Home Forex FX Weekly Recap: July 17 – 21, 2023

FX Weekly Recap: July 17 – 21, 2023

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FX Weekly Recap: July 17 – 21, 2023

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World progress and excessive rate of interest issues dragged the New Zealand greenback to the underside of the foreign exchange heap this week.

In the meantime, sturdy U.S. information impressed hawkish Fed bets and pushed the U.S. greenback larger throughout the board.

Missed the key foreign exchange headlines? Right here’s what it’s essential to find out about final week’s FX scene:

USD Pairs

Overlay of USD vs. Major Currencies Chart by TV

Overlay of USD vs. Main Currencies Chart by TV

Anti-risk world progress issues and pro-risk “peak Fed rate of interest” speculations following the earlier week’s sluggish U.S. CPI studying saved the U.S. greenback in tight ranges within the first half of the week.

The Buck began gaining extra constantly throughout the board because the U.S. and different main economies printed sturdy sufficient financial reviews to help longer intervals of excessive rates of interest if not much more fee hikes from the key central banks.

USD gained essentially the most in opposition to JPY and high-yielding bets like NZD, AUD, and GBP and noticed weak beneficial properties/small losses in opposition to CHF and CAD.

🟢 Bullish Headline Arguments

NY Manufacturing Index for July: 1.1 (-6.0 forecast; 6.6 earlier); workers index popped to 4.7 from -3.6 earlier; costs paid index fell to 16.7 vs. 22.0 earlier

Retail Gross sales for June: 0.2% m/m (0.3% m/m forecast; 0.5% m/m earlier); core retail gross sales was inline with expectations at 0.2% m/m (0.3% m/m earlier)

NAHB Housing Market Index ticked up in July to 56 vs. 55; “The dearth of resale stock means potential house patrons who haven’t been priced out of the market proceed to hunt out new development in higher numbers”

Preliminary jobless claims for the week ending July 15: 228K (242K forecast; 237K earlier); the much less unstable four-week transferring common additionally fell 9.25K to 237.5K

Philly Fed Manufacturing Index for July: -13.5 vs. -13.7 in June

🔴 Bearish Headline Arguments

Industrial Manufacturing in June: -0.4% y/y (0.5% y/y forecast; 0.2% y/y earlier)

Constructing Permits for June : 1.44M (1.46M forecast; earlier revised larger to 1.5M); house begins fell by -8.0% m/m however higher than anticipated and nonetheless at pre-pandemic ranges.

Current Residence Gross sales for June: -3.3% m/m (-1.2% m/m forecast; 0.2% m/m earlier); the downturn is especially on account of extraordinarily low stock of pre-owned properties

EUR Pairs

Overlay of EUR vs. Major Currencies Chart by TV

Overlay of EUR vs. Main Currencies Chart by TV

There weren’t plenty of catalysts to trigger a re-pricing of ECB fee hike expectations, so the euro behaved extra as a countercurrency outdoors of small Eurozone data-related spikes.

ECB Governor Council member Klaas Knot did assist EUR some on Tuesday when he hinted {that a} September fee hike is just not a performed deal.

The frequent foreign money noticed essentially the most beneficial properties in opposition to NZD, JPY, GBP, and AUD however misplaced to CHF, USD, and CAD.

🟢 Bullish Headline Arguments

ECB Governing Council member Klaas Knot mentioned financial tightening past subsequent week’s assembly is something however assured — suggesting officers may quickly pause their unprecedented marketing campaign of interest-rate hikes.

Euro-area annual inflation fell to five.5% y/y in June 2023 as anticipated; core inflation strengthened to five.5% y/y (5.4% y/y forecast; 5.3% y/y earlier)

Germany’s producer costs edged up 0.1% y/y in June – the bottom since November 2020 – vs. 0.0% anticipated, 1.0% y/y in Could

Euro Space Flash Client Confidence for July 2023 improved by 1 level to -15.1, persevering with its sluggish restoration since 2022 low ranges round -30

GBP Pairs

Overlay of GBP vs. Major Currencies Chart by TV

Overlay of GBP vs. Main Currencies Chart by TV

The British pound was buying and selling in tight ranges and going together with threat sentiment when the U.Ok.’s CPI figures confirmed sharp slowdowns in June.

Talks of a much less hawkish BOE dragged U.Ok.’s bond yields and lessened the demand for GBP within the second half of the week.

GBP appears to be like set to finish the week decrease in opposition to its main counterparts with exception to the Kiwi and the yen.

🟢 Bullish Headline Arguments

Falling gas costs dragged the U.Ok.’s client costs from 8.7% y/y to 7.9% y/y in June. Core CPI additionally eased from 7.1% y/y to six.9% y/y.

Manufacturing unit gate costs eased from 2.7% y/y in Could to 0.1% in June, the bottom fee since December 2020

🔴 Bearish Headline Arguments

Retail gross sales for June: 0.7% m/m (0.1% m/m forecast/earlier)

CHF Pairs

Overlay of CHF vs. Major Currencies Chart by TV

Overlay of CHF vs. Main Currencies Chart by TV

An absence of market-moving Swiss information releases meant that CHF principally took its cues from general threat sentiment and counter foreign money flows.

The Swiss franc’s safe-haven attraction helped it acquire floor in opposition to “riskier” bets like NZD, GBP, AUD, EUR, and even CAD within the first half of the week.

CHF misplaced a few of its intraweek beneficial properties, nevertheless, after sturdy information prints from the U.S. made the U.S. greenback extra engaging as a secure haven in opposition to the higher-yielding currencies.

🔴 Bearish Headline Arguments

Commerce surplus tightened from 4.4B CHF to three.3B CHF in June as exports fell by 1.7% m/m whereas imports grew by 3.7%

AUD Pairs

Overlay of AUD vs. Major Currencies Chart by TV

Overlay of AUD vs. Main Currencies Chart by TV

Chinese language and world progress issues dragged AUD to downtrends early within the week.

Fortunately for AUD bulls, the RBA’s sorta hawkish assembly minutes and Australia’s surprisingly sturdy June labour information enabled the comdoll to recoup a few of its intraweek losses.

Till the U.S. dropped its sturdy preliminary jobless claims report, that’s.

Talks of the Fed having room to maintain its charges excessive and possibly execute a pair extra fee hikes weighed on threat belongings like AUD, and the comdoll misplaced its beneficial properties in opposition to EUR, CHF, USD, and CAD.

🟢 Bullish Headline Arguments

China’s industrial manufacturing up by 4.4% y/y in June vs. 2.5% anticipated, 3.5% in Could

China’s fastened asset funding elevated by 3.8% ytd/y vs. 3.4% anticipated, 4.0% in Could

RBA’s July assembly minutes confirmed that the Board agreed that “some additional tightening could also be required” and hints at revisiting the speed hike transfer on the August assembly


The Convention Board Main Financial Index grew by 0.1% m/m in Could after a 0.3% downtick in April

MI main index improved from -1.01% to -0.51% in June. Expectations of a protracted RBA fee hike pause helped, whereas subdued progress outlook dragged.

Australia added internet 32.6K jobs in June vs. 15K anticipated, 76.6K earlier. The unemployment fee dipped from 3.6% to three.5% because the participation fee edged 0.1% decrease to 66.8%

PBoC raised a parameter on cross-border company financing below its macro-prudential assessments (MPA) to 1.5 from 1.25, permitting firms to borrow extra abroad in proportion to their belongings

China’s Nationwide Growth and Reform Fee Deputy Director Li Chunlin shared that two new insurance policies for supporting non-state-owned companies can be launched quickly

Quarterly NAB survey confirmed enterprise confidence rising 1pt to -3 whereas enterprise situations dropped 8 pts to +9 as companies “moderated significantly” in Q2

🔴 Bearish Headline Arguments

China’s GDP grew by 0.8% in Q2 2023, slower than the two.2% quarterly progress in Q1. Annual GDP got here in at 6.3%, quicker than Q1’s 4.5% uptick however slower than the 7.1% progress anticipated

China’s retail gross sales slowed down from 12.7% to three.1% y/y in June

CAD Pairs

Overlay of CAD vs. Major Currencies Chart by TV

Overlay of CAD vs. Main Currencies Chart by TV

Danger aversion? Who she?

Due to internet constructive Canadian information releases and better crude oil costs, CAD shrugged off many of the threat aversion vibes and traded larger in opposition to its main counterparts.

🟢 Bullish Headline Arguments

International funding in Canadian securities for Could: C$11.2B (-C$2.5B forecast; C$12.7B prevoius); “Canadian buyers decreased their holdings of overseas securities by $2.8B in Could, after buying $2.4B value in April.”

Wholesale gross sales (excluding petroleum, petroleum merchandise, and different hydrocarbons and excluding oilseed and grain) rose 3.5% as anticipated (vs. -1.4% earlier) to C$83.6B in Could.

CPI for June 2032: 2.8% y/y (3.0% y/y forecast; 3.4% y/y earlier); led by falling power prices to a 27-month low; core CPI fell to three.2% y/y (3.6% y/y forecast) vs. 3.7% y/y earlier

Industrial Product Value Index for June: -0.6% m/m (0.1% m/m forecast; -0.6% m/m earlier; Uncooked Supplies Value Index was -1.5% m/m (-0.4% m/m forecast; -5.0% m/m earlier)

Housing begins in June: 281K (200K forecast/earlier)

New Housing Value Index for June: 0.1% m/m (-0.1% m/m forecast; 0.1% m/m earlier)

🔴 Bearish Headline Arguments

Retail gross sales for Could 2023: 0.2% m/m (0.5% m/m forecast; 1.0% m/m earlier); core retail gross sales was 0.0% m/m (0.3% m/m forecast; 1.2% m/m earlier)

 

NZD Pairs

Overlay of NZD vs. Major Currencies Chart by TV

Overlay of NZD vs. Main Currencies Chart by TV

The New Zealand greenback was in all probability the most important loser this week as profit-taking from the earlier weeks’ beneficial properties acquired blended in with general threat aversion and different main central banks having extra causes to lift rates of interest. 

NZD noticed a gradual promoting all week apart from when New Zealand printed a nonetheless comparatively excessive inflation replace for Q2, Australia dropped a robust (hawkish) jobs report, and when China made strikes to stimulate its economic system.

🟢 Bullish Headline Arguments

Inflation up by 1.1% q/q in Q2 2023 vs. 1.2% in Q1, 0.9% anticipated. Annual CPI dropped from 6.7% to six.0% in Q2 due to decrease petrol costs and better rates of interest

🔴 Bearish Headline Arguments

Companies PMI fell to 50.1 in June (52.5 forecast) from a revised 53.1 earlier learn; Employment index fell to 49.1 vs. 52.3 earlier; New orders dipped to 51.3 vs. 55.4 earlier

JPY Pairs

Overlay of JPY vs. Major Currencies Chart by TV

Overlay of JPY vs. Main Currencies Chart by TV

Very similar to different secure havens, threat aversion pushed the yen larger within the first half of the week.

However BOJ members sticking to their hawkish bias (regardless of a barely larger nationwide core CPI) made the foreign money much less engaging in opposition to its main counterparts.

JPY weakened amidst risk-taking on Tuesday and slid on a sluggish and regular downtrend to finish the week decrease in opposition to all of its main counterparts apart from NZD.

🟢 Bullish Headline Arguments

Japan posts first annual commerce surplus in 23 months as exports grew by 1.5% y/y whereas imports dipped by 12.9% in June

🔴 Bearish Headline Arguments

BOJ Governor Kazuo Ueda hinted at prolonged ultra-loose insurance policies, saying that “our general narrative on financial coverage stays unchanged” if the prospect of sustained 2% inflation stays distant

Japan Nationwide Core CPI: 3.3% y/y (3.2% y/y forecast / earlier)

Japanese authorities downgraded its financial outlook on Thursday from 1.5% for the fiscal 12 months ending March 2024 to 1.3%; raised its 2023 client value inflation forecast to 2.6% from 1.7% prior

Sources acquainted with the Financial institution of Japan mentioned that the BOJ is probably going leaning in direction of conserving yield management regular subsequent week

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