The US Federal Reserve on Wednesday decided to leave the Federal Funds Rate at less than 0.25 percent. The Fed noted that there was a pickup in activity and the economy is gaining further momentum. It expressed that it would continue the process of reducing its bond purchases.
Aside from the Fed’s rate announcement, the biggest draw this week was the US Bureau of Labor Statistics’ release of the jobs data. BLS reported that Non-Farm Employment Change for April increased by 288,000, the biggest monthly advance since 2012. The prior reading was also revised higher, from 192,000 to 203,000. Moreover, the Unemployment Rate improved from 6.7 percent in March to 6.3 percent.
In other US news, Pending Home Sales for March came in over 3 times better than anticipated. Meanwhile, Chicago PMI surged past the 60 level to 63.0 in April, its best level in the last 6 months. On the other hand, Jobless Claims for the previous week increased for the second week in a row. 344,000 Americans filed for their unemployment insurance claims last week, compared to median forecast of 317,000.
In other news, Spanish Unemployment Rate ticked higher, German Unemployment Change declined and beat forecast for the fifth month, while Italian Unemployment Rate and the Eurozone Unemployment Rate for March were unchanged.
Commodities
Gold failed to close the week above $1,300 this time, but price indicated that $1,275 has become a support zone for bulls. It would be good to see a strong advance through $1,320-30 in the coming week, followed by a weekly close near the highs or on new highs.
Oil is now on its second weekly decline after the 100 level gave way easily to selling pressure. The weekly low below 99 could indicate price is ready to travel to 96-97 in the coming weeks.
Currency Pairs
Overall, it was a good week for EURUSD which has now clinched its second bullish weekly close in a row. The bullish picture for this week was untainted despite Friday’s volatility brought about by the US jobs numbers. In the coming week, we could see the 1.3950s challenged by eager bulls.
GBPUSD closed lower on Friday, but that did not stop the pair from printing its fourth consecutive bullish weekly close. Now, it is possible that we will see a strong footing above 1.6900 in the coming week or so.
Despite the volatility on Friday, USDJPY has remained locked in consolidation and it has now been so for nearly 2 weeks. The 102 level continues to exert influence and bulls aren’t strong enough to push price through 103. Expect the same action if both sides won’t be able to exert some dominance.
The Week Ahead
Monday offers several key economic news such as Australia’s Building Approvals and ANZ Job Advertisements; China’s HSBC Final Manufacturing PMI; EU Economic Forecasts; Eurogroup Meetings; and US ISM Non-Manufacturing PMI.
Tuesday will get busy as usual, this time with Australia’s Trade Balance and RBA Cash Rate Announcement and Statement; Services PMI for Italy, UK, Spain; ECOFIN Meetings; US and Canada Trade Balance; Canada’s Ivey PMI.
Wednesday will be a bit less busier with New Zealand’s Jobless Rate and Employment Change; BOJ’s Monetary Policy Meeting Minutes; Australia’s Retail Sales; German’s Factory Orders; Canada’s Building Permits; and US Preliminary Unit Labor Costs and Nonfarm Productivity and Fed Chair Yellen’s speech.
Thursday will have Australia’s jobs data; China’s Trade Balance; Germany’s Industrial Production; Switzerland’s CPI; BOE Asset Purchase Facility and Official Bank Rate votes as well as MPC Rate Statement; ECB’s Minimum Bid Rate and Press conference; US Jobless Claims.
On Friday, the RBA will release its Monetary Policy Statement, followed by China’s CPI and New Loans; Germany’s Trade Balance; UK’s Trade Balance and Manufacturing Production; Canada’s jobs data; US JOLTS Job Openings.
