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Mon 18th July 2016, 06:00 GMT
EURUSD NEUTRAL GBPUSD NEUTRAL
Matthew Ashley & Steven Knight
The Euro initially drifted higher early in the week as the Eurogroup meeting
commenced, but the strength evaporated following the US Retail Sales
figures which proved robust at 0.6% m/m. Subsequently, the Euro Dollar
saw plenty of selling pressure late on Friday to close the week down at
1.1024. Moving forward, keep a close watch on the ECBʼs minimum bid rate
decision as it could provide plenty of volatility for markets.
The Cable was volatile but rose early in the week as news that David
Cameron had resigned and was being immediately replaced by Theresa May
as Prime Minister steadied the markets. In addition, the BoEʼs decision to hold
rates steady was also a surprise and saw the Cable rally somewhat. Although
the pair slipped following Fridayʼs US Retail Sales data, it still managed to
retain most of its gains to close the week out around the 1.3170 mark. On the
news front, watch for the UK Manufacturing and Services PMI results.
USDJPY BEARISH AUDUSD BULLISH
The USDJPY had a strong week as the pair continued to bounce from the
key 100.00 handle with the help of some stronger US economic data and
continued speculation of additional Japanese QE. The speculation over
further QE subsequently drove the Yen lower and saw the pair finish the
week sharply higher around the 104.72 mark. On the news front, watch
for the US Philly Fed Manufacturing Index, due late in the week.
Whilst the strong US results released on Friday did erase a sizeable portion
of the weekʼs gains, the Aussie Dollar closed the week fractionally higher.
The move was largely the result of the strong rally which was seen on
Tuesday in the wake of the NAB Business Confidence result. However, the
weaker US JOLTS Job Openings figure also played a role in Tuesdayʼs
performance. As for this week, both the Australian CB and MI Leading
indices are due which could influence the pair significantly.
NZDUSD NEUTRAL XAUUSD NEUTRAL
In the early stages of last week, the NZD bounced between the 0.7324 and
0.7208 levels strongly as a result of mixed NZ and US results. However, the
slowing NZ Home Sales data and some strong US results released during
Thursday and Fridayʼs sessions saw the pair plummet, breaking the 0.7208
support and dashing hopes of continued bullishness. Going forward, the
GDT Prices figure is due this week which will play its usual role in impacting
the NZD strongly.
Gold spent the week in decline as the appointment of a new UK Prime
Minister helped to stabilise the markets, as did the notable improvements in
the US economy which were reported in the US Beige Book. The
combination of growing stability in the UK and an improving US economy
now brings into question how long the metal can remain above the 1300.00
level. However, the commodityʼs movements will largely be technical in the
early stages of this week ahead of Thursdayʼs US results.
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