BluetonaFX - Forex Weekly Recap
Hi Traders!
Forex Weekly Recap for 28 August–01 September, 2023:
Fundamentals
The European Central Bank’s (ECB) Holzmann noted that he supports a rate hike in September barring any downside surprises before the meeting; his other key mentions were:
Not in the clear yet on inflation.
The ECB should start a debate soon on ending pandemic emergency purchase programme (PEPP) reinvestments.
Reserve Bank of Australia's (RBA) Bullock noted that inflation will be her main priority as the new RBA’s Governor; her other key mentions were:
The bank may have to raise rates again, but she is watching the data carefully.
All central banks are grappling with how much further to hike.
Climate change is likely to lead to more volatile inflation outcomes.
The Federal Reserve's Mester noted that progress on inflation and the labour market is improving; her other key mentions were:
The job market is still strong amid signs of rebalancing.
The 3.8% jobless rate is still low.
The main Fed debate is how restrictive policy needs to become and for how long.
Future policy decisions will be based on incoming data.
The Fed must balance risks when setting rate policy.
Bank of Japan's (BoJ) Nakamura noted that Japan is no longer in deflation; his other key mentions were:
The BoJ must patiently maintain an easy policy for the time being.
Japan's economy is recovering moderately.
The BoJ is closely watching the impact of yen moves on the economy and prices.
Weak yen benefit exports and tourism but is negative for domestic-driven firms and households.
The decision on when to end negative rates depends on economic developments.
If Japan achieves sustained economic recovery, they won't need yield curve control (YCC), but now is not the time to get rid of YCC.
Key Data
Preliminary data for Australian July retail sales
Retail sales M/M came in better at 0.5% vs. 0.3% expected and -0.8% prior.
Retail sales Y/Y came in worse at 2.1% vs. 2.3% prior.
Japan Unemployment Rate missed expctations
The unemployment rate came in worse at 2.7% vs. 2.5% expected and 2.5% prior.
The US job openings for July missed expectations.
Job openings came in worse at 8.827M vs. 9.465M expected and 9.165M prior (revised from 9.582M).
The US Non-Farm ADP came in worse at 177K vs. 195K expected and 371K prior (revised from 324K).
Japan's retail sales came in better across the board.
Retail sales Y/Y came in better at 6.8% vs. 5.4% expected and 5.6% prior (revised from 5.9%).
Retail sales M/M came in better at 2.1% vs. -0.4% prior.
The Eurozone's August preliminary CPI came in better, and the core CPI came out as expected:
CPI Y/Y came in better at 5.3% vs. 5.1% expected and 5.3% prior.
CPI M/M came in better at 0.6% vs. 0.4% expected and -0.1% prior.
Core CPI Y/Y came in as expected at 5.3% and 5.5% prior.
Core CPI M/M came in as expected at 0.3% and -0.1% prior.
The Eurozone unemployment rate came in at 6.4%, as expected.
The US jobless claims beat expectations for initial claims but missed expectations for continuing claims.
Initial claims came in better at 228K vs. 235K expected and 323K prior (revised from 230K).
Continuing claims came in worse at 1725K vs. 1703K expected and 1697K prior (revised from 1702K).
US Non-Farm Payroll beat expectations; however, there was an increase in the unemployment rate:
NFP came in better at 187K vs. 170K expected and 157K prior (revised from 187K).
The unemployment rate came in worse at 3.8% vs. 3.5% expected and 3.5% prior.
The US ISM Manufacturing PMI came in better at 47.6 vs. 47.0 expected and 46.4 prior.
Technicals
The US dollar started off weak but ended up with a strong finish near the end of the week against most of its counterparts.
AUDUSD 1W Chart
AUDUSD has rebounded off its new 2023 low at 0.63646 but is still nearing its 2022 low at 0.61702. The symmetrical triangle on the 1W chart was broken to the downside, and the price action is indicating a possible re-test of the trendline support break.
USDJPY 1W Chart
Another strong end to the week for USDJPY, as the pair tested the 145.073 resistance level for the third week in a row. The 147 level was finally reached this week and found resistance at 147.378, which is just short of our resistance level of 147.572.
EURUSD 1W Chart
EURUSD has now broken below the support line of the rising wedge. We got the swings with less momentum and for them to have lower highs and lower lows to show signs of possible reversal and break the wedge to the downside. There is potential for a continuation towards 1.07000 and possibly 1.06750.
GBPUSD 1W Chart
GBPUSD has looked bearish since the ascending channel break. The bearish outlook is also supported by the bollinger-band indicator, as the market looks like it will fail to break and close back above the middle band. If the bearish momentum continues, there is potential support at 1.23081.
The key focus for the upcoming trading week will be:
Tuesday: Reserve Bank of Australia Policy Decision
Wednesday: Eurozone Retail Sales, US ISM Services PMI, Bank of Canada Policy Decision
Thursday: US Jobless Claims
Friday: Japan Wage Data, Canada Jobs Report
We will be back with another Forex Weekly Recap report next week.
Best of luck for the upcoming trading week ahead. Trade safely and responsibly.
BluetonaFX
Forex Weekly Recap for 28 August–01 September, 2023:
Fundamentals
The European Central Bank’s (ECB) Holzmann noted that he supports a rate hike in September barring any downside surprises before the meeting; his other key mentions were:
Not in the clear yet on inflation.
The ECB should start a debate soon on ending pandemic emergency purchase programme (PEPP) reinvestments.
Reserve Bank of Australia's (RBA) Bullock noted that inflation will be her main priority as the new RBA’s Governor; her other key mentions were:
The bank may have to raise rates again, but she is watching the data carefully.
All central banks are grappling with how much further to hike.
Climate change is likely to lead to more volatile inflation outcomes.
The Federal Reserve's Mester noted that progress on inflation and the labour market is improving; her other key mentions were:
The job market is still strong amid signs of rebalancing.
The 3.8% jobless rate is still low.
The main Fed debate is how restrictive policy needs to become and for how long.
Future policy decisions will be based on incoming data.
The Fed must balance risks when setting rate policy.
Bank of Japan's (BoJ) Nakamura noted that Japan is no longer in deflation; his other key mentions were:
The BoJ must patiently maintain an easy policy for the time being.
Japan's economy is recovering moderately.
The BoJ is closely watching the impact of yen moves on the economy and prices.
Weak yen benefit exports and tourism but is negative for domestic-driven firms and households.
The decision on when to end negative rates depends on economic developments.
If Japan achieves sustained economic recovery, they won't need yield curve control (YCC), but now is not the time to get rid of YCC.
Key Data
Preliminary data for Australian July retail sales
Retail sales M/M came in better at 0.5% vs. 0.3% expected and -0.8% prior.
Retail sales Y/Y came in worse at 2.1% vs. 2.3% prior.
Japan Unemployment Rate missed expctations
The unemployment rate came in worse at 2.7% vs. 2.5% expected and 2.5% prior.
The US job openings for July missed expectations.
Job openings came in worse at 8.827M vs. 9.465M expected and 9.165M prior (revised from 9.582M).
The US Non-Farm ADP came in worse at 177K vs. 195K expected and 371K prior (revised from 324K).
Japan's retail sales came in better across the board.
Retail sales Y/Y came in better at 6.8% vs. 5.4% expected and 5.6% prior (revised from 5.9%).
Retail sales M/M came in better at 2.1% vs. -0.4% prior.
The Eurozone's August preliminary CPI came in better, and the core CPI came out as expected:
CPI Y/Y came in better at 5.3% vs. 5.1% expected and 5.3% prior.
CPI M/M came in better at 0.6% vs. 0.4% expected and -0.1% prior.
Core CPI Y/Y came in as expected at 5.3% and 5.5% prior.
Core CPI M/M came in as expected at 0.3% and -0.1% prior.
The Eurozone unemployment rate came in at 6.4%, as expected.
The US jobless claims beat expectations for initial claims but missed expectations for continuing claims.
Initial claims came in better at 228K vs. 235K expected and 323K prior (revised from 230K).
Continuing claims came in worse at 1725K vs. 1703K expected and 1697K prior (revised from 1702K).
US Non-Farm Payroll beat expectations; however, there was an increase in the unemployment rate:
NFP came in better at 187K vs. 170K expected and 157K prior (revised from 187K).
The unemployment rate came in worse at 3.8% vs. 3.5% expected and 3.5% prior.
The US ISM Manufacturing PMI came in better at 47.6 vs. 47.0 expected and 46.4 prior.
Technicals
The US dollar started off weak but ended up with a strong finish near the end of the week against most of its counterparts.
AUDUSD 1W Chart
AUDUSD has rebounded off its new 2023 low at 0.63646 but is still nearing its 2022 low at 0.61702. The symmetrical triangle on the 1W chart was broken to the downside, and the price action is indicating a possible re-test of the trendline support break.
USDJPY 1W Chart
Another strong end to the week for USDJPY, as the pair tested the 145.073 resistance level for the third week in a row. The 147 level was finally reached this week and found resistance at 147.378, which is just short of our resistance level of 147.572.
EURUSD 1W Chart
EURUSD has now broken below the support line of the rising wedge. We got the swings with less momentum and for them to have lower highs and lower lows to show signs of possible reversal and break the wedge to the downside. There is potential for a continuation towards 1.07000 and possibly 1.06750.
GBPUSD 1W Chart
GBPUSD has looked bearish since the ascending channel break. The bearish outlook is also supported by the bollinger-band indicator, as the market looks like it will fail to break and close back above the middle band. If the bearish momentum continues, there is potential support at 1.23081.
The key focus for the upcoming trading week will be:
Tuesday: Reserve Bank of Australia Policy Decision
Wednesday: Eurozone Retail Sales, US ISM Services PMI, Bank of Canada Policy Decision
Thursday: US Jobless Claims
Friday: Japan Wage Data, Canada Jobs Report
We will be back with another Forex Weekly Recap report next week.
Best of luck for the upcoming trading week ahead. Trade safely and responsibly.
BluetonaFX
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