Trading Week Ahead: 10th – 15th August 2020
Key Events and Data Releases This Week
Japanese Bank Holiday
USD PPI, Core PPI
NZD Official Cash rate, RBNZ Monetary Policy Statement, RBNZ Rate Statement, RBNZ Press Conference
GBP Prelim GDP
USD CPI Core CPI
AUD Employment Change, Unemployment Rate –
USD Unemployment Claims
AUD RBA Gov Lowe Speaks
USD Retail Sales, Core Retail Sales
(Times adapted to AEST timezone)
Last Week’s Key Moments
The USD was a key focus Forex wise last week as we saw it make further moves lower during the week. Selling halted late in the week, as buyers made a small stand in Friday’s session after U.S. jobs data did it again! Risk currencies finished the week mixed after the USD fightback, with the EUR and AUD holding gains but the GBP finished in the red. All three saw strong rallies before fading, with the EUR and AUD hitting 1% gains before turning.
Central banks held rates as expected, and we saw surprise growth on the ISM US manufacturing PMI data. German factory orders also surprised, hitting 27.9%, well above the 10.3% expected. Stocks saw mainly higher during the week with the Nasdaq once again hitting new records, although we saw a pullback Friday after the U.S. jobs data.
Well, we saw another surprise in U.S. employment data on Friday with the unemployment rate decreasing to 10.2% from 10.5%, Employment change came in at 1,736K above the 1,530K expected. Average earnings jumped to 0.2%, well above the -0.5% expected. This had a positive effect on the Dow and SP500 which saw them close out the week in the green. The Dow added 3.80% for the week, and the SP500 added 2.45%, and the Nasdaq gained 2.47% despite its lower close on Friday.
Jobs data and stimulus were two key issues last week, with stimulus remaining foggy until Saturday after news came in that President Trump finally signed the executive orders. The president’s orders are to extend unemployment benefits, provide a payroll tax holiday, defer student loan payments through 2020 and extend the federal moratorium on evictions. According to CNBC, Trump will extend the unemployment bonus at a reduced level of $400 per week, instead of the $600 per week federal unemployment insurance that was approved in March and expired at the end of July. This certainly doesn’t end here, this issue could potentially drag into the new week. The orders could face legal challenges as the programs require federal funding to continue, which congress controls.
Trade tensions could also be another one to watch this week as things continue to bubble. Last week the US banned Chinese apps Tik Tok and WeChat. Oil and gold finished the week higher but failed to hold highs. Gold continued its run early in the week on a weaker USD hitting 2,075 before pulling back after the USD made its late-week fightback. That was the fifth weekly close higher for gold – if we see a continued USD fightback, could we see pressure on the run? Bitcoin is another to keep an eye on as buyers continue to hold price above 11K after the prior week’s breakout.
U.S. CPI data and retail sales will be a focus this week on top of the stimulus. CPI is expected to come in at 0.3% and Core CPI at 0.2%. AUD traders will also be focused on the week’s unemployment data. With one state in hard lockdown, could we see any unexpected surprises? Employment changes are expected to drop to 30.0K, while the unemployment rate is expected to increase to 7.8% As much as we’ve enjoyed looking at the Nasdaq and Gold’s amazing rallies, we want to change track this week and take a look at developing support on the USDCAD Weekly. We’re starting to see some decent demand developing from buyers anytime that price moves below 1.3350 at the moment. Could this be early signs of support forming?