Weekly Wrap Up (31 July – 4 August)

4 Aug 2017 08:21 PM

The US dollar managed at the end of the week to erase losses since the beginning of the week, following positive employment data that exceeded expectations in July. The Non-Farm Employment Change Index added 209 K jobs with the June reading revised to 231 K jobs. Also, unemployment rates were at their 16-year low of 4.3%, and the hourly wage rose by 0.3% in July.

The US dollar rose against most of its rivals on Friday in a significant way to offset the losses of the week, as the EURUSD fell to its lowest level since the beginning of the week at 1.1727, after breaking a rising wedge on the 1-hour chart. Gold fell almost 15 $ to its lowest level since July 26 at 1254 $ per ounce. The USDJPY was up around 100 pips after the data to hit its highest level since last Friday at 111.04.

The most important point on the European economic calendar this week was the preliminary data for inflation, where the CPI stabilized during the month of July at 1.3%. Also, preliminary GDP data for the second quarter of 2017 showed that the eurozone economy grew by 0.6% against the first quarter, which grew by 0.5%. The euro continued to rise during the week, hitting a 31-month high of 1.1909 before losing all gains on Friday.

The Bank of England kept interest rates unchanged at 0.25% at historic lows and kept the asset purchase program at 435 £ billion, but lowered expectations for inflation as well as growth expectations because of uncertainty over Brexit, as the Governor of the Bank of England, referred to its impact on the British economy. Sterling fell nearly 150 pips on Thursday after the Bank of England's decision before dropping almost the same pips on Friday, as the GBPUSD dropped from its highest level in almost a year at 1.3266 to currently trade at 1.3040 levels.

In Canada, the number of jobs added by the economy in July rose to 10.9 K, slightly better than expected, but lower than June's reading of 45.3 K. While the unemployment rate was at an 8-year low of 6.3%. The data did not accompany the Canadian dollar to strengthen against the US counterpart, pushing the USDCAD from a low level throughout the week at 1.2425 retreated from the rising trend line on the weekly chart and currently is trading at levels of 1.2650.

The Reserve Bank of Australia kept interest rates unchanged at 1.5% at historic lows, pointing out that the continued rise in the Australian dollar will affect economic growth and therefore have negative consequences on inflation, stressing the continuation of the current policy because it is in line with the current situation.

In New Zealand, employment rates fell for the first time in two years, which had a significant impact on the New Zealand dollar, which has continued to decline since the beginning of the week, where the decline in employment by 0.2% in the second quarter of 2017 after a rise in the first quarter by 1.1%.

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