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Last week recap

BY VANI KOLLURI

Reversed direction, gaining ground last week as the RBA Meeting Minutes for its August meeting indicated policymakers were optimistic about the global and domestic economies. The week began with the pair selling off on Monday in the absence of any significant data from either country. The rate extended its losses on Tuesday, making its weekly low of 0.7807 after the release of the RBA’s Meeting Minutes, which predicted an annual growth rate of 3% for the Australian economy, nevertheless, policymakers expressed concern with the rising Aussie exchange rate, noting that, “a further appreciation of the exchange rate would be expected to result in a slower pick-up in inflation and economic activity than currently forecast.” On Wednesday, the pair gained sharply after a dovish FOMC Meeting Minutes, and the Australian Wage Price Index, which increased by +0.5% q/q, in line with expectations. The rate then made its weekly high of 0.7961 on Thursday after Australian Employment Change showed an increase of +27.9K compared to an expectation of +19.8K with the previous number upwardly revised from +14.0K to +20.0K, while the Australian Unemployment Rate held steady at 5.6%. The pair gained a fraction on Friday despite a better than expected U.S. consumer sentiment number. AUD/USD closed at 0.7922, with an overall gain of +0.4% from its previous weekly close. 

Declined for its third consecutive week last week after a disappointing UK CPI number, with otherwise mostly better than expected economic data from both countries. Cable began the week declining off its weekly high of 1.3021 on Monday after Chancellor of Exchequer Philip Hammond and International Trade Secretary Liam Fox released a joint article over the weekend. The article reiterated that the UK would definitely leave the EU in March of 2019, emphasizing that a time limit on the transition would “further our national interest and give business greater certainty”.  The rate continued selling off on Tuesday after UK CPI increased by +2.6% y/y compared to an expectation of +2.7%. Also, PPI Input showed flat growth m/m versus an expected increase of +0.4%, and RPI, which increased by +3.6% y/y versus +3.5% anticipated. Wednesday saw Cable gain a fraction after the UK Average Earnings Index increased by +2.1% 3m/y versus a consensus of +1.8%. Also, Claimant Count Change showed a decline of -4.2K, significantly better than the expected increase of +3.2K, with the previous number downwardly revised from +5.9K to +3.5K, while the UK Unemployment Rate declined to 4.4% from 4.5%. The rate resumed its decline on Thursday, falling a fraction despite UK Retail Sales, which increased by +0.3% versus +0.2% expected. Cable then consolidated at a slightly higher level on Friday despite a better than expected U.S. consumer sentiment number. GBP/USD closed at 1.2869, with a loss of -1.1% for the week. 

Reversed direction last week, trading lower after the ECB’s Monetary Policy Meeting Minutes showed policymakers remain concerned over the strength in the Euro, while the FOMC Meeting Minutes indicated members were concerned that inflation would remain below two percent. The week began with the rate trading lower after making its weekly high of 1.1837 on Monday after the United States downplayed the risk of a war with North Korea. The pair extended its losses on Tuesday after German Preliminary GDP increased by +0.6% q/q compared to an expectation of +0.7%. U.S. data had Core Retail Sales increase by +0.5% m/m versus +0.3% anticipated and Retail Sales, which increased by +0.6% m/m versus +0.3% expected. On Wednesday, the rate gained a fraction after the FOMC Meeting Minutes noted that, “Many participants ... saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside”. Also on Wednesday was news that ECB President Draghi would not be delivering a speech on ECB monetary policy at the Jackson Hole Symposium, but was instead focusing on the symposium’s theme of fostering a dynamic global economy. Wednesday’s economic numbers had EZ Flash GDP increase by +0.6% q/q as was widely anticipated. Also, U.S. Building Permits dropped to 1.22M compared to 1.25M expected. The rate resumed its selloff on Thursday, making its weekly low of 1.1661 after the ECB Monetary Policy Meeting Minutes noted that, “While it was remarked that the appreciation of the euro to date could be seen in part as reflecting changes in relative fundamentals in the euro area vis-a-vis the rest of the world, concerns were expressed about the risk of the exchange-rate overshooting in the future”. Thursday’s economic data had EZ Final CPI increase by +1.3% y/y as was widely expected. Also, U.S. Initial Jobless Claims declined to 232K compared to an expected 240K, while the Philly Fed Manufacturing Index printed at 18.9 versus an expectation of 18.3. The pair then gained a fraction after continued uncertainty with the Trump administration, Senate Republican Bob Corker called for “radical changes” to take place in the Trump White House. EUR/USD closed at 1.1756, with an overall weekly decline of -0.5%.  

Showed little change last week as both countries reported mostly better than expected economic numbers. The week began with the rate gaining on Monday despite Japanese Preliminary GDP, which increased by +1.0% q/q, significantly higher than the expectation of +0.6% and the fastest rate of growth in the indicator in two years. The pair continued gaining on Tuesday after better than expected U.S. Retail Sales data. Wednesday saw the rate decline after making its weekly high of 110.94 after a dovish FOMC Meeting Minutes, and the Japanese Trade Balance, which showed a surplus of +0.34T compared to an expectation of +0.20T. The pair continued its slide on Thursday despite better than expected U.S. employment and manufacturing numbers. On Friday, the rate made its weekly low of 108.59 despite a better than expected U.S. consumer sentiment number. USD/JPY settled at 109.17, with a gain of just one pip and virtually unchanged on the week. 

Tread water last week as New Zealand reported mostly better than expected economic data, with mixed numbers from the United States. The rate began the week declining a fraction on Monday despite New Zealand Retail Sales, which increased by +2.0% q/q compared to a previous reading of +1.6%, while Core Retail Sales increased by +2.1% compared to a previous reading of +1.5%. The pair extended its losses on Tuesday after better than expected U.S. Retail Sales data, and the New Zealand GDT Price Index, which printed at -0.4% versus a previous reading of -1.6%. The rate then gained sharply after making its weekly low of 0.7222 on Wednesday after New Zealand PPI increased by +1.4% q/q versus +0.9% anticipated. The pair then made its weekly high of 0.7333 on Thursday before declining after mixed U.S. economic data. Friday saw the rate gain ground despite a better than expected U.S. consumer sentiment number. NZD/USD closed at 0.7305, with a loss of just 8 pips or -0.1% for the week. 

Reversed direction, trading lower last week as risk assets favoured the Loonie over the Greenback with mixed economic numbers from both countries. The week began with the pair gaining a fraction on Monday in the absence of any significant data from either country. The rate extended its gains on Tuesday, making its weekly high of 1.2777 after better than expected U.S. Retail Sales data. The pair then declined sharply on Wednesday after the release of the FOMC’s Meeting Minutes and despite Canadian Foreign Securities Purchases, which declined by -0.92B, significantly lower than the expected increase of +23.45B that was expected. The rate recovered some of its losses on Thursday after Canadian Manufacturing Sales declined by -1.8% m/m versus -1.0% anticipated. The pair then resumed its selloff on Friday after Canadian CPI showed a flat reading m/m, that was in line with expectations. USD/CAD closed at 1.2579, with a net loss of -0.7% for the week.