The Reserve Bank of New Zealand decided to maintain its Official Cash Rate at 2.5 percent as widely expected by analysts surveyed. RBNZ Chief Graeme Wheeler pointed out the elevated house price inflation seen specifically Auckland and Christchurch, and this suggests a mild bias to hike rates by next year. RBNZ expects rates to stay the same for the rest of this year.
In other news, Japan’s Shinzo Abe took victory in the Upper House elections held last Sunday. 74 of the 121 Upper House seats went to Abe’s Liberal Democratic Party as well as the coalition partner, the New Komeito, providing them a favorable majority in the Upper House, and thereby ceasing the parliamentary stalemate which has been ongoing for the last 6 years.
The labor market in Spain exhibited a sign of improvement. Jobless rate fell to 26.3 percent in the June quarter. This follows seven consecutive quarters of unwelcome advances.
Orders of durable goods in the United Stated surged 4.2 last June, rising much more than 1.1 percent expectations, according to a Census Bureau report on Friday. Meanwhile, Core Durable Goods was flat for the same period.
Commodities
Gold finished a strong week in favor of the bulls. The bullish week started early with the break through $1,300 on Monday. $1,350 was attacked early as well, but it was surprisingly well protected for four straight days. Bulls should see a break of this level next week if they can continue supporting $1,300 against further attacks.
After four straight weeks of bullish exuberance, oil finally printed a bearish week soon after price encountered difficulties sustaining the lofty $108 level. Sellers did not waste time and started the bearish momentum on early Monday, depressing price through several levels and closed the week in the mid-$104s. Downside, the key area to watch is $102-$104.
Currencies
Another triumphant week ensued for EURUSD as buyers managed to course through 1.3200 with ease. Now, the pair is set to break the 1.3300 level and continued bullish momentum would see price visit the 1.3400 area soon. On the downside, sellers would have to contend with the strong support around 1.3150-1.3200.
As expected, USDJPY continued to have a difficult time trading through 100.00-50 and this led to a downside move this week. Support around 99 quickly crumbled and this prompted a dash towards 97.95 before the week closed at 98.27. The outlook remains bearish especially if 97-98 fails to hold the line for the bulls.
Just like EURUSD, GBPUSD rose for the third consecutive week on the back of a weak Dollar and to some extent the favorable UK GDP data. The next area of interest is 1.5550-1.5600 ahead of 1.5700. Buyers must remain vigilant as 1.5150-1.5300 is still vulnerable.
The Week Ahead
Monday will begin early with Japan’s Retail Sales; followed by UK’s Net Lending to Individuals, Mortgage Approvals, M4 Money Supply, and CBI Realized Sales; and US Pending Home Sales.
Tuesday will get more active with New Zealand’s Building Consents; Japan’s Household Spending, Preliminary Industrial Production, and Unemployment Rate; Germany’s Gfk Consumer Climate and Preliminary CPI; Spain’s Flash GDP; Eurozone Retail PMI; Canada IPPI and RMPI; US S&P/CS Composite-20 HPI and CB Consumer Confidence.
Wednesday will see the release of UK BRC Shop Price Index and Gfk Consumer Confidence; Japan Manufacturing PMI and Housing Starts; New Zealand’s ANZ Business Confidence; Germany’s Retail Sales and Unemployment Change; Italy’s Unemployment Rate; Eurozone CPI Flash Estimate and Unemployment Rate; US ADP Non-Farm Employment Change, Advance GDP, Chicago PMI, FOMC Statement and Federal Funds Rate.
Thursday will witness the greatest action of the week with China’s Manufacturing PMI and HSBC Final Manufacturing PMI; UK Halifax HPI; Spain, UK, and Italy Manufacturing PMI; Eurozone Final Manufacturing PMI; UK’s BOE and Eurozone’s ECB Rate Announcements and Statements; US Unemployment Claims, ISM and Final Manufacturing PMI.
Friday ends the week with Japan’s Monetary Base; Australia’s PPI; US Unemployment Rate, Non-Farm Employment Change, Core PCE Price Index, and Factory Orders.
