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Weekly Market Watch - Monday, 29 June 2009
Subscribe to our weekly "Market Watch" newsletter. Last Week RecapThe Greenback continued its roller coaster ride against the EURO and Yen last week with US data still sending out mixed signals to the world markets. Against the EURO the Greenback hit a high of 1.3827 and a low of 1.4138 and moved within a 2 cent range against the Yen, hitting a high of 96.50 and a low of 0.6250. Of key importance last week was the announcement by the Federal Open Market Committee that interest rates would remain on hold for some time thus tempering market expectations that interest rates may start to rise towards the end of 2009. Also adding to the volatility on the Greenback was Tuesdays Existing Home Sales for May, with the number coming in at 2.4% compared with a forecast of 3% and Thursdays better than expected annualized Quarter 1 GDP reading showing an actual figure of negative 5.5% compared with forecast of negative 5.7%. Across on the Atlantic, the German IFO Business Climate Index, the GfK Consumer Confidence Survey and Consumer Price Index for June all came in favourable and better than previous numbers, with many suggesting that “green shoots” story maybe appearing in the broader European economy as well.US data ruled movement for the Pound last week in which we saw the currency trade between 1.6250 and 1.6590 against the Greenback. Comments from the International Money Fund talking down world growth in 2009 and re forecasting their previous March expectations played on the markets mind and added further volatility. On a technical level 1.6660 continues to be the frist level of upside resistance for the Pound followed by 1.6740 whilst on the downside strong chart support is expected at 1.6250 a clear break of which opens the door for 1.60 and below. The Australian Dollar continues to impress and is holding up relatively well against the Greenback. Last week we saw the dollar test the all important technical support level of 0.7800 cents however the moved was temporary and the Aussie rebounded almost immediately. The trading range for the currency was a relatively wide 0.7785 to 0.8078. With no data released last week direction came from offshore events and happenings including updated growth figures for the Australian economy released by both the World Bank and International Money Fund. Traders will continue to speculate about the direction of the Australian Dollar with many believing that short term resistance continues to be at the 0.82 cent level, closely followed by 0.8350. On the downside support for the dollar is found at 0.7850, with a break through this level opening up 0.7720 cents and below. The New Zealand dollar traded in a 2 cent range last week as weaker than expected data played havoc on trader’s positions. Fridays’ release of Quarter1 GDP indicated that the economy had shrunk negative 1% compared with a forecast of negative 0.7% during the first three months of the calendar year. This is the fifth consecutive reading of negative growth for New Zealand and this coupled with recent comments from the Reserve Bank of New Zealand Governor talking the local currency down will add further volatility. The Loonie was at the mercy of US data releases and rhetoric from some of the world’s most influential people and organizations. The Greenback rose on Monday from 1.1300 to 1.1550 on the back of the IMF’s downgraded economic outlook. Notable support was found at 1.1420 mid week, with what has become a traditional level of resistance at 1.1600 being momentarily broken during Thursday morning trade. The Canadian Unit was able to show some signs of strength against the big dollar riding the coattails of several positive performances from the equity markets. The Week AheadUSD: The Big dollar opens the week under some selling pressure amidst continued talk of a new global reserve currency from Chinese officials. Whist the talk is likely to persist economic data comes in the form of Tuesday’s release of the ABC Consumer Confidence for the month of June with the survey an indicator of individual’s personal financial situation and current willingness to spend. The economic calendar for Wednesday sees Pending Home sales and Construction Spending data both for the month of May. Also on Wednesday we see the release of both MBA Mortgage Applications and ISM manufacturing both for the month of June. Finally on Friday we see the release of the all important and closely watched Non-farm Payrolls for the month of June and the US Unemployment Rate as it nears double digits.AUD: A fairly light week is expected on the data front in Australia this week with the main direction to come from developments in the U.S and debate around a new global reserve currency. Tuesday sees the release of HIA New Home Sales data for the month of May however on Wednesday we see the release of a key data in the form of both Building Approvals and Retail Sales for the month of May which are likely to attract some attention. Late in the week on Thursday Trade balance data is released for the month of May which may influence the Aussie dollar. To view live charts follow these links: AUD/USD AUD/EUR AUD/GBP AUD/JPY AUD/NZDNZD: After finishing last week seemingly trapped between 64 and 65 cents this week it all starts in New Zealand with Monday’s release of both Trade Balance data and Building Permits for the month of May. On Wednesday we see the release of RBNZ Business Confidence for the month of June. Finally on Friday with the release of ANZ Commodity Price Index for the month of June. Traders will follow the outcome closely as expected falling export prices may indicate a decline in demand for New Zealand commodities; weakening the exchange rate. To view live charts follow these links: NZD/USDGBP: Economic growth in the U.K will come under further scrutiny this week with first quarter Gross Domestic Product being release on Tuesday. Economist forecasts are for continued deterioration in the U.K economy and GDP to drop to -2.1% taking the annual figure as low as -4.3%. This is likely to keep a lid on any attempts on the GBP/USD to clearly break through 1.6600 during the early part of the week. Wednesday sees Index of Services and to finish the week we have Purchasing Manager Index Services and Bank of England Housing Equity Withdrawal. To view live charts follow these links: GBP/USDEUR: There is a plenty of data out this week which should provide traders with a closer insight into the current economic situation in Europe. It begins today with the release of Euro Zone Consumer Confidence for the month of June, however all eyes this week will be on Thursday’s European Central Bank Interest Rate Decision where rates are expected to stay on hold and the Euro Zone Unemployment Rate. Finally on Friday we see the release of Euro Zone Retails Sales figure for the month of May with expectations of a decline to around -0.1%. To view live charts follow these links: EUR/USDJPY: On the data front this week in Japan we start with some key releases, beginning on Monday with Japanese Retail Trade data for the month of May. On Tuesday we see the release of Japan’s Jobless Rate and Household Spending for the month of May to be followed on Wednesday with Housing Starts and Construction Orders also for the month of May. In addition, on Wednesday the release of Labor Cash Earnings for the month of May and Small Business Confidence for the month of June will also capture the markets attention. To view live charts follow these links: JPY/USDCAD: The week ahead is likely to see some extended volatility with Canada’s GDP and US employment data expected. With rising commodity prices, specifically oil, Q2 GDP is expected still post a negative headline number further dampening any expectations of a quick rebound in economic growth. Despite the negative forecasts it should be noted that the rate of decline is forecasted to be less than previous quarters. The same can not be said for the Greenback with unemployment data expected to rise yet again, so look for an increase in risk aversion and a possible slide on the Loonie on the back of this news. To view live charts follow these links: CAD/USD
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