Weekly Recap 23rd – 30th December ’16

Forex markets ended 2016 with a surprisingly volatile week that was highlighted by the flash-crash of the U.S. Dollar on Friday. Precious metals were active all week long as the European banking worries and the late week correction in stocks helped the safe haven assets. The Japanese Yen also drifted higher in the low volume environment, while the U.S. Dollar also declined slightly in choppy trading. The Canadian Dollar was the weakest major in the first half of the week, as the prior GDP releases weighed heavily on the currency. The Australian Dollar and the New Zealand Dollar both hit new long-term lows before bouncing higher amid the broad Dollar correction.

 

Let’s see how the most important pairs ended the year!

EUR/USD:

The week in numbers

The Euro had a slightly bullish week once again following a negative start, as it finished higher after Friday’s spike at 1.0517 with a small gain of 69 pips or 0.62%, from an opening rate of 1.0448. The cross had a wide 287-pip weekly range, with a low of 1.0361 and a weekly high of 1.0648. The pair closed the week below the 161.8% Fibonacci extension level at 1.0780.

Fundamentals

The Euro continued to consolidate above the recent 13-year lows, as the mixed economic releases and the central bank related speculation still provided conflicting pressures. The Eurozone M3 Money Supply came in above the expected 4.4% rate, with an annualized reading of 4.8%. Private Loans were in line with expectations in the same period, coming in at 1.9%. The Euro jumped higher towards the end of the week following the mostly bullish numbers, amid the Dollar correction.

Technical picture

The Euro traded inside a short-term consolidation pattern all week long before surging above the 1.05 and finishing near the top of the range. The dominant uptrend is still intact. Strong resistance is still found at the current rate near1.0500, at 1.0850 and above that at 1.100, while support is near 1.0250 and below that around parity. The MACD is overbought while the short-term Stochastic is oversold going into the weekend.

Trading Range: 1.1000 – 1.0250

Weekly Support & Resistance Levels

R3: 1.0634

R2: 1.0527

R1: 1.0468

Pivot Point: 1.0419

S1: 1.0359

S2: 1.0311

S3: 1.0203

GBP/USD:

The week in numbers

The Pound had a consolidation week between the holidays and finished on a positive note at 1.2349 for a gain of of 73 pips or 0.56%, from an opening price of 1.2276. Cable had a weekly range of 196 pips with a low of 1.2198 and a high of 1.2394. GBP/USD closed the week well below the 261.8% Fibonacci extension level at 1.2785 on Friday.

Fundamentals

The Pound is still under strong pressure, as Brexit related worries are hurting the currency once again. The renewed banking worries in the Eurozone are also weighing on the currency. The better than expected U.S. releases pushed Cable lower in during the week, with the multi-decade lows near 1.20 still being in danger. The cross has been trading sideways around the Christmas holidays, and trading volumes remained low all week long.

Technical picture

The pair corrected slightly after the strong decline in recent weeks, but remains just below the all important 1.2350 level, slightly above the multi-decade lows near 1.20. 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 overbought while the short-term Stochastic is neutral going into the weekend.

Trading Range: 1.2900 – 1.1900

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 drifted lower all week long as volatility remained low until Friday’s session, and it finished at 116.95 with a small loss of 38 pips or -0.31% after opening at 117.38. The cross hit a weekly high of 117.80 and a low of 116.12 for a weekly range of 168 pips. The cross closed the week well above the full Fibonacci retracement level at 115.50 again on Friday.

Fundamentals 

The slightly hawkish Bank of Japan Summary of Opinions report pushed the pair sharply lower on Thursday. The Japanese Yen remained relatively strong compared to the other majors all week long. U.S. Pending Home Sales came in at -2.5%, well below the expected rise of 0.6%. The U.S. Goods Trade Balance was worse than expected, with a deficit of -65.3 billion, despite the recent strength in the Dollar. Wholesale Inventories also grew by more than expected in the crucial Christmas period, putting more pressure on the USD in the second half of the week.

Technical picture

The pair briefly exited a triangle consolidation pattern but when well below the upper boundary after a late-week decline, albeit still inside a long-term uptrend. 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

   

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 traded sideways throughout the holiday-shortened week and finished close to the opening rate after a bearish ending at 0.7199, for a small gain of 17 pips or 0.25% after opening at 0.7182. The pair had a weekly trading range of just 86 pips with a high of 0.7247 and a low of 0.7161. The cross finished the week below the 61.8% Fibonacci support level at 0.7215 on Friday.

Fundamentals 

The Aussie remained relatively weak throughout the week despite the sharp correction in the Greenback in the second half of the period. With no major releases coming out around the holidays, the pair was influenced by commodity prices, the reemerging Asian worries, and the broad moves in the USD. Precious metals had a bullish, but volatile week, while oil drifted slightly higher. The positive trends couldn’t lift the currency, as it remained near its 7-month lows.

Technical picture

The cross has been inside a narrow consolidation pattern this week, amid thin trading. The pair is still trading in a strong declining long-term trend, after breaking below several key support level in previous weeks. Crucial support is still 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 neutral while the short-term Stochastic is oversold going into the weekend.

Trading Range: 0.7750 – 0.7150

Weekly Support & Resistance Levels

R3: 0.7296

R2: 0.7241

R1: 0.7207

Pivot Point: 0.7185

S1: 0.7151

S2: 0.7129

S3: 0.7073

USD/CAD:

The week in numbers

The pair finished lower after a positive start to the week, as it fell sharply on Thursday and Friday and closed at 1.3424, for a loss of 108 pips or 1.46%, from an opening price of 1.3532. The cross traded in a 199-pip range with a weekly high of 1.3598 and a low of 1.3399. The pair finished the week still above the 61.8% retracement level at 1.3385 on Friday.

Fundamentals 

The Canadian Dollar finished the period slightly higher after a strongly negative period, despite the mostly bearish economic releases coming out from the country recently. Crude oil finished the week above the $52.50 level again, but still below the recent highs near $55. Last week’s huge negative surprise in the monthly Canadian GDP print still pushed the Loonie lower this week, although the currency gained relative strength towards the end of the period

Technical picture

The pair is still inside a long-term trading range after briefly trading above the 1.3550 level this week, with the overall picture remaining neutral for now. 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 is oversold while the short-term Stochastic is neutral going into the weekend.

Trading Range: 1.3750 – 1.3015

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

2-Jan Mon

EUR

Markit/ADACI Italy Manufacturing PMI

08:45

 

EUR

Markit France Manufacturing PMI

08:50

 

EUR

Markit/BME Germany Manufacturing PMI

08:55

 

EUR

MarkitEurozone Manufacturing PMI

09:00

 

CAD

RBC Canadian Manufacturing PMI

14:30

 

AUD

AiG Performance of Manufacturing Index

22:30

 

AUD

CoreLogic House Px (MoM)

23:00

 

JPY

Nikkei Japan PMI Mfg

00:30

3-Jan Tue

AUD

Commodity Index AUD

05:30

 

AUD

RBA Commodity Index SDR (YoY)

05:30

 

EUR

German Unemployment Change

08:55

 

EUR

German Unemployment Rate s.a.

08:55

 

GBP

Markit UK PMI Manufacturing SA

09:30

 

CAD

MLI Leading Indicator (MoM)

12:00

 

EUR

German Consumer Price Index (YoY)

13:00

 

USD

ISM Manufacturing

15:00

 

USD

Construction Spending (MoM)

15:00

 

USD

Total Vehicle Sales

 

 

JPY

Official Reserve Assets

 

 

USD

Domestic Vehicle Sales

 

4-Jan Wed

EUR

Markit/ADACI Italy Services PMI

08:45

 

EUR

Markit/ADACI Italy Composite PMI

08:45

 

EUR

Markit France Composite PMI

08:50

 

EUR

Markit France Services PMI

08:50

 

EUR

Markit Germany Services PMI

08:55

 

EUR

Markit/BME Germany Composite PMI

08:55

 

EUR

MarkitEurozone Services PMI

09:00

 

EUR

MarkitEurozone Composite PMI

09:00

 

GBP

Net Lending Sec. on Dwellings

09:30

 

GBP

M4 Money Supply (MoM)

09:30

 

GBP

Markit/CIPS UK Construction PMI

09:30

 

GBP

Net Consumer Credit

09:30

 

GBP

Mortgage Approvals

09:30

 

EUR

Euro-Zone Consumer Price Index – Core (YoY)

10:00

 

USD

MBA Mortgage Applications

12:00

 

USD

U.S. Fed Releases Minutes from Dec. 13-14 FOMC Meeting

19:00

 

AUD

AiG Performance of Service Index

22:30

 

JPY

Loans & Discounts Corp (YoY)

23:50

 

JPY

Monetary Base (YoY)

23:50

 

EUR

ECB account of the monetary policy meeting

 

 

JPY

Nikkei Japan PMI Services

00:30

 

JPY

Nikkei Japan PMI Composite

00:30

5-Jan Thu

JPY

Vehicle Sales (YoY)

05:00

 

EUR

Markit Germany Construction PMI

08:30

 

GBP

New Car Registrations (YoY)

09:00

 

EUR

Markit Germany Retail PMI

09:10

 

EUR

MarkitEurozone Retail PMI

09:10

 

EUR

Markit France Retail PMI

09:10

 

GBP

Official Reserves (Changes)

09:30

 

GBP

Markit/CIPS UK Composite PMI

09:30

 

GBP

Markit/CIPS UK Services PMI

09:30

 

EUR

Euro-Zone Producer Price Index (MoM)

10:00

 

USD

Challenger Job Cuts (YoY)

12:30

 

USD

ADP Employment Change

13:15

 

USD

Initial Jobless Claims

13:30

 

CAD

Industrial Product Price (MoM)

13:30

 

CAD

Raw Materials Price Index (MoM)

13:30

 

USD

Markit US Composite PMI

14:45

 

USD

Markit US Services PMI

14:45

 

USD

ISM Non-Manufacutring Composite

15:00

 

USD

DOE U.S. Crude Oil Inventories

16:00

 

JPY

Real Cash Earnings (YoY)

00:00

 

AUD

Trade Balance (Australian dollar)

00:30

6-Jan Fri

EUR

German Factory Orders n.s.a. (YoY)

07:00

 

GBP

Unit Labor Costs (YoY)

09:30

 

EUR

Euro-Zone Economic Confidence

10:00

 

EUR

Euro-Zone Retail Sales (YoY)

10:00

 

USD

Trade Balance

13:30

 

USD

Revisions: Household Survey Data

13:30

 

CAD

International Merchandise Trade (Canadian dollar)

13:30

 

USD

Two-Month Payroll Net Revision

13:30

 

USD

Change in Private Payrolls

13:30

 

CAD

Participation Rate

13:30

 

CAD

Unemployment Rate

13:30

 

CAD

Net Change in Employment

13:30

 

USD

Unemployment Rate

13:30

 

USD

Change in Non-farm Payrolls

13:30

 

USD

Durable Goods Orders

15:00

 

USD

Fed’s Evans Speaks

17:15

 

USD

Baker Hughes U.S. Rig Count

18:00