That all started with a comparatively quiet Asian trading session as several countries were off. China, Singapore, Taiwan, Hong Kong and South Korea were celebrating the New Lunar Year and Spring Festival, which lowered the trading volume as a result. Australian building approvals kicked off the economic calendar last week and the data came in negative with declines in both December and November (revised down). That was in a contrast to last week's positive reports and traders reacted with buying put options for AUD/USD and AUD/JPY. In Europe, the Spanish unemployment change was higher-than-expected in January, while the EU producer price index failed to meet markets' expectations with a monthly decline of -0.8% (vs -0.7% predicted and -0.3% previous reading). December's year-over-year producer inflation slowed down to 3.0% growth which was also weaker than analysts predicted (3.2%) and November's result of 4.0%. That data was the first driver of weakness for EUR/USD which kept sliding throughout the whole trading week. British Construction PMI was in red, weighing on traders' sentiment for GBP/USD and other pound cross-rates. The United States published factory orders in November which were negative (-0.6% versus +0.3% expected) and stock indices were trading in the put-mode.
Tuesday was another day of disappointment for the Aussie traders as December's Retail Sales declined in Australia. Although RBA did not make any changes in the monetary policy, AUD/USD was sliding slightly lower as traders were trying to understand further regulator's measures in the financial conditions. They had to wait for the next day as RBA Governor Lowe postponed his press conference till Wednesday. Eurozone published Services PMI report and that was a mixture rather than something clear, as the EU, France and Spain showed a decent growth while Germany and Italy performed in red. Eurozone retails sales were positive month-over-month but negative year-over-year in December. Nevertheless, put options were dominant in the market on Tuesday and EUR/USD kept sliding. So did the pound as UK Services PMI failed to add optimism, while the lack of good news from the Brexit battlefield forced traders to by put options for GBP/USD and GBP/JPY. Purchase Managers Index was negative in the United States as well, however, the US dollar kept strengthening across the board on risk aversion trade.
Wednesday was highlighted with Trump's speech overnight and US President did not bring anything positive to the binary options market. German factory orders declined significantly in December (-1.6% versus +0.3% expected), affecting the acceleration of EUR/USD downtrend. New York started the trading session with positive news for the US economy as the trade balance narrowed its negative surplus in November with a slightly negative revision for October's figures. That was achieved by lowering both imports and exports volume, so there was no disbalance in that report and investors reacted with buying call options for S&P 500 and other benchmarks. Positive earnings reports brought another wave of optimism and NASDAQ was leading the gains. Canada reported positive Housing sector data and negative Ivey PMI, while BoC Governor Council Member Lane spoke about the monetary policy prospects. The overall impact was bullish for USD/CAD as oil price kept falling on the back of US Crude oil inventories report.
New Zealand reported a huge spike of unemployment rate: 4.3% compared to 4.1% predicted and 3.9% previously. Participation rate and unit labour cost were in the red as well. As a result, NZD/USD dropped sharply, following its neighbour, the Aussie. The Central Bank of India surprised analysts a sudden cut of the interest rates by 25 basis points. German Industrial production added another brick in the wall of soft monetary policy by the ECB this year. British Halifax Price index fell. The Sterling was weakening versus all major currencies except NZD as traders and investors were expecting the Bank of England to announce interest rate decision and MPC Governor Carney to host a press conference. The first event was widely anticipated as BoE Members voted unanimously to keep the monetary policy unchanged. However, Carney's speech was mostly positive for Sterling bulls and GBP/USD managed to find a local bottom, bouncing off the lowest weekly price for more than 100 pips by the end of the trading week. US Initial Jobless Claims (worth than expected) had a limited impact on the greenback but put options for equities were in demand.
The final day of the trading week started with soft macroeconomic data in Japan and USD/JPY kept sliding from the local top slightly above 110 yen per dollar. The European economic calendar was almost empty but major currency pairs were trading in the same direction. Canadian employment was reported at a surprisingly strong level with more than 60 thousand jobs added in January while economists were forecasting just 8 thousand. USD/CAD dropped more than 80 pips in a blink of an eye bt kept climbing slowly throughout Friday. The US dollar was strong across the board despite the lack of any significant data.