Weekly Recap 16th – 23rd December ’16

Forex markets had a relatively quiet week before the Christmas weekend, as trading volumes and volatility declined sharply. The decline of the Pound was the most dominant trend of the week as Brexit fears reemerged after a period of relative strength for the currency. The Dollar rally stalled following the hawkish monetary statement of the Federal Reserve. Commodity currencies also declined throughout the week, as the looming trade wars between the U.S. and China weighed heavily on the segment. The Canadian Dollar got close to its long-term lows, while the New Zealand Dollar and the Aussie both fell to new 6-month lows, as the region underperformed.

 

Let’s see how the most important pairs performed this week!

EUR/USD:

The week in numbers

The Euro had a slightly bullish week, as it drifted higher after an initial decline and finished at 1.0448 with a small gain of 18 pips or 0.12%, from an opening rate of 1.0430. The cross had a 148-pip weekly range, with a low of 1.0352 and a weekly high of 1.0500. The pair closed the week below the 161.8% Fibonacci extension level at 1.0780.

Fundamentals 

The Euro consolidated above the recent 13-year lows, as the mixed economic releases and the central bank related speculation provided both upward and downward pressures. The better than expected German IFO Business Climate Index helped the currency in the middle of the period, but the bullish U.S. numbers pushed the pair back near the 1.04 level towards the end of the week.

Technical picture

The Euro remained inside the dominant declining short-term trend channel, after touching the upper boundary of the pattern in late trading yesterday. Strong resistance is still found at 1.0500, near 1.0850 and above that at 1.100, while support is near 1.0250 and below that around parity. The MACD and the short-term Stochastic are both neutral going into the weekend.

Trading Range: 1.1000 – 1.0250

 eurusdh1_12_24

Weekly Support & Resistance Levels

R3: 1.1245

R2: 1.0969

R1: 1.0790

Pivot Point: 1.0693

S1: 1.0514

S2: 1.0416

S3: 1.0140

GBP/USD:

The week in numbers

The Pound had a very bearish week as it fell almost every day and closed near its weekly lows at 1.2276 for a large loss of 298 pips or -2.36%, from an opening price of 1.2574. Cable had a weekly range of 224 pips with a low of 1.2278 and a high of 1.2502. GBP/USD closed the week well below the 261.8% Fibonacci extension level at 1.2785 on Friday.

Fundamentals

The Pound continued lower despite some encouraging economic numbers in the second half of the week. Public Sector Net Borrowing was below the expected level, but the Final GDP Print and the Current Account Balance were both well above the consensus estimate. The better than expected U.S. Durable Goods Report, and the positive housing data gave another boost to the downtrend, as the Dollar remains strong.

Technical picture

The pair started a new leg down in the dominant downtrend after exiting a steep trend channel earlier on this week. Crucial support is now found at 1.2150 and below that at 1.1900 with strong resistance near 1.2350 and at 1.2500. The MACD is neutral while the short-term Stochastic is oversold going into the weekend.

Trading Range: 1.2900 – 1.1900

 gbpusdh1_12_24

Daily Support & Resistance Levels

R3: 1.2513

R2: 1.2412

R1: 1.2346

Pivot Point: 1.2311

S1: 1.2245

S2: 1.2210

S3: 1.2108

USD/JPY:

The day in numbers

The pair consolidated all week low as volatility declined sharply, and it ended the period virtually unchanged at 117.33 with a small loss of 63 pips or -0.53% after opening at 117.96. The cross hit a weekly high of 118.18 and a low of 116.57 for a weekly range of 161 pips. The cross closed the week well above the full Fibonacci retracement level at 105.50 again on Friday.

Fundamentals 

The decline of the Japanese Yen came to a halt as the Bank of Japan’s meeting failed to surprise the market in a substantial way. The calm week saw a slight rebound for the currency, despite the initial decline following the central bank’s announcement. The renewed worries regarding the Chinese economy and the trade relations between the U.S. and China weighed on the region, but the oversold Yen still finished on a positive note against its major counterparts.

Technical picture

The pair still trades in a short-term symmetrical triangle pattern, as volatility collapsed in recent days. The long-term rising trend channel is still intact, despite the recent correction. Support is still found near the 115.50 and 113.50 levels, and at 110.50. Resistance now lies ahead around 118.50, and above that near 120.00.The MACD and the short-term Stochastic are both neutral going into the weekend.

Trading Range: 120.00 – 115.50

   usdjpyh1_12_24

Weekly Support & Resistance Levels

R3: 118.76

R2: 118.15

R1: 117.82

Pivot Point: 117.54

S1: 117.21

S2: 116.93

S3: 116.32

AUD/USD:

The week in numbers

The Aussie continued to trend lower all week long and finished close to the weekly lows at 0.7182, for a large loss of 112 pips or -1.54% after opening at 0.7294. The pair had a weekly trading range of 134 pips with a high of 0.7293 and a low of 0.7159. The cross finished the week below the 61.8% Fibonacci support level at 0.7215 on Friday.

Fundamentals 

The Aussie lost ground compared to the U.S. Dollar despite the stability of the USD, and commodity prices, as Chinese worries weighed heavily on the currency. The worse than expected fiscal outlook also put pressure on the Australian Dollar, while the bullish New Zealand GDP print caused a slight bounce in the region on Thursday. The Aussie is now deeply oversold, as it trades at fresh 6-month lows, but the U.S. Dollar’s advancing trend might still continue.

Technical picture

The pair is still trading in a strong declining trend, after breaking below several key support level during the week. Crucial support is now found at 0.7150 and around the 0.7000 level. Strong resistance is ahead near 0.7250, and above that at 0.7450. The MACD is slightly oversold while the short-term Stochastic is neutral going into the weekend.

Trading Range: 0.7750 – 0.7150

 audusdh1_12_24

Weekly Support & Resistance Levels

R3: 0.7344

R2: 0.7283

R1: 0.7249

Pivot Point: 0.7223

S1: 0.7189

S2: 0.7162

S3: 0.7101

USD/CAD:

The week in numbers

The pair jumped higher again in the second half of the week following a brief consolidation period and finished near the highs at 1.3532, for a gain of 182 pips or 1.46%, from an opening price of 1.3347. The cross traded in a 240-pip range with a weekly high of 1.3557 and a low of 1.3317. The pair finished the week back above the 61.8% retracement level at 1.3385 on Friday.

Fundamentals 

The Canadian Dollar continued lower amid the mostly bearish economic releases and the sideways price action in commodities. Crude oil finished the week near the $52.50 level again, well below the recent highs near $55. The monthly Canadian GDP print was well below expectations on Friday, causing a late decline in the already battered currency. Wholesale Sales and Retail Sales were both better than expected, but that didn’t change the underlying bearish trend of the Loonie.

Technical picture

The pair is now trading in a clear short-term uptrend after starting a new leg up this week, approaching the upper boundary of the long-term neutral trading range. Crucial support is still found near the 1.3385level and around 1.3185. Strong resistance is ahead at 1.3450, and near 1.3550. The MACD and the short-term Stochastic are both overbought going into the weekend.

Trading Range: 1.3750 – 1.3015

 usdcadh1_12_24

Weekly Support & Resistance Levels

R3: 1.3689

R2: 1.3579

R1: 1.3529

Pivot Point: 1.3469

S1: 1.3419

S2: 1.3359

S3: 1.3248

Economic Data Release

Note: All times are in GMT.

   

 

 

Date

Currency

Event

Time

25-Dec Sun

JPY

Corporate Service Price (YoY)

23:50

 

JPY

BOJ Minutes of Oct. 31-Nov.1 Meeting

23:50

 

JPY

BOJ Kuroda speaks in Keidanren

04:00

26-Dec Mon

JPY

Coincident Index

05:00

 

JPY

Leading Index

05:00

 

JPY

Job-To-Applicant Ratio

23:30

 

JPY

Household Spending (YoY)

23:30

 

JPY

National Consumer Price Index Ex-Fresh Food (YoY)

23:30

 

JPY

Jobless Rate

23:30

 

JPY

Tokyo Consumer Price Index (YoY)

23:30

 

JPY

National Consumer Price Index (YoY)

23:30

 

JPY

National Consumer Price Index Ex Food, Energy (YoY)

23:30

 

JPY

Tokyo Consumer Price Index Ex Food, Energy (YoY)

23:30

 

EUR

German Retail Sales (MoM)

 

 

EUR

German Import Price Index (MoM)

 

27-Dec Tue

JPY

Housing Starts (YoY)

05:00

 

JPY

Construction Orders (YoY)

05:00

 

JPY

Natl CPI Ex Fresh Food, Energy (YoY)

05:00

 

JPY

Small Business Confidence

05:00

 

JPY

Annualized Housing Starts

05:00

 

USD

S&P/Case-Shiller Composite-20 (YoY)

14:00

 

USD

Consumer Confidence

15:00

 

USD

Richmond Fed Manufacturing Index

15:00

 

USD

Dallas Fed Manufacturing Activity

15:30

 

JPY

Industrial Production (MoM)

23:50

 

JPY

Retail Trade s.a. (MoM)

23:50

 

JPY

Large Retailers’ Sales

23:50

 

GBP

Nationwide House Prices n.s.a. (YoY)

 

 

JPY

Vehicle Production (YoY)

04:00

28-Dec Wed

 

 

 

 

GBP

BBA Loans for House Purchase

09:30

 

USD

MBA Mortgage Applications

12:00

 

USD

Pending Home Sales (YoY)

15:00

 

JPY

BOJ Summary of Opinions at Dec.19-20 Meeting

23:50

 

CAD

CFIB Business Barometer

 

29-Dec Thu

EUR

Euro-Zone M3 s.a. (YoY)

09:00

 

USD

Advance Goods Trade Balance

13:30

 

USD

Initial Jobless Claims

13:30

 

USD

EIA Natural Gas Storage Change

15:30

 

USD

EIA Working Natural Gas Implied Flow

15:30

 

USD

DOE U.S. Crude Oil Inventories

16:00

 

AUD

Private Sector Credit (MoM)

00:30

30-Dec Fri

USD

Chicago Purchasing Manager

14:45

 

USD

Baker Hughes U.S. Rig Count

18:00