Following four central bank announcements last week, the Reserve Bank of New Zealand and Swiss National Bank followed up this week and they also maintained their rates. RBNZ kept its Official Cash Rate at 2.50 percent, while the SNB left its Libor Rate at less than 0.25 percent.
Meanwhile, Reserve Bank of Australia Governor Stevens seems to be in favor of seeing the local dollar somewhere in the $80 cent level. In his interview with the Australian Financial Review, he said “…I just think that if things over the medium term evolve as we’re presently assuming – and I think it’s reasonable to make these assumptions – it’s going to be surprising if a nine at the front is the right number.â€
In other news, China released some robust numbers last Tuesday. Fixed Asset Investment remained high at 19.9 percent, while Retail Sales edged up 13.7 percent year-on-year in November. Industrial Production for November rose 10 percent, the National Bureau of Statistics reported.
Employment Change in Australia surprisingly jumped 21,000 in November, with participation rate stable at 64.8 percent, according to the Australian Bureau of Statistics.
In the United States, the latest report from the Department of Labor showed the Jobless Claims rose to 368,000, its weakest level since early October.
Commodities
Despite the downside bias, Gold went on to chop around just above the $1,200 level for the third straight week. Price showed signs of bearish defiance as it tried to jump through the $1,260s, but sellers quelled the move easily. Nonetheless, the move was enough to create a bullish close for the week, and this could indicate that price could attempt another upside attack in the coming weeks.
Oil had a limited range of action this week, managing a brief foray into the $98s before sliding to a weekly low and close in the mid-$96s. Bulls are expected to remain supportive of any declines to the $92-$95 area.
Currency Pairs
EURUSD saw a move higher for its fifth bullish weekly close, but it failed to take out the October high at 1.3831 in the process. The pair struggled to support the move through 1.3800 despite constant attempts on Wednesday and Thursday. Anyway, as long as 1.3700 holds, we expect another shot or two at 1.3800 in the coming week.
GBPUSD kicked off its week with an early scurry, reaching a new high (1.6464) before easing off for the rest of the week, giving it its second consecutive bearish weekly close. This is a worrying sign that could mean a potential move through the 1.6200 is in the offing.
USDJPY sported another action-packed week which pretty much replicated the price action in the prior week. A second week of volatility-spiced activity saw the pair challenge the downside in the beginning of the week, followed by a squeeze toward new highs. 104.00 has not been reached but nevertheless we could see at least a brief visit to that area in the days to come.
The Week Ahead
As the year draws to a close, this will be the final busy week for December.
Monday begins very early with New Zealand’s Westpac Consumer Sentiment, followed a few hours later by Japan’s Tankan indices; China’s HSBC Flash Manufacturing PMI; Flash Manufacturing PMI and Flash Services PMI for France, Germany, and the Eurozone; Bundesbank Monthly Report; Canada’s Foreign Securities Purchases; US Empire State Manufacturing Index, Flash Manufacturing PMI, TIC Long-Term Purchases, and Industrial Production.
On Tuesday, there will be Australia’s CB Leading Index, Monetary Policy Meeting Minutes, and New Motor Vehicle Sales; UK PPI input, RPI, and CPI; Germany’s ZEW Economic Sentiment; Eurozone CPI and ZEW Economic Sentiment; US Current Account, CPI, and NAHB Housing Market Index.
Wednesday will start early again with New Zealand’s Current Account. Japan’s Trade Balance will follow, then ANZ Business Confidence; Germany’s Ifo Business Climate; UK Claimant Count Change, Jobless Rate, and MPC Asset Purchase Facility and Official Bank Rate Votes; Switzerland’s ZEW Economic Expectations; UK CBI Realized Sales; US Housing Starts, Building Permits, FOMC Economic Projections, FOMC Statement, and US Federal Funds Rate.
Thursday kicks off with New Zealand’s GDP; Eurozone Current Account; UK Retail Sales; US Jobless Claims, Existing Home Sales, and Philly Fed Manufacturing Index.
Friday will end the week with a flurry of news release such as BOJ’s Monetary Policy Statement; Germany’s PPI and Gfk Consumer Climate; UK Final GDP, Current Account, and Public Sector Net Borrowing; Canada CPI and Retail Sales; US Final GDP.
