The United States has had an overall positive week according to the latest slew of economic data.
The US Census Bureau reported a weaker than expected Retail Sales reading of -0.3 percent (core -0.2 percent) for September. At the same time, the Labor Department issued a similarly weak PPI (-0.1 percent) for the same month. Meanwhile, the October Empire State Manufacturing Index came in less than a third of median expectations (6.2 versus 20.3). On the other hand, the Philly Fed Manufacturing Index ticked higher to 20.7 in October, and it has been above the 20 level for the fourth straight month. Jobless Claims stood at 264,000 for the previous week, while Industrial Production and Capacity Utilization Rate were also slightly better than anticipated (1 percent and 79.3 percent, respectively).
China’s September PPI also came in weaker (-1.8 percent) similar to the US. Meanwhile, Chinese CPI grew less than forecast (1.6 percent versus 1.7 percent forecast).
In Europe, German ZEW Economic Sentiment posted an overwhelming surprise as it plunged to negative territory for the very first time in almost 2 years. The October reading of the index dropped to -3.6 after a better-than-expect 6.9 reading back in September. The Eurozone ZEW Economic Sentiment came in weaker too at 4.1 (versus 7.1 forecast). The Eurozone Industrial Production dropped slightly more than expected at -1.8 percent.
Commodities
Gold bulls kept the pace for the second week as they search for higher ground beyond the $1,200 level. The sky would continue to open up if price can reach the $1,300 level. The $1,180 area remains a triple bottom at risk of breaking.
Another week, another decline. Oil saw its third consecutive volatile week as it sought out any brave buyers until $80. Price breached this level shortly on Thursday until buyers decided to step in. The weekly close above $80 is just the first step in dealing with the serious decline in black gold. Tons of sellers are expected to camp out around the $90s.
Currency Pairs
EURUSD has closed bullish for the second week amidst weakness in the Dollar. The pair is poised for a retest of the 1.2900 level if bulls can maintain support around 1.2800 this week. Support lies at 1.2500-1.2600.
GBPUSD posted a fleeting move through 1.5800 but the week ended with a huge reversal candle that closed the week just below 1.6100. Bulls should snatch the opportunity and keep the momentum on their side. Plenty of resistance until 1.6500-50.
USDJPY saw a tug of war between USD and JPY supporters but ultimately the JPY supporters won the week, albeit with a strong battle. USD bulls fought back mid-week and this prevent a freefall through $105. The pair remains well above the 200-SMA which is located at 103.23, however we could still see volatility in the coming weeks in favor of JPY.
The Week Ahead
Monday is going to be quite again, with only German Bundesbank’s Monthly Report and Canada’s Wholesale Sales giving a jolt in activity. US FOMC member Powell is also expected to give a speech.
Tuesday will begin with Australia’s Monetary Policy Meeting Minutes. This will be followed shortly by China’s Industrial Production, Gross Domestic Product, Retail Sales, Fixed Asset Investment, and NBS press conference; Switzerland’s Trade Balance; UK Public Sector Net Borrowing; and US Existing Home Sales.
Wednesday will get very busy with Japan’s Trade Balance; Australia’s CPI and Trimmed Mean CPI; UK MPC Asset Purchase Facility and Official Bank Rate Votes; Canada’s Retail Sales, CPI, Overnight Rate Announcement, BOC Rate Statement, BOC Monetary Policy Report and BOC press conference.
Early Thursday, RBA Governor Stevens will provide a speech, followed shortly by New Zealand’s CPI; Australia’s NAB Quarterly Business Confidence; China’s HSBC Flash Manufacturing PMI; France, Germany, Eurozone Flash Manufacturing PMI and Services PMI; Spain’s Jobless Rate; UK Retail Sales and BBA Mortgage Approvals; EU Economic Summit; US Flash Manufacturing PMI.
Friday will be brief with New Zealand’s Balance; GfK Germany Consumer Climate; UK Prelim GDP; EU Economic Summit (day 2); and US New Home Sales.
