Hi Traders!
Forex Weekly Recap for 26–30 June, 2023:
Fundamentals
This week was light on the data side, but there were several announcements from central bank members and finance officials.
Japan’s top currency diplomat, Kanda, commented on the recent Japanese yen depreciation and noted that they will respond to excessive FX moves. In fact, he added that it’s the pace of moves that they're more focused on instead of the levels. Later on, Japan’s Finance Minister, Suzuki, confirmed that they would respond appropriately if there were excessive moves. To note, the 145.00–150.00 area in USDJPY is where we started to see interventions last year.
European Central Bank (ECB) President Lagarde said that they are committed to reaching the inflation target no matter what and that there is still some way to go. She added that they need to bring rates to a sufficiently restrictive territory and stay there for as long as necessary. She acknowledged that they have not yet seen the full impact of rate hikes since July of last year. That being said, she confirmed that another interest rate hike in July 2023 is likely. She added that the European economy is "stagnant at best," but their baseline does not include a recession. For the September interest rate hike decision, it will be data dependent.
Bank of England (BOE) member Dhingra said that UK wages are responding to inflation with a lag and that the sharp drop in the Purchasing Price Index (PPI) is promising as the Consumer Price Index (CPI) follows the PPI with a lag of around one to two quarters. She noted that food prices, especially, is where the inflation remains most stubborn.
Federal Reserve member Powell said that they believe there is more restrictive policy coming because, if you look at the data over the last quarter, jobs, inflation, and activity are all strong. He noted that they have not made a decision to hike at every other meeting. He concluded that they need to see more softening in the labour market and that the services sector is not particularly interest-rate sensitive.
Key Data
The German IFO Business Climate Index printed at 88.4 vs. 90.7 expected, with the expectations index diving to 83.6 vs. 88.0 expected.
US Durable Goods Orders for May were better than expected at 1.7% vs. -1.0% expected. Core Durable Goods Orders were better than expected, at 0.6% vs. -0.1% expected.
Australia's CPI Y/Y was at 5.6% vs. 6.1% expected and 6.8% prior, with the M/M figure coming at 0.0% vs. 0.3% prior. Core CPI Y/Y slowed to just 6.4% vs. 6.5% prior. The Australian dollar weakened following the news.
The US Q1 Final GDP was 2.0% vs. 1.4% expected and 1.3% preliminary. Consumer spending growth accelerated more than expected at 4.2%, which is the strongest in almost two years. The US dollar strengthened on the news.
The US Initial Jobless Claims were stronger than expected, at 239K vs. 265K expected.
UK Q1 Final GDP came in at 0.1%, as expected.
Eurozone CPI Y/Y came in at 5.5% vs. 5.6% expected and 6.1% prior, while the M/M reading was at 0.3% vs. 0.0% expected and 0.0% prior. The unemployment rate remained unchanged at 6.5%.
Technicals
The technical price action this week showed a lot of indecision, with either traders being uncertain, or a complete standoff between buyers and sellers.
AUDUSD 1W Chart
A spinning top candle has formed on the chart, which shows indecision. That being said, there is a slight bearish bias as we look to be approaching the long term support level at 0.64583, which is May 2023's low. A descending triangle pattern seems to also be forming to support our bearish bias.
USDJPY 1W Chart
Another bullish week for the US dollar against the yen We are near critical levels for the Yen. We had a momentum swing to break the 144 barrier and breached 145 briefly before a slight pullback to end the week near the mid-144 range.
EURUSD 1W Chart
An indecisive week for EURUSD, with a spinning top candle showing the indecision, though there was a strong bull push to the end of the week. There may be a possible retest of the long-term resistance at 1.10956.
GBPUSD 1W Chart
An indecisive week also for GBPUSD with a spinning top candle. Although there was a strong finish to the week by closing back above the 13-month resistance level re-test at 1.26670, additionally, an ascending price channel has formed.
We will be back with another Forex Weekly Recap report next week.
Best of luck for the trading week ahead. Trade safely and responsibly.
BluetonaFX
Forex Weekly Recap for 26–30 June, 2023:
Fundamentals
This week was light on the data side, but there were several announcements from central bank members and finance officials.
Japan’s top currency diplomat, Kanda, commented on the recent Japanese yen depreciation and noted that they will respond to excessive FX moves. In fact, he added that it’s the pace of moves that they're more focused on instead of the levels. Later on, Japan’s Finance Minister, Suzuki, confirmed that they would respond appropriately if there were excessive moves. To note, the 145.00–150.00 area in USDJPY is where we started to see interventions last year.
European Central Bank (ECB) President Lagarde said that they are committed to reaching the inflation target no matter what and that there is still some way to go. She added that they need to bring rates to a sufficiently restrictive territory and stay there for as long as necessary. She acknowledged that they have not yet seen the full impact of rate hikes since July of last year. That being said, she confirmed that another interest rate hike in July 2023 is likely. She added that the European economy is "stagnant at best," but their baseline does not include a recession. For the September interest rate hike decision, it will be data dependent.
Bank of England (BOE) member Dhingra said that UK wages are responding to inflation with a lag and that the sharp drop in the Purchasing Price Index (PPI) is promising as the Consumer Price Index (CPI) follows the PPI with a lag of around one to two quarters. She noted that food prices, especially, is where the inflation remains most stubborn.
Federal Reserve member Powell said that they believe there is more restrictive policy coming because, if you look at the data over the last quarter, jobs, inflation, and activity are all strong. He noted that they have not made a decision to hike at every other meeting. He concluded that they need to see more softening in the labour market and that the services sector is not particularly interest-rate sensitive.
Key Data
The German IFO Business Climate Index printed at 88.4 vs. 90.7 expected, with the expectations index diving to 83.6 vs. 88.0 expected.
US Durable Goods Orders for May were better than expected at 1.7% vs. -1.0% expected. Core Durable Goods Orders were better than expected, at 0.6% vs. -0.1% expected.
Australia's CPI Y/Y was at 5.6% vs. 6.1% expected and 6.8% prior, with the M/M figure coming at 0.0% vs. 0.3% prior. Core CPI Y/Y slowed to just 6.4% vs. 6.5% prior. The Australian dollar weakened following the news.
The US Q1 Final GDP was 2.0% vs. 1.4% expected and 1.3% preliminary. Consumer spending growth accelerated more than expected at 4.2%, which is the strongest in almost two years. The US dollar strengthened on the news.
The US Initial Jobless Claims were stronger than expected, at 239K vs. 265K expected.
UK Q1 Final GDP came in at 0.1%, as expected.
Eurozone CPI Y/Y came in at 5.5% vs. 5.6% expected and 6.1% prior, while the M/M reading was at 0.3% vs. 0.0% expected and 0.0% prior. The unemployment rate remained unchanged at 6.5%.
Technicals
The technical price action this week showed a lot of indecision, with either traders being uncertain, or a complete standoff between buyers and sellers.
AUDUSD 1W Chart
USDJPY 1W Chart
EURUSD 1W Chart
GBPUSD 1W Chart
We will be back with another Forex Weekly Recap report next week.
Best of luck for the trading week ahead. Trade safely and responsibly.
BluetonaFX