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Interest Rates Unchanged in EU, UK, Canada & Australia; Strong Aussie Data Surprise

The month of March kicked off with a very busy week, particularly with the release of central bank rate decisions, strong Aussie data, and mixed data from the US.

All four central banks – the European Central Bank, Bank of England, Bank of Canada, and Reserve Bank of Australia – decided to leave their respective rates unchanged (0.25 percent, 0.50 percent, 1 percent, and 2.50 percent, respectively).

In other news, several data surprises came out from Australia. Building Approvals surged in January, rising 6.8 percent following a 1.3 percent decline in the previous month. Analysts expected a measly 0.7 percent advance for January. GDP was slightly better at 0.8 percent, Retail Sales rose 1.2 percent, while Trade Balance surprised with AUD1.43 billion. Current Account came in as expected at –AUD10.1 billion.

In Canada, Building Permits surged to 8.5 percent in January, following significant back-to-back monthly declines. The Ivey PMI continued to rise in February, 57.2. On the other hand, Employment Change saw a dip of 7,000 while Unemployment Rate stayed at 7 percent.

In the United States, Non-Farm Employment Change rose more than forecast to 175,000. Jobless Rate, however, dipped to 6.7 percent. The Jobless Claims rose less than expected last week at 323,000.

Commodities

Gold pushed higher again this week despite headwinds faced along the way. Sellers kept buyers on their toes again as the latter tried to cross the $1,350s. It’s the third week wherein the price range has been very tight, and this possibly indicates that we will see a considerable pullback in the coming week or so.

Oil saw intense volatility throughout the entire week as price moved within a $5 trading range. Price explored both sides of the previous week’s range, and we saw oil trade from $105 down to the $100s in the first four days. We could expect a similar action in the coming weeks, so traders should be very careful.

Currency Pairs

EURUSD gave another strong weekly finish, rising for the fifth straight week and touching the 1.3900 level for the first time since October 2011. The preferred move for the coming week is solidifying supports around 1.3700/1.3800 before price trampolines toward the 1.4000s.

GBPUSD displayed a much subdued price action this week, unlike EURUSD. Price has been magnetized to the 1.6700 level since mid-February, and bulls must control the situation soon and prevent a strong regrouping of sellers. A strong break of 1.6700 would risk a move toward 1.6200-50.

USDJPY started the week with a downside gap which saw no follow-through move. Price reversed quickly on Tuesday, instead, and the move snowballed to a break of the recent range top and the 103 level. The pair reached as high as 103.74 before it closed the week at 103.24. This strong weekly finish gives buyers a ticket to regain the 105 in the coming weeks, assuming 103 holds.

The Week Ahead

Starting March 9, Canada and the United States will implement the Daylight Savings time shift and clocks will move ahead by 1 hour.

This time around, Monday will have a sparse amount of critical news releases, such as Japan’s Current Account and Final GDP; France and Italy’s Industrial Production; Switzerland’s Retail Sales; and Eurogroup Meetings.

Tuesday will have Australia’s NAB Business Confidence; BOJ Press Conference and Monetary Policy Statement; Germany’s Trade Balance; China’s New Loans; UK and Manufacturing Production and Inflation Report Hearings; US JOLTS Job Openings; and ECOFIN meetings.

Wednesday is relatively concise this week but nonetheless teeming with key news like Australia’s Westpac Consumer Sentiment and Home Loans; Japan’s BSI Manufacturing Index; UK Trade Balance; Euro-area’s Industrial Production; and US Federal Budget Balance.

Thursday’s action will start very early with New Zealand’s Interest Rate Announcement, Statement, and Press Conference. This will be followed by Australia’s jobs data; China’s Industrial Production and Fixed Asset Investment; ECB Monthly Bulletin; Canada’s NHPI; US Retail Sales and Jobless Claims.

Finally on Friday, we will witness the release of New Zealand’s Business NZ Manufacturing Index; BOJ Monetary Policy Meeting Minutes; Switzerland’s PPI; US PPI and Preliminary University of Michigan Consumer Sentiment.

Strong German Data Dominate; US Data Mixed

During the final week of February, German economic data outshone and this undoubtedly gave the EUR a boost. Monday started off with the release of better-than-expected German Ifo Business Climate, which rose to 111.3 this February, the highest since June 2011. German Unemployment Change also came in better than expected, -14k versus -10k. Meanwhile, German Retail Sales released on Friday showed a more than double increase to 2.5 percent in January. The prior reading was also revised higher to -1.7 percent from -2.5 percent.

On the other hand, the United States showed a different picture with its mixed bag of data this week. Richmond Manufacturing Index came in less than half of expectations (-6 versus 13 forecast). CB Consumer Confidence slipped further to 78.1, putting it below the 80 level for the fifth straight month. New Home Sales surprised to the upside with a reading of 468,000 in January, but Pending Home Sales for the same month rose only 0.1 percent. Chicago PMI stood at 59.8, while Durable Goods Orders data was mixed (headline eased 1 percent but core rose 1.1 percent).

In other news, UK CBI Realized Sales increased more than double its forecast, 37 versus 15. Australia’s Private Capital Expenditure sank 5.2 percent in the final quarter of 2013.

Commodities

Gold forged higher for the third straight week, reaching $1,345 before Wednesday’s sell off took price down. Eventually, Gold ended the week pretty much unchanged. As price approaches the October resistance area and the $1,400 level, we could see more tug-of-wars ahead.

Sellers in oil took charge this week and prevented forays to new highs beyond $103.50. This will be a litmus test whether buyers can continue to push price higher. More challenges lie up ahead around $108-$112.

Currency Pairs

Four consecutive up days including a strong 130-pip rally on Friday gave EURUSD a very strong weekly finish this time around. The pair’s Friday advance gave it enough strength to close the week just above 1.3800. Unlike GBPUSD, EURUSD still needs to clear a short-term resistance ahead of 1.3900 before it can reach new highs.

The late-Friday volatility enabled GBPUSD to clinch an up week, following a strong rejection above 1.6800 in the prior week. This gives bulls a chance to attack the 1.70 level in the next week or so.

USDJPY saw another tough week as bulls failed to take hold of price above 102.50 for a second straight week. Coupled with a weekly close below the 102, this has hiked the risk of moves to the downside by next week. Range trading remains a possibility.

The Week Ahead

Monday will have a good breadth of news such as New Zealand’s Overseas Trade Balance; Japan’s Capital Spending; Australia’s Company Operating Profits, ANZ Job Advertisements, and HIA New Home Sales; China’s Non-Manufacturing PMI, HSBC Final Manufacturing PMI; Manufacturing PMI for Spain, Italy and the UK; CAD RMPI and IPPI; US Core PCE Price Index and Personal Spending, ISM Manufacturing PMI; and ECB Draghi’s speech.

Tuesday will be much compact with Australia’s Building Approvals, Current Account and RBA Cash Rate Announcement and Statement; Spain’s Unemployment Change; UK’s Construction PMI; Euro-area PPI.

Wednesday is relatively concise this week but nonetheless teeming with key news like Australia’s GDP; Eurozone Retail Sales; Services PMI for Spain, Italy, the UK; US ADP Non-Farm Employment Change, Beige Book, and ISM Non-Manufacturing PMI; Bank of Canada Rate Announcement and Rate Statement.

Thursday’s action starts early with Australia’s Retail Sales and Trade Balance; Germany’s Factory Orders; BOE Rate Announcement and Statement; ECB Rate Announcement and Press Conference; Canada’s Building Permits and Ivey PMI; and US Unemployment Claims and Factory Orders.

On Friday, we will witness RBA Governor Stevens’ speech; Switzerland’s Foreign Currency Reserves and CPI; Germany’s Industrial Production; UK Consumer Inflation Expectations; Canada and US Trade Balance; Canada’s Employment data, Labor Productivity; and US Employment data.

Fed’s Yellen Testifies; Australia Jobless Rate Jumps to 10-Year High

Federal Reserve Chair Janet Yellen made her testimony in the Semiannual Monetary Policy Report before the House Financial Services Committee in Washington last Tuesday. In her debut as the Fed Chair, Yellen said the Fed is committed to stay the course and continue trimming the monthly bond purchases. She emphasized that she does not plan to make any sudden changes to the monetary policy as the recovery from the labor market is still incomplete.

In other news, Japan’s Core Machinery Orders declined 15.7 percent, nearly four times as expected in December, reversing from the 9.3 percent gain in the previous month. Tertiary Industry Activity eased 0.4 percent.

China’s Trade Balance surpassed expectations as it registered CNY31.9 billion versus CNY24.2 billion expected. This is the second best reading in the last 15 months. CPI remained at 2.5 percent for the second month.

In Australia, the Bureau of Statistics reported that Employment Change for January decreased 3,700, while analysts expected a 15,300 advance. In contrast, Employment Change declined 23,000 last December. The Unemployment Rate rose to 6 percent, the worst in over 10 years.

In the United States, Unemployment Claims rose 339,000 compared to the 331,000 forecast. Meanwhile, Preliminary University of Michigan Consumer Sentiment.

Commodities

Gold outpaced Oil this week as the former broke the $1,300 level successfully. Buyers would need to contend with potential sellers around $1,350-$1,400 next.

Oil took a huge breather this week around the $100 level, following four straight weeks of gains. Bears are likely very jittery at this point as bullish momentum could drive price toward $104-$106 very soon. Sellers should prevent the floodgates of $100 from opening to the upside.

Currency Pairs

We have just seen two consecutive weekly gains for EURUSD but the pair still needs to contend with the sellers around 1.3700. This pair needs to play catch-up with GBPUSD as there are still topside barriers in the form of previously monthly highs.

GBPUSD showed remarkable gains this week, giving the pair a total of 7 straight daily gains since the 1.6250 level held in the prior week. Expect a few tests of the 1.6700 level to happen in the coming days or weeks.

USDJPY saw a pretty much uneventful week as the pair failed to capitalize on last week’s bullish reversal. Sellers around 102.50 took charge and pulled this pair down. If price will continue to find problems advancing through 103, we could see attempts to break the 100 level.

The Week Ahead

The week will start out with only a few news highlights for Monday, particularly Australia’s New Motor Vehicle Sales for January; Japan Prelim GDP; and Eurogroup meetings. US banks are closed to commemorate President’s Day (Washington’s birthday).

Tuesday will provide more action in the form of Monetary Policy Meeting Minutes from the  RBA and Monetary Policy Statement from BOJ; Euro-area Current Account; UK CPI, RPI, and PPI Input; Germany and Euro-area ZEW Economic Sentiment; Canada’s Foreign Securities Purchases; US TIC Long-term Purchases, Empire State Manufacturing Index, and NAHB Housing Market Index.

On Wednesday, there are Australia’s CB Leading Index and Wage Price Index; UK Claimant Count Change, Unemployment Rate, MPC Asset Purchase Facility and Official Bank Rate votes; Switzerland’s ZEW Economic Expectations Survey; Canada Wholesale Sales; US PPI, Building Permits, Housing Starts, Fed’s Meeting Minutes.

Thursday’s action begins with New Zealand’s PPI Input and Output; Japan’s Trade Balance; China’s HSBC Flash Manufacturing PMI; Germany’s PPI; Flash Manufacturing PMI and Flash Services PMI for Euro-area, France, and Germany; UK CB Industrial Order Expectations; US Unemployment Claims, CPI, Philly Fed Manufacturing Index, and speech from Fed Chair Yellen.

Friday will remain active with BOJ’s Monetary Policy Meeting; UK Retail Sales and Public Sector Net Borrowing; G20 Meetings; EU Economic Forecasts; Canada’s CPI and Retail Sales; and US Existing Homes Sales.

Interest Rate Unchanged in the EU, UK & Australia, US Data Mixed

Similar to the actions of RBNZ and US Federal Reserve last week, the Reserve Bank of Australia, European Central Bank, and the Bank of England all decided to leave rates unchanged this week. Rates for these three central banks will remain at 2.50 percent, 0.25 percent, and 0.50 percent, respectively.

In the United States, the raft of news releases has been a mixed bag. ISM Non-Manufacturing PMI came in better than forecast and the Unemployment Rate improved to 6.6 percent from 6.7 percent. However, Trade Balance, ISM Manufacturing PMI, and Non-Farm Payrolls have been weak. Non-Farm Payrolls for January rose 113,000 compared with expectations for a 185,000 rise.

In the UK, Construction PMI came in much better than anticipated, while both Manufacturing PMI and Services PMI were slightly weaker than forecast.

In other news, unexpected declines were seen in Australia’s Building Approvals (-2.9% vs. -0.3% expected), Spain’s Unemployment Change (113,100 vs. -21,300 expected), and Canada’s Building Permits (-4.1% vs. 2.3% expected). On the other hand, Canada’s Employment Change and Unemployment Rate for January improved (29,400 and 7 percent, respectively).

Commodities

As expected, not much has changed in Gold in the past week. This week’s price action is virtually a mirror image of last week’s, with the mid- to upper-$1,200s continuing to pose as resistance. Bulls might try to switch up the pace next week. And if they are successful, we could see a move toward $1,300.

Oil left Gold in the dust this week, as the former jolted higher on Friday, closing just above the $100 level. Oil could be setting up for a break to new highs if buyers can maintain support around 98-99 in the coming weeks.

Currency Pairs

The strong advance in EURUSD seen on Thursday and Friday allowed this pair to recuperate from the prior week’s decline. More than half of that week’s 237 pip decline has been erased in the process, and this gives buyers a chance to bring price back above 1.3700 and challenge the 1.3800 highs again.

A well-established support around 1.6250 has helped GBPUSD bulls mitigate a further decline after the hefty 1-day fall seen on Monday. Aided by the considerable rebound on Friday, this pair is effectively unchanged this week. A follow-through move from the bulls could drive price higher.

Like EURUSD and GBPUSD, USDJPY has experienced a reversal of fortune this week as the pair managed to recover from the decline below 101. Given that there are a lot of wood to chop ahead, price could find trouble advancing through 103.

The Week Ahead

Monday will start the week slowly with the release of Japan’s Current Account; France and Italy Industrial Production; Canada’s Housing Starts; and US Mortgage Delinquencies.

On Tuesday, Japanese banks will be closed to celebrate National Foundation Day. UK will kick things off with BRC Retail Sales Monitor; Australia’s NAB Business Confidence, Home Loans, and HPI; China’s Trade Balance and New Loans; Canada’s Annual Budget Release; US JOLTS Job Openings and testimony of Federal Reserve Chair Janet Yellen.

Wednesday will be slightly busier with Australia’s Westpac Consumer Sentiment; Japan’s Core Machinery Orders and Tertiary Industry Activity; Switzerland’s CPI; Eurozone Industrial Production; BOE Inflation Report and BOE Governor Carney’s Speech; and US Federal Budget Balance.

On Thursday, there will be a raft of news such as Business NZ Manufacturing Index; Australia’s MI Inflation Expectations and jobs data; Switzerland’s PPI; ECB Monthly Bulletin; Canada’s NHPI; US Retail Sales, Jobless Claims, and Business Inventories.

Finally, on Friday, there will still be news to watch out for such as Chinas CPI and PPI; France, Italy, and Germany’s Preliminary GDP; Eurozone Flash GDP; Canada’s Manufacturing Sales; US Import Prices, Capacity Utilization Rate, Industrial Production, and Preliminary UoM Consumer Sentiment.

US Federal Reserve Left Rates Unchanged, Fed Taper Continues

The Reserve Bank of New Zealand and US Federal Reserve decided to leave rates unchanged according to their latest statements release this week. For the Fed’s part, it decided to continue cutting the monthly bond purchases by $10 billion to $65 billion , citing pickup in growth in past quarters as well as improvement “on balance” in the labor market. The Fed noted that the jobless rate has “declined but remains elevated” and the housing sector’s recovery “slowed somewhat.”

In the US, there were more weakness seen in economic indicators in the US. New Home Sales for December came in weaker than expected at 414,000 versus 457,000 expected. Pending Home Sales declined sharply, -8.7 percent, its worse since April 2011.

On Tuesday, reports showed US Durable Goods Orders including its Core part declined in December, posting -4.3 percent and -1.6 percent respectively. The decline of the headline figure is its worst decline in 5 months. Meanwhile, US CB Consumer Confidence returned above the 80 level, (80.7) this January.

In other news, Destatis reported that German Unemployment Change surprised to the upside with a 28,000 decline, much better than the -5,000 forecast.

Commodities

Gold filed a new high this week (fifth consecutive weekly high, in fact), but price immediately reversed and went on to close the week lower, erasing most of the prior week’s gains. The $1,200 level continues to attract both sides and we could expect price to remain close to where it is now for some time.

Following Gold, Oil also posted another consecutive weekly high this week. But unlike Gold, Oil was able to keep its gains. The pullback from the $98s was expected, but we should see another challenge of this level in the coming week.

Currency Pairs

EURUSD had a very tough week as sellers pounded on their competitors for five straight days, leading to the pairs breakdown to new weekly lows. Bulls were unable to protect the 1.3500 level and this puts price at risk of spiraling down toward 1.3000-1.3300 in the coming week or so.

The decline in GBPUSD was much milder compared to what has transpired in EURUSD. This pair formed an inside bar for the weekly. We expect a potential test of the 1.6250-1.6300 area in the coming week.

USDJPY fell in unison with GBPUSD and EURUSD this week as USDJPY found it hard to get past sellers around 103. The weekly close below 102 could give sellers more confidence to attack 96-100 again.

The Week Ahead

This week will definitely be news-packed as the month of February gets under way.

Monday will kick off with Australia’s Building Approvals and ANZ Job Ads; China’s Non-Manufacturing PMI; Switzerland SVME PMI; Euro-area, Spain, Italy, UK Manufacturing PMI; Canada’s IPPI and RMPI; US Final and ISM Manufacturing PMI.

On Tuesday, Australia’s RBA Rate Announcement and Statement will be anticipated, as well as Spain’s Unemployment Change; UK Halifax HPI and Construction PMI; and US Factory Orders.

Wednesday will start very early with New Zealand’s Unemployment Rate and Employment Change ; Japan’s Average Cash Earnings; Services PMI data from Spain, Italy, and the UK; Eurozone Retail Sales; US ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI; and Canada Building Permits.

On Thursday, we will have Australia’s Retail Sales and Trade Balance; Germany’s Factory Orders; BOE and ECB Rate Announcement and Statement; US Trade Balance and Jobless Claims; and Canada’s Ivey PMI.

Finally, on Friday, RBA will release its Monetary Policy Statement. This will be followed in the afternoon by the release of Germany’s Trade Balance; Switzerland’s Foreign Currency Reserves and Retail Sales; UK Manufacturing Production and Trade Balance; and Canada and US Jobs Data.

Davos World Economic Forum Concludes, Central Banks Maintain Status Quo

Over 2,500 key government officials as well as entrepreneurs, various organization representatives, and business leaders convened in Davos, Switzerland this week for the annual meeting of the World Economic Forum. This year, the WEF was spread across only four days and it concluded yesterday, January 25.

Though recovery has been seen, particularly in certain advanced economies, the WEF attendees agree that more needs to be done. During the WEF’s opening day, IMF Managing Director Christine Lagarde said “while the worst fears have faded, the emerging economies face new policy challenges.” IMF expects the global economy to grow at 3.6 percent this year, below its potential growth which is 4%. With uncertainty as well as recovery expected ahead, key officials of the world want to reshape the world with collaborative action, in line with this year’s WEF theme, “The Reshaping of the World: Consequences for Society, Politics and Business.”

In other news, status quo reigned in Bank of Japan, Bank of England, and the Bank of Canada as shown by these central banks’ respective data releases and policy statements last Tuesday.

Flash Manufacturing PMI and Flash Services PMI in Europe were broadly better than expected. On the other hand, China’s HSBC Flash Manufacturing PMI came in weaker than forecast and slid below the 50 level for the first time since July.

In Canada, Manufacturing Sales for November came out with its best reading in four months. Retail Sales also came out better than expected, 0.6 percent, following a 0.1 percent decline in October.

In the United States, Jobless Claims for the prior week came in lower than forecast (326,000 versus 331,000). On the other hand, December Existing Home Sales was weaker (4.87 million actual versus 4.94 forecast), with November’s reading revised down to just 4.82 million.

Commodities

Gold had it tough during the first three days but price roared higher on Thursday and a follow-through move was seen on Friday, giving the yellow metal its best close since November 20. Buyers can’t celebrate yet, as there are still more wood to chop until at least $1,350.

Oil had a better week, rising over $4 and closing in on the $98 level before ending the week in mid-$96s. Buyers still need to take out the resistance built around the $98-$101 area.

Currency Pairs

EURUSD clinched a new low on Monday but the pair ended the week on a good note. EURUSD flew through the 1.3700 on mid-Friday before easing to close the week around 1.3676. We should see support pile up around 1.3600 to keep the momentum on the upside.

Most of GBPUSD’s 270-pip advance this week evaporated in front of traders’ eyes as the pair erased about 190 pips in the latter part of Friday. Recent price action suggests this pair could revisit 1.6250-1.6400 next week.

After a quiet start to the week, risk sentiment went stale on the last two days and this dragged the pair to a new 7-week low, putting a serious challenge to the multi-month advance. The 98-100 area would take a lot of heat if 102 breaks.

 The Week Ahead

Monday will have little news scattered throughout the day. There will be Japan’s Trade Balance and BOK Monetary Policy Meeting Minutes; Germany’s Ifo Business Climate and Bundesbank Monthly Report; Eurogroup meetings; and US New Home Sales. Australia will celebrate Australia Day.

Tuesday will be much more packed with Australia’s CB Leading Index and NAB Business Confidence; UK Preliminary GDP; ECOFIN meetings; US Durable Goods Orders, S&P/Case-Shiller Composite-20 House Price Index and US Consumer Confidence.

Wednesday will be unusually brief yet still busy with GfK German Consumer Climate; UK Nationwide HPI; Eurozone M3 Money Supply; BOE Governor Carney’s speech; US Federal Reserve interest rate announcement and FOMC Statement.

On Thursday, New Zealand will be out early with its announcement of its Official Cash Rate and Rate Statement. Other news releases include Japan’s Retail Sales; UK’s Net Lending to Individuals; Australia’s HIA New Home Sales and Import Prices; Germany’s Unemployment Change and preliminary CPI; Spain’s Flash GDP; and US Unemployment Claims, Advance GDP, Pending Home Sales.

Friday will have a good mix of economic releases, to wit: New Zealand’s Trade Balance; RBNZ Governor Wheeler’s speech; Japan’s Household Spending, Preliminary Industrial Production, and Tokyo Core CPI; Australia PPI and Private Sector Credit; Germany’s Retail Sales; Eurozone Unemployment Rate; Canada’s GDP; US Core PCE Price Index, Employment Cost Index, Chicago PMI, Personal Spending, Personal Income, and Revised University of Michigan Consumer Sentiment.

EURUSD Slides While USDJPY is on the Rise

Retail Sales in the UK has beaten expectations and soared to its strongest pace in over nine years. The Office for National Statistics reported that retail sales have jumped 2.6 percent in December, amounting to a year-on-year estimate of 5.3 percent, aided by improved sales in smaller stores. This was compared to analysts’ forecast of just 0.4 percent.

In the United States, the Philly Fed Manufacturing Index and Empire State Manufacturing Index surpassed their respective expectations. The former came in at 9.4, while the latter jumped to 12.5 which was nearly 4 times higher than expectations. Meanwhile, the Preliminary University of Michigan Consumer Sentiment slid to 80.4 from 82.5.

In other news, Australia’s Employment Change surprised with a reading of minus 22,600, compared to the forecast for a 10,300 gain. The Unemployment Rate stood at 5.8 percent.

In Japan, Core Machinery Orders jumped 9.3 percent in November, its best reading in the last 6 months.

Commodities

Gold is chugging along well and has now clinched its third consecutive bullish week. Price closed the week just above $1,250 but there are evidently more wood to chop until at least $1,350. $1,200-30 should provide support to keep the upside momentum going.

Oil made a strong rebound this week and price was able to close the week just above the critical $94 level. The next step is to take out the resistance surrounding the $98-$101 area.

 Currency Pairs

The upmove last week in EURUSD now appears to be a break from the ongoing slide in this pair. The weakness in EUR crosses helped drag this pair even lower, and EURUSD closed the week at 1.3540. This is a serious situation, and technically, the pair should make a strong rebound next week, otherwise bear will look for 1.3000-1.3300.

GBPUSD soared almost 150 pips on Friday but apparently this was not enough to change the course of this pair this week. Price closed the week just above the middle of the weekly range at 1.6422. There are tons of resistances from 1.6500 and higher. Bulls can take these out if Retail Sales-led momentum flows through the coming weeks.

USDJPY had a rough start to the week, but eventually JPY weakness prevailed and the pair closed the week at 104.30. Now, price is back at challenging the 105 highs which have been a headache to buyers since late-December. We can expect another test of either side of price in the coming week.

The Week Ahead

Monday will have very few economic releases to watch out for, such as China’s GDP, Industrial Production, Fixed Asset Investment, and Retail Sales; Germany’s PPI, Bundesbank Monthly Report.

On Tuesday, there will be New Zealand’s CPI; German ZEW Economic Sentiment; Spain’s HPI; UK CBI Industrial Order Expectations; Canada’s Manufacturing Sales and Wholesale Sales.

Wednesday will be busy as usual with news namely, Australia’s CPI;  BOJ’s Monetary Policy Statement and Press Conference; UK Claimant Count Change, Unemployment Rate, MPC Asset Purchase Facility and Official Bank Rate Votes; Bank of Canada Overnight Rate Announcement, Rate Statement, Press Conference, and Monetary Policy Report. Today is also day 1 of the 4-day World Economic Forum annual meetings.

Thursday is just as busy with Business NZ Manufacturing Index; Australia’s MI inflation Expectations; China’s HSBC Flash Manufacturing PMI; Euro-area, France, and Germany Flash Manufacturing PMI and Services PMI; Spain’s Unemployment Rate; Eurozone Current Account; Canada’s Retail Sales; US Jobless Claims, Flash Manufacturing PMI, Existing Home Sales.

Friday’s Asian session is pretty much quiet. Focus will be on UK BBA Mortgage Approvals; Canada’s CPI.

England & EU maintain their Rates, Yellen Confirmed as US Fed Chief

The Bank of England maintained its Official Bank Rate at 0.50 percent; and the European Central Bank decided to keep its Minimum Bid Rate at 0.25 percent.

In the US, the Senate passed on Monday the nomination of Janet Yellen as the Federal Reserve Chairperson. Yellen will serve her post for four years, from February 2014 to January 2018.

The US Bureau of Labor Statistics reported on Friday that the labor market added 74,000 jobs in December, much weaker than the median estimate of economists surveyed (196,000). November’s reading was revised higher, from 203,000 to 241,000. Meanwhile, the unemployment rate came in at 6.7 percent.

In other news, Canada’s Employment Change surprisingly came in at -45,900, more than triple and opposite its forecast of 14,400. The Unemployment Rate rose to 7.2 percent.

Commodities

Gold caught some wind and moved higher this week. The advance was marginal, however, as price only peaked at $1,248 and closed the week nearby. There is still potential resistance ahead of the $1,300 level. There are lots of wood to chop further up.

Oil declined further this week after it dropped nearly $7 the other week. The current decline peeked through the multi-month support (set on late-November at $91.75) before bouncing to close the week just below $93. Expect another attack on the $90-$92 area.

Currency Pairs

EURUSD was pretty much under water for most of the week until it made a mad dash higher late-Friday. This run-up was enough to give the pair a bullish weekly close above the 1.3600 level. Buyers need to be careful with resistance around 1.3800.

Price-action wise, GBPUSD was slightly ahead of EURUSD and the former also managed to eke out gains this week. Bulls should continue the pressure higher so they can take out the 1.6602 high.

USDJPY was all pretty quiet before US NFP Friday, when it created the week’s 150-pip trading range as it moved to the downside. Bulls have been having problems with the 105 level, so sellers pounced to take the cake this time. Further decline is possible but not without potential detractors along the way.

The Week Ahead

Monday will be quiet for the most part. We will witness the release of Australia’s ANZ Job Ads; China’s Money Supply and New Loans; Bank of Canada’s Business Outlook Survey; and US Federal Budget Balance. There will be a bank holiday in Japan due to ‘Coming of Age Day.’

Tuesday will start early with New Zealand’s NZIER Business Confidence; Japan’s Current Account; UK CPI, RPI, and PPI; Eurozone Industrial Production; US Retail Sales, Import Prices, and Business Inventories.

Wednesday will be a very brief news day with Australia’s new Motor Vehicle Sales; Switzerland’s Retail Sales; US PPI, Empire State Manufacturing Index, and Beige Book.

Thursday will be busy with Japan’s Core Machinery Orders and Tertiary Industry Activity; Australia’s Unemployment Rate and Employment Change; ECB Monthly Bulletin; Eurozone CPI; Canada Foreign Securities Purchases; US CPI, TIC Long-term Purchases, Philly Fed Manufacturing Index. Fed Chairman Bernanke is also slated to give a speech.

Finally, Friday will cap the week with Switzerland’s PPI; UK Retail Sales; US Building Permits, Capacity Utilization Rate, Housing Starts, Industrial Production, and Preliminary UoM Consumer Sentiment.

New Zealand & Switzerland Interest Rates Unchanged

Following four central bank announcements last week, the Reserve Bank of New Zealand and Swiss National Bank followed up this week and they also maintained their rates. RBNZ kept its Official Cash Rate at 2.50 percent, while the SNB left its Libor Rate at less than 0.25 percent.

Meanwhile, Reserve Bank of Australia Governor Stevens seems to be in favor of seeing the local dollar somewhere in the $80 cent level. In his interview with the Australian Financial Review, he said “…I just think that if things over the medium term evolve as we’re presently assuming – and I think it’s reasonable to make these assumptions – it’s going to be surprising if a nine at the front is the right number.”

In other news, China released some robust numbers last Tuesday. Fixed Asset Investment remained high at 19.9 percent, while Retail Sales edged up 13.7 percent year-on-year in November. Industrial Production for November rose 10 percent, the National Bureau of Statistics reported.

Employment Change in Australia surprisingly jumped 21,000 in November, with participation rate stable at 64.8 percent, according to the Australian Bureau of Statistics.

In the United States, the latest report from the Department of Labor showed the Jobless Claims rose to 368,000, its weakest level since early October.

Commodities

Despite the downside bias, Gold went on to chop around just above the $1,200 level for the third straight week. Price showed signs of bearish defiance as it tried to jump through the $1,260s, but sellers quelled the move easily. Nonetheless, the move was enough to create a bullish close for the week, and this could indicate that price could attempt another upside attack in the coming weeks.

Oil had a limited range of action this week, managing a brief foray into the $98s before sliding to a weekly low and close in the mid-$96s. Bulls are expected to remain supportive of any declines to the $92-$95 area.

Currency Pairs

EURUSD saw a move higher for its fifth bullish weekly close, but it failed to take out the October high at 1.3831 in the process. The pair struggled to support the move through 1.3800 despite constant attempts on Wednesday and Thursday. Anyway, as long as 1.3700 holds, we expect another shot or two at 1.3800 in the coming week.

GBPUSD kicked off its week with an early scurry, reaching a new high (1.6464) before easing off for the rest of the week, giving it its second consecutive bearish weekly close. This is a worrying sign that could mean a potential move through the 1.6200 is in the offing.

USDJPY sported another action-packed week which pretty much replicated the price action in the prior week. A second week of volatility-spiced activity saw the pair challenge the downside in the beginning of the week, followed by a squeeze toward new highs. 104.00 has not been reached but nevertheless we could see at least a brief visit to that area in the days to come.

The Week Ahead

As the year draws to a close, this will be the final busy week for December.

Monday begins very early with New Zealand’s Westpac Consumer Sentiment, followed a few hours later by Japan’s Tankan indices; China’s HSBC Flash Manufacturing PMI; Flash Manufacturing PMI and Flash Services PMI for France, Germany, and the Eurozone; Bundesbank Monthly Report; Canada’s Foreign Securities Purchases; US Empire State Manufacturing Index, Flash Manufacturing PMI, TIC Long-Term Purchases, and Industrial Production.

On Tuesday, there will be Australia’s CB Leading Index, Monetary Policy Meeting Minutes, and New Motor Vehicle Sales; UK PPI input, RPI, and CPI; Germany’s ZEW Economic Sentiment; Eurozone CPI and ZEW Economic Sentiment; US Current Account, CPI, and NAHB Housing Market Index.

Wednesday will start early again with New Zealand’s Current Account. Japan’s Trade Balance will follow, then ANZ Business Confidence; Germany’s Ifo Business Climate; UK Claimant Count Change, Jobless Rate, and MPC Asset Purchase Facility and Official Bank Rate Votes; Switzerland’s ZEW Economic Expectations; UK CBI Realized Sales; US Housing Starts, Building Permits, FOMC Economic Projections, FOMC Statement, and US Federal Funds Rate.

Thursday kicks off with New Zealand’s GDP; Eurozone Current Account; UK Retail Sales; US Jobless Claims, Existing Home Sales, and Philly Fed Manufacturing Index.

Friday will end the week with a flurry of news release such as BOJ’s Monetary Policy Statement; Germany’s PPI and Gfk Consumer Climate; UK Final GDP, Current Account, and Public Sector Net Borrowing; Canada CPI and Retail Sales; US Final GDP.

US Jobless Claims Improve, Other US Economic Parameters Disappoint

The US dominated the economic news arena this week and it was a mixed bag.

US Pending Home Sales kicked off the week and it surprised to the downside, declining 0.6 percent in October. Based on the data given by National Association of Realtors, this is the fifth straight monthly decline.

US Building Permits were slightly higher at 0.97 million (versus 0.94 million expectations) for September, and breached the 1 million-mark in October (1.03 million versus 0.94 million expectation). The October reading is the highest in more than five years. S&P/CS Composite-20 HPI continued to increase for the third straight month with a 13.3 percent gain. Meanwhile, CB Consumer Confidence declined to a seven-month low in November (70.4 versus 72.2 forecast).

According to the US Census Bureau, Durable Goods Orders along with its core reading contracted on October. Purchase orders for durable goods declined 2 percent while purchase orders for core durable goods eased 0.1 percent during the same period.

On the other hand, US Jobless Claims improved for the second consecutive week. Only 316,00 Americans filed for unemployment benefits last week (analysts expected 331,000). Chicago PMI stayed above the 60 level for the second month in November at 63.0. Revised University of Michigan Consumer Sentiment rose to 75.1 in November.

In other news, New Zealand posted a Trade Balance of –NZD168 million, its lowest October trade deficit since the mid-1990s. This is the fourth straight trade deficit posted, but it has significantly declined since August.

Australian Bureau of Statistics reported that, after three consecutive quarterly declines, Construction Work Done surged a seasonally adjusted 2.7 percent in the September quarter. Meanwhile, Private Capital Expenditures also remained robust in the September quarter, surprising analysts with a 3.6 percent advance.

Commodities

After the strong bearish performance during the previous week, Gold took a breather this week and struggled to close in on the $1,200 level. Price pretty much stayed close to $1,250 throughout the week, and some eager bulls seem to have intervened as if they are seeing bargains. They will need to tackle potential seller ahead of $1,300 and perhaps above this level.

Oil went on to close down for the third straight week. Despite the last-ditch rally on Friday, price closed the week below $93 signifying sellers still have consistent control. Buyers must certainly exert more effort as there are a lot of wood to chop until $95.

Currency Pairs

The activity in EURUSD was subdued last week as bulls found it hard to take out the 1.3600 level for three consecutive days. If this indicates limited upside potential, we may see the pair drift down towards 1.3400-1.3500.

GBPUSD continued to outpace EURUSD for a third straight week as the former surged past its own tough resistance (1.6250-1.6300) with ease. The strong weekly close at 1.6367 gives the pair the extra jolt it needs to take on higher prices.

Meanwhile, USDJPY made another impressive run higher, giving the pair its fifth straight weekly advance. Now that 102 has completely been taken out, we could see an attack on the 103 level. The 60-month high comes in at 103.72.

The Week Ahead

Unlike the past few weeks, Monday will be relatively packed with news. It will begin with New Zealand’s Overseas Trade Index, succeeded by Australia’s Building Approvals and Company Operating Profits; China’s HSBC Final Manufacturing PMI; Japan’s Capital Spending and BOJ Kuroda speech; Manufacturing PMI for Spain, Switzerland (SVME), Italy, UK, and the US. Fed Chairman Bernanke will also give a speech not long after the start of the US session.

UK’s BRC Retail Sales Monitory will kick off Tuesday, followed by Australia’s Retail Sales, Current Account, and RBA Rate Announcement and Statement; China’s Non-Manufacturing PMI; Japan’s Average Cash Earnings; Spain’s Unemployment Change; UK’s Halifax HPI and Construction PMI.

Wednesday will have Australia’s GDP; Spain, Italy, and UK Services PMI; Eurozone Retail Sales; Canada Trade Balance, BOC Rate Announcement and Statement; US ADP Non-Farm Employment Change, Trade Balance, New Home Sales, ISM Non-Manufacturing PMI, and Beige Book.

On busy Thursday, there will be Australia’s Trade Balance; UK Autumn Forecast Statement, Asset Purchase Facility, Official Bank Rate and MPC Rate Statement; ECB Rate Announcement and press conference; Canada’s Building Permits and Ivey PMI; US Preliminary GDP, Jobless Claims, and Factory Orders.

Finally, Friday will remain active with the release of Switzerland’s Foreign Currency Reserves and CPI; UK Consumer Inflation Expectations; Germany’s Factory Orders; Canada and US jobs data; US Core PCE Price Index, Personal Spending, Personal Income, and Prelim UoM Consumer Sentiment.