The Bank of Japan has again decided to leave current rates unchanged at 0.10 percent in its latest announcement. BOJ’s chief Kuroda stated that the central bank is implementing monetary easing with the intention of price stability, and not to target foreign exchange. Furthermore, he declared that the BOJ will not halt in buying short-term debt, will continue in buying JGBs in a “balanced wayâ€, and that all Board members agreed that an extension of the current semi-annual review’s forecast period is warranted. BOJ was also of the view that long-term rates could rise when the confidence in financial sustainability wanes.
In other news, US Jobless claims for the prior week surprised the market with a much-better reading than its forecast. According to the Labor Department’s report on Thursday, US jobless weekly claims fell to 339,000, which was lower compared to an expectation of 352,000 and the prior week’s reading of 355,000.
UK’s Office for National Statistics also reported a better-than-expected Preliminary GDP data on Thursday. Gross Domestic Product surprised to the upside with an expansion of 0.3 percent in the first quarter of 2013, avoiding the prospect of a triple-dip recession.
Commodities
After tumbling in the previous two weeks with a total drop of $283, gold made a remarkable recovery this week. Buyers aimed and have achieved to neutralize this week’s slide, closing the week at $1,461 after reaching $1,485 which was just $10 away from the prior week’s top price. In the coming week, buyers must try to overcome the $1,480-$1,500 area.
Compared to gold, Oil did much better in this week’s trading. Oil clinched a smooth climb higher from Wednesday after breaking through the $89.30-50 resistance which held price for nearly two weeks. Oil did so well that it nearly erased all of the losses in the last two weeks. Oil buyers will have to contend next with potential ceiling around $94.70-$95 ahead of higher resistance at $97.70.
Currencies
EURUSD spent most of its 140-pip weekly trading range within the 1.3000s this week. Bulls and bears really fought hard as evident in the quick rejections which occurred in around 1.3090s and 1.2950s. 1.3000 proves to be a very important level and whoever wins in the coming weeks could bring about a potentially lasting move. Beyond 1.2950 and 1.3100, there are 1.2750 and 1.3200 which each side must contend with.
Another week and it was another failure of buyers to clinch the coveted 100 level. The scheduled BOJ Press Conference did not bring anything new to the table. Because of this, Yen bears got disappointed and this helped the pair slide back down to the 98 level. If momentum picks up, the pair could head back to 95 and perhaps even further below.
GBPUSD was very timidly trading during the first three days of this week, but this all changed when the pair blasted higher by nearly 220 pips after the UK GDP data surprised to the upside on Thursday. The better-than-expected data buoyed price until the Friday close, and the pair is on its way to move toward 1.5500-1.5800 in the coming weeks.
The Week Ahead
On Monday, the Asian session will be somewhat quiet as Japanese banks will be closed to observe Showa Day, while Chinese banks will also be closed to observe Labor Day. Later that da y, there are Germany’s Preliminary CPI data, US Personal Spending, US Personal Income and US Core PCE Price Index..
Tuesday is fully-packed as there are New Zealand’s Building Consents and ANZ Business Confidence; Japan’s Household Spending, Manufacturing PMI, Retail Sales, Preliminary Industrial Production, and Unemployment Rate; Australia’s Private Sector Credit; Germany’s Retail Sales, Unemployment Change, and Gfk German Consumer Climate; France’s Consumer Spending; Spain’s Flash GDP; UK’s Net Lending to Individuals; Eurozone CPI Flash Estimate and Unemployment Rate; Canada’s GDP, IPPI, and RMPI.
On Wednesday, China will release its Manufacturing PMI. Other releases include Australia’s HIA New Home Sales; Japan’s Average Cash Earnings; UK’s Nationwide HPI and Manufacturing PMI; US ADP Non-Farm Employment Change, Final and ISM Manufacturing PMI, and US Fed Funds Rate and FOMC Statement.
Thursday, Japan will publish its Monetary Policy Meeting Minutes from BOJ and Monetary Base data. Not long after, there are Australia’s Building Approvals, China’s HSBC Final Manufacturing PMI, Spain’s and Italy’s Manufacturing PMI, UK’s Construction PMI; ECB Rate Announcement and Press Conference; US Unemployment Claims and Trade Balance.
Finally on Friday, there are data releases such as Australia’s PPI, UK Service PMI, EU Economic Forecasts, US Unemployment Rate, US Non-Farm Employment Change, US ISM Non-Manufacturing PMI. Japan will observe Constitution Day on this day.
