The main news item in the previous week was undoubtedly the US government shutdown. It is impacting the US economy and the global economy alike.
Two central banks announced their latest interest rates this week. The European Central Bank and Reserve Bank of Australia both held their respective benchmark interest rates unchanged at 0.50 percent and 2.50 percent, respectively.
In Japan, Household Spending surprisingly declined 1.6 percent. Meanwhile, the third quarter Tankan Manufacturing Index rose sharply to 12, beating its forecast for an advance to 7.
In Australia, Building Approvals declined more than expected in August, contracting 4.7 percent versus an expectation for a 0.7 percent decline. Trade Balance for August showed a –AUD0.82 billion deficit.
In the United States, a mixed slew of economic data were reported this week. US Unemployment Claims increased 308,000 (less than expected); Chicago PMI rose to 55.7 in September (versus August’s 53.0); ISM Manufacturing PMI climbed to 56.2, while ISM Non-Manufacturing PMI declined in September to 54.4 from 58.6 the previous month; and US ADP Non-Farm Employment Change increased less than expected (166,000). The Non-Farm payroll report was absent this Friday due to the US government shutdown.
Commodities
Now that the week is over, we could see that the prior week was just a pause from the prevailing downtrend in Gold. Buyers attempted on Monday to rally price through the $1,350s but easily failed. This gave sellers the chance to control the market the entire week. The move toward $1,277 could be a prelude to what will come next week.
It was a completely different story for Oil. After three consecutive weekly declines, Oil made its first weekly advance after nearly breaking $101 on Monday and Tuesday. Buyers need to go through a thick forest of resistance around $105-$108.
Currency Pairs
EURUSD broke new ground this week after hesitating in the mid-13500s for two weeks. The pair is moving closer to breaking its 2013 highs at 1.3710 which was posted in late-January. If the pair can push higher further next week, and then we could see new highs sometime before the current year closes.
A huge reversal ended the week for GBPUSD, after reaching a new 2013 high of 1.6259 last Tuesday. 1.6000 is back in the hot seat and we could see a good battle happen in this area next week.
USDJPY bearishness remains prevalent despite attempts break higher through the 98.00s. The up-trendline extending all the way from February remains at risk of breaking. A big move could arise if this trendline gives way.
The Week Ahead
The most significant issue this week will be the US government shutdown. This issue has a huge impact on the American and global economies and the markets are deeply affected by it.
This Monday, a significant number of Australian banks will observe Labor Day. However, the Australian Industry Group will release its Construction Index. Japan will have BOJ Monthly Report and Leading Indicators, while Switzerland will release Foreign Currency Reserves. Meanwhile, Canada will issue the latest Building Permits report.
New Zealand will open up Tuesday with NZIER Business Confidence, followed by UK BRC Retail Sales Monitor; Japan’s Current Account; Australia’s NAB Business Confidence and ANZ job Advertisements; Germany’s Factory Trade Balance; Switzerland’s Retail Sales and CPI; and Canada’s Trade Balance.
On Wednesday, there will be Australia’s Westpac Consumer Sentiment; Japan’s BOJ Monetary Policy Meeting Minutes; UK Trade Balance, NIESR GDP Estimate, and Manufacturing Production; and US FOMC Meeting Minutes.
On Thursday, there will be Business NZ Manufacturing Index; Japan’s Tertiary Industry Activity and Core Machinery Orders; Australia’s MI Inflation Expectations, Unemployment Rate, and Employment Change; China’s New Loans; ECB Monthly Bulletin; UK Interest Rate Announcement and Statement; Canada’s NHPI; and US Jobless Claims.
On Friday, the market will only have a few key economic data to look at, mainly jobs reports from the United States and Canada.
