FX Weekly Recap: July 17 – 21, 2023


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

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

Missed the main foreign exchange headlines? Right here’s what it is advisable 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 development considerations and pro-risk “peak Fed rate of interest” speculations following the earlier week’s gradual U.S. CPI studying saved the U.S. greenback in tight ranges within the first half of the week.

The Buck began gaining extra persistently throughout the board because the U.S. and different main economies printed sturdy sufficient financial studies to help longer durations of excessive rates of interest if not much more charge hikes from the main central banks.

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

???? Bullish Headline Arguments

NY Manufacturing Index for July: 1.1 (-6.0 forecast; 6.6 earlier); staff 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 consumers who haven’t been priced out of the market proceed to hunt out new building in better numbers”

Preliminary jobless claims for the week ending July 15: 228K (242K forecast; 237K earlier); the much less risky four-week shifting 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 greater to 1.5M); house begins fell by -8.0% m/m however higher than anticipated and nonetheless at pre-pandemic ranges.

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

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 charge hike expectations, so the euro behaved extra as a countercurrency exterior of small Eurozone data-related spikes.

ECB Governor Council member Klaas Knot did assist EUR some on Tuesday when he hinted {that a} September charge hike just isn’t a carried out deal.

The frequent forex noticed essentially the most features in opposition to NZD, JPY, GBP, and AUD however misplaced to CHF, USD, and CAD.

???? Bullish Headline Arguments

ECB Governing Council member Klaas Knot stated financial tightening past subsequent week’s assembly is something however assured — suggesting officers might 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 Might

Euro Space Flash Shopper Confidence for July 2023 improved by 1 level to -15.1, persevering with its gradual 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 danger 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 seems 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 shopper 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 facility gate costs eased from 2.7% y/y in Might to 0.1% in June, the bottom charge 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 knowledge releases meant that CHF principally took its cues from general danger sentiment and counter forex flows.

The Swiss franc’s safe-haven enchantment 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 features, nonetheless, after sturdy knowledge prints from the U.S. made the U.S. greenback extra engaging as a protected 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 development considerations 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 knowledge 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 perhaps execute a pair extra charge hikes weighed on danger property like AUD, and the comdoll misplaced its features 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 Might

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

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 Might after a 0.3% downtick in April

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

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

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

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

Quarterly NAB survey confirmed enterprise confidence rising 1pt to -3 whereas enterprise circumstances 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 development in Q1. Annual GDP got here in at 6.3%, quicker than Q1’s 4.5% uptick however slower than the 7.1% development 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?

Because of internet constructive Canadian knowledge releases and better crude oil costs, CAD shrugged off a lot of the danger aversion vibes and traded greater in opposition to its main counterparts.

???? Bullish Headline Arguments

Overseas funding in Canadian securities for Might: C$11.2B (-C$2.5B forecast; C$12.7B prevoius); “Canadian buyers decreased their holdings of overseas securities by $2.8B in Might, 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 Might.

CPI for June 2032: 2.8% y/y (3.0% y/y forecast; 3.4% y/y earlier); led by falling vitality 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 Worth Index for June: -0.6% m/m (0.1% m/m forecast; -0.6% m/m earlier; Uncooked Supplies Worth 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 Worth Index for June: 0.1% m/m (-0.1% m/m forecast; 0.1% m/m earlier)

???? Bearish Headline Arguments

Retail gross sales for Might 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 largest loser this week as profit-taking from the earlier weeks’ features obtained blended in with general danger aversion and different main central banks having extra causes to lift rates of interest. 

NZD noticed a gentle promoting all week apart from when New Zealand printed a nonetheless comparatively excessive inflation replace for Q2, Australia dropped a powerful (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 like different protected havens, danger aversion pushed the yen greater within the first half of the week.

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

JPY weakened amidst risk-taking on Tuesday and slid on a gradual 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 shopper worth inflation forecast to 2.6% from 1.7% prior

Sources accustomed to the Financial institution of Japan stated that the BOJ is probably going leaning in direction of preserving yield management regular subsequent week


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