The final week of August started out very quietly but this all changed as the week wore on.
Orders for US Durable Goods tumbled greater than estimated after three continued monthly advances. Purchase orders for durable goods fell 7.3 percent in July led by capital goods and aircraft, according to the Census Bureau. Core Durable Goods Orders eased for the second month at minus 0.6 percent.
US CB Consumer Confidence climbed to 81.5 in August from last month’s 81.0 reading. This is the third index reading above the 80 level.
US Pending Home Sales contracted, according to the latest report from the National Association of Realtors. Pending sales of existing homes declined 1.3 percent in July, a greater decline than forecast. The rise in mortgage rates is causing concern, putting pressure on Pending Home Sales which has now declined for the second month.
The US economy grew more than expected in the second quarter of this year, the Bureau of Economic Analysis said on Thursday. Preliminary Gross Domestic Product advanced 2.5 percent, compared to the median estimate of 2.2 percent.
US Core PCE Price Index, Personal Spending, and Personal Income all came in at 0.1 percent in July. All were also below their respective forecasts.
In other news, Private Capital Expenditure in Australia surged 4.0 percent (seasonally adjusted) in the June quarter 2013. This puts it back in the black after capital expenditure of private business slumped 4.1 percent in the first quarter of this year.
Meanwhile, in the United Kingdom, the Confederation of British Industry reported Wednesday that CBI Realized Sales jumped to 27 in August, following July’s equally-impressive advance to 17.
Commodities
Bullish momentum in Gold fizzled out as the week progressed. Gold advanced for five days since August 22, but the fifth day saw a marked about-face after price met sellers around the $,1420-50 area. From there, it was all downhill until the Friday close, when bulls had still attempted to print a weekly close above $1,400—but failed. Next week, bulls should strive for a move back up; otherwise, expect $1,350-80 or even lower.
Oil became active and perky this week as news and speculation about a potential attack on Syria has been doing the rounds throughout the internet. From $105.80s on Tuesday, price shot up past $112 before closing the day in the mid-$109s. Expect further volatility in the coming days or weeks.
Currencies
EURUSD failed to capitalize on the recent consolidation this week and slipped through 1.3300 and even 1.3200 before New York closed on Friday. If bearish momentum continues next week, the pair will target the 1.3100 level, ahead of which is where the 200-day MA lies.
USDJPY remained range-bound below the 99.00 level for a fourth straight week. Risk aversion in relation to the potential attack on Syria could provide a lift to JPY in the following weeks. Trading range has tightened up further; hence expect a burst of volatility soon.
Despite a bullish close on Monday, it was all downhill for GBPUSD throughout this week after bulls failed to make price close above 1.5600 since Thursday. Next week, bulls need to move it back above 1.5600 so they can attack stops toward a break of 1.5700.
The Week Ahead
The start of the new month sees a barrage of economic data this week.
On Monday, there will be New Zealand Overseas Trade Index; Japan’s Capital Spending; Australia’s Building Approvals and Company Operating Profits; China’s HSBC Final Manufacturing PMI; Spain’s, UK’s, and Italy’s Manufacturing PMI; Switzerland’s SVME PMI. Canada and the US are on holiday to celebrate Labor Day.
On Tuesday, traders will focus on China’s Non-Manufacturing PMI; Australia’s Current Account, Retail Sales, Interest Rate Announcement, and RBA Rate Statement; Spain’s Unemployment Change; UK Construction PMI; and US ISM Manufacturing PMI.
Australia kicks off Wednesday with the GDP data, followed by UK Halifax HPI; Spain Italy, and UK Services PMI; Eurozone Retail Sales; US and Canada Trade Balance; US Beige Book; BOC Rate Announcement and Statement.
On Thursday, there will be Australia’s Trade Balance; BOJ’s Press Conference and Monetary Policy Statement; BOE’s and ECB’s Rate Announcement and Statement; US Unemployment Claims, ISM Non-Manufacturing, and Factory Orders.
Finally on Friday, the week closes with Germany’s Trade Balance and Industrial Production; Switzerland’s CPI; UK Trade Balance and Manufacturing Production; US Non-Farm Employment Change and Unemployment Rate; Canada’s Ivey PMI, Employment Change and Unemployment Rate.
