Hi Traders!
Forex Weekly Recap for 31 July–04 August, 2023:
Fundamentals
Federal Reserve's Kashkari noted that the door remains open for a rate hike in September as the Federal Open Market Committee (FOMC) remains data-dependent. He also noted that, as it currently stands, it appears that the US will avoid a recession, and he hopes that remains true.
The European Central Bank’s (ECB) President Lagarde noted that the door remains open for a September hike and mentioned that they are closely monitoring the risks of a wage-to-price spiral. She also noted that inflation is undoubtedly falling and that the second-quarter GDP figures for France, Germany, and Spain are encouraging.
The Reserve Bank of Australia (RBA) left its interest rate unchanged at 4.10%. The key notes in their policy statement were:
The decision to leave rates unchanged gives them more time to assess the impact of the increase in interest rates to date and the outlook for Australia's economy.
Inflation in Australia is declining but is still too high.
Returning inflation to the 2% target within a reasonable timeframe is still the main priority.
Bank of Japan's (BoJ) Deputy Governor Uchida noted that he is cautious about the inflation outlook in Japan. He also noted that Japan is now at a phase where it's important to patiently maintain easy policy and that there is still quite a long way to go before conditions fall in place to raise the short-term rate target.
The Bank of England raised interest rates by 25 basis points to 5.25%. The key notes in their policy statement were:
Bank rate vote: 8-1 vs. 7-2 expected (Dhingra dissented; Haskel and Mann voted for a 50 basis point increase).
CPI inflation remains well above the 2% target.
The labour market remains tight, but there are some indications that it is loosening.
Fitch downgraded the US long-term credit rating to AA+ from AAA. According to Fitch, there has been a steady deterioration in standards of governance over the last 20 years in the US, and they forecast a general government deficit of 6.6% of GDP in 2024 and a further deficit of 6.9% of GDP in 2025.
Key Data
The Eurozone July Preliminary CPI Y/Y came in at 5.3% vs. 5.3% expected and 5.5% prior, while the M/M number came in at -0.1% vs. 0.3% expected and 0.3% prior.
The Eurozone Q2 Preliminary GDP Q/Q came in better at 0.3% vs. 0.2% expected and -0.1% prior. GDP Y/Y also came in better at 0.6% vs. 0.5% expected and 1.0% prior.
The Eurozone June Unemployment Rate came in better at 6.4% vs. 6.5% expected and 6.4% prior (revised from 6.5%).
The US ISM Manufacturing PMI came in at 46.4 vs. 46.8 expected and 46.0 prior.
The US Job Openings for June came in worse at 9.528 million vs. 9.610 million expected and 9.616 million prior (revised from 9.824 million).
New Zealand's Employment Change (Q2) came in at 1.0% vs. 0.5% expected and 0.8% prior. The Unemployment Rate came in worse at 3.6% vs. 3.5% expected and 3.4% prior.
The US ADP July Employment came in better at 324K vs. 189K expected and 455K prior (revised from 497K).
US Jobless Claims came in expected at 227K and 221K prior.
The US ISM Services PMI came in at 52.7 vs. 53.0 expected and 53.9 prior.
The US NFP came in worse at 187K jobs added vs. 200K expected and 185K prior (revised from 209K, and prior months were also revised lower). The Unemployment Rate came in better at 3.5% vs. 3.6% expected and 3.6% prior.
Canada's July Employment Change came in worse at -6.4K vs. 21.1K expected and 59.9K prior. The Unemployment Rate came in expected at 5.5%, and 5.4% prior.
Technicals
The US dollar had a strong start to the week but had a weak finish against its major counterparts.
AUDUSD 1W Chart
An indecisive week for AUDUSD. Long wicks on either side of the candle show the indecision. The market has broken under the 20 EMA and bounced off the lower Bollinger band.
USDJPY 1W Chart
USDJPY was heading towards the 145.073 resistance level until a price rejection spike just under the 144 level at 143.891. Long-term, the market still looks bullish due to the higher highs and higher lows and is also still above the 20 EMA.
EURUSD 1W Chart
EURUSD had a pullback to the 20 EMA support, bounced off it, and has now established an ascending price channel. There is potential for another re-test of 1.11000.
GBPUSD 1W Chart
GBPUSD's potential head and shoulders pattern is forming on the 1W chart; the head and left shoulder have been formed, waiting for a possible right shoulder to now form. The 20 EMA support is very strong at the moment; the market has not been below it for almost six months.
The key focus for the upcoming trading week will be:
Thursday: US CPI, US Jobless Claims
Friday: US PPI, University of Michigan Consumer Sentiment
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 31 July–04 August, 2023:
Fundamentals
Federal Reserve's Kashkari noted that the door remains open for a rate hike in September as the Federal Open Market Committee (FOMC) remains data-dependent. He also noted that, as it currently stands, it appears that the US will avoid a recession, and he hopes that remains true.
The European Central Bank’s (ECB) President Lagarde noted that the door remains open for a September hike and mentioned that they are closely monitoring the risks of a wage-to-price spiral. She also noted that inflation is undoubtedly falling and that the second-quarter GDP figures for France, Germany, and Spain are encouraging.
The Reserve Bank of Australia (RBA) left its interest rate unchanged at 4.10%. The key notes in their policy statement were:
The decision to leave rates unchanged gives them more time to assess the impact of the increase in interest rates to date and the outlook for Australia's economy.
Inflation in Australia is declining but is still too high.
Returning inflation to the 2% target within a reasonable timeframe is still the main priority.
Bank of Japan's (BoJ) Deputy Governor Uchida noted that he is cautious about the inflation outlook in Japan. He also noted that Japan is now at a phase where it's important to patiently maintain easy policy and that there is still quite a long way to go before conditions fall in place to raise the short-term rate target.
The Bank of England raised interest rates by 25 basis points to 5.25%. The key notes in their policy statement were:
Bank rate vote: 8-1 vs. 7-2 expected (Dhingra dissented; Haskel and Mann voted for a 50 basis point increase).
CPI inflation remains well above the 2% target.
The labour market remains tight, but there are some indications that it is loosening.
Fitch downgraded the US long-term credit rating to AA+ from AAA. According to Fitch, there has been a steady deterioration in standards of governance over the last 20 years in the US, and they forecast a general government deficit of 6.6% of GDP in 2024 and a further deficit of 6.9% of GDP in 2025.
Key Data
The Eurozone July Preliminary CPI Y/Y came in at 5.3% vs. 5.3% expected and 5.5% prior, while the M/M number came in at -0.1% vs. 0.3% expected and 0.3% prior.
The Eurozone Q2 Preliminary GDP Q/Q came in better at 0.3% vs. 0.2% expected and -0.1% prior. GDP Y/Y also came in better at 0.6% vs. 0.5% expected and 1.0% prior.
The Eurozone June Unemployment Rate came in better at 6.4% vs. 6.5% expected and 6.4% prior (revised from 6.5%).
The US ISM Manufacturing PMI came in at 46.4 vs. 46.8 expected and 46.0 prior.
The US Job Openings for June came in worse at 9.528 million vs. 9.610 million expected and 9.616 million prior (revised from 9.824 million).
New Zealand's Employment Change (Q2) came in at 1.0% vs. 0.5% expected and 0.8% prior. The Unemployment Rate came in worse at 3.6% vs. 3.5% expected and 3.4% prior.
The US ADP July Employment came in better at 324K vs. 189K expected and 455K prior (revised from 497K).
US Jobless Claims came in expected at 227K and 221K prior.
The US ISM Services PMI came in at 52.7 vs. 53.0 expected and 53.9 prior.
The US NFP came in worse at 187K jobs added vs. 200K expected and 185K prior (revised from 209K, and prior months were also revised lower). The Unemployment Rate came in better at 3.5% vs. 3.6% expected and 3.6% prior.
Canada's July Employment Change came in worse at -6.4K vs. 21.1K expected and 59.9K prior. The Unemployment Rate came in expected at 5.5%, and 5.4% prior.
Technicals
The US dollar had a strong start to the week but had a weak finish against its major counterparts.
AUDUSD 1W Chart
USDJPY 1W Chart
EURUSD 1W Chart
GBPUSD 1W Chart
The key focus for the upcoming trading week will be:
Thursday: US CPI, US Jobless Claims
Friday: US PPI, University of Michigan Consumer Sentiment
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