Solforex.com - Weekly/Daily Forex Market Analysis

[limyeeshin]

Thursday 14 April 2016​

U.S. dollar rebounds despite slow economic reports

The dollar hit one-week highs against other major currencies despite disappointing U.S. economic data, recovering from sharp loss in previous week. In the U.S., March retail sales fell by 0.3% following 0.1% drop in earlier month and compared to 0.1% gain expected. Core retail sales also rose 0.2%, below the expectations of 0.4% rise. Another report of producer prices fell by 0.1% in March, disappointing 0.4% gain expected. The producer prices slipped 0.1% in yearly basis, below 0.3% increase seen. Core PPI also slipped 0.1%, compared to expected 0.1% uptick. The dollar however rebounded from its previous sharp loss from Federal Reserve’s dovish stance toward next hike last week. USD/JPY pair gained 0.51%, traded at 109.19. The dollar’s strength was up 0.67% against other major currencies at 94.65.

The euro drops sharply as dollar bounces

The euro fell sharply against the dollar, hitting its lowest level in two weeks as strong China exports buoyed slumping of the dollar. The release of strong economic data reduced the concerns against the global economy slowdown. The dollar boosted after the Chinese government reported that exports sharply rose by 11.5% in March, beating 2.5% gains seen and following 25% collapse in previous month. The upbeat report bolstered investor confidence and bolstered the dollar. The EUR/USD pair was affected by the dollar’s bounce and fell 0.93%, traded at 1.1277.

Aussie gains with limit despite improved jobs report

The Australian dollar was bullish in early Asia on Thursday ahead of jobs report as widely expected to improve. The Australian employment report came in at 26,100 jobs added, above 20,000 gains expected. The unemployment rate also fell to 5.7% from 5.9%. The Aussie shrugged off upbeat data as Singapore dollar eased that added concerns on Asian currencies growth. AUD/USD traded at 0.7647, down 0.08% from early trade.

Major pairs

USD/JPY ↑0.04% 109.38
EUR/USD ↓0.10% 1.1264
USD/CAD ↑0.28% 1.2852
GBP/USD ↓0.44% 1.4141
USD/CHF 0.00% 0.9669
AUD/USD ↓0.09% 0.7660


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[limyeeshin]

Edition 51｜April 18, 2016​

The U.S. dollar shortened its gain against other major currencies on Friday after the release of downbeat U.S. economic reports. The U.S. industrial production fell by 0.6%, worse than expected drop of 0.1%. Manufacturing sector fell by 0.3% and capacity utilization rate also fell to 74.8%, below 75.4% expected and from 75.3% in previous month. Another report from University of Michigan of consumer sentiment came in at 89.7 in April, compared to 91.0 in March and disappointing expectation of 92.0. Economy sentiment also fell to 105.4 from 105.6. The release of blunt reports supported the view that the Federal Reserve is likely to continue cautious stances toward future rate hike. The dollar itself fell 0.27% against other major currencies, but was still up 0.46% for the week. EUR/USD pair shortened its loss by 0.17%, but still ended the week down 1.06%. USD/JPY also slid 0.6% to 108.77, but with 0.44% gain on the week.

Commodity linked currencies slumped early on Monday after global oil producers failed to agree on an output freeze. A deal to freeze oil production by OPEC and non-OPEC producers fell apart on Sunday after Saudi Arabia protested that all OPEC countries including Iran should join the agreement, but Iran did not join the meeting. The Failure in freezing agreement led the oil prices dropped over 6% with crude sliding to $37.68 a barrel, while Brent dropped to $40.18 per barrel.

Investor rushed to safe-haven yen and EUR/JPY pair hit three-year highs at 122.00 before settling at 122.25. Canadian dollar and Australian dollar both fell more than 1% in early trade. Previously, commodity linked currencies were generally higher with improved China’s economy. The Aussie rallied more than 2% with lowered views on rate cut by the central bank with improved data. NZD/USD also gained 1.5% for the week at 0.6916. In NZ, the first quarter consume report came in line with expectation on Monday, and slid 0.16% with the oil price impact.

In the week ahead, investors will pay attention to the European Central Bank’s monetary policy meeting on Thursday followed by data on private sector activity on Friday.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, April 18
New Zealand is to release data on consumer price inflation.
China is to report on housing prices.
The U.S. is to publish housing market index.
Canada is to release data on foreign securities purchases.


Tuesday, April 19
The Reserve Bank of Australia is to release its recent monetary policy meeting minutes.
In Germany, ZEW Institute is to report on economic sentiment in the Eurozone.
Eurozone is to release data on construction production.
The U.S. is to publish data on housing starts and building permits.
The Reserve Bank of Australia Governor Glenn Stevens is to speak at an event in New York.


Wednesday, April 20
Japan is to publish data on trade balance and machinery orders.
In Australia, Westpac is to release composite leading index.
The U.K. is to report on unemployment rate and average weekly earnings.
Germany is to release data on producer price inflation.
Canada is to publish data on wholesale sales.
The U.S. is to release data on existing home sales.


Thursday, April 21
Australia is to release NAB economic sentiment report.
The U.K. is to publish data on retail sales.
In the Eurozone, the ECB is to hold monetary policy meeting and announce its policy decision followed by a press conference with President Mario Draghi.
The U.S. is to release data on initial jobless claims and Philadelphia and Chicago region manufacturing.


Friday, April 22
Japan is to release Nikkei manufacturing report.
Eurozone is to publish data on manufacturing and service sector.
Canada is to release data on core consumer price inflation and core retail sales.
The U.S. is to close week with release of PMI manufacturing index.


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[limyeeshin]

Thursday 21 April 2016​

Euro falls sharply ahead of ECB meeting

The euro plunged against the U.S. dollar on Wednesday, cutting off from three-day winnings as crude oil futures jumped to fresh five year highs on Wednesday and boosted the dollar. The European Central Bank President Mario Draghi indicated market friendly stances ahead of Thursday’s monetary policy meeting, weakened the euro. Previous month, the euro rallied substantially after Draghi said there might not be further rate cuts if the recent stimulus worked well. The ECB is broadly expected to keep the rates unchanged at the record lows. EUR/USD fell 0.54% on Wednesday’s session, closed at 1.1298. EUR/JPY traded just above 124.00.

U.S. dollar surges with soaring in oil prices

The greenback gained in line with rise in oil prices on Wednesday, and rose markedly in afternoon trading. The U.S. Energy Information Administration (EIA) reported that the U.S. commercial crude oil inventories increased by 2.1 million barrels for the week, below 2.4 million seen and compared to 6.6 million barrels previously. Consequently, concerns on overstock are eased and WTI crude surged more than 3%, surpassing $44 per barrel. Both WTI and Brent crude futures hit highest level since November. A separate report from National Association of Retailers said existing home sales rose by 5.1% to 5.33 million unit sales, compared to 5.07 units in previous month. The U.S. dollar rose 0.50% against other major currencies at 94.54. USD/JPY traded steady at 109.84.

Yen holds steady and commodity currencies rise

Japanese yen held steady in Asia despite weaker corporate loan demand report by Bank of Japan. Bank of Japan has its meeting on 28th of April and it is widely expected that BOJ members to talk on further easing as concerns on strength of the yen. Commodity linked currencies generally held higher following improvement in Chinese economic reports, giving hopes on outlook for raw material demand. AUD/USD traded at 0.7809, rising 0.10%. Canadian dollar also rose 0.07%, traded at 1.2647.

Major pairs (Thursday update)

USD/JPY ↓0.03% 109.81
EUR/USD ↓0.04% 1.1291
USD/CAD ↓0.09% 1.2645
GBP/USD ↑0.03% 1.4338
USD/CHF ↓0.09% 0.9717
AUD/USD ↑0.19% 0.7810
NZD/USD ↓0.04% 0.6973


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[limyeeshin]

Edition 52｜April 26, 2016​

Japanese yen slightly shortened the loss in Asia on Tuesday while investors await comments from the Bank of Japan and the Federal Reserve this week on their monetary policies. The yen had a steep drop of 2.1% last Friday after Bloomberg said the Bank of Japan could expand its negative interest rate at the monetary policy meeting on Thursday. There are views from some investors that the central bank will not extend further easing measures as the impact of the negative rate policy started in January is still being assessed. It is widely expected that the BoJ is to cut its forecast on growth and inflation as current strong yen and earthquake this month encumbered supply chains. USD/JPY traded at 111.15, shortened 0.04%.

The U.S. dollar remained broadly lower against other major currencies after release of downbeat housing data. The U.S. Commerce Department reported new home sales dropped by 1.5% at 511,000 units last month. Also, February new home sales were revised to 0.4% decline at 519,000 units, from previous reading of 2.0% gain. Investors await the Federal Open Market Committee’s meeting to indicate further on the pace of future rate hikes. The dollar was volatile in recent weeks after dovish comments from Fed members that the central bank will remain on cautious move toward next rate hike due to backlash from global financial markets. The dollar dropped 0.40% against other major currencies at 94.73.

The euro rose modestly against the dollar as investors continued to wait for the start of FOMC meeting. In the Eurozone, German Ifo Institute reported that the business climate index in April fell by 0.1% to 106.6, below 107.0 seen. EUR/USD gained 0.36%, traded at 1.1263. The British pound also rose as the Brexit concerns ebbed. The U.S. President Obama warned in the weekend that Britain would be at the “back of the queue” to arrange a trade deal with the U.S. in the event of Brexit. GBP/USD gained 0.59% at 1.4489. USD/CHF pair also slid 0.42% to 0.9747.

Commodity related currencies were generally firm, with AUD/USD rising 0.16% to 0.7723 and NZD/USD adding 0.10% to 0.6860 while markets in Australia and New Zealand were closed for Anzac day on Monday. There is also the Reserve Bank of New Zealand’s rate decision on Thursday. USD/CAD held steady at 1.2671.

In the week ahead, investors will pay attention to the euro zone’s preliminary data on first quarter growth and inflation. Wednesday’s FOMC meeting will be also in focus for further indication of future monetary tightening path. Bank of Japan’s rate statement on Thursday will be also closely watched.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Tuesday, April 26
The U.S. is to release bundle of data on durable goods orders, consumer confidence, PMI service sector and Richmond region manufacturing.
Bank of Canada Governor Stephen Poloz is to speak at an event in New York.

Wednesday, April 27
New Zealand is to publish report on the trade balance.
Japan is to release data on industrial activity.
China is to release industrial product index.
Australia is to publish data on consumer price inflation for first quarter.
The U.K. is to report on first quarter GDP growth.
Germany is to release data on import and export prices and retail sales.
The Federal Reserve is to release the minutes of FOMC meeting and announce its benchmark rate and publish its rate statement.

Thursday, April 28
The Reserve Bank of New Zealand is to announce its benchmark rate and publish rate statement.
Bank of Japan is to release the monetary policy meeting minutes followed by the rate announcement.
Japan is also to publish bundle of data on household spending, core consumer price inflation, retail sales, unemployment rate, and housing starts.
Germany is to release data on consumer price inflation.
The U.S. is to report on first quarter GDP growth and weekly initial jobless claims.

Friday, April 29
Markets in Japan are closed for Showa Day holiday.
Australia is to release data on producer price inflation.
Eurozone is to report on unemployment rate, core consumer prices, and first quarter GDP growth.
Germany is to publish data on retail sales.
Canada is to release its monthly report on GDP.
The U.S. is to publish reports on personal income and expenses, core PCE prices, and Chicago region manufacturing.


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[limyeeshin]

Thursday 28 April 2016​

Yen boosts as BoJ keeps policy steady

Japanese yen boosted on Thursday after Bank of Japan held monetary policy steady at 80 trillion yen annually and forwent further moves toward negative interest rate policy with the downside risks to a 2% target rise. Yen dropped before the BoJ meeting as Bloomberg reviewed that the BoJ could expand the negative rate placed in January. Meanwhile in Japan, the provisional industrial production in March rose 3.6%, above 2.9% gain expected, while retail sales fell 1.1%, less than 1.5% drop seen. Another report of house hold spending eased 5.3% in March, further than 4.2% drop seen. Core CPI and unemployment rate also fell but as expected. USD/JPY changed hands and traded at 109.34, down 1.90%

Dollar drops with neutral FOMC statement

The dollar fell against other major currencies as the Federal Reserve kept the neutral stance on monetary policy with keeping the rate at current level. The April monetary policy statement by FOMC was relatively neutral, keeping the funds rate unchanged at 0.25-0.50%. The FOMC lifted the rate by 25b.p after seven years with zero rate policy. The FOMC said the future adjustments to the Federal Funds rate will depend on economic conditions, labor market conditions and inflation expectations. They added they will assess readings on financial and international developments for further rate decision, keeping the cautious stance. The dollar lowered despite upbeat economic reports and fluctuated before settling at 94.38, down 0.07%, near eight month lows.

Euro gains as Fed holds the rate steady

The euro extended its gain against the U.S dollar as the Federal Reserve held interest rates steady for a third consecutive meeting. EUR/USD pair traded between range of 1.1273 and 1.1361 and settled at 1.1326, rising 0.24%. The currency pair rose about 1.4% against the U.S. counterpart over the last month of trading. The euro has rallied 4.25% against greenback since start of this year. The British pound also rebounded following the FOMC meeting after slightly shortening its gains with slowed GDP for the first quarter. GBP/USD pair traded at 1.4548.

RBNZ holds the official cash rate at 2.25%

The New Zealand dollar rose after the Reserve Bank of New Zealand decided to keep the interest rate at 2.25% on Thursday. They however indicated that further easing may be needed to ease the upward pressure of the currency and ensure future inflation settles near the target range. NZD/USD traded at 0.6919, up 0.52% after the rate statement by RBNZ. AUD/USD pair also rose by 0.16%, traded at 0.7612.

Major pairs (Thursday update)

USD/JPY ↓2.34% 108.84
EUR/USD ↑0.11% 1.1335
USD/CAD ↓0.14% 1.2581
GBP/USD ↑0.06% 1.4551
USD/CHF ↓0.10% 0.9700
AUD/USD ↑0.18% 0.7614
NZD/USD ↑0.78% 0.6938

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[limyeeshin]

Edition 53｜May 2, 2016​

The U.S. dollar dipped to eight months lows against other major currencies on Friday as the Japanese yen continued to hold strong after the Bank of Japan’s policy meeting. The Federal Reserve held the interest rates on hold after the Federal Open Market Committee meeting on Wednesday. Fed members held neutral position toward the monetary tightening path and indicated the future rate hikes will be gradual depending on economic outcomes. On Thursday, the U.S. GDP in first quarter came in at slowest growth rate in two year with just 0.5% increase from previous year. A separate report on Friday with personal spending and expenditures ticked up 0.1% in March. The greenback’s strength was down 0.76% at 93.02 on Friday at the lowest level since August 2015, closing the week down 2.14%.

Japanese yen boosted after the Bank of Japan refrained from adding fresh stimulus. Japan Finance Minister Taro Aso showed concerns toward yen’s strength but yet many traders doubt Japanese officials can intervene in the market. The U.S. Treasury Department said it created a new monitoring list that includes China, Japan, Korea, Taiwan, and Germany which all have a large current account surplus. Given Japan’s financial markets are closed for holidays this week some traders expect the dollar could hit 105 yen. USD/JPY pair fell as far as 106.14 yen, breaking Friday’s trough. EUR/JPY was steay at 122.00 byt still in a three-year trough around 121.66 set last Friday.

The euro boosted after the report on Friday showing the Eurozone’s economy grew at the fastest rate in five years in the first quarter with GDP increasing 0.6%, above 0.4% growth seen. The economy ticked up by 1.6% on annual growth. Another report of consumer prices however fell by 0.2% in April from a year earlier. EUR/USD rallied to almost three-week highs at 1.1453, up 0.9%. GBP/USD hit 12-week highs against the dollar at 1.4670, with weekly gains of 1.09%.

Commodity linked currencies little reacted to the survey on China’s manufacturing sector on Sunday. The report showed activity expanded for the second month but only marginally. Australian dollar held stronger at 0.7614 on Monday, up 0.16 after strong business confidence survey. The Reserve Bank of Australia is due to meet on Tuesday for the monetary policy meeting.

In the week ahead, investors will pay attention to monetary policy meeting by the Reserve Bank of Australia on Tuesday for the rate decision. On Friday, U.S. jobs report for the month of April will be in focus. Manufacturing reports from the U.S., China, and U.K. will also be closely watched.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, May 2
Markets in China and U.K. are closed for public holidays.
Japan: Nikkei PMI manufacturing
Australia: AIG manufacturing index, NAB business confidence
Eurozone: PMI manufacturing (April), ECB Mario Draghi speech (Frankfurt)
U.S: PMI manufacturing index, ISM manufacturing index, construction spending

Tuesday, May 3
Markets in Japan are closed for public holiday.
China: Caixin PMI manufacturing
Australia: RBA monetary policy meeting, Rate statements, Building approvals
Eurozone: Producer price inflation
U.K: Manufacturing activity index
U.S: Auto-sales, Redbook

Wednesday, May 4
Markets in Japan are remained closed for a national holiday.
New Zealand: Quarterly employment report
Australia: AIG Service index
Eurozone: PMI service index, retail sales
U.K: Construction activity
U.S: ADP job creation, PMI service index, ISM non-manufacturing index

Thursday, May 5
Markets in Japan and Germany are closed for a national holiday.
Australia: Retail sales, Trade balance, RBA minutes
China: Caixin service sector report
Eurozone: ECB policy report, PMI retail sales
U.K: PMI Service index
U.S: Building permits, Weekly jobless claims

Friday, May 6
Japan: Nikkei PMI service sector
Australia: AIG construction index
Germany: PMI construction index, Retail sales
Canada: Monthly employment report
U.S: Non-farm payrolls, Unemployment rate, Consumer sentiment

The above schedule can change*

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[limyeeshin]

Thursday 5 May 2016​

Yen slightly shortens gains
Japanese yen slightly reduced its recent strong gains on Thursday after the dollar bounced back with optimism over the strength of the economy. Japan Prime Minister Shinzo Abe warned on Wednesday that Japan will act if necessary to weaken the yen. The dollar ticked up to 107.11 yen, recovering from 18 month trough of 105.55. The euro was also rose to 123.00, pulling away from 3 year low of 121.66 on last Friday. Japanese financial markets are remained closed for the Golden Week holiday until Friday.

Dollar rises with upbeat U.S. data
The U.S. dollar took broadly higher against other major currencies after the release of mostly upbeat U.S. data, giving optimism over the economy. The non-manufacturing index rose to 55.7 in April from 54.5 in March, highest level in four months. Also, the U.S. trade deficit narrowed to $40.44 billion from $46.96 in previous month. Meanwhile, another separate report of employment showed the economy created 194,000 jobs in March with non-farm private employment rising by 156,000, slight below expectations. The U.S. dollar rose 0.32% at 93.31, off the previous 16 month trough of 91.89.

Euro eases against greenback
The euro inched down in tight against the U.S. counterpart after the release of positive U.S. data. In the Eurozone, research group Markit said the bloc’s service PMI slipped to 53.1 in Aril from 53.2 in March. The pound also weakened after U.K. construction PMI fell to 52.0 last month from 54.2 the previous month, showing slowest pace since 2013. EUR/USD pair traded between 1.1467 and 1.1528 and settled at 1.1484, down 0.13%. GBP/USD fell 0.39%, traded at 1.4523.

Aussie gains with upbeat trade data
The Australian dollar gained on Thursday in Asia after trade gap came in narrower than expectation. The trade balance for March showed a deficit of A$2.163 billion, below A$2.9 billion expected. Data trend showed imports rose 1% and exports increased by 4%. Earlier in Australia, new home sales figure jumped 8.9% from a previous drop of 5.3%. AUD/USD traded at 0.7488, rising 0.43%.

Commodity currencies take step back
In New Zealand, the unemployment rate rose to 5.7% in the first quarter from 5.3% in last December, slight uptick from 5.5% seen. The report also said, number of employed people rose by 1.2% in last quarter, beating 0.7% increase seen. Yet, NZD/USD pair slid 0.39% to 0.6889 as firm U.S. data strengthens the dollar. USD/CAD pair also rallied 1.08% to 1.2785 after Canada’s trade deficit widened to C$3.41 billion from C$2.47 in previous month.

Major pairs (Thursday update)
USD/JPY ↑0.10% 107.13
EUR/USD ↓0.02% 1.1484
USD/CAD ↓0.32% 1.2832
GBP/USD ↑0.13% 1.4515
USD/CHF ↑0.08% 0.9584
AUD/USD ↑0.50% 0.7493
NZD/USD ↑0.31% 0.6902

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[limyeeshin]

Thursday 12 May 2016​

Euro rebounds against the dollar

The euro rose against the dollar cutting off a six day losing streak, as the greenback retreated from two-week highs. European Central Bank Governing Council member Ewald Nowotny reiterated that it is incumbent on the bank not to wait until the inflation is too high before reversing its monetary policy. He also noted that the ECB doesn’t have the means to influence foreign exchange rates despite a wide range of easing measures in recent months. The euro leaped more than 3% since the ECB lowered the rates to the lowest in record and expanded QE program in March. EUR/USD traded between 1.1369 and 1.1446 and settled at 1.1425, rising 0.47%. Earlier, the euro suffered against the dollar in six straight sessions after hitting above 1.16 last week. The euro is up more than 4% against the greenback since start of the year.

Dollar remains lower broadly in eased trades

The U.S. dollar held broadly lower against the other major currencies as investors continued to lock in profits from its recent gains. The dollar was higher against the yen after Japan warned that it is prepared to intervene in the foreign exchange market if excessive moves are enough to affect the country’s economy. But many investor expect that it is unlikely that Japan to weaken the yen ahead of a G7 meeting it is hosting this month. The U.S. dollar fell 0.40% against other major six currencies at 93.84.

Yen remains higher after the current account release

Japanese yen remained between small gains and losses after the current account data release. The adjusted current account for April came in at a surplus of ¥1.89 trillion, narrower than expected ¥1.90 trillion. Foreign investments in Japanese stocks fell ¥434.6 billion in April, while pond purchases by foreigners reached ¥270.3 billion. USD/JPY traded at 108.40.

Pound ticks up ahead of BoE inflation report

British pound inched up against the dollar ahead of Bank of England’s meeting on Thursday releasing first quarterly inflation report since February. The BoE is largely expected to leave the benchmark rate flat at 0.5 this year, even inflation remains below its target of 2%. The meeting also comes weeks before the referendum on Brexit next month. Several Fed members have indicated that the Brexit vote could affect the Fed’s interest rate decision a week earlier. Earlier, the U.K.’s manufacturing and industrial only increased slightly disappointed expectations following decline from the preceding month. GBP/USD rose 0.05% to 1.4449.

Commodity currencies steady as oil price rebounds

The commodity linked currencies held steady as oil prices rebounded. The American Petroleum Institute said on Tuesday that U.S. crude inventories increased by 3.45 million barrels to a record 543.1 million barrels in last week. USD/CAD hit 12868, the pair’s lowest level since May 6. The pair settled at 1.2888, falling 0.18%. The AUD/USD pair was steady at 0.7359, while NZD/USD rising 0.58% to 0.6800.

Major pairs (Thursday update)

USD/JPY ↑0.40% 108.84
EUR/USD ↓0.03% 1.1423
USD/CAD ↑0.07% 1.2856
GBP/USD ↓0.03% 1.4442
USD/CHF ↑0.03% 0.9713
AUD/USD ↓0.47% 0.7341
NZD/USD ↑0.19% 0.6832

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[limyeeshin]

Edition 54｜May 16, 2016​

The U.S. dollar rose to almost one-month highs against other major currencies after stronger than expected economic reports on Friday, easing concerns over the outlook of the economy. The Commerce Department reported on Friday that retail sales boosted 1.3% in April, well above 0.8% increase seen. It was the biggest growth since March 2015. Another report of U.S. consumer sentiment came in at 95.8 in May, from 89.0 in April and beating 90.0 expected. It was the highest reading since June 2015. The upbeat data soothed some existing fears over the health of the economy and revived the expectations for rate hike to be sooner. The dollar rose 0.52% on Friday against other major peers at 94.6, the strongest index since late April.

In the euro zone, the first quarter GDP growth was revised down slightly to 0.5% from 0.6% estimated in previous report. Annual growth was also revised down to 1.5% from 1.6%. The weaker data in the euro zone in contrary to upbeat data in U.S. has brought EUR/USD pair lower at 1.1309, down 0.55%. The pair ended the week with 0.63% losses. The euro area is to release revised report on consumer inflation this week.

Japanese yen was stronger against the dollar despite the boost in greenback as the Bank of Japan kept monetary policy unchanged. Japan producer prices for April fell 0.3% monthly, slightly further than 0.2% decline expected. The annual growth came in at 4.2% decline, more than 3.7% drop seen. USD/JPY hit two-week highs of 109.57 on Friday and settled at 108.61, down 0.35%. EUR/JPY pair extended its pullback from last Thursday’s peak of 124.65 to 122.62.

The Australian dollar, which is closely linked with the biggest trade partner China plays, fell to its two-month lows after downbeat Chinese data release. In the weekend, Chinese fixed asset investment cane in at 10.5%, below 11.0% expected. Retail sales in China also came in at 10.1% increase, not reaching 10.6% rise seen. AUD/USD hit 0.7249, the lowest level in two months. AUD/JPY also fell to a low of 78.58.

In the week ahead, investors will pay attention to U.S. inflation data on Tuesday and Federal minutes of April meeting on Wednesday for better indication of the rate hike path. Japan’s first quarter GDP growth and U.K. jobs report will also be in focus.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, May 16
Markets in Germany and France will be closed.
Japan is to release data on producer price inflation and machinery orders.
The U.K. is to publish data on Rightmove housings price index.
The U.S. is to report on New York state manufacturing and NAHB housing market index.

Tuesday, May 17
Japan is to publish index of mining and manufacturing industrial product.
The Reserve Bank of Australia is to publish its recent monetary policy meeting minutes.
New Zealand is to release data on inflation expectations.
The U.K. is to report on consumer, producer, and retail prices inflation.
Eurozone is to release data on trade balance.
Canada is to report on manufacturing sales.
The U.S. is to publish bundle of data on consumer price inflation with core price inflation, new starts, building permits, industrial production, and manufacturing.

Wednesday, May 18
New Zealand is to release data on producer price inflation.
Japan is to publish data on first quarter GDP growth.
Australia is to release first quarter wage index.
The U.K. is to report on monthly employment.
Eurozone is to publish data on consumer price inflation and core consumer prices.
The Federal Reserve is to publish minutes of April monetary policy meeting.

Thursday, May 19
Japan is to release data on core machinery orders and industrial activity.
Australia is to publish its monthly employment report.
The U.K. is to report on April retail sales.
In the Eurozone, ECB is to release its recent monetary policy meeting minutes followed by data on construction activity.
Canada is to publish data on wholesale sales.
The U.S. is to release weekly initial jobless claims and Philadelphia state manufacturing report.

Friday, May 20
G7 meeting will be held in Tokyo, Japan.
Germany is to publish data on producer price inflation.
Canada is to release data on retail sales and consumer prices.
The U.S. is to publish data on existing home sales.

The above schedule may change*

(Mia Chung)
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[limyeeshin]

Thursday 19 May 2016​

Dollar goes higher after the Fed minutes

The U.S. dollar rose to a three-week high against Japanese yen on Thursday after the minutes of FOMC meeting spurred the expectations for rate hike in June. The dollar hit highs of 110.27, almost 4.5% gain from 18-month low of 105.55 yen in early May. Overnight, the dollar slightly trimmed gains against other major currencies at 95.18, down 0.01%. Expectations for the next rate hike mounted as Tuesday’s U.S. consumer prices rose by 0.4%, at the fastest pace in three years. Another reports of housing starts and industrial production also increased strongly in April. Moreover, Atlanta and San Francisco state Fed Presidents both said that there could be two or three rate hikes this year, which increased investors’ expectations.

Yen remains strong with upbeat machinery orders

Japanese yen held gains in early Asia on Thursday after surprise gain in core machinery orders. Japan core machinery orders sharply increased by 3.2%, much higher than 0.8% gain seen and at 5.5% pace month on month, beating 0.5% gain expected. The Cabinet Office projects core machinery orders will slip back 3.5% in April- June quarter in accordance to high 6.7% rise in the first quarter. Another report on Wednesday with GDP showed that the economy grew 1.7% in the first quarter, well above 0.2% rise expected. Japanese officials are likely to reaffirm that they will intervene in the market if USD/JPY become one sided volatile. EUR/JPY pair remained firm, traded at 123.66 on Thursday.

Aussie falls with downbeat employment report

The Australian dollar fell after the release of jobs report on Thursday. The Australian April employment data showed a gain of 10,800 jobs, below 12,500 jobs gain expected. The unemployment rate came in at 5.7%, slightly below the 5.8% seen, with a participation rate of 64.8%. AUD/USD hit a low of 0.7199, its lowest since early March, and settled at 0.7200, down 0.4%.

Kiwi drops with increased Fed rate hike expectations

The New Zealand dollars also declined against the U.S. counterpart after release of downbeat data opposed to upbeat U.S. report. In New Zealand, the producer prices fell by 1.0% in the first quarter, disappointing 0.3% rise seen. The PPI output also slipped 0.2%, below expected 0.4% gain. NZD/USD fell by 0.51%, traded at 0.6777.

Major pairs (Thursday update)

USD/JPY ↑0.07% 110.28
EUR/USD ↑0.03% 1.1219
EUR/JPY ↑0.06% 123.69
USD/CAD ↑0.31% 1.3074
GBP/USD ↓0.14% 1.4579
USD/CHF ↓0.01% 0.9877
AUD/USD ↓0.36% 0.7203
NZD/USD ↓0.10% 0.6733

(Mia Chung)
COMPANY PROMOTION
20% Recovery Bonus (Volt-Mini Account only)
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