Behind us the last week before Christmas, which compared with the whole December was probably the calmest period. There were, however, significant macroeconomic publications that influence fluctuations of exchange rates even though their number was rather insignificant.
What in particular affected the course of American dollar were published on Wednesday, weekly oil stocks in the local market. After a strong decline last week by 2.6 million barrels, investors expected a comparable depreciation of 2.5 million. These however, as usual surprised and were at altitude of 2.256 million.
On Wednesday we met data of sale of existing property, which despite worse forecasts at 5.50 m compared to the previous reading of 5,60M (revised to 5,57M) in November has improved and reached 5,61M.
On Thursday we met positive data of basis orders of fixed assets, which compared month-on-month (m/m) despite forecasts of 0.2% in November amounted to 0.5% and GDP which has been significantly improved, both in relation to the last reading 3.2% as well as forecasts of 3.3% in the third quarter (Q3) amounted to 3.5%.
The last important publication having effect on strengthening of the US Dollar in Friday readings were sales of new real estate, which has significantly improved, and despite the already better forecasts of 575K from the previous 563K reading in November amounted to up to 592K.
This week we also met some extremely positive publications on our domestic market. Both Monday and Friday readings surprise us positively : Industrial production grows to 3,3% and unemployment falls to 8,2%
Let’s get to the charts …
AUDUSD
As a result of ongoing from the beginning of the week declines market came on Friday to assumed in the last week support 0.7170 coinciding with the 127% Fibonacci levels of the external measurement of the previous impulse and measuring 161.8% of last upward correction. The rejection of this level could trigger a bullish correction for which potential target could be around level of 0.7330.
If, however, the supply will overcome the current zone and the declines will continue, then we would expect to test even neighborhood of level 0.6840.
EURUSD
For over more than a week market was moving in a consolidation where upper limit coincides with the level of 38.2% Fibonacci correction of the earlier declines. From Thursday, we can also see a smaller consolidation which its lower limit at 1.0432 is around the level of momentum of 50% Fibonacci correction of the ongoing from Tuesday to Thursdays increases. Only breakout from this consolidation could determine future direction of this instrument. Taking into account the current strength of the US Dollar and the fact that “large” consolidation is a correction of earlier declines seems more probable breaking down and continuation of previous trend.
What has supported growth in the beginning of the week were most important readings on the European currency published on Monday wages in the euro zone, which year-over-year (y/y) improved in the third quarter (Q3) and amounted 1.60% ( previous reading of 0.90%).
GBPUSD
As a result of the ongoing declines since beginning of the week, on Tuesday market overcame support area around last week’s lows. From Tuesday afternoon we saw a bullish correction, which after re-testing has rejected the said zone from the bottom (as resistance). It is worth noting that this level also coincided precisely with the measuring 38.2% of Fibonacci correction of the earlier declines.
Finally price broke bottom of the bullish channel and overcame support around 1.2320, and thus in the coming days market continued to decline.
The most important publications for the British Pound on Friday were readings of GDP, which in relation q/ q improved and, despite forecasts unchanged at 0.5% in the third quarter was 0.6%, while year-over-year (y/y) despite forecasts on current level of 2.3% finally was only 2.2%
USDCAD
As a result of ongoing growth market last week was again around November highs and level 1.3570 coinciding with the momentum of 50% Fibonacci correction of the earlier declines. In this area, we could expect a re-emergence of a strong response from bears but for this probably we will have to wait.
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In addition to the aforementioned data regarding weekly oil stocks Canadian dollar exchange rate was also affected by :
- Tuesday’s wholesale readings which, although better forecasts of 0.6% compared to the previous reading -1.2% (revised to -1.5%) in December ranked as much as 1.1%.
- The base CPI, which both the month-on-month (m/m) as well as the year-on-year (y y) deteriorated
- Basic retail sales, which despite better forecasts of 0.7% compared to the previous reading 0.0% (revised up to 0.3%) has improved and finally reached 1.4%. It is worth noting that this is the best result since April 2015.
- Friday’s publication of GDP, which although worse forecasts of 0.1% compared to the previous reading of 0.3% (revised up to 0.4%) was negative and was -0.3%.
USDJPY
Although on chart we don’t observe increased volatility and considering the last few weeks, we can say that market behaved extremely sluggishly moving for most of the week in a consolidation is worth recalling that on Tuesday night we met the decision of BoJ on policy monetary which decided to leave interest rates unchanged at -0.10%.
What we learned after the meeting of BoJ?
There are no surprises from chief of BoJ Haruhiko Kuroda – short-term target for the interest rate is still -0.1% target yield of 10-year JGB is about 0%, and the purchase of government bonds is still on the annual ceiling of 80 trillion yen. Markets expected hawkish changes in business ratings and those actually were made. Full text of the statement can be downloaded here and detailed summary of both the BoJ meeting and subsequent press conference here.
What awaits us in coming week?
After already relatively quiet week next proves to be even more “boring”. This will be the last week of the year and in connection with Christmas Monday is a public holiday, and in many countries even Tuesday is considered as a day off from work.The only publications that may have effect on increasing dynamics on the markets will come from the United States:
Taking the opportunity, I would like to wish a healthy and peaceful holidays spent with family and friends. Let this be a time free of all worries and stress so you can rest not only from daily work but also from the charts and if this year you was kind and behaved properly may you find under Christmas tree a pleasant surprise that will make you happy ?
