During its board meeting on August 6, the Reserve Bank of Australia under the leadership of Governor Glenn Stevens determined to slash the Cash Rate to 2.50 percent from 2.75 percent. The Board views commodity prices to be at elevated levels. It foresees a pickup in the global growth by 2014.
On Thursday, Australia’s Bureau of Statistics announced a shocking decline in its Employment Change data. The labor force was reduced by 10,200 in July, a big surprise since analysts expected a gain of 6,200 jobs. Unemployment Rate improved a bit, 5.7 percent.
Canada also revealed surprisingly poor jobs data on Friday. Employment Change lost 39,400 jobs in July as there were lesser employment opportunities in government and for the youth. The Unemployment Rate climbed a notch to 7.2 percent.
Building Permits in Canada fell 10.3 percent, more than the -2.5 percent estimate. This decline in June is the first in the last 6 months. Meanwhile, Ivey PMI in July also fell to 48.4, the first decline below the 50 level since November.
Commodities
Gold started off the week quite tepid as it followed through with the selling momentum from the prior week. This changed mid-week as price made a V-shaped recovery enough to enable price to close the week just a tad above the weekly open and the embattled $1,300 level. There’s a lot of work ahead for the bulls: lots of wood to chop through $1,350. If they succeed, bears could scramble for the exits as $1,400 would become vulnerable by then.
The potential double top mentioned last week materialized quite well, but price opted to bounce soon after the double top’s bottom broke and price reached slightly beyond the $102 level. Unlike in Gold, oil buyers did not have enough time to recover all the losses, but they managed to close the week just above $105. Near-term areas to watch are $106-$108 and $100-$102.
Currencies
EURUSD finally made a march upward this week, but price quickly reversed after touching 1.3400. Overall, this gives bulls control of the pair in four out of the last five weeks, and this gets them closer to their mid-term goal of reaching 1.3700. To achieve this, they need to keep the momentum on their side in the next few weeks.
With the inability to move higher from 99, sellers obviously saw no option but to dump price lower throughout the week. The pair slid 330 pips and fleetingly visited the upper-95.00s. This puts 93.00-94.00 in serious danger in the next few weeks.
GBPUSD had a volatile week, featuring a near-330-pip whipsaw on Wednesday during the time of BOE Governor Carney’s speech and release of the BOE Inflation Report. Thanks to this price action, GBPUSD caught up with EURUSD, and the former is on track to move toward 1.5700.
The Week Ahead
It’s pretty much all about Japan on Monday with the slew of economic releases such as Japan’s Preliminary GDP, CGPI, and Revised Industrial Production. Switzerland’s Retail Sales and US Federal Budget Balance will follow late in the day
On Tuesday, there are Japan’s Core Machinery Orders and BOJ Monetary Policy Meeting Minutes; Australia’s NAB Business Confidence; New Zealand REINZ HPI; UK CPI, RPI and PPI Input; Germany’s ZEW Economic Sentiment; Eurozone Industrial Production and ZEW Economic Sentiment; US Retail Sales, Business Inventories, and Import Prices.
Busy Wednesday starts early with New Zealand Retail Sales; Australia’s Westpac Consumer Sentiment and Wage Price Index; France and Germany GDP; France Non-Farm Payrolls (Prelim); Switzerland’s PPI; UK Claimant Count Change, MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes, Unemployment Rate, and Average Earnings Index; Eurozone Flash GDP; US PPI.
On Thursday, there are New Zealand’s Business NZ Manufacturing Index; Australia’s MI Inflation Expectations; UK Retail Sales; US CPI, Unemployment Claims, TIC Long-term Purchases, Empire State Manufacturing Index, Philly Fed Manufacturing Index, Industrial Production and NAHB Housing Market Index.
Finally, Friday releases come in the form of Eurozon Current Account, Trade Balance, and CPI; Canada’s Manufacturing Sales; US Housing Starts, Prelim. Unit Labor Costs, Prelim. Nonfarm Productivity, Building Permits, and UoM Consumer Sentiment.
