The Week That Was…
A very important week in Forex markets comes to a conclusion with yet another impressive figure from the US Non-Farm Payrolls pushing the possibility of a June rate hike further into the spotlight.
In the game of Central Bank “stick or twist” we saw all 4 CB’s decide to “stick” and it was the words of Mario Draghi once again that spurred the main action as the ECB President cited the Central Bank’s commitment to their easing program which will start next week and carry on through September 2016 and which he also confirmed will include the buying of negative yield bonds. On the back of the ECB press conference we saw EURUSD push through the important psychological 1.10 figure and then drive even lower on the NFP print.
- USD The Greenback remains strong into the weekend with the latest NFP number striking another positive tone and fuelling anticipation of a possible June Fed lift-off. Growth and rate differentials continue to favour the Dollar against its European and Japanese counterparts and the index pushes into new YTD highs.
- EUR Continued its downward trajectory this week, with the ECB meeting passing mostly as expected. QE is set to begin next week and the ECB has clarified its willingness to buy negative yield bonds and it’s commitment to continuing purchases through September 2016. The ECB’s stated commitment to easing saw the single currency push through the important psychological figure of 1.10 only for the blockbuster NFP number to push price down even further into the 1.08s .
- JPY Recent improvements in data add to signs of growth in Japan suggesting that the BoJ will not ease further this year even against the backdrop of global CB action. Howver continued signs of strength out of the US are pushing any JPY positives to the side and a surging Nikkei is forcing increased exporter selling of JPY which is likely to continue through Japanese elections.
- GBP After a five week run up off the lows, the UK currency saw a decline this week, falling more than 400 pips off the highs with the strong NFP print proving the final nail in the coffin for GBP. Data out of the UK remains robust and the BoE continues its relatively hawkish tone however, uncertainty in the lead up to the May elections weighs on the currency and attention to the Fed lift off leans heavily .
CAD After surprising markets with an unexpected cut and taking a March cut off the table. Yesterday’s meeting saw further hawkish surprises with the BoC shifting away from further easing citing an improvement in financial conditions adding that risks surrounding inflation are now more balanced. However, any CAD positives were upstaged into Friday on the NFP print.
- AUD A choppy week for the Australian currency. The recent RBA meeting further easing was postponed but not cancelled. Policymakers maintain the view that a weaker AUD is needed to add stability to the economy. With a Fed lift off nearing and Chinese growth forecasts being revised lower, AUD is likely to weaken into mid year. The AUD ends the week in the lows of the weekly range, failing against Dollar strength on the back of a strong NFP print.
USD Index: Short Term (1-3 Days) : Bullish – Medium Term (1-3 weeks) Bullish
EURUSD: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
GBPUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish
USDJPY: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish
USDCAD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish
AUDUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish
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