Weekly Outlook: 2014, January 27 - 31
NZD/USD weekly outlook: January 27 - 31
The New Zealand dollar fell sharply against its U.S. counterpart on Friday, after a steep selloff in U.S. equities and ongoing turmoil in emerging markets dampened demand for risk-sensitive assets.
NZD/USD fell to 0.8212 on Friday, the pair’s lowest since January 20, before subsequently consolidating at 0.8214 by close of trade, down 1.06% for the day and 0.53% lower for the week.
The pair is likely to find near-term support at 0.8211, the low from January 20 and resistance at 0.8295, Friday’s high.
A broad based selloff in financial markets Friday spurred safe haven demand. U.S. stocks suffered their worst weekly loss since 2011, with the Dow plunging 318 points on Friday.
Market sentiment was hit by concerns over a slowdown in China after data on Thursday showed that the preliminary reading of the HSBC manufacturing index fell to a six-month low in January.
The Asian nation is the world’s second largest economy and New Zealand’s second biggest export partner.
Meanwhile, a selloff in emerging markets accelerated on Friday, after the Turkish lira fell to the latest in a series of record lows against the dollar. South Africa’s rand, the Russian ruble and the Argentine peso all fell to multi-year lows against the greenback.
Emerging market currencies have been hard hit since the Federal Reserve announced plans last month to begin scaling back its asset purchase program.
The New Zealand dollar was also sharply lower against the yen on Friday, with NZD/JPY plunging 1.98% to hit a seven-week low of 83.95 at the close.
Data from the Commodities Futures Trading Commission released Friday showed that speculators reduced their bullish bets on the New Zealand dollar in the week ending January 21.
Net longs totaled 8,556 contracts as of last week, down 11% from net longs of 9,614 contracts in the previous week.
In the week ahead, Wednesday’s outcome of the Federal Reserve’s monthly meeting will be in focus amid expectations for a reduction to USD65 billion from the current USD75 billion in the bank’s stimulus program.
Data from the U.S. on fourth quarter growth and an interest rate decision from the Reserve Bank of New Zealand will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 27
The U.S. is to produce data on new home sales, a leading indicator of demand in the housing sector.
Tuesday, January 28
The U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.
Wednesday, January 29
The Federal Reserve is to announce its federal funds rate and publish its rate statement.
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
New Zealand is also to publish data on building consents.
Thursday, January 30
The U.S. is to publish preliminary data on fourth quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.
Later Thursday, New Zealand is to produce data on the trade balance.
Friday, January 31
The U.S. is to round up the week with a report on manufacturing activity in the Chicago region, revised data on consumer sentiment and a report on personal spending.
AUD/USD weekly outlook: January 27 - 31
AUD/USD weekly outlook: January 27 - 31
The Australian dollar tumbled to the lowest level since July 2010 against its U.S. counterpart on Friday, as surprisingly weak Chinese manufacturing data and a selloff in emerging markets dampened demand for growth-linked assets.
AUD/USD fell to 0.8660 on Friday, the pair’s lowest since July 19, 2010, before subsequently consolidating at 0.8683 by close of trade, down 0.97% for the day and 1.1% lower for the week.
The pair is likely to find short-term support at 0.8631, the low from July 19, 2010 and resistance at 0.8774, Friday’s high.
Market sentiment was hit by concerns over a slowdown in China after data on Thursday showed that the preliminary reading of the HSBC manufacturing index fell to a six-month low in January.
The Asian nation is the world’s second largest economy and Australia’s biggest export partner.
Meanwhile, a selloff in emerging markets accelerated on Friday, after the Turkish lira fell to the latest in a series of record lows against the dollar. South Africa’s rand, the Russian ruble and the Argentine peso all fell to multi-year lows against the greenback.
Emerging market currencies have been hard hit since the Federal Reserve announced plans last month to begin scaling back its asset purchase program.
The Aussie came under additional pressure after a Reserve Bank of Australia board member said Friday that a value of around USD0.80 would be a “fair” level for the currency.
The Australia dollar was also sharply lower against the yen on Friday, with AUD/JPY plunging 1.84% to hit a four-month low of 88.88 at the close.
Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bearish bets on the Australian dollar in the week ending January 21.
Net shorts totaled 64,584 contracts, up 19.5% from the previous week’s total of 51,988 net shorts. Gross long Australian dollar positions rose by 5,269 contracts to 15,645 last week, while gross short positions increased by 17,935 contracts to 80,229.
In the week ahead, Wednesday’s outcome of the Federal Reserve’s monthly meeting will be in focus amid expectations for a reduction to USD65 billion from the current USD75 billion in the bank’s stimulus program.
The policy-meeting will mark the last for outgoing Fed Chairman Ben Bernanke, as current Vice Chair Janet Yellen prepares to take over.
In addition, the initial estimate of U.S. fourth quarter gross domestic product is reported on Thursday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 27
The U.S. is to produce data on new home sales, a leading indicator of demand in the housing sector.
Tuesday, January 28
Australia is to publish private sector data on business confidence, a leading indicator of economic health.
The U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.
Wednesday, January 29
The Federal Reserve is to announce its federal funds rate and publish its rate statement.
Thursday, January 30
Australia is to release data on import prices, while China is to publish the revised reading of the HSBC manufacturing PMI.
The U.S. is to publish preliminary data on fourth quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.
Friday, January 31
Australia is to produce reports on producer price inflation and private sector credit.
The U.S. is to round up the week with a report on manufacturing activity in the Chicago region, revised data on consumer sentiment and a report on personal spending.
USD/JPY weekly outlook: January 27 - 31
USD/JPY weekly outlook: January 27 - 31
The yen rose to seven-week highs against the dollar on Friday as weak Chinese manufacturing data and a selloff in emerging markets bolstered investor demand for the traditional safe-haven yen.
USD/JPY fell to 102.00, the weakest since December 6 and was last down 0.91% at 102.33. For the week, the pair lost 1.83%.
The pair is likely to find support at 101.20 and resistance at 103.57, Friday’s high.
Market sentiment was hit by concerns over a slowdown in China after data on Thursday showed that the preliminary reading of the HSBC manufacturing index fell to a six-month low in January.
A selloff in emerging markets accelerated on Friday, after the Turkish lira fell to the latest in a series of record lows against the dollar, when a currency market intervention by Turkey’s central bank failed to halt the currency’s steep decline. South Africa’s rand, the Russian ruble and the Argentine peso fell to multi-year lows against the dollar.
Argentina's central bank said Friday it was loosening strict foreign exchange rules, giving up its traditional policy of supporting the currency through interventions.
Emerging market currencies have been hard hit since the Federal Reserve announced plans last month to begin scaling back its asset purchase program. Recent indications that the global economic recovery is deepening has fuelled expectations that some central banks may move to tighten monetary policy this year.
Bank of Japan Governor Haruhiko Kuroda said Friday the country’s economy is making significant progress after the bank unveiled a huge stimulus program last April, but added that there was still some way to go before policy would be normalized.
The euro was also sharply lower against the yen on Friday, with EUR/JPY down 1.05% to a six-week low of 139.97 at the close.
In the week ahead, Wednesday’s outcome of the Federal Reserve’s monthly meeting will be in focus amid expectations for a reduction to USD65 billion from the current USD75 billion in the bank’s stimulus program.
Data from the U.S. on fourth quarter growth will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 27
The BoJ is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. Japan is also to release data on the trade balance, the difference in value between imports and exports.
The U.S. is to produce data on new home sales, a leading indicator of demand in the housing sector.
Tuesday, January 28
The U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.
Wednesday, January 29
The Federal Reserve is to announce its federal funds rate and publish its rate statement.
Thursday, January 30
Japan is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
The U.S. is to publish preliminary data on fourth quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.
Friday, January 31
Japan is to release a series of data, including reports on household spending, inflation, and industrial production.
The U.S. is to round up the week with a report on manufacturing activity in the Chicago region, revised data on consumer sentiment and a report on personal spending.
Weekly outlook: January 27 - 31
Weekly outlook: January 27 - 31
The dollar fell to seven week lows against the yen on Friday and hit three week lows against the Swiss franc, as a broad based selloff in financial markets spurred safe haven demand.
USD/JPY fell to 102.00, the weakest since December 6 and was last down 0.91% at 102.33. For the week, the pair lost 1.83%. USD/CHF fell to lows of 0.8902 and was last down 0.32% to 0.8943, extending the week’s losses to 1.82%.
Market sentiment was hit by concerns over a slowdown in China after data on Thursday showed that the preliminary reading of the HSBC manufacturing index fell to a six-month low in January.
The growth linked Australian dollar came under renewed selling pressure following the soft Chinese data, falling to three-and-a-half year lows against the U.S. dollar. AUD/USD hit lows of 0.8659 and was last down 0.97% to 0.8682. For the week, the pair dropped 1.37%.
The Aussie was not helped after a Reserve Bank of Australia board member said Friday that a value of around USD0.80 would be a “fair” level for the currency.
A selloff in emerging markets accelerated on Friday, after the Turkish lira fell to the latest in a series of record lows against the dollar, when a currency market intervention by Turkey’s central bank failed to halt the currency’s steep decline. South Africa’s rand, the Russian ruble and the Argentine peso fell to multi-year lows against the dollar.
Argentina's central bank said Friday it was loosening strict foreign exchange rules, giving up its traditional policy of supporting the currency through interventions.
Emerging market currencies have been hard hit since the Federal Reserve announced plans last month to begin scaling back its asset purchase program. Recent indications that the global economic recovery is deepening has fuelled expectations that some central banks may move to tighten monetary policy this year. Data last week showing a sharper than expected fall in the U.K. unemployment rate heightened expectations that the Bank of England may tighten monetary policy sooner than anticipated.
Sterling rose to two-and-a-half year highs of 1.6668 against the dollar on Friday, but ended the session down 0.94% at 1.6480.
The euro ended Friday’s session slightly lower against the dollar, with EUR/USD down 0.17% to 1.3676, after rising to three-week highs of 1.3738 earlier. Elsewhere, the common currency was sharply lower against the yen and the Swiss franc. EUR/JPY fell 1.05% to 139.97, while EUR/CHF fell 0.44% to a one-month low of 1.2231.
In the week ahead, Wednesday’s outcome of the Federal Reserve’s monthly meeting will be in focus amid expectations for a reduction to USD65 billion from the current USD75 billion in the bank’s stimulus program.
Data from the U.S. and the U.K. on fourth quarter growth and euro zone data on inflation will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 27
The Bank of Japan is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. Japan is also to release data on the trade balance, the difference in value between imports and exports.
In the euro zone, Germany is to release the Ifo report on business climate.
The U.S. is to produce data on new home sales, a leading indicator of demand in the housing sector.
Tuesday, January 28
Australia is to publish private sector data on business confidence, a leading indicator of economic health.
The U.K. is to release preliminary data on fourth quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
In the euro zone, Italy is to hold an auction of 10-year government bonds.
The U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.
Wednesday, January 29
The Federal Reserve is to announce its federal funds rate and publish its rate statement.
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
New Zealand is also to publish data on building consents.
Thursday, January 30
Japan is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
Australia is to release data on import prices, while China is to publish the revised reading of the HSBC manufacturing PMI.
Germany is to produce preliminary data on consumer price inflation, which accounts for the majority of overall inflation, as well as a report on the change in the number of people unemployed. Elsewhere in the euro zone, Spain is to release preliminary data on fourth quarter growth.
Switzerland is to publish its KOF economic barometer.
The U.K. is to release data on net lending to individuals.
The U.S. is to publish preliminary data on fourth quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.
Later Thursday, New Zealand is to produce data on the trade balance.
Friday, January 31
Japan is to release a series of data, including reports on household spending, inflation, and industrial production.
Australia is to produce reports on producer price inflation and private sector credit.
The euro zone is to release preliminary data on consumer inflation and a separate report on the unemployment rate across the currency bloc
Canada is to publish the monthly report on GDP growth.
The U.S. is to round up the week with a report on manufacturing activity in the Chicago region, revised data on consumer sentiment and a report on personal spending.
1 Attachment(s)
Australian Dollar at a Crossroads as Focus Turns to FOMC
Australian Dollar at a Crossroads as Focus Turns to FOMC
Fundamental Forecast for Australian Dollar: Neutral
- Australian Dollar Sank to a 3.5 Year Low Amid Risk Aversion Last Week
- Forward Outlook Clouded as the Spotlight Turns to the FOMC Outcome
Attachment 5067
The Australian Dollar continued to sink last week, dropping 1.1 percent against its US namesake to settle at the weakest level in three and a half years. The currency veered away from its relationship with US Treasury yields – a reflection of sensitivity to the Fed monetary policy outlook – to take cues from risk sentiment trends. Indeed, last week’s selloff tracked a sharp downward reversal in the MSCI World Stock Index while the rate on the benchmark US 10-year note fell to the lowest in two months (2.715 percent).
Another rotation in the driving catalysts behind Aussie price action may on tap in the week ahead as the spotlight turns to the FOMC monetary policy meeting. The sit-down will mark the first outing to be led by newly-minted Fed Chair Janet Yellen. Expectations call for another $10 billion cutback in aggregate QE, spread evenly between purchases of MBS and Treasury bondsecurities. While a mixed tone to US economic news-flow in recent weeks has introduced a degree of speculation about a pause in the “tapering” process, commentary from Fed officials has forcefully dismissed such concerns, suggesting stimulus reduction will proceed as advertised.
Confirmation of another $10 billion cutback would effectively reflect the FOMC policy status quo as established at December’s meeting. With that in mind, traders will be keen to dissect the text of the statement accompanying the announcement. On this front, the spotlight will be on any changes in the forward-guidance framework accompanying the QE cutback process. The US unemployment rate averaged 7.3 percent in 2013, a hair higher than the 7.0-7.1 percent range expected by the FOMC in December’s updated set of economic forecasts. Inflation expectations derived from bond yields (so-called “breakeven rates”) are pointing to price growth below 2 percent in the next 1-2 years, hinting the 2.5 percent bound set by the FOMC is not in danger.