Forex Weekly Summary: USD/JPY Ended At 129.80, AUD/USD Closed Above 0.71
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The US dollar was flat in trading this week. Next week's economic calendar is filled with high-impact events such as the Fed on Wednesday or the BoE and ECB on Thursday. And if the major central banks aren't enough, there will be an NFP report on Friday, and given the stance taken by the Fed on Wednesday, this jobs report could be even more important than usual as the FOMC monitors the data for signs of a slowdown from massive rate hikes from last year.
USD/JPY
USD/JPY started the trading week at 129.2700. Then it increased and exceeded the level of 130.00. On Tuesday, USD/JPY crossed the 131.00 level and recorded the highest trading level of the week at 131.0650. The level above 131.00 was not maintained and the pair fell below 130.00 again. Following this decline, USD/JPY hit a week-high trading low close to 129.00, 129.0400 to be exact. The pair then increased and broke above 130.00 again, but USD/JPY failed to hold above that level and ended the week at 129.8000.
GBP/USD
The Cable pair (GBP/USD) started the week trading quite high at 1.2399 and rose to a week high of 1.2446. The GBP/USD pair then declined and hit a trading low of 1.2274 on Tuesday. After that, the GBP/USD pair rose and traded above 1.2350. The cable pair ended the week just below 1.2400 at 1.2395.
The British pound is gearing up for the week ahead which includes the Bank of England (BoE) and Federal Reserve interest rate decisions respectively. The BoE suggested another hike of 50 basis points, which is confirmed by prices in the money market. At the last meeting the majority voted for 50 bp, but taking into account new economic data, votes may be divided between 50 bp and 25 bp. The BoE is likely to remain unchanged - this would likely cause a bearish reaction on the pound.
EUR/USD
The major pair (EUR/USD) is holding above 1.08 and this week's trade was extremely favorable for the pair. The EUR/USD pair started the week trading at 1.0874. The EUR/USD pair then rose. Weekly trading was mostly above the 1.0860 level. EUR/USD peaked above 1.09 at 1.0930. The week's trading low for the pair was below 1.0850, while the EUR/USD record low was at 1.0841. EUR/USD ended the week at 1.0874.
The market's attention will remain focused on the key risks related to the central bank's events. The Fed will announce its policy decision at the end of its two-day meeting on Wednesday. This will be followed by the ECB monetary policy meeting on Thursday, which in turn will play a key role in determining the next stage of the EUR/USD directional move.
AUD/USD
The Australian pair (AUD/USD) performed best on Wednesday in the major currency pairs. AUD/USD started the week trading at 0.6971. Then the Aussie pair rose and passed the 0.70 level, maintaining this level in the following trading days. On the first day of trading, AUD/USD traded below 0.70 and thus recorded the lowest trading level of the week at 0.6965. The highest trading level of the Australian pair was above 0.7100, at the level of 0.7138. The Aussie Pair finished the week just above 0.7100.
Australia’s annual inflation jumped 7.8% in the December quarter, the biggest increase since 1990 and above market forecasts of 7.5%.
The strong reading was more than twice the pace of wage growth and cemented expectations that the Reserve Bank of Australia will hike interest rates by 25 basis points in February.
Source: investing.com, finance.yahoo.com
