During the final week of February, German economic data outshone and this undoubtedly gave the EUR a boost. Monday started off with the release of better-than-expected German Ifo Business Climate, which rose to 111.3 this February, the highest since June 2011. German Unemployment Change also came in better than expected, -14k versus -10k. Meanwhile, German Retail Sales released on Friday showed a more than double increase to 2.5 percent in January. The prior reading was also revised higher to -1.7 percent from -2.5 percent.
On the other hand, the United States showed a different picture with its mixed bag of data this week. Richmond Manufacturing Index came in less than half of expectations (-6 versus 13 forecast). CB Consumer Confidence slipped further to 78.1, putting it below the 80 level for the fifth straight month. New Home Sales surprised to the upside with a reading of 468,000 in January, but Pending Home Sales for the same month rose only 0.1 percent. Chicago PMI stood at 59.8, while Durable Goods Orders data was mixed (headline eased 1 percent but core rose 1.1 percent).
In other news, UK CBI Realized Sales increased more than double its forecast, 37 versus 15. Australia’s Private Capital Expenditure sank 5.2 percent in the final quarter of 2013.
Commodities
Gold forged higher for the third straight week, reaching $1,345 before Wednesday’s sell off took price down. Eventually, Gold ended the week pretty much unchanged. As price approaches the October resistance area and the $1,400 level, we could see more tug-of-wars ahead.
Sellers in oil took charge this week and prevented forays to new highs beyond $103.50. This will be a litmus test whether buyers can continue to push price higher. More challenges lie up ahead around $108-$112.
Currency Pairs
Four consecutive up days including a strong 130-pip rally on Friday gave EURUSD a very strong weekly finish this time around. The pair’s Friday advance gave it enough strength to close the week just above 1.3800. Unlike GBPUSD, EURUSD still needs to clear a short-term resistance ahead of 1.3900 before it can reach new highs.
The late-Friday volatility enabled GBPUSD to clinch an up week, following a strong rejection above 1.6800 in the prior week. This gives bulls a chance to attack the 1.70 level in the next week or so.
USDJPY saw another tough week as bulls failed to take hold of price above 102.50 for a second straight week. Coupled with a weekly close below the 102, this has hiked the risk of moves to the downside by next week. Range trading remains a possibility.
The Week Ahead
Monday will have a good breadth of news such as New Zealand’s Overseas Trade Balance; Japan’s Capital Spending; Australia’s Company Operating Profits, ANZ Job Advertisements, and HIA New Home Sales; China’s Non-Manufacturing PMI, HSBC Final Manufacturing PMI; Manufacturing PMI for Spain, Italy and the UK; CAD RMPI and IPPI; US Core PCE Price Index and Personal Spending, ISM Manufacturing PMI; and ECB Draghi’s speech.
Tuesday will be much compact with Australia’s Building Approvals, Current Account and RBA Cash Rate Announcement and Statement; Spain’s Unemployment Change; UK’s Construction PMI; Euro-area PPI.
Wednesday is relatively concise this week but nonetheless teeming with key news like Australia’s GDP; Eurozone Retail Sales; Services PMI for Spain, Italy, the UK; US ADP Non-Farm Employment Change, Beige Book, and ISM Non-Manufacturing PMI; Bank of Canada Rate Announcement and Rate Statement.
Thursday’s action starts early with Australia’s Retail Sales and Trade Balance; Germany’s Factory Orders; BOE Rate Announcement and Statement; ECB Rate Announcement and Press Conference; Canada’s Building Permits and Ivey PMI; and US Unemployment Claims and Factory Orders.
On Friday, we will witness RBA Governor Stevens’ speech; Switzerland’s Foreign Currency Reserves and CPI; Germany’s Industrial Production; UK Consumer Inflation Expectations; Canada and US Trade Balance; Canada’s Employment data, Labor Productivity; and US Employment data.
