Forex Followup: July 14 - July 18, 2014

Key Fundamental Forex Events for the Week of July 14th through July 18th

The following table lists the key economic data and other events that came out during the week of July 14th through July 18th, with release times displayed for the GMT time zone.

The list also indicates how much each release deviated from the market consensus forecast upon release, as well as what the affected major currency pair or pairs did after each event or set of events.

Monday, July 14th

• All Day EUR French Bank Holiday
• 6:00pm EUR ECB President Draghi said that, "Upside and downside risks to the outlook for price developments are both seen as limited and broadly balanced over the medium term. We will monitor the possible repercussions of geopolitical risks and exchange rate developments closely in this context. The exchange rate is not a policy target for the ECB. Nevertheless, the exchange rate remains an important driver of future inflation in the euro area. Certainly, the appreciation that took place since mid-2012 had an impact on price stability. In the present context, an appreciated exchange rate is a risk to the sustainability of the recovery." The currency rose.

Tuesday, July 15th

• 2:30am AUD Monetary Policy Meeting Minutes stated that,"Members noted that riskier asset markets, which had been the recipient of large capital inflows resulting from the accommodative monetary policy settings in the major economies, had been most affected by the shift in expectations about US monetary policy. Currencies and share markets of emerging market economies had fallen sharply, while sovereign bond yields in those countries had increased to their highest levels in around a year." The currency fell.
• 3:58am JPY Monetary Policy Statement noted that, "The weighted average of the overnight call rate has been below the 0.1 percent level, and interest rates on term instruments have declined somewhat. Compared with last month, stock prices have risen. Meanwhile, the value of the yen against the U.S. dollar and long-term interest rates have remained at more or less the same levels as last month." The currency fell.
• 7:30am JPY BOJ Press Conference: BOJ Governor Haruhiko Kuroda said that, "Inflation will not fall below one percent". The currency fell.
• 9:30am GBP CPI 1.9% versus 1.6% expected. The currency rose.
• 10:00am EUR German ZEW Economic Sentiment 27.1 versus 28.9 expected. The currency fell.
• 10:00am GBP BOE Governor Carney said that, "If you buy insurance, which is effectively what you are doing by hedging through an interest rate, and if you match the maturity of the hedge, the maturity of the loan, then this is not an issue.If you were speculating, by saying that I took out insurance at a certain interest rate and I wanted to redo it, then yes, there is always a break fee but the stance of monetary policy is determined not by interest rate speculation but by achieving the inflation target." The currency rose.
• 1:30pm USD Core Retail Sales 0.4% versus 0.5% expected. The currency rose.
• 1:30pm USD Retail Sales 0.2% versus 0.6% expected. The currency rose.
• 3:00pm USD Fed Chair Yellen testified that, "Although the economy continues to improve, the recovery is not yet complete. Even with the recent declines, the unemployment rate remains above Federal Open Market Committee (FOMC) participants' estimates of its longer-run normal level. Labor force participation appears weaker than one would expect based on the aging of the population and the level of unemployment. These and other indications that significant slack remains in labor markets are corroborated by the continued slow pace of growth in most measures of hourly compensation." The currency rose.
• 11:45pm NZD CPI 0.3% versus 0.4% expected. The currency fell.

Wednesday, July 16th

• 3:00am CNY GDP 7.5% versus 7.4% expected)
• 3:00am CNY Industrial Production 9.2% versus 9.0% expected)
• 9:30am GBP Claimant Count Change -36.3K versus -27.1K expected. The currency fell.
• 9:30am GBP Unemployment Rate 6.5% versus 6.5% expected. The currency fell.
• 1:30pm CAD Manufacturing Sales 1.6% versus 1.3% expected. The currency rose.
• 1:30pm USD PPI 0.4% versus 0.2% expected. The currency rose.
• 3:00pm CAD BOC Monetary Policy Report noted that, "The global economic expansion is modest and uneven. After growing at a healthy pace in the second half of 2013, the world economy experienced a sharp and broad-based slowdown in economic activity and trade in the first quarter of this year. While global growth is expected to gather momentum, the resulting profile is weaker than anticipated at the time of the April Report Global economic growth is expected to be 2.9 per cent in 2014, picking up to 3.6 per cent in 2015 and 3.7 per cent in 2016." The currency rose.
• 3:00pm CAD BOC Rate Statement noted that, "Given the downgrade to the global outlook, economic activity in Canada is now projected to be a little weaker than previously forecast. However, the Bank still expects that the lower Canadian dollar and a projected strengthening in global demand will lead to a pickup in Canadian exports and business investment and, eventually, a more sustainable growth track. Meanwhile, household imbalances continue to evolve constructively and recent data are broadly consistent with a soft landing in Canada’s housing market. Real GDP growth is projected to average around 2 1/4 per cent during 2014–2016. Consequently, the economy is expected to reach full capacity around mid-2016, a little later than anticipated in April." The currency rose.
• 3:00pm CAD Overnight Rate Decision unchanged at 1.00% versus 1.00% expected. The currency rose.
• 3:00pm USD Fed Chair Yellen testified that, "I will now turn to monetary policy. The FOMC is committed to policies that promote maximum employment and price stability, consistent with our dual mandate from the Congress. Given the economic situation that I just described, we judge that a high degree of monetary policy accommodation remains appropriate. Consistent with that assessment, we have maintained the target range for the federal funds rate at 0 to 1/4 percent and have continued to rely on large-scale asset purchases and forward guidance about the future path of the federal funds rate to provide the appropriate level of support for the economy." The currency rose.
• 4:15pm CAD BOC Press Conference: BOC Governor Stephen Poloz said that, “We do not have a sustainable growth picture in Canada". The currency rose.

Thursday, July 17th

• 1:30pm USD Building Permits 0.96M versus 1.04M expected. The currency rose.
• 1:30pm USD Weekly Initial Jobless Claims 302K versus 310K expected. The currency rose.
• 3:00pm USD Philly Fed Manufacturing Index 23.9 versus 15.6 expected. The currency rose.

Friday, July 18th

• 1:30pm CAD Core CPI -0.1% versus -0.1% expected. The currency rose.
• 1:30pm CAD Wholesale Sales 2.2% versus 0.7% expected. The currency rose.
• 2:55pm USD Preliminary University of Michigan Consumer Sentiment survey 81.3 versus 83.5 expected. The currency rose.

Technical Recap for the Majors This Week

EUR/USD:

Forecast: Higher
Actual: Mildly lower from a 1.3605 open to a 1.3515 close.

USD/JPY:

Forecast: Mildly Lower
Actual: Unchanged from a 101.33 open to a 101.33 close.

GBP/USD:

Forecast: Higher
Actual: Mildly lower from a 1.7120 open to a 1.7062 close.

AUD/USD:

Forecast: Higher
Actual: Unchanged from a 0.9380 open to a 0.9380 close.

USD/CAD:

Forecast: Mildly Lower
Actual: Unchanged from a 1.0730 open to a 1.0730 close.

NZD/USD:

Forecast: Mildly Higher
Actual: Lower from a 0.8809 open to a 0.8672 close.

Disclaimer: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.