The US Federal Reserve decided on Wednesday to leave the Federal Funds Rate at less than 0.25 percent. The Reserve Bank of New Zealand followed up on Thursday with a similar decision, holding its Official Cash Rate at 3.50 percent.
In other US news, the latest Advance GDP report showed the first-quarter growth was nearly zero. The 0.2 percent growth is much weaker than the one percent growth median estimate. The prior reading was cut back to 2.2 percent from 2.6 percent.
Meanwhile, CB Consumer Confidence declined to 95.2 in April after posting 101.4 in March. On the other hand, Jobless Claims for the previous week showed 262,000 Americans filed for their unemployment insurance claims last week, compared to median forecast of 290,000.
US Employment Cost Index advanced 0.7 percent, but Personal Spending grew only 0.4 percent. ISM Manufacturing PMI stayed at 51.5 in April for the second month. This is the weakest reading in nearly two years, according to ISM.
In other news, Retail Sales in Germany and Japan showed surprise drops. Japan Retail Sales sunk 9.7 percent while Germany’s Retail Sales dropped 2.3 percent. Meanwhile, Eurostat said Eurozone Jobless Rate remained at 11.3 percent for the second month on March.
Commodities
Gold managed to get through the $1,200 level during the first half of the week, but sellers quickly faded the move and controlled the latter part of the week. The result is Gold formed a lower weekly low and close, endangering the current mini range.
Oil made another headway into the resistance and came closer to the $60 this week. We may well see the $60-$80 range prove critical in the month of May. Of course, a test of the $50 is still in the table.
Currency Pairs
EURUSD saw a spectacular week as it printed its third straight weekly advance. This time, it blew past the 1.1200 level with a 470 pip weekly range in favor of bulls. Any retracement should find some support around 1.1000.
GBPUSD posted a shocking turn as the pair reversed nearly 400 pips after failing to touch the 1.5500 level. This puts a significant blow to the pair and puts the 1.5000 back in play.
USDJPY thwarted a break to the downside and surprised with a 180-pip move through 120, which helped the pair end the week above that psychological level. This pair remains in a very tight range so it would be interesting to see what happens in the next few weeks.
The Week Ahead
This week, Monday will be a very brief news day with Australia’s Building Approvals and ANZ Job Ads; China’s HSBC Manufacturing PMI; Spain, Italy and Germany Manufacturing PMI; and US Factory Orders. Japan will observe Greenery Day, while the UK will observe May Day.
Tuesday will get busy as usual, starting with Australia’s Trade Balance and RBA Cash Rate Announcement and Statement; UK Construction PMI and Halifax HPI; EU Economic Forecast; US and Canada Trade Balance; US ISM Non-Manufacturing PMI.
Wednesday will also be busy with New Zealand’s Jobless Rate and Employment Change; Australia’s Retail Sales; China’s HSBC Services PMI; UK Services PMI; Eurozone Retail Sales; Canada’s Ivey PMI; US ADP Non-Farm Employment Change, US Preliminary Unit Labor Costs and Nonfarm Productivity and Fed Chair Yellen’s speech.
On Thursday, we will see the announcement of Australia’s jobs data; Germany’s Factory Orders; Switzerland’s Foreign Currency Reserves; UK Parliamentary Elections; Canada’s Building Permits; and US Jobless Claims.
Friday will showcase RBA’s Monetary Policy Statement; China’s Trade Balance; Germany and UK Trade Balance; and US and Canada jobs reports.
