Weekly Outlook: 2014, July 20 - 27

NZD/USD weekly outlook: July 21 - 25

The New Zealand dollar ended Friday’s session close to a four-week low against its U.S. counterpart, amid speculation that the Federal Reserve could hike U.S. interest rates sooner than expected.

NZD/USD hit 0.8648 on Thursday, the pair’s lowest since June 17, before subsequently consolidating at 0.8688 by close of trade on Friday, up 0.24% for the day but 1.45% lower for the week.

The pair is likely to find support at 0.8648, the low from July 17 and resistance at 0.8717, the high from July 17.

Demand for the U.S. dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.

Meanwhile, investors reassessed the geopolitical situation in Eastern Europe and in the Middle East.

A Malaysian Airlines passenger jet crashed in eastern Ukraine on Thursday. All 298 people on board were killed, with the U.S. blaming pro-Russian separatists for the act.

Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza against Hamas militants who fired hundreds of rockets into Israel.

Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the New Zealand dollar in the week ending July 15.

Net longs totaled 15,453 contracts, compared to net longs of 14,416 in the preceding week.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders, while a rate statement by New Zealand’s central bank will also be in focus.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday and Wednesday as there are no relevant events on these days.

Tuesday, July 22

• The U.S. is to release reports on consumer price inflation and existing home sales.

Thursday, July 24

• 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. The central bank is also to hold a press conference to discuss the monetary policy decision.
• New Zealand is also due to release a report on its trade balance.
• The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• New Zealand is to release private sector data on business confidence.
• The U.S. is to round up the week with data on durable goods orders.

USD/CAD weekly outlook: July 21 - 25

The U.S. dollar fell to one-week lows against the Canadian dollar on Friday after official data showed that the annual rate of inflation in Canada rose at the fastest pace since February 2012 in June.

USD/CAD touched lows of 1.0709, the weakest since July 11 and was last down 0.23% to 1.0734.

The pair was likely to find support at around the 1.0700 level and resistance at 1.0775.

The Canadian dollar strengthened after Statistics Canada reported that the annual rate of inflation rose to 2.4% last month, up from 2.3% in May. Market expectations had been for an unchanged reading.

Core inflation, which excludes some food and energy costs, rose to 1.8% from 1.7%.

On a monthly basis, inflation slowed to 0.1% from 0.5% in May, while core inflation declined to 0.1% after a 0.5% gain in May.

A separate report that showed that wholesale sales rose by a larger-than-forecast 2.2% in May.

Earlier in the week, the Bank of Canada said the recent increase in inflation was due to temporary factors, such as the high cost of energy, rather than any change in economic fundamentals.

The bank left rates on hold at 1.0% in a widely anticipated decision on Wednesday and said the future path of monetary policy would be data dependent.

In the wider markets, investors remained cautious following the shooting down of a Malaysia Airlines jet in eastern Ukraine on Thursday. Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders, while Canada is to release data on retail sales.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events on this day.

Tuesday, July 22

• The U.S. is to release reports on consumer price inflation and existing home sales.

Wednesday, July 23

• Canada is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Thursday, July 24

• The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• The U.S. is to round up the week with data on durable goods orders.

AUD/USD weekly outlook: July 21 - 25

The Australian dollar rose to a more than one-week high against its U.S. counterpart on Friday, as disappointing U.S. consumer sentiment data weighed on the greenback, while investors reassessed the geopolitical situation in Eastern Europe and in the Middle East.

AUD/USD hit 0.9409 on Friday, the pair’s highest since July 10, before subsequently consolidating at 0.9392 by close of trade on Friday, up 0.44% for the day and flat for the week.

The pair is likely to find support at 0.9334, the low from July 17 and resistance at 0.9455, the high from July 10.

In a report, the University of Michigan said Friday that its consumer sentiment index fell to a four-month low of 81.3 in July, from a reading of 82.5 in June, confounding expectations for rise to 83.0.

Meanwhile, sentiment remained under pressure after a Malaysian Airlines passenger jet crashed in eastern Ukraine on Thursday. All 298 people on board were killed, with the U.S. blaming pro-Russian separatists for the act.

Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza against Hamas militants who fired hundreds of rockets into Israel.

Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.

Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the Australian dollar in the week ending July 15.

Net longs totaled 39,743 contracts, compared to net longs of 36,603 in the preceding week.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events on this day.

Tuesday, July 22

• Reserve Bank of Australia Governor Glenn Stevens is to speak, his comments will be closely watched.
• The U.S. is to release reports on consumer price inflation and existing home sales.

Wednesday, July 23

• Australia is to produce data on consumer price inflation.

Thursday, July 24

• The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• The U.S. is to round up the week with data on durable goods orders.

USD/JPY weekly outlook: July 21 - 25

The dollar pushed higher against the yen late Friday after falling to one week lows earlier in the session as safe haven demand for the Japanese currency was boosted by heightened geopolitical tensions.

USD/JPY touched lows of 101.05, the lowest since July 10 before edging up 0.16% to 101.32 late Friday, to end the week little changed.

The pair is likely to find support at the 100.85 level and resistance at 101.68, Thursday’s high.

The yen strengthened broadly on Friday following the shooting down of a Malaysia Airlines jet in eastern Ukraine. Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza.

Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.

Elsewhere Friday, the weaker euro fell to five month lows against the yen. EUR/JPY hit lows of 136.72, the lowest since February 5 and was last at 137.07. The pair lost 0.59% for the week.

The single currency came under pressure after the Bank of Italy cut its growth forecast for 2014 to 0.2% from 0.7% and warned that risks to the economy remained to the downside.

The announcement underlined concerns over the faltering economic recovery in the currency bloc.

Earlier in the week European Central Bank President Mario Draghi said that large scale asset purchases are “squarely” within the bank’s mandate. The remarks were the latest indication that the central bank is open to further monetary easing measures to stave off the risk of deflation in the euro area.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders, while Japan is to produce data on trade and inflation.

Monday, July 21

• Markets in Japan are to remain closed for a national holiday.

Tuesday, July 22

• The U.S. is to release reports on consumer price inflation and existing home sales.

Thursday, July 24

• Japan is to release data on the trade balance, the difference in value between imports and exports.
• The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• Japan is to release data on consumer inflation.
• The U.S. is to round up the week with data on durable goods orders.

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