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Weekly analysis

ECB is following a different path than RBA?

The EUR/AUD price rose by more than 400 pips, after the release of european and australian data last week.

Eurozone economic growth rate remained stable in the first quarter, according to  Eurostat. Gross domestic product expanded 0.5 percent sequentially, in line with expectations. The EU28 grew 0.4 percent from the prior quarter, when it advanced 0.6 percent. The annual growth rate remained stable at 1.9 percent. The European Union's statistics agency said the number of unemployed workers fell by just 5,000 during the month. This drop left the unemployment rate unchanged at 9.5%, down from 10.2% a year earlier.

Germany: Unemployment rate, at record-low

German unemployment extended its four-year decline last month, suggesting companies are confident that momentum in Europe’s largest economy remains strong. Joblessness slipped 15,000 in April vs estimated 11,000 drop. Unemployment rate remained unchanged in Germany, at record-low 5.8%.

Draghi’s remarks stayed clear of the monetary policy outlook

European Central Bank President Mario Draghi on Thursday said that the European Union is "being wrongly held responsible" for decisions that belong to individual countries. Mario Draghi's prepared remarks stayed clear of the monetary policy outlook. Monetary union "is sometimes claimed to be the cause of low growth in parts of the euro area. Yet we have seen that for countries that implemented structural reforms and ran sound fiscal policies, the single currency has been no barrier to success”, Draghi added in Lausanne, where he was accepting an award from the Jean Monnet Foundation for Europe.

RBA: Low expectations for economy

Australian increase in household debt relative to the income has made the economy less resilient to future shocks, according to the Governor of the Reserve Bank of Australia, Philip Lowe.

Australia posted a seasonally adjusted merchandise trade surplus of A$3.107 billion in March, the Australian Bureau of Statistics said on Thursday. That was shy of forecasts for A$3.250 billion and down from A$3.574 in February.It was also down A$550 million or 15 percent on year.Exports gained A$776 million or 2 percent on month to A$33.343 billion.

Non-monetary gold surged A$443 million (32 percent), rural goods climbed A$271 million (7 percent) and non-rural goods added A$19 million. Net exports of goods under merchanting fell A$1 million (2 percent). Services credits added A$45 million (1 percent). Imports were up A$1.325 billion or 5 percent on month to A$30.235 billion.

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What's behind the drop in oil prices?

Oil prices extended losses last week because of oil stock pile and woldwide demand. Prices fall more after news that two key oilfields in Libya had restarted.

Libya's Sharara oilfield, with a production capacity of almost 300,000 barrels per day (bpd), has restarted after the end of protests that had blocked pipelines there, according to a Libyan oil source. The source said El Feel oilfield, with a capacity of about 90,000 bpd, had also restarted.

North Sea oil is flooding into Asia like never before thanks to the most competitive crude prices in seven years. North Sea tankers sailing to Asia soared to a record this month, hauling at least 540,000 barrels a day. OPEC, along with Russia and other non-OPEC producers, pledged to cut output by 1.8 million barrels per day (bpd) in the first half of 2017.That deal expires at the end of June.

Global inventories rose in the first quarter
OPEC Secretary, General Mohammad Barkindo, said that stocks needed to fall further. Saudi Energy Minister Khalid al-Falih said on Friday that it was important to agree on an extension of a global oil cuts deal into the second half of the year.
Despite the supply cuts, global inventories rose in the first quarter, according to the International Energy Agency. Key highlights from the EIA's report's summary of weekly petroleum data for the week ending April 21, 2017:
• U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.6 million barrels from the previous week.
• At 528.7 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year
• U.S. crude oil refinery inputs averaged 17.3 million barrels per day during the week ending April 21, 2017
• U.S. crude oil imports averaged over 8.9 million barrels per day last week, up by 1.1 million barrels per day from the previous week
• Refineries operated at 94.1% of their operable capacity last week
• Gasoline production decreased last week, averaging over 9.7 million barrels per day
• Distillate fuel production decreased last week, averaging about 5.1 million barrels per day

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Will the US dollar bull market continue in 2017?

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The USD/CAD currency pair rose last week around 200 pips, based on the U.S. and Canada data.

The National Association of Realtors said last week that existing-home sales ran at a seasonally adjusted annual rate of 5.71 million, a 4.4% monthly increase. That was the strongest selling pace since February 2007 and was 5.9% higher than a year ago. Tight inventory is still the biggest factor in the marketplace: supply was 6.6% lower compared to a year ago. According to Statistics Canada, excluding food and energy, the the Consumer Price Index (CPI) was up 1.7% year over year in March, after posting a 2.0% increase in February. Prices were up in five of the eight major components in the 12 months to March, with the transportation and shelter indexes contributing the most to the year-over-year rise in the CPI.
Other potential rate hikes for this year
According to other news, Dallas Federal Reserve President Robert Kaplan said that two more interest rate hikes this year remains possible but that the U.S. central bank has the flexibility to wait and see how the economy unfolds. The Fed has already raised its benchmark interest rate once this year, by a quarter percentage point at its last policy meeting in March.
Kaplan said that three rate increases this year is still a good baseline. The Dallas Fed chief noted he was watching inflation and that even though it continued to slowly move up. Excess capacity in China and technology-enabled disruption of business were both exerting downward pressure.

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Oil exports fell
Oil exports fell to 6.95 million barrels a day, the lowest since May 2015, from 7.7 million a day in January, according to data published by Joint Organisations Data Initiative website. Saudi Arabia trimmed exports to a 21-month low in February as local refineries took advantage of more abundant supplies and processed a record amount of crude.

A future growth of the British economy?

The UK economy is in a good shape, according to the last week economic data, despite the economic uncertainty caused by Brexit. The rate was at 2.3 percent as in February. That’s still the highest since 2013 and up from just 0.5 percent a year ago.

Consumer prices rose

According to the Office for National Statistics, consumer prices rose 0.4 percent. Airfares fell 4 percent, compared with a 23 percent jump a year earlier. Across the UK, prices rose by 5.8% in the year to February, up from 5.3% in January. The most recent figures from the Nationwide and the Halifax have suggested that house price growth is slowing down. However, the ONS data (which include cash sales) show that the average price of a property has risen to a record high of £217,502. According to the Office for National Statistics, consumer prices rose 0.4 percent. Airfares fell 4 percent, compared with a 23 percent jump a year earlier. Across the UK, prices rose by 5.8% in the year to February, up from 5.3% in January. The most recent figures from the Nationwide and the Halifax have suggested that house price growth is slowing down. However, the ONS data (which include cash sales) show that the average price of a property has risen to a record high of £217,502.

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UK jobless rate, in line with expectations

The ILO jobless rate held steady at 4.7 percent in three months to February, in line with expectations. It has not been lower since June to August 1975. The employment rate was 74.6 percent in three months to February. Average earnings including bonus advanced 2.3 percent annually, slightly faster than the expected 2.2 percent.

Uncertainty for firms in the medium term?

According to a recent business survey, the services sector also recovered to rack up its strongest sales growth since last June's Brexit vote. British manufacturers reported the fastest export growth in more than two years in early 2017. Even if British Chambers of Commerce said firms reported a robust short-run outlook, there was much more uncertainty about the medium term as well as fears of sharply rising costs.

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U.S. Dollar: A week of strong increase

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The U.S. dollar climbed against most major peers last week. The EUR/USD pair fell to 1.0581 last week, the lowest level since March 10, after important U.S. economic data. The jobless rate unexpectedly sank to the lowest in almost a decade. The U.S. economy is gaining traction. Companies added 263,000 jobs in March, according to the latest ADP and Moody's Analytics private payrolls report. That was above the 185,000 expected from most economists.

According to the Governor Daniel Tarullo, the job growth at american companies provides a confirmation of a trend of strength in employment. The unemployment rate fell to 4.5 percent from 4.7 percent. The market isn’t worried about jobs picture at this moment, preferring to focus on the path of Fed tightening. The Fed meeting on interest rates will be on May 2-3. A major debate on Wall Street is whether the Fed increases rates two more or three more times in 2017.

EUR/CAD Weekly Analysis ( March 27-31)

Daily chart analysis
The EUR/CAD currency pair is in a retracement at the moment, according to the daily chart. The end of the retracement might be at 1.4532 (Fibo 50%). It is highly possible that the MACD and the stochastic oscillator will turn negative next week.

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8 hour chart analysis
According to the 8 hour chart, the EUR/CAD currency pair is into a range between 1.4500 and 1.4350 at the moment. If the price exits from the range below 1.4350, it might continue to fall below EMA 200 (1.4371).

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EUR/GBP Weekly analysis ( March 20-24)

Daily chart analysis
The EUR/GBP pair will continue in a downtrend if falls below EMA 200 (0.8599), according to the daily chart. The MACD is near a negative mode. A possible target for this currency pair may be Fibo 23% (0.8520), then 0.8424, in order to form a triangle.

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8 hour chart analysis
According to the 8 hour chart, the MACD is in negative territory. The downtrend may continue for this pair if the price reaches Fibo 50% (0.8626).

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EUR/USD Weekly Analysis ( March 13-17)

Daily chart analysis
The EUR/USD currency pair has increased, but the price is still below EMA 200. A possible next target as a retracement might be Fibo 50% ( 1.0814), then Fibo 61%( 1.0928). The MACD is positive and the stochastic oscillator indicates an uptrend in the short term.

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8 hour chart analysis
The price on EUR/USD is above EMA 200 and this indicates an uptrend in the medium term. The uptrend will continue until at least Fibo 50% (1.0818), when it will close an intermediate gap. The MACD also indicates a positive trend for this currency pair.

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