The market is fully back and economic releases dotted the entire week, with attention centering on Thursday when central banks made interest rate announcements.
UK’s Bank of England maintained the Asset Purchase Facility at 375 billion Pounds for another month, saying there was a moderate success in their credit program. BOE also retained the official bank rate at 0.50 percent. Likewise, ECB retained interest rate for Eurozone banks at 0.75 percent.
During the ECB press conference on Thursday, ECB President Mario Draghi expressed optimism that 2013 would be a year of recuperation for the Eurozone economy, and sees the bond markets of the Euro-area stabilizing.
Statistics Canada reported a surprising 17.9 percent decline in Building Permits for November, the lowest level in nearly one year. According to the report, the decline was attributed to Ontario’s weak construction intentions for both the residential and non-residential sectors. The decline was surprising given that there was a 15.9 percent increase in the prior month.
The US and Canada reported much weaker trade balances, minus 48.7 billion and minus 2 billion, respectively. Meanwhile, China posted a much bigger trade surplus, 31.6 billion compared to a modest 20.1 billion forecast.
Commodities
Gold spent the first three days of the week consolidating below the $1,660s, which is at the top half of last Friday’s much larger range. The trip above this level on Thursday turned out to be unsupported, and price slid back to close the week at $1,662. Bulls need to make a concerted move above the $1,700 level in order to push price higher to the $1,750s.
Oil spent most of its time at the $93.00s, bobbing up and down all week, but in the end not much changed. The week closed just below the New Year gap high at $93.82. This area would continue to be sticky unless either side will be able to push price above $94 or below $91.51
Currencies
EURUSD traded relatively quietly for the first half of the week, and then rocketed 230-pips higher on Thursday. This was succeeded by a 115-pip rise after a brief consolidation on early Friday. With bulls succeeding in pushing price and closing above 1.3300, price is now ready to revisit the mid-1.3400s/1.3500. Buyers should watch the 1.3300 level and look for opportunities to buy.
USDJPY proved relentless and continued to push higher this week, with the dip below the 87.00 only serving another opportunity for late buyers. Price is now just 55 pips away from the 90.00 level, and this area would definitely be on the spotlight this week. Watch for the reaction of bears at this area.
Unlike EURUSD, GBPUSD was indecisive this week, staying in the 1.6000/1.6100 area the whole week. Price action is suggesting that the potential for a revisit of sub-1.6000s remain.
On the other hand, AUDUSD has showed some life as price made a milestone move this week – breaching the 1.0580s and nearing the 1.0600 level for the first time in 80 trading days. The climb was brief, however; price slid back down to the lower 1.0500s and closed the week at 1.0532. Buyers now have the upper hand and they must seize the opportunity to force price above 1.0600. Before that happens, they should conquer any attacks on the 1.0500 level.
The Week Ahead
Another busy week is ahead for traders, with the bulk of economic releases imparted on Tuesday, Wednesday, and Thursday.
Monday will be the release day of Australia’s ANZ Job Advertisements, Italian and Euro-area Industrial Production, and Canada’s Business Outlook Survey. There will be a bank holiday in Japan due to ‘Coming of Age Day’. Fed Chairman Bernanke is due to speak later today at University of Michigan.
On Tuesday, the market will get busier with New Zealand’s NZIER Business Confidence, Real Estate Institute of New Zealand’s House Price Index, UK’s RICS House Price Balance, Germany’s Final CPI, UK CPI and PPI, BOE Inflation Letter, US Retail Sales, US PPI, and US Empire State Manufacturing Index.
On Wednesday, Australia’s Westpac Consumer Sentiment, Japan’s Core Machinery Orders, Switzerland’s Retail Sales, Italian Trade Balance, Euro-area CPI, and US CPI, Beige Book, Industrial Production, and TIC Long-Term Purchases.
On Thursday, Australia will have its employment data in the form of Unemployment Rate and Employment Change. The market will also wait for the ECB Monthly Bulletin, France and Spain’s 10-year bond auction, and the US Unemployment Claims, Building Permits and Housing Starts.
For Friday, China will release GDP and Industrial Production data. The National Bureau of Statistics will also hold a press conference. Other releases include New Zealand CPI, UK Retail Sales and Canada’s Manufacturing Sales.
