Tuesday trading session started with better-than-expected Australian Business Confidence which had a support for AUD/USD initially but the demand for the greenback across the board made that gains very limited for Aussie. All the Chinese reports followed with a negative sentiment. Fixed Asset Investments, Industrial production and Retail sales disappointed investors and the overall risk appetite went down again. The greenback was strong versus almost all currencies except the Japanese Yen which also played its role as the safe-haven instrument. German second-quarter GDP report added pessimism failing to meet the consensus (2.3% versus 2.5% expected) and even the first-quarter result was revised down to 1.4% from 1.6%. Together with the flat inflation in France, Spain and Germany that pushed EUR/USD lower and some signs of the turmoil continuation were in place on Tuesday. Positive ZEW Economic Sentiment and Eurozone GDP did not help bulls to recover and bears took the market under control till Wednesday. Export and Import prices from the United States were mixed and that did not have any significant influence on general greenback demand. One of the biggest stories on Tuesday was the OPEC report published and API weekly Crude Oil Stock in the U.S. Both events were negative for the price of Oil and the commodity went down throughout the whole trading week.
Wednesday was full of British reports and most of them were positive. But that did not help the pound to recover as Brexit worst-case scenario seems to be more probable due to the unsuccessful negotiations between EU and the U.K. European calendar was almost empty while the U.S. reported Retails Sales in July which was comparatively strong (0.5% versus 0.2% expected). Despite the downward revision of the previous reading, the overall sentiment begins to reverse with stock indices leading the gains. The completely opposite picture was seen in the currency market where the strength of the greenback halted and most of the major currency pairs bottomed out on Wednesday. Moreover, some of them managed to reverse and cover the losses as the weekly result. NZD and CAD were leading the gains. Much higher-than-expected Crude oil inventories in the U.S. pushed the WTI Oil prices lower and bears had a significant achievement breaking through several technical support levels.
Japanese trade balance and export was weak on Thursday and USD/JPY kept falling on that negative news. Australian unemployment rate report was surprisingly strong and RBA officials’ comments were also positive for Aussie. AUD/USD managed to have a bullish bounce 3 days in a row. EUR/USD was strengthening as well in the scope of weakening greenback. The British pound was trying to follow the majors and the British Retail Sales report was a supportive factor for that. But looking at the speed of that recovery, we can make a conclusion about how strong the selling pressure is for GBP/USD. Philadelphia Fed Manufacturing index added pessimism for the greenback while Canadian ADP employment figures were strong and USD/CAD was one of the fast moving currency pairs on Thursday.
Friday was also supportive for commodity currencies. AUD/USD and NZD/USD traded on a positive tone and one of the largest events influencing that was the RBA Governor Lowe speech which was hawkish. European Current account in June continued the series of supportive positive data for EUR/USD and the pair moved very close to the technical resistance of 1.1450 as the weekly result. The United States economic calendar was empty but the stock indices gained on the overall sentiment and the greenback was weaker as the result. The Canadian dollar was strong again with the support from Inflation report: CPI rose 3.0% in July beating the market consensus of 2.5%. The chances for September rate hike jumped to 76% and it is just a matter of time when we would see USD/CAD well below 1.3000 support.
On the other markets, we should mention the slide of the precious metals with Silver leading the losses (-4% on Wednesday). Gold was also down after the trading week and the prices are well below $1200.00 per ounce. This is explained by the growing chances of the Fed rate hike in September and the U.S. bonds and treasuries become more attractive due to the growing yields. So investors keep selling the precious metals. The emerging markets are becoming more attractive for the investors but still, there is a big risk of the worldwide economic slowdown so the economists recommend being very selective in these assets. One of the most important events scheduled for the upcoming week is the negotiations between China and the United States and this meeting is supposed to clarify the situation with the trade war.