Forex Weekly Summary: USD/JPY Closed Below 135.00, GBP/USD Ended The Week Above 1.20, EUR/USD Ended At 1.0697 And The Aussie Pair Closed Below 0.69
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For the forex market, the most important event was the publication of the US CPI and speeches by representatives of the Fed and the ECB.
The Dollar Index (DXY) has seen gains recently thanks to Fed officials, which is somewhat surprising as the markets seemed steady after the Non-Farm Payroll (NFP), CPI and Retail Sales figures. In addition, the Fed's guidance has been largely rejected recently, but as the pressure to maintain tight monetary policy in the US increases, so does its impact on market participants. The Fed's Mester mentioned that "January's CPI figures showed there is still a long way to go in cooling down inflation," again adding to the messages sent by yesterday's speakers giving further support to the dollar.
USD/JPY
The yen pair started the week trading at a weekly low of 131.5020. Throughout the week, USD/JPY was in an uptrend. The weekly high of USD/JPY was above 135.00 at 135.0840. After that it dropped below 135.00 to 134.1140 where it closed the week.
As Federal Reserve officials continued to reiterate their commitment to containing price pressures through tight monetary policy, compelling arguments for another 50 basis-point rate hike at the March FOMC meeting supported the strengthening of the dollar versus the yen.
Although Tuesday's appointment of Kazuo Ueda as a possible successor to incumbent BoJ (Bank of Japan) governor Haruhiko Kuroda gave the Japanese yen a slight respite, losses were limited.
EUR/USD
The euro/dollar pair started trading at 1.0681, and rose for a day and a half to reach a weekly high at 1.0789 on Tuesday. And from this level, the EUR/USD pair was in a downtrend where the pair was heading towards 1.0620. On Friday, in the European session, it approached this level and thus recorded the lowest trading level of the week, and then bounced back and closed the week at a level close to 1.07, 1.0697.
ECB Executive Board member Fabio Panetta said on Thursday that the ECB should consider the risks of over-tightening the policy and argued that the bank should not unconditionally pre-commit to future policy moves.
Despite the rather dovish comments, money markets priced in a terminal ECB rate of 3.75% for the first time - implying that the ECB still has another 125 bps worth of hikes to come.
GBP/USD
The Cable pair started the week at 1.2053. And similarly to the EUR/USD pair, the GBP/USD pair remained in a bullish trend until Tuesday's US session. GBP/USD, like EUR/USD, had a weekly high on Tuesday above 1.22 (1.2241), then the pair began its decline. The decline in the pair continued until Friday until GBP/USD reached its lowest trading level (1.1916), after which the cable pair rebounded and ended the week above 1.20 at 1.2044.
The UK's Office for National Statistics reported on Friday that Retail Sales increased by 0.5% on a monthly basis in January
AUD/USD
The AUD/USD trade start was at 0.6916. The movement of the Australian pair was linked to its European counterparts (GBP, EUR). On Tuesday, AUD/USD reached its highest level of the week - 0.7016. In the following days, the pair was falling towards 0.6825, where on Friday below this level, at 0.6814, it reached its lowest level. Towards the end of the trade, AUD/USD rebounded and closed the week at 0.6880.
Source: investung.com, finance.yahoo.com
