The holidays and yearend are in the horizon and yet the rest of December remains active with top-level meetings and key economic releases.
Several central bank rate decisions were reported and ECB, BOE, and BOC all maintained their interest rates, while Reserve Bank of Australia cut its rate down to three percent as expected.
Economic releases like UK Manufacturing PMI, US Final Manufacturing PMI, US ISM Noon-Manufacturing PMI, US Factory Orders, and employment data from Australia, US, and Canada all came in better than expected. On the other hand, US ISM Manufacturing PMI, Australia Building Approvals, UK Construction PMI, UK Trade Balance, Canada’s Ivey PMI, UK’s Manufacturing Production, Germany’s Industrial Production, and Preliminary University of Michigan Consumer Sentiment slumped, coming in much worse than forecasts.
And how did the markets react to these events?
Commodities
Gold continues to be supported by demand around $1,682, with buyers showing up in this area during the last three days of this week. Bulls are still under pressure on the downside and needs to reclaim their foothold of the mid-$1,730s next week. $1,750 is the next near-term resistance towards the $1,795 highs posted in late-September.
Oil performed worse than gold and continued its sour range trading this week, falling $4 after printing a fake high at $90.30 on Monday. Supply maintained its guard of the $90.00 level well and sellers are poised to put more pressure. It is mandatory for bulls to prevent a breach of the $85/86 area this coming week.
Currencies
EURUSD started the week on a strong note with a 140-pip climb from 1.2982. Midway on Wednesday, the bulls lost momentum as price moved above 1.3100 and towards 1.3125, giving the bears the chance to sway the price in their favor. The 1.3000s became a battleground but in the end, bears won and pushed price back below this key level and more than 100 pips lower toward 1.2875, erasing all of the gains for this week. Essentially, the pair is back into consolidation and all of the bullish effort would be put into waste if the key 1.3000 level is not regained quickly and 1.2900 cedes.
USDJPY continues to be confined in a 100-pip range, but Dollar strength and Yen’s weakness continues to favor this pair. Buyers reached for the November 82.82 high on Friday, but pulled back to close the week better at 82.47. This topside resistance at 82.80/83.00 needs to break to open up the upside.
GBPUSD finished slightly better than EURUSD, closing the week marginally to the upside and protecting its own important 1.6000 level. Having said that, the pair is far from being safe as the 1.6000 level has received continuous bear attacks thanks to recent Dollar strength. This key level is vulnerable to breakage any time soon, unless renewed demand can shift the attention back to the 1.6100 area.
AUDUSD continues to play the consolidation game, printing a mere 122-pip range this week. 1.0500 continues to pose as a stubborn resistance for bulls, but bears seem to be slowly giving up the fight. Bulls should maintain the pressure to the upside; otherwise the downside would yield in bears’ favor.
The Week Ahead
The coming week is generally lighter than the previous weeks, but the swath of central bank rate decisions continues, as well as important economic releases and top-level meetings and speeches.
Monday starts off with the releases of Japan’s BSI (Business Survey Index) Manufacturing Index, Current Account, Final GDP, and Consumer Confidence; China’s Trade Balance; Germany’s Trade Balance, France and Italy’s Industrial Production; Canada’s Housing Starts; and BOE Governor King’s speech.
On Tuesday, Germany’s ZEW Economic Sentiment, UK’s 10-year bond auction, Canada and US Trade Balance.
Wednesday is the key day for this week. It will have the releases of Australia’s Westpac Consumer Sentiment, RBA Governor Stevens’ speech, UK’s Claimant Count Change and Unemployment Rate, UK MPC member Dale’s speech. OPEC meetings will also be held, as well as the much-awaited releases from the US including the FOMC rate decision, FOMC Statement and press conference, Federal Budget Balance and Economic Projection.
Thursday, Switzerland’s LIBOR Rate, SNB Monetary Policy Assessment and press conference, ECB Monthly Bulletin, Eurogroup meetings, (two-day) EU Economic Summit, US Retail Sales, US PPI, US Unemployment Claims.
For Friday, Japan’s tankan Manufacturing Index, China’s HSBC Flash Manufacturing PMI, Germany’s Flash Manufacturing PMI, US CPI and Industrial Production.
