The Reserve Bank of New Zealand on Thursday raised its Official Cash Rate by another 25 basis points to 3 percent, citing possible continuation of its country’s economic expansion as the global financial condition remains accommodating. Future rate hikes were also alluded to by the central bank.
In the UK, the Monetary Policy Committee or MPC voted to keep the Asset Purchase Facility and Official Bank Rate unchanged. In the news front, Public Sector Net Borrowing came in at GBP4.9 billion, much better than the GBP8.9 billion expected by analysts. The previous reading was also revised better. CBI Realized Sales also came much higher than expected (30 versus 18 forecast); Retail Sales was slightly better; while CBI Industrial Order Expectations declined for the first time in three months.
In the United States, Durable Goods Orders, particularly the Core data, came in much higher than expected. Existing Home Sales slightly better but this was negated by much-weaker New Home Sales. Jobless Claims for the prior week jumped to 329,000, higher by 20,000 compared to its median estimate.
Commodities
Gold declined to new monthly lows this week but somehow buyers managed to resuscitate this on Thursday when it jumped back close to the weekly open. The slight advance on Friday enabled Gold to close the week, surprisingly, higher and back above the $1,300 level. Bulls have the chance of defending $1,300 again, so they can attempt for higher highs.
Oil shied away from reaching new 8-month highs last week after bulls struggled to break the 105 barrier. The lack of upside momentum opened the downside, and sellers quickly pounced on the opportunity and continue to hold control. With $103 down to $101 quickly eradicated, bears are setting their sights on the 96-98 area.
Currency Pairs
EURUSD struggled to find direction again this week as evidenced by the 51-pip weekly trading range. The pair reached a marginal new weekly low but eventually closed the week in the green. Bulls need to have more participation this week so they can revisit the 1.39s.
Although it had a wider weekly trading range, GBPUSD did not fare much better than its rival EURUSD. The former faced headwinds in its quest for new multi-year highs. Bulls should just keep trying to prevent any attempts to revisit or break 1.6700.
USDJPY failed to make a follow-through move again this week, managing just 76 pips of weekly movement, and this was mostly to the downside. 101 and 102 are back on the radar. It seems like buyers will be having a hard time defending the lows and reaching the 104s in the remaining part of April.
The Week Ahead
For Monday, April 28, there will only be a few economic releases such as Japan’s Retail Sales, Germany’s Bundesbank Monthly Report, and US Pending Home Sales.
On Tuesday, news activity will start early with New Zealand’s Trade Balance; Gfk German Consumer Climate and German Preliminary CPI; Eurozone M3 Money Supply; UK Prelim GDP; US CB Consumer Confidence; and Bank of Canada Governor Poloz’s speech. Japan will observe Showa Day today.
Wednesday will have the most activity this week with New Zealand’s Building Consents and ANZ Business Confidence; Japan’s Preliminary Industrial Production, Average Cash Earnings, and Monetary Policy Statement, and BOJ Outlook Report; Germany’s Retail Sales and Unemployment Change; France’s Consumer Spending; Spain’s Flash GDP; US ADP Non-Farm Employment Change, Advance GDP, Chicago PMI, Employment Cost Index, FOMC Statement, and Federal Funds Rate announcement; Canada’s GDP, RMPI, and IPPI.
Thursday will have China’s Manufacturing PMI; Australia’s Import Prices; UK Nationwide HPI, Manufacturing PMI and Net Lending to Individuals; EU Economic Forecasts; US Fed Chair Yellen’s speech, Unemployment Claims, Personal Spending, and ISM Manufacturing PMI.
Friday’s news highlights will include Japan’s Household Spending; Australia’s HIA New Home Sales and PPI; Spain’s and Italy’s Manufacturing PMI; UK Construction PMI; Eurozone Jobless Rate; US Non-Farm Employment Change, Jobless Rate, and Factory Orders.
