Forex Market - Weekly Update

The US Dollar held its ground the previous week pushing higher against its counterparties. The US Dollar index remained near its resistance at 96.84. Against the Japanese Yen, the US Dollar peaked at cap at 106.30 on expectations building towards fiscal and monetary stimulus by end of July. Safe haven role for the Yen is fading, while the greenback has been gaining on stronger than expected US Retail Sales and Industrial Production data. The USDJPY registered big wins over the previous week, technically explained by being well into oversold zone previously.

On Friday China has released growth data for the second quarter of 2016, the GDP increase being slightly higher than expect but the same like the 2nd quarter in 2015. The Chinese Retail Sales were the positive surprise increasing by 6.2% up from expected at 5.9%, backing risk appetite. At the end of the previous week markets volatility jumped amid coup in Turkey, thus the risk saverse spiked at the market close.
The Bank of England the previous week decided to keep rates unchanged at 0.50% surprising market participants who have discounted a 0.25% rate cut. Thus, the British pound managed to recover further the previous week as there was no decision to ease monetary policy. The GBPUSD registered gains up to resistance at 1.3474, the new PM, Theresa May, takes the lead on negotiations with EU, though concerns for the UK economy remain. Lastly, the Bank of England Chef Economist, Andrew Haldane, stated that the central bank will act on August MPC meeting. The last point limited upside potential for the pound.

Early this week, New Zealand annual CPI data were below expectations triggering some speculation for rate cut in August. The NZDUSD has been on a downtrend, decreasing down to support at 0.7067 from resistance met earlier the previous week at 0.7326. At the same time, the Aussie retraced on Friday, down to 0.7557, nevertheless remaining on upside track and supported by 50 Moving Average. The RBA is expected to release it minutes of the last monetary meeting tomorrow.

Source: www.fcmforex.com