active as last week, featuring key jobs data on Wednesday and Friday. Monday starts the week’s highlights off with ISM Manufacturing PMI 54.2, and Tuesday’s key events include Factory Orders (3.1%). Wednesday then features a speech by FOMC Member Evans, the ADP Non-Farm Employment Change (203K), ISM Non-Manufacturing PMI (55.9), Crude Oil Inventories (last 3.3M) and a speech by FOMC Member Bullard. Thursday offers Weekly Initial Jobless Claims (354K), speeches by FOMC Member Evans, Fed Chairman Bernanke, FOMC Member George and FOMC Member Yellen. Friday’s important data then concludes the week with Non-Farm Payrolls (201K), the Trade Balance (-44.6B), the Unemployment Rate (7.7%) and Average Hourly Earnings (0.2%).

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