ECB head Draghi’s speech created market frenzy on Friday that sent the Euro back close to the latest lows. At the 24th European Banking Congress, Draghi expressed concern about inflation, and said the ECB may entertain the idea of increasing its asset purchase to gain a higher inflation.
In the United States, the Federal Reserve Bank of Philadelphia reported that its Manufacturing Index soared to 40.8 this November, more than double its median estimate and the previous reading of 20.7. A reading this high was last seen on March 2011. Empire State Manufacturing Index, in contrast, advanced to 10.2, lower than expected.
Meanwhile, US Jobless Claims rose 291,000 in the previous week, while the prior week’s reading has been modified higher to 293,00 from the initial reading of 290,000. US PPI unexpectedly gained 0.2 percent in October, while CPI was flat. Industrial Production edged lower by 0.1 percent.
In other news, China’s HSBC Flash Manufacturing PMI went flat at 50 this November. Meanwhile, French, German, Eurozone Flash Manufacturing PMI were all weaker, while; corresponding Flash Services PMI were all weaker as well, except for France which slightly topped estimates. The US Flash Manufacturing PMI was also weak at 54.7 (versus 56.2 estimate).
Commodities
Slowly but surely, Gold has etched its third bullish weekly close. Price made a quick peek above $1200 this week but price closed the week just above this level. The next goal for buyers is a strong close above $1,250.
Oil saw a battle for control between buyers and sellers throughout the week but the former emerged as winners as they pulled a 2-day win streak to end the week in the mid-76s. We could see price linger around current rates, as price remains close to the key support around $67 to $70.
Currency Pairs
EURUSD was poised to end the week with a meager positive weekly close but Friday’s drop spoiled this eventuality. The pair sank nearly 200 pips on Friday to a 10-day low, putting the 1.2300 level back in the spotlight. Some indicators are flashing a bullish divergence, so if we don’t see a new low soon, price could swing back toward 1.2700.
Unlike the big smackdown seen in the previous week, GBPUSD was contented to trade within a tight 148-pip range this week. 1.5500 remains on track but we could see a bounce towards 1.5800-1.5900. 1.5588 is the low so far.
USDJPY has achieved five straight bullish weekly closes this week. Price momentum seems to have slowed since the start of November, but bulls remain undeterred. 118 and 120 are the likely key levels moving forward.
The Week Ahead
Asia will be quiet this Monday, particularly because Japan will be on holiday to celebrate Labor Thanksgiving Day. Europe will have Switzerland’s Employment Level and Germany’s Ifo Business Climate.
Tuesday will open up with BOJ’s Monetary Policy Meeting Minutes and BOJ Governor Kuroda’s speech, followed by New Zealand’s Inflation Expectations; UK’s BBA Mortgage Approvals, Inflation Report Hearings; Canada’s Retail Sales; US S&P/CS Composite-20 HPI, and CB Consumer Confidence.
Wednesday will have a lot of economic releases such as Australia’s Construction Work Done; UK’s Second Estimate GDP, Preliminary Business Investment, and CBI Realized Sales; US Durable Goods Orders, Jobless Claims, Core PCE Price Index; Personal Spending; Personal Income; Chicago PMI, New Home Sales, Pending Home Sales, and Revised UoM Consumer Sentiment.
Thursday will be busy but less active than Wednesday with New Zealand’s Trade Balance; Australia’s Private Capital Expenditure and HIA New Home Sales; Germany’s Preliminary CPI, Gfk Consumer Climate, and Unemployment Change; Eurozone Private Loans and M3 Money Supply; and Canada’s Current Account. US will celebrate Thanksgiving Day.
Friday will still be active with New Zealand’s Building Consents and ANZ Business Confidence; Japan’s Household Spending, Tokyo Core CPI, Retail Sales, Jobless Rate, and Preliminary Industrial Production; Australia’s Private Sector Credit; Germany’s Retail Sales; Switzerland’s KOF Economic Barometer; UK’s Nationwide HPI; Eurozone CPI Flash Estimate and Jobless Rate; and Canada’s GDP, IPPI, and RMPI.
