The US Federal Reserve decided to put their respective interest rates on hold at 0-0.25 percent. The shocker was the Swiss National Bank’s decision on Thursday to introduce negative interest rates with an initial -0.25 percent.
Meanwhile, the UK led the pack this week with generally stronger than expected data. CPI has been reported by the Office for National Statistics to have gained one percent, its slowest pace since 2002 on lower oil prices. Votes on the MPC Official Bank Rate and Asset Purchase Facility came in as expected (2-0-7 and 0-0-9, respectively), while Unemployment Rate remained steady at 6 percent for the third straight month. Claimant Count Change decreased by 26,900, which was better than forecast and prior reading’s decline. UK Average Earnings Index improved 1.4 percent. Retail Sales, at 1.6 percent, turned out to be much stronger than forecast and the previous reading’s 1 percent gain. CBI Realized Sales surged, to 61, its best reading since 1988 and just over double than the current forecast.
In the United States, the latest report from the Department of Labor showed the Jobless Claims rose to 289,000, which was 8,000 lower than forecast. The NAHB Housing Market Index came in at 57, weaker than forecast and the previous reading. Building Permits and Housing Starts came in close to expectations.
Commodities
Gold slashed through both sides of the important $1,200 level for a second week. However, this time price sellers have won, albeit barely. Expect more moves on both sides of $1200 in the coming weeks.
Oil thrusted down to a new low in the 53s as weakness persists. Major levels have been breached, and we should expect selling momentum ease if buyers can push price back through $70 which looks unlikely as of this time.
Currency Pairs
EURUSD made a strong u-turn this week as it declined 350 pips from top to bottom. The pair encountered selling pressure early this week just above the 1.2550 level, and the move snowballed downward until Friday to new lows. Sellers are now targeting the 1.2000-1.2100 area.
USDJPY made an early dive this week toward the mid-115s, but this got quickly supported by dip-buyers who brought price to the 119s. If buyers control this pair, they will attack 120-121 until year-end.
GBPUSD had trouble finding a clear direction this week, but eventually sellers dominated. The pair closed at the second lowest weekly close in the last five trading weeks. The pair will try to test the 1.5600 level again next week as bears gain more control. This time, a freefall could happen past 1.5500.
The Week Ahead
The coming week will be unusual since Tuesday will be the most packed day ahead of Christmas.
Monday will have Australia’s Westpac Consumer Sentiment; Bank of Japan’s Monthly Report; Eurozone’s Consumer Confidence data; and US Existing Home Sales.
Tuesday will start early with New Zealand’s Trade Balance; France’s Consumer Spending; UK Current Account, Final GDP, and BBA Mortgage Approvals; Canada’s GDP; and US Revised University of Michigan Consumer Sentiment, Durable Goods Orders, Personal Spending, Personal Income, Final GDP, and New Home Sales. Japanese banks will be closed to celebrate the Emperor’s birthday.
Wednesday will be brief with Australia’s CBI Leading Index; Switzerland’s KOF Economic Barometer; and US Jobless Claims.
Thursday is Christmas Day so many countries will be on holiday. The only data coming out are Japan’s Monetary Policy Meeting Minutes and BOJ Kuroda’s speech.
Japan will again take center stage on Friday with the release of Household Spending, Tokyo Core CPI, Preliminary Industrial Production, Jobless Rate, Average Cash Earnings, and Retail Sales.
