Weekly Report

Market analysis

Highlights:

• EUR/USD : French election fears pressure euro to lows
• GBP/USD : Retreated from two-week lows
• USD/JPY : Pops higher against yen on Trump comments
• USD/CAD : Drops after strong Canadian jobs report
• Gold : Prices tumble on stronger dollar
• Crude Oil : Stages rally to settle higher in U.S.

EUR/USD

French election fears pressure euro to lows

The euro slid to a one-week low against the dollar on Monday on concerns over French politics ahead of the presidential vote in April as well as other impending elections in Europe in a year of political uncertainty. Polls have shown that conservative presidential candidate Francois Fillon lost his position as favorite to win the election to centrist Emmanuel Macron after his campaign became embroiled in a fake-job scandal. On Tuesday the U.S. dollar was broadly higher against a currency basket, amid renewed expectations for higher interest rates, while the euro was on track for its biggest one day decline of 2017 so far as rising political risk weighed. On Wednesday the euro fell another third of a percent against the dollar, as concerns around resurgence in political risk to the single currency project drove its worst run of daily losses in almost two months. Concerns over the impact on the world economy of President Trump's protectionism and immigration policy have also weighed on the greenback, along with the new administration's hints that it would prefer a weaker dollar.

On Thursday the fell against the U.S. dollar, after comments by U.S. President Donald Trump and upbeat U.S. jobless claims data. The comments came after the U.S. Department of Labor said initial jobless claims decreased by 12,000 to 234,000 in the week ending February 4 from the previous week’s total of 246,000. On Friday the dollar rose to fresh two-week highs against other major currencies on Friday, as investors eyed the release of U.S. consumer sentiment data due later in the day and as recent comments by U.S. President Donald Trump continued to support. The dollar remained supported after U.S. President Donald Trump said on Thursday that he would announce the most ambitious tax reform plan since the Reagan era in the next few weeks.

EUR/USD

GBP/USD

Retreated from two-week lows

The pound briefly rose above the 1.30 level against the dollar on Monday, boosted by prospects that Theresa May will become the next U.K. prime minster much earlier than had been anticipated. On Tuesday the pound extended gains against the dollar and the yen fell further as political uncertainty in the U.K. eased and Japan prepared fresh economic stimulus measures, boosting risk appetite. Sterling found support as investors reacted to the news that Britain’s home secretary Theresa May would soon replace David Cameron as prime minister, removing some of the political uncertainty that has hit the currency in the wake of the June 23 vote to leave the European Union. Carney also refuted allegations that the central bank attempted to scare voters about the economic risks of a Brexit vote in the run-up to the referendum, describing the allegations as “extraordinary”. On Wednesday Britain's vote to leave the European Union is raising questions about sterling's place among the small, elite group of hard currencies underpinning the financial system. For Britons, the impact may feel slight or even ambiguous. Consumers of imported goods may see them become more expensive and travelers will find foreign trips more costly. Exporters, on the other hand, may find their products more competitive abroad and any overseas earnings get a boost. The pound rose considerably on Thursday, holding onto sharp gains from earlier in the session, after the Bank of England triggered a rally in the Pound by unexpectedly leaving its benchmark interest rate steady at a closely-watched meeting. In the U.K., the Bank of England jolted markets by holding their key interest rate steady at 0.5% and leaving its comprehensive Quantitative Easing program unchanged on Thursday afternoon. Following the 8-1 vote, Bank of England governor Mark Carney hinted that the BOE could approve fresh stimulus measures when meets again on August 4.

GBP/USD

USD/JPY

Pops higher against yen on Trump comments

Japan's former currency czar Eisuke Sakakibara said the dollar could fall below 100 yen by year-end on U.S. President Donald Trump's perceived support for a weak dollar, but cautioned that any yen-selling intervention by Tokyo might be counterproductive. On Tuesday the dollar was higher against the yen, as the safe haven yen amid a lack of clarity on U.S. President Donald Trump's economic policies. On Wednesday the dollar trimmed gains against other major currencies in quiet trade, but the greenback was expected to remain supported as political uncertainty in Europe continued to dominate market sentiment. On Thursday The dollar rose to one-week highs against the yen, after U.S. President Donald Trump said he would announce “something” on taxes in the next two to three weeks and reiterated a pledge to roll back regulations.. On Friday the dollar gained on expectations of a constructive meeting between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe, while Trump's comments on tax reform Thursday continued to support the greenback.

USD/JPY

USD/CAD

Drops after strong Canadian jobs report

The Canadian dollar was lower against its U.S. counterpart on Monday as the greenback recovered after data on Friday showing tepid U.S. wage growth dampened expectations for a faster rate of interest rate hikes this year. On Tuesday the Canadian dollar fell to two-week lows against its U.S. counterpart, as the greenback strengthened and lower prices for oil, a major Canadian export, weighed. On Wednesday the U.S. dollar fell against its Canadian counterpart, pulling away from the previous session’s two=week high, but losses were expected to remain limited as concerns over geopolitical uncertainties in Europe lent broad support to the greenback. Meanwhile, sentiment on the greenback remained supported after Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday that the U.S. central bank should keep monetary policy moderately accommodative. On Thursday the U.S. dollar was lower against its Canadian counterpart, despite the release of upbeat U.S. jobless claims data, as rising oil prices lent support to the commodity-related Canadian currency. But sentiment on the greenback remained vulnerable amid concerns over U.S. President Donald Trump's protectionist stance and recent hints from the new administration that it would prefer a weaker dollar. On Friday the U.S. dollar dropped against its Canadian counterpart on Friday, after the release of strong Canadian employment data and as rising oil prices continued to support to the commodity-related Canadian currency. However, the greenback was still supported after U.S. President Donald Trump said on Thursday that he would announce the most ambitious tax reform plan since the Reagan era in the next few weeks.

USD/CAD

Gold

Gold prices tumble on stronger dollar

Gold prices added to overnight gains in North American morning trade on Monday, hitting the strongest level since November as investors sought the perceived safety of the yellow metal amid growing concerns over political risks around the globe. On Tuesday gold prices swung between small gains and losses in North American morning trade, steadying near the prior session's three-month high as rising global political uncertainty supported safe-haven demand. Investors were largely focused on French politics, as far-right National Front leader Marine Le Pen launched her presidential bid over the weekend, vowing to fight globalization and take France out of the euro zone.

Gold prices rose for the fifth day in a row on Wednesday extending a rally to a fresh three-month high amid ongoing worries over political risks in Europe and economic uncertainty in the U.S. on Thursday Gold prices were slightly higher in North American morning trade, hovering below the prior session's three-month high amid ongoing worries over political risks in Europe and economic uncertainty in the U.S. Uncertainty about European politics has boosted gold in recent sessions. Polls this week have shown German Chancellor Angela Merkel falling behind a candidate from the country's Social Democrats in this year's elections scheduled to take place in September. Gold prices steadied on Friday, but remained below the week’s three-month highs as the dollar pared back some of the gains made in the wake of U.S. President Donald Trump's promise of a major tax announcement.

GOLD

Crude Oil

Stages rally to settle higher in U.S.

Crude Oil fell on Monday as ample U.S. supplies and excess speculative length outweighed OPEC output curbs and rising tensions between the United States and Iran. On Tuesday Oil prices fell more than 1 percent, pressured by growing gasoline stockpiles in the United States as evidence of a burgeoning revival in U.S. shale production could complicate efforts by OPEC and other producers to reduce a supply glut. On Wednesday crude prices settled higher in the U.S., after data on crude oil inventories from the the Energy Information Administration (EIA) showed a massive build and the third straight weekly increase. Crude oil inventories in the U.S. jumped by 13.8 million barrels at the end of last week, the EIA said a surprise above the expected 2.8 million barrels gain.

On Tuesday, the industry group the American Petroleum Association reported at 14.23 million barrels builds in crude stocks. A deal by OPEC and non-OPEC nations to trim nearly 1.8 million barrels per day in the first six months of the year is seen largely on track, supporting prices above $50 a barrel with the focus on demand in major importing countries such as India and China where overall economic growth prospects are being closely watched as well as supply responses. Ahead the Paris-based International Energy Agency will update its monthly supply and demand estimates. On Thursday Oil prices rose after an unexpected draw in U.S. gasoline inventories pointed to higher demand in the world's biggest oil market, although bloated crude supplies meant that fuel markets remain under pressure. On Friday crude oil prices finished sharply higher, as traders cheered signs that global supply was beginning to tighten in wake of a planned agreement by major crude producers to cut output. OPEC has delivered more than 90% of pledged oil output curbs in January, according to figures the exporter group uses to monitor its supply, making a strong start to implementation of its first production cut in eight years.

MAJOR DATA RELEASED DURING LAST WEEK

Event		Actual	Previous
AUD	Retail Sales m/m	-0.001	0.001
CNY	Caixin Services PMI	53.1	53.4
EUR	German Factory Orders m/m	0.052	-0.036
EUR	ECB President Draghi Speaks
USD	FOMC Member Harker Speaks
NZD	Inflation Expectations q/q	0.019	0.017
AUD	Cash Rate	0.015	0.015
AUD	RBA Rate Statement
GBP	Halifax HPI m/m	-0.009	0.016
CAD	Trade Balance	0.9B	1.0B
CAD	Building Permits m/m	-0.066	-0.012
USD	Trade Balance	-44.3B	-45.7B
NZD	GDT Price Index	0.013	0.006
CAD	Ivey PMI	57.2	60.8
USD	JOLTS Job Openings	5.50M	5.51M
GBP	MPC Member Cunliffe Speaks
USD	Crude Oil Inventories	13.8M	6.5M
NZD	Official Cash Rate	0.0175	0.0175
NZD	RBNZ Rate Statement
NZD	RBNZ Monetary Policy Statement
NZD	RBNZ Press Conference
NZD	RBNZ Gov Wheeler Speaks
AUD	NAB Quarterly Business Confidence	5	6
AUD	RBA Gov Lowe Speaks
CAD	NHPI m/m	0.001	0.002
USD	Unemployment Claims	234K	246K
CAD	Gov Council Member Schembri Speaks
USD	FOMC Member Evans Speaks
GBP	BOE Gov Carney Speaks
AUD	RBA Monetary Policy Statement
CNY	Trade Balance	355B	275B
GBP	Manufacturing Production m/m	0.021	0.014
GBP	Goods Trade Balance	-10.9B	-11.6B
CAD	Employment Change	48.3K	53.7K
CAD	Unemployment Rate	0.068	0.069
USD	Import Prices m/m	0.004	0.005
USD	Prelim UoM Consumer Sentiment	95.7	98.5
USD	FOMC Member Fischer Speaks

MAJOR DATA COMING OUT THIS WEEK (Time zone GMT)

Date	Time	Event		Forecast	Previous
2/12/2017	11:50pm	JPY	Prelim GDP q/q	0.003	0.003
2/14/2017	1:30am	CNY	CPI y/y	0.024	0.021
2/14/2017	1:30am	CNY	PPI y/y	0.066	0.055
2/14/2017	7:00am	EUR	German Prelim GDP q/q	0.005	0.002
2/14/2017	8:15am	CHF	PPI m/m	0.003	0.002
2/14/2017	9:30am	GBP	CPI y/y	0.019	0.016
2/14/2017	9:30am	GBP	PPI Input m/m	0.01	0.018
2/14/2017	9:30am	GBP	RPI y/y	0.028	0.025
2/14/2017	10:00am	EUR	Flash GDP q/q	0.005	0.005
2/14/2017	10:00am	EUR	German ZEW Economic Sentiment	15.1	16.6
2/14/2017	Tentative	EUR	EU Economic Forecasts
2/14/2017	1:30pm	USD	PPI m/m	0.003	0.003
2/14/2017	1:30pm	USD	Core PPI m/m	0.002	0.002
2/14/2017	3:00pm	USD	Fed Chair Yellen Speaks
2/14/2017	6:00pm	USD	FOMC Member Kaplan Speaks
2/15/2017	9:30am	GBP	Average Earnings Index 3m/y	0.028	0.028
2/15/2017	9:30am	GBP	Claimant Count Change	1.1K	-10.1K
2/15/2017	9:30am	GBP	Unemployment Rate	0.048	0.048
2/15/2017	1:30pm	CAD	Manufacturing Sales m/m	0.014	0.015
2/15/2017	1:30pm	USD	CPI m/m	0.003	0.003
2/15/2017	1:30pm	USD	Core CPI m/m	0.002	0.002
2/15/2017	1:30pm	USD	Core Retail Sales m/m	0.004	0.002
2/15/2017	1:30pm	USD	Retail Sales m/m	0.001	0.006
2/15/2017	1:30pm	USD	Empire State Manufacturing Index	7.2	6.5
2/15/2017	2:15pm	USD	Capacity Utilization Rate	0.756	0.755
2/15/2017	2:15pm	USD	Industrial Production m/m	0.001	0.008
2/15/2017	3:00pm	USD	Fed Chair Yellen Testifies
2/15/2017	3:30pm	USD	Crude Oil Inventories		13.8M
2/15/2017	5:45pm	USD	FOMC Member Harker Speaks
2/16/2017	12:30am	AUD	Employment Change		13.5K
2/16/2017	12:30am	AUD	Unemployment Rate		0.058
2/16/2017	12:30pm	EUR	ECB Monetary Policy Meeting Accounts
2/16/2017	1:30pm	USD	Building Permits		1.21M
2/16/2017	1:30pm	USD	Philly Fed Manufacturing Index		23.6
2/16/2017	1:30pm	USD	Unemployment Claims		234K
2/16/2017	1:30pm	USD	Housing Starts		1.23M
2/16/2017	Tentative	USD	Mortgage Delinquencies		0.0452
2/16/2017	9:45pm	NZD	Retail Sales q/q		0.009
2/16/2017	9:45pm	NZD	Core Retail Sales q/q		0.003
2/17/2017	9:30am	GBP	Retail Sales m/m		-0.019
2/17/2017	1:30pm	CAD	Foreign Securities Purchases		7.24B