Monday's FX Analysis: EUR/USD, GBP/USD, AUD/USD
SGT Markets | Apr 10, 2017 04:41AM ET
EUR/USD
U.S. Nonfarm Payrolls poor but Unemployment Rate above expectations.
The market is only starting to factor in recent developments regarding North Korea, and it now wants to figure out the geopolitical implications of the U.S.-China summit.
German Unemployment Change again better than Expected (for the sixth time in a row) but Inflation data on downbeat.
The dollar was supported after official data showed that the third estimate of fourth quarter gross domestic product was at 2.1%, up from the previous reading of a 1.9% expansion.
The majority of the Fed's policymakers foresee at least two more increases this year, very few foresee three rate hikes. But, Markets are underestimating the impact that Trumponomics will have on USD, especially now that the U.S. House of Representatives withdrew a healthcare bill to repeal and replace Obamacare.
Reinforcing rate hike expectations, the Conference Board said U.S. consumer confidence index hit 125.6 in March, surpassing expectations for a reading of 114, and much higher than 116.1 in February. The March level marked the highest since December 2000.
Last Germany Manufacturing Purchasing Managers Index print was pretty good, on the contrary the U.S. Purchasing Managers Indexes were, again, worse than expected.
Last German GDP print was below expectations, adding to the concerns about the outside chance of a victory by far-right parties in France, Holland, Italy and about Greek bailout.
1.072 area is a very important resistance, we exclude a breakout of that barrier in the short-term. 1.067 support level breached: as we wrote in the previous commentaries, a breakout of 1.062 can lead down to 1.056. And this is happening right now.
Our special Fibo Retracement is confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Neutral
1st Resistance: 1.0619
2nd Resistance: 1.0679
1st Support: 1.0560
2nd Support: 1.0506
EUR
Recent Facts:
31st of January, German Unemployment Change
Better than Expected
31st of January, Eurozone’s CPI and GDP preliminary release
Better than Expected
1st of February, Eurozone Manufacturing PMI
As Expected
Get The News You Want
9th of February, German Trade Balance
Worse than Expected
10th of February, French Industrial Production + French Non-Farm Payrolls
French Industrial Production Worse than Expected, French Non-Farm Payrolls Better than Expected
14th of February: German GDP (Preliminary release) + German ZEW Economic Sentiment + Eurozone GDP (Preliminary release)
German GDP Worse than Expected, German ZEW Worse than Expected, Eurozone GDP Worse than Expected
15th of February, Eurozone Trade Balance
Better than Expected
21st of February, German Manufacturing PMI
Better than Expected
23rd of February, German GDP
Worse than Expected
1st of March, German Manufacturing + German Unemployment Change
German Manufacturing Worse than Expected, German Unemployment Change Better than Expected
2nd of March, Eurozone Inflation data
In line with Expectations
3rd of March, German Services PMI + Eurozone Retail Sales
Worse than Expected
7th of March, Germany Factory Orders
Worse than Expected
8th of March, German Industrial Production
Better than Expected
9th of March, ECB Interest Rate decision + ECB Press Conference
Interest Rates Unchanged, ECB President Dovish (can be cut again in the future if necessary)
14th of March, German CPI + German ZEW Economic Sentiment
German CPI as Expected, German ZEW Worse than Expected
24th of March, German Manufacturing PMI
Significantly Better than Expected
30th of March, German CPI
Lower than Expected
31st of March, German Unemployment Change + Eurozone CPI
German Unemployment Change better than Expected (for the sixth time in a row), Eurozone CPI Worse than Expected
3rd of April, German Manufacturing PMI
As Expected
USD
Recent Facts:
2nd of December: Nonfarm Payrolls + Unemployment Rate
Better than Expected
27th of January, GDP + Durable Good Orders
GDP Significantly Worse than Expected, Durable Good Orders as Expected
1st of February, ADP Nonfarm Unemployment Change + U.S. Institute for Supply Management Manufacturing
Better than Expected (ISM Manufacturing at its highest level since November 2014)
3rd of February, Nonfarm Payrolls + Unemployment Rate
Nonfarm Payrolls better than Expected, Unemployment Rate Worse than Expected
14th of February, Producer Price Index (PPI)
Better than Expected
15th of February, Core CPI (Consumer Price Index) + Retail Sales
Better than Expected
16th of February, Building Permits + Initial Jobless Claims + Philadelphia Fed Manufacturing Index
Better than Expected
21st of February, Manufacturing PMI + Services PMI
Worse than Expected
27th of February, Core Durable Good Orders + Pending Home Sales
Worse than Expected
28th of February, GDP (Preliminary release)
Worse than Expected
3rd of March, ISM Non-manufacturing PMI + Fed Chair Yellen Speech
ISM Non-manufacturing PMI Better than Expected, Yellen noted that a rate increase at next meeting "would likely be appropriate" insisting on the condition that data on employment and inflation have to move in line with expectations.
8th of March, ADP Nonfarm Employment Change
Better than Expected
10th of March, Nonfarm Payrolls + Unemployment Rate
Better than Expected
14th of March, Producer Price Index
Higher than Expected
15th of March, Core CPI + Retail Sales
As Expected
15th of March, FOMC Economic Projections + FOMC Statement + Fed Interest Rate Decision + FOMC Press Conference
The Federal Reserve increased interest rates by 0.25% to a 0.75-1% range. Dovish speech of Chairwoman Yellen
16th of March, Building Permits + Philadelphia Fed Manufacturing Index
Building Permits Worse than Expected, Philadelphia Fed Manufacturing Better than Expected
24th of March, Core Durable Goods Orders
Worse than Expected
24th of March, Manufacturing PMI + Services PMI (preliminary release)
Worse than Expected (4th time in a row)
28th of March, Conference Board Consumer Confidence
Better than Expected (the highest since December 2000)
30th of March, GDP
Better than Expected
5th of April, ADP Nonfarm Employment Change + ISM Non-Manufacturing Employment + ISM Non-Manufacturing PMI
ADP Nonfarm Employment Change Better than Expected
ISM Non-Manufacturing Employment + ISM Non-Manufacturing PMI Worse than Expected
7th of April, Nonfarm Payrolls + Unemployment Rate
Nonfarm Payrolls Worse than Expected, Unemployment Rate Better than Expected
GBP/USD
Manufacturing Production data and Trade Balance below expectations.
U.S. Nonfarm Payrolls poor but Unemployment Rate above expectations.
UK Services PMI seen back to 55, far better than the 53.3 of previous month. UK Manufacturing PMI dropped below previous one, for the second time in a row. UK GDP YoY worse than Expected. U.S. Non-farm Private Employment rose much than expected for the second straight month in March.
British Prime Minister Theresa May is formally filing paperwork to leave the European Union. Some unresolved tension with Scotland and Northern Ireland, which voted against leaving the EU. May provided no clear plan about the comprehensive “free-trade” partnership with EU members she wants to achieve.
Good UK Retail Sales data, good also the annual rate of inflation in the UK (rose to the highest since September 2013 in February) but Brexit setup will soon deteriorate all this progress in the GBP value.
Job market’s data better than expected. UK Manufacturing Production printed another negative number, while Trade Balance is better than expected.
As we wrote in the previous commentaries, 1.2530 is very important resistance and now we expect a consolidation around 1.238 area. A breakout of 1.238 can lead down to 1.22 area.
Our special Fibo Retracement is confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2001:
Weekly Trend: Neutral
1st Resistance: 1.2530
2nd Resistance: 1.2705
1st Support: 1.2380
2nd Support: 1.2200
GBP
Recent Facts:
4th of August, Bank of England Interest Rates decision (expected a cut)
Bank of England lowers Interest Rates as Expected (record low of 0.25%) and increases purchase program
20th of January, Retail Sales
Worse than Expected
26th of January, GDP (Preliminary release)
Better than Expected
1st of February, UK Manufacturing PMI
As Expected
2nd of February, Construction PMI
Worse than Expected
3rd of February, Services PMI
Worse than Expected
10th of February, Manufacturing Production
Better than Expected
14th of February, Consumer Price Index (CPI)
Worse than Expected
15th of February, Job Market
Better than Expected
17th of February, Retail Sales
Worse than Expected
1st of March, Manufacturing PMI
Worse than Expected
2nd of March, Construction PMI
Better than Expected
3rd of March, Services PMI
Worse than Expected
10th of March, Manufacturing Production + Trade Balance
UK Manufacturing Production Worse than Expected, Trade Balance Better than Expected
15th of March, Job Market
Better than Expected
16th of March, Interest Rates Decision + BoE Meeting Minutes
A Bank of England policymaker unexpectedly voted to raise interest rates
21st of March, CPI
CPI Higher than Expected
23rd of March, Retail Sales
Better than Expected
31st of March, GDP YoY
Worse than Expected
3rd of April, Manufacturing PMI
Worse than Expected
5th of April, Services PMI
Better than Expected
7th of April, Manufacturing Production
Worse than Expected
USD
Recent Facts:
See above.
AUD/USD
U.S. Nonfarm Payrolls poor but Unemployment Rate above expectations.
Australia's central bank held steady as expected in its latest interest rate decision: "The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment".
Investors cautious ahead of a meeting this week between U.S. President Donald Trump and Chinese President Xi Jinping in Florida expected to be contentious on trade.
Australia Retail Sales worse than Expected while Chinese factory activity grew at fastest pace in nearly 5 years.
A joint committee of ministers from OPEC and non-OPEC oil producers has agreed to review whether a global pact to limit supplies should be extended by six months. Oil sector analysts said the lack of an immediate extension could drag on crude prices.
As we wrote in the previous commentaries, we expected a test around 0.7506 area. That is happening. Next important support area between 0.746 and 0.742.
Our special Fibo Retracements are confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Neutral
1st Resistance: 0.7570
2nd Resistance: 0.7735
1st Support: 0.7460
2nd Support: 0.7425
AUD
Recent Facts:
1st of November, RBA Interest Rates Statement
RBA’s Governor Lowe signals tolerance for weak inflation and bets seem off for future rate cuts
3rd of November, RBA Monetary Policy Statement + Retail Sales
RBA said it is focused on the medium-term inflation target
Retail Sales better than Expected
8th of November, ELECTION OF THE 45th PRESIDENT OF THE UNITED STATES
Donald Trump elected President
9th of November, Reserve Bank of New Zealand Interest Rate Decision + Monetary Policy Statement
Interest Rates cut to 1.75% from 2.00% as Expected
19th of December, Mid-Year Economic and Fiscal Outlook
Scott Morrison announced lower than an original prediction of A$37.1 billion, investors see it as promising to stave off a downgrade of its AAA (triple A) rating from S&P Global
9th of January, Retail Sales
Worse than Expected
19th of January, Employment Change
Better than Expected
25th of January, CPI (Consumer Price Index measures the change in the price of goods and services from the perspective of the consumer)
Lower than Expected
1st of February, AIG Manufacturing Index
Worse than Expected
2nd of February, Building Approvals + Trade Balance
Better than Expected
7th of February, RBA Interest Rates Decision + RBA Rate Statement
RBA held steady as expected at a record low 1.50%, while noting better economic conditions with China
8th of February, New Zealand Interest Rate Decision + RBNZ Monetary Policy Statement
Interest Rates Unchanged and RBNZ’s agenda contains no changes for 2017
16th of February, Employment Change
Better than Expected
28th of February, New Home Sales, Current Account, Private Sector Credit
1st of March, Australia GDP
Better than Expected
16th of March, Employment Change + Unemployment Rate
Worse than Expected
2nd of April, Retail Sales
Worse than Expected
4th of April, RBA Interest Rate Decision
Interest Rates Unchanged, as Expected. Dovish tone in Philip Dowe’s Speech
9th of April, Home Loans
Worse than Expected
USD
Recent Facts:
See above.
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