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Yellen to Head the US Fed, US economic Data Disappoints

On balance, there was a raft of negative economic news this week, particularly from the United States.

On Monday, the Australian Bureau of Statistics said Home Loans surprised to the upside with a 4.4 percent growth in September, beating its median expectation of 3.6 percent. Westpac Banking Corporation reported on Wednesday that the Westpac Consumer index crawled back into positive territory this November, up by 1.9 percent after sliding 2.1 percent in October.

In the UK, Claimant Count Change surprised again last October with a -41,700 reading, its 12th straight monthly decline. The Unemployment Rate declined slightly to 7.6 percent in October. Meanwhile, October Retail Sales slipped 0.7 percent, the Office for National Statistics said on Thursday.

The United States reported plenty of negative news this week. US Jobless Claims increased to 339,000 in the prior week, and the previous week’s reading was revised higher to 341,000 from 336,000. The Empire State manufacturing Index shocked the market with a -2.2 reading for November, when analysts were expecting a growth of 5.2. Import prices slipped more than anticipated, -0.7 percent. Industrial Production for October was also weaker than expected, -0.1 percent.

Meanwhile, Janet Yellen swiftly went through her nomination as the next head of the US Federal Reserve in the Senate Banking Committee’s hearing last Thursday.

Commodities

Gold buyers’ mid-week upside attempt was good enough that they were able to push price back to the weekly open – and this is where it ended the week. The brief plunge toward the $1,260s could be just that – fleeting. Or, we could see another downside test next week.

It was yet another tough week for Oil as sellers continue to put pressure on price. Bulls made an effort early Monday to bring price close to $96; however, sellers were apparently lurking just above $95, and they dominated after pulling price down on Tuesday. Buyers had a very tough time preserving their position above $94 for the rest of the week. Bulls must recapture the $95-$98 area next week.

Currency Pairs

EURUSD closed the week with an inside trading range that spanned a mere 160 pips. Although the 1.3500 level has been breached in late-Friday, price closed the week at 1.3495. We need to see a strong move above 1.3500 this coming week, so that bulls can tackle 1.3600-50.

GBPUSD displayed a much better performance than EURUSD this week, as the former easily cut through and subsequently close above last week’s high. Bulls are undeniably aiming for another fight around 1.6250.

The question in all USDJPY traders’ mind was whether 100 can be hit again, and this was answered with a confident “Yes!” this Friday. The pair reached and broke the 100 level for the first time since September 11, and USDJPY bulls are surely ecstatic about it! Before they celebrate, they need to make sure 100 holds in the coming weeks.

The Week Ahead

Asia will be quiet this Monday. The European session will start off with the Eurozone’s Current Account data, followed by Canada’s Foreign Securities Purchases, US TIC Long-term Purchases, and US NAHB Housing Market Index.

Australia will welcome Tuesday with its CB Leading Index and RBA’s Monetary Policy Meeting Minutes. Next up are ZEW Economic Sentiment for Germany and the Eurozone, and the US Employment Cost Index.  US Treasury Secretary Lew and FOMC members Dudley and Evans will give their respective speeches.

Wednesday will start very early with New Zealand’s PPI Output and PPI Input. Then there will be Japan’s Trade Balance; Germany’s PPI; UK’s MPC Asset Purchase Facility and Official Bank Rate Votes; Switzerland’s Economic Expectations; Canada’s Wholesale Sales; US Retail Sales, Existing Home Sales, CPI, and FOMC Meeting Minutes.

On Thursday, we’ll have China’s HSBC Flash Manufacturing PMI; BOJ Monetary Policy Statement and Press conference; Flash Manufacturing PMI and Flash Services PMI for Germany, France, and the Eurozone; UK CBI Industrial Order Expectations and Public Sector Net Borrowing; US PPI, Flash Manufacturing PMI, Jobless Claims, and Philly Fed Manufacturing Index.

Finally, Friday will end the week with the release of Germany’s Ifo Business Climate, Canada’s CPI and Retail Sales, and US JOLTS Job Openings.

US Shutdown Continues, Yellen New Federal Reserve Chairman

US shutdown enters its third week and it seems that there is no solution in sight. The US senate will now have to expedite the efforts to find a solution to the crisis before the US government reaches its debt ceiling.

In other US news, President Obama chose Janet Yellen to succeed Ben Bernanke as Federal Reserve Chairman. She is expected to maintain the current expansionary policies implemented by the Fed.

US Jobless Claims came in worse than expected, based on the prior week’s data from the Department of Labor. Jobless Claims ballooned by 66,000 to 374,000 and was attributed to the current US government shutdown and a computer system-related backlog in California.

The preliminary University of Michigan Consumer Sentiment dropped to 75.2 in October, the lowest reading since January’s 71.3 reading.

Bank of England decided on Thursday to leave its Official Bank Rate unchanged at 0.50 percent, and its Asset Purchase Facility at GBP375 billion.

UK Manufacturing Production surprisingly contracted 1.2 percent, the most in nearly a year according to the Office for National Statistics on Wednesday. Meanwhile, trade deficit came in more than expected, GBP9.6 billion.

In Canada, a very weak Building Permits figure was reported by Statistics Canada last Monday. Permits sank 21.2 percent on August, falling from the record 21.4 percent gain registered in July. Trade deficit increased slightly to CAD1.3 billion. Meanwhile, Employment Change climbed less than expected, 11,900 (versus 15,300 forecast). On the other hand, Unemployment Rate improved to the lowest in nearly five years, 6.9 percent from the August reading of 7.1 percent.

Commodities

Gold displayed signs of bullish fatigue early this week. Bears took notice and tore down all buying above the $1,300, and bulls quickly retreated. This resulted in four straight days of selling until Friday, pulling price down to its lowest in four months. The risk now is for a move towards the 2013 low (also the three-year low) at $1,180.

Oil has now declined in four out of five weeks and this is bad news for bulls who’ve been trying to aim for a move back toward $110. Just like Gold bulls, Oil bulls struggled on the topside and this paved the way for bears to aim for lower prices, which they succeeded in doing. A sustained break of the $100 level could prove more disastrous.

Currency Pairs

Looking at the weekly chart, EURUSD has been trading close to the 1.3500 level for three weeks now. Bulls must be able to print a strong weekly close at/or above 1.3600-1.3700 to maintain the momentum on their side.

In a matter of a few weeks, GBPUSD has gone from a leader to one of the laggards of the major pairs. Bulls failed close strongly above the 1.6200 level during the prior week, and this opened up the possibility for downside attacks this week. Coupled by a spate of weak UK data, the pair closed the week below 1.6000, a serious indication that bears are increasing their control. If 1.6000 will not be recovered quickly, we could see 1.5600-1.5800 soon.

Thanks to the latest recovery in the Dollar, USDJPY gained considerably this week after playing with fire with the ascending trendline discussed in the previous week. It won’t be smooth-sailing for bulls as they have to contend with sellers around 99.00-100.00.

The Week Ahead

This Monday, we will witness the release of Australia’s Home Loans; China’s New Loans, PPI, and CPI; Switzerland’s PPI; and Eurozone’s Industrial Production. The United States will observe Columbus Day, while Canada will celebrate Thanksgiving Day.

The Reserve Bank of Australia will kick off Tuesday with the disclosure of the latest Monetary Policy Meeting Minutes. This will be followed by UK’s PPI, RPI, and CPI; Eurozone’s and Germany’s ZEW Economic Sentiment; and US Empire State Manufacturing Index.

Economic data release on Wednesday will start very early with New Zealand’s Consumer Price Index. Then, this will be succeeded by UK’s Unemployment Rate, Average Earnings Index, and Claimant Count Change; Eurozone CPI; Canada’s Manufacturing Sales; and US Beige Book.

Thursday would be a rather short news day this week with Australia’s NAB Quarterly Business Confidence; Eurozone Current Account; UK Retail Sales; Canada’s Foreign Securities Purchases; and US Jobless Claims and Philly Fed Manufacturing Index.

Friday will also be a short one with RBA Governor Stevens’ speech; China’s Industrial Production, Gross Domestic Product, and Fixed Asset Investment; BOJ Governor Kuroda’s speech; and Canada’s CPI.

Central Banks Held Rates Steady, US Jobs Data Mixed

It was a very busy week as four central banks made interest rate announcements. The Reserve Bank of Australia, Bank of Canada, Bank of England, and the European Central Bank all maintained their respective rates. RBA’s Cash Rate was held at 2.50 percent, BOC held its Overnight Rate at 1 percent, while both ECB and BOE held rates at 0.50 percent. BOE’s Asset Purchase Facility was also maintained at GBP375 billion.

The UK had quite a stellar week as Manufacturing PMI, Construction PMI, and Services PMI topped their respective estimates (57.2, 59.1, and 60.5, respectively).

US Non-Farm Employment Change missed expectations for its August reading, increasing 169,000 compared to its 178,000 estimate. August Unemployment Rate improved slightly to 7.3 percent, according to the Bureau of Labor Statistics.

Meanwhile, Canada’s Employment Change increased 59,200 in August, while the Unemployment Rate also improved, from 7.2 percent to 7.1 percent. Ivey PMI jumped to 51.0 from 48.4 in the previous month.

Commodities

Gold’s $1,400 level has been pivotal in this week’s trading, but in the end bears were able to close the week slightly on their side. Next week, focus will remain on whether the level can put a lid on price. Near-term areas to watch are $1,350 and $1,430-50.

Oil had another volatile week, and like last week bulls had the upper hand. Unlike the other week, though, bulls completely dominated in this week’s trading, making deep discount buys since early Monday and pushing price upward through $110. In the process, weekly price closed at the highest level since May 2011. It would be fascinating to see whether bulls can continue the momentum next week.

Currencies

EURUSD weakness persisted this week but bears had trouble getting through the 1.3100 level. The pair bounced on Friday but it was not enough to reverse the weekly decline. Key areas to watch next week are 1.3000-1.31000 and 1.3300.

The downside trendline capping USDJPY since May has been duly broken this week. But after the brief excursion above 100.00, the pair has been slammed down very hard on Friday. Price reached a 98.53 low before it was able to close the week just above 99.00. Bulls should make another attempt at closing above 100.00 next week.

GBPUSD had a pretty smooth ride upward, thanks to several favorable data released this week. The steady climbed started near 1.5500 and the pair rose all the way up through 1.5650, topping just ahead of 1.5700. The August top at 1.5716 is looming and bulls should try to blast through it this coming week.

The Week Ahead

The second week of September will turn out to be evenly busy.

On Monday, watch out for Japan’s Current Account and Final GDP; Australia’s Job Advertisements and Home Loans; China’s PPI, CPI and New Loans; Switzerland’s Retail Sales; and Canada’s Building Permits.

On Tuesday, traders will keep an eye on Japan’s Monetary Policy Meeting Minutes and Tertiary Industry Activity; Australia’s NAB Business Confidence and MI Inflation Expectations; China’s Industrial Production and Fixed Asset Investment; BOE Credit Conditions Survey; US JOLTS Job Openings.

On Wednesday, there will be Japan’s BSI Manufacturing Index; Australia’s Westpac Consumer Sentiment; UK Claimant Count Change and Unemployment Rate.

On Thursday, RBNZ will have its Rate Announcement and Monetary Policy Statement. Other noteworthy releases include Japan’s Core Machinery Orders; Australia’s Jobs data; ECB Monthly Bulletin; UK’s Inflation Report Hearings; US Unemployment Claims and Import Prices.

Friday ends the week with New Zealand’s Business NZ Manufacturing Index; Switzerland’s PPI; ECOFIN Meetings and Eurogroup Meetings; US Retail Sales, PPI, and Preliminary UoM Consumer Sentiment.

Raft of Economic Data Ends the Month of August

The final week of August started out very quietly but this all changed as the week wore on.

Orders for US Durable Goods tumbled greater than estimated after three continued monthly advances. Purchase orders for durable goods fell 7.3 percent in July led by capital goods and aircraft, according to the Census Bureau. Core Durable Goods Orders eased for the second month at minus 0.6 percent.

US CB Consumer Confidence climbed to 81.5 in August from last month’s 81.0 reading. This is the third index reading above the 80 level.

US Pending Home Sales contracted, according to the latest report from the National Association of Realtors. Pending sales of existing homes declined 1.3 percent in July, a greater decline than forecast. The rise in mortgage rates is causing concern, putting pressure on Pending Home Sales which has now declined for the second month.

The US economy grew more than expected in the second quarter of this year, the Bureau of Economic Analysis said on Thursday. Preliminary Gross Domestic Product advanced 2.5 percent, compared to the median estimate of 2.2 percent.

US Core PCE Price Index, Personal Spending, and Personal Income all came in at 0.1 percent in July. All were also below their respective forecasts.

In other news, Private Capital Expenditure in Australia surged 4.0 percent (seasonally adjusted) in the June quarter 2013. This puts it back in the black after capital expenditure of private business slumped 4.1 percent in the first quarter of this year.

Meanwhile, in the United Kingdom, the Confederation of British Industry reported Wednesday that CBI Realized Sales jumped to 27 in August, following July’s equally-impressive advance to 17.

Commodities

Bullish momentum in Gold fizzled out as the week progressed. Gold advanced for five days since August 22, but the fifth day saw a marked about-face after price met sellers around the $,1420-50 area. From there, it was all downhill until the Friday close, when bulls had still attempted to print a weekly close above $1,400—but failed. Next week, bulls should strive for a move back up; otherwise, expect $1,350-80 or even lower.

Oil became active and perky this week as news and speculation about a potential attack on Syria has been doing the rounds throughout the internet. From $105.80s on Tuesday, price shot up past $112 before closing the day in the mid-$109s. Expect further volatility in the coming days or weeks.

Currencies

EURUSD failed to capitalize on the recent consolidation this week and slipped through 1.3300 and even 1.3200 before New York closed on Friday. If bearish momentum continues next week, the pair will target the 1.3100 level, ahead of which is where the 200-day MA lies.

USDJPY remained range-bound below the 99.00 level for a fourth straight week. Risk aversion in relation to the potential attack on Syria could provide a lift to JPY in the following weeks. Trading range has tightened up further; hence expect a burst of volatility soon.

Despite a bullish close on Monday, it was all downhill for GBPUSD throughout this week after bulls failed to make price close above 1.5600 since Thursday. Next week, bulls need to move it back above 1.5600 so they can attack stops toward a break of 1.5700.

The Week Ahead

The start of the new month sees a barrage of economic data this week.

On Monday, there will be New Zealand Overseas Trade Index; Japan’s Capital Spending; Australia’s Building Approvals and Company Operating Profits; China’s HSBC Final Manufacturing PMI; Spain’s, UK’s, and Italy’s Manufacturing PMI; Switzerland’s SVME PMI. Canada and the US are on holiday to celebrate Labor Day.

On Tuesday, traders will focus on China’s Non-Manufacturing PMI; Australia’s Current Account, Retail Sales, Interest Rate Announcement, and RBA Rate Statement; Spain’s Unemployment Change; UK Construction PMI; and US ISM Manufacturing PMI.

Australia kicks off Wednesday with the GDP data, followed by UK Halifax HPI; Spain Italy, and UK Services PMI; Eurozone Retail Sales; US and Canada Trade Balance; US Beige Book; BOC Rate Announcement and Statement.

On Thursday, there will be Australia’s Trade Balance; BOJ’s Press Conference and Monetary Policy Statement; BOE’s and ECB’s Rate Announcement and Statement; US Unemployment Claims, ISM Non-Manufacturing, and Factory Orders.

Finally on Friday, the week closes with Germany’s Trade Balance and Industrial Production; Switzerland’s CPI; UK Trade Balance and Manufacturing Production; US Non-Farm Employment Change and Unemployment Rate; Canada’s Ivey PMI, Employment Change and Unemployment Rate.

Federal Reserve Open Market Committee: QE Could Be Tapered Later This Year

According to the latest Federal Reserve Federal Open Market Committee Meeting Minutes, majority of the FOMC participants were “broadly comfortable” with the tapering of the asset purchases “later this year.” The minutes also noted that domestic economic activity has progressed at a moderate pace during the first half of 2013, labor conditions improved, while jobless rate continues at an elevated pace.

US Unemployment Claims grew more than expected in the prior week at 336,000. Meanwhile, the National Association of Realtors said Existing Home Sales advanced 5.39 million in July, its quickest pace since November 2009. On the other hand, the Census Bureau reported New Home Sales plunged to just 394,000 in July and the June reading was revised down to 455,000 from its initial reading of 497,000.

In other news, Flash Manufacturing PMI and Flash Services PMI data were released across Europe. France had them at 49.7 and 47.7, Germany at 51.3 and 51.0, and Eurozone at 52.0 and 52.4, respectively.

UK’s Second Estimate Gross Domestic Product went up 0.7 percent during the second quarter of the year, thanks to advances in manufacturing, construction, and trade. Preliminary Business Investment also increased, 0.9 percent, during the same period.

 Commodities

Gold marched higher for a third straight week and bulls just missed the $1,400 level a few hours before the week ended. It would be interesting to see if there are remaining bears lurking around and above the $1,400 level. We expect layers of resistance ahead of $1,500. Higher targets include $1,550-$1,630.

Tug-of-war rages on in Oil for a seventh straight week. Infighting between bulls and bears focus mainly between $103 and $108 within the broader $102-$109 range. Overall, the risk is slightly to the downside if the weekly declining peaks are a good indication. Expect the consolidation to persist until we get a decent break out of this range.

Currencies

EURUSD managed to complete its third bullish weekly close despite whipsaw moves during several trading sessions. The pair made a fleeting excursion above 1.3400, but overall the level capped throughout the week. We could see bullish attempts to break beyond this level next week.

Thanks to Dollar recovery, USDJPY has emerged successful in this trading week following last week’s achievement in defending the 96.00 level. To keep the momentum going, bulls need to launch a stronger attack to 100-101.50 starting this coming week.

GBPUSD went from a leader to a laggard after the pair failed to hold on to its gains above the 1.5700 level. This move broke the string of weekly advances which started in the low-1.5200s. Despite this, bulls are still ahead but they need to maintain support at 1.5500 if any attacks surface next week.

The Week Ahead

On Monday, there will only be New Zealand’s Trade Balance and US Durable Goods Orders. UK banks will observe the Summer Bank Holiday.

On Tuesday, traders will only have to look at Germany’s Ifo Business Climate and US CB Consumer Confidence.

Economic releases pick up the pace on Wednesday with Australia’s Construction Work Done; Gfk German Consumer Climate; Eurozone M3 Money Supply; UK CBI Realized Sales and BOE’s Carney speech; and US Pending Home Sales.

On Thursday, there will be Japan Retail Sales; New Zealand’s ANZ Business Confidence; Australia’s Private Capital Expenditures; Germany’s Preliminary CPI; Switzerland’s Employment Level; Canada’s Current Account and RMPI; and US Preliminary GDP and Unemployment Claims.

Finally August ends on Friday with Japan’s Household Spending, Preliminary Industrial Production, and Tokyo Core CPI; Australia’s Private Sector Credit; Germany’s Retail Sales; UK Nationwide HPI and Net Lending to Individuals; and US Chicago PMI and Revised UoM Consumer Sentiment.

Bank of England Votes in Favor of QE and Bank Rate Status Quo

The Bank of England’s Monetary Policy Committee remained in consensus in terms of Asset Purchase Facility and Official Bank Rate votes, but not in terms of forward guidance. The committee voted unanimously in favor of retaining the QE and the bank rate. However, Martin Weale dissented, in favor of a stricter stance with regards above-average inflation.

UK Claimant Count Change has declined for the ninth straight month, decreasing a little over 29,000 in July. Unemployment Rate stood at 7.8 percent for the fourth straight month. Retail Sales increased 1.1 percent, following the prior month’s mild 0.2 percent gain.

In other news, New Zealand posted a surprise increase in the June quarter Retail Trade Survey. According to Statistics New Zealand, Retail Sales rose 1.7 percent, the second strongest reading in the last six quarters. Core Retail Sales was nearly double than expected, 2.3 percent.

The US Empire State and Philly Fed Manufacturing Index both disappointed with readings of 8.2 and 9.3. Analysts were expecting above 10-level readings. The same happened with the Preliminary reading of the University of Michigan Consumer Sentiment, which stood at 80.0 compared to 85.6 expectations by analysts surveyed.

Commodities

Gold launched the week with a good start and ended in the same fashion, maintaining its stance above the $1,300 level all the way through. With fresh momentum on the side of the bulls, they are ready to tackle remaining bear defense lurking around $1,400. Layer of resistances are scattered through $1,500.

Oil completed the week with five straight days of advances, bringing price closer to fulfilling the expected triple top. There is a potential thick layer of defense around $108-$109, so buyers need to be extra vigilant.

Currencies

EURUSD managed a V-shaped recovery after blasting higher by more than 150 pips on Thursday, effectively erasing the losses built on the early part of the week. Bulls will surely aim for a trek above the 1.3400 level this coming week.

USDJPY started the week well bid but a significant turnaround happened on Thursday which thwarted a great bullish advance. Based on this price action, it appears bears remain in control; hence bulls need to act with conviction next week in order to significantly reverse the bearish momentum.

GBPUSD led the majors this week as the pair rocketed above the 1.5600 level after breaking away from the sticky 200-day MA which influenced price for a week. Bullish target this week could go as high as 1.5800-1.5900. Before that, June’s 1.5750 high needs to be taken out of the way.

The Week Ahead

The coming week is rather quiet relative to its normal state.

On Monday, there will only be New Zealand’s PPI Input; Japan’s Trade Balance; Australia’s New Motor Vehicle Sales.

On Tuesday, traders will focus on Australia’s Monetary Policy Meeting Minutes; New Zealand’s Inflation Expectations; Germany’s Producer Price Index; Canada’s Wholesale Sales.

Wednesday is unusually quiet, with just a few key releases such as UK Public Sector Net Borrowing and CBI Industrial Order Expectations; US Existing Home Sales and FOMC Meeting Minutes.

Thursday tops the week with the most releases, particularly Australia’s CB Leading Index; China’s HSBC Flash Manufacturing PMI; Eurozone, France, and Germany Flash Manufacturing PMI and Flash Services PMI; US Unemployment Claims and Flash Manufacturing PMI; Canada’s Retail Sales

Finally on Friday, the week winds down with the release of Germany’s Final GDP; UK Second Estimate GDP, Prelim. Business Investment, and BBA Mortgage Approvals; Canada CPI; and US New Home Sales. The Jackson Hole Symposium, to be held in Wyoming, will also start today and is expected to end on Sunday.

Fed, ECB, BOE Rates Unchanged, US Jobs Data Disappoints

The US Federal Reserve, European Central Bank, and the Bank of England all decided to leave rates unchanged this week. The Fed left its rate at less than 0.25 percent, while the ECB and BOE declared they have held their respective rates at 0.50 percent.

The US Non-Farm Employment Change, one of the key economic data releases this week, showed on Friday that there were 162,000 new Americans employed in July, according to the US Bureau of Labor Statistics. The ADP Non-Farm Employment Change released Wednesday was way off with a 200,000 reading. Unemployment rate stood at 7.4 percent, and Average Hourly Earnings eased 0.1 percent for the same period.

The National Association of Realtors said US Pending Home Sales eased 0.4 percent in June after posting a 5.8 percent gain last May.

US ISM Manufacturing PMI leapt to 55.4 in July from June’s 50.9 reading.

In other news, UK Manufacturing PMI and Construction PMI improved considerably in July, rising 54.6 and 57.0 respectively, reports from Markit showed.

Japan’s Household Spending surprisingly declined in June. Consumer spending eased 0.4 percent when analysts expected a modest 1.2 percent gain, on the back of May’s 1.6 percent decline. Unemployment Rate improved slightly to 3.9 percent from the previous month’s 4.1 percent, while June’s Preliminary Industrial Production contracted 3.3 percent, following May’s 1.9 percent advance.

Commodities

Gold has been moving lower for most of the week until Friday’s US jobs data came along. Price broke through the recent consolidation and touched a $1,283 low before it popped higher. The upside pop enabled Gold to close the week above the $1,300 level, after testing support below the level. Bulls escaped the drop through the consolidation this time, but the considerable task of breaking through the consolidation top situated at $1,347 is up ahead.

Potential double top has been printed in Oil after price drove toward the July 19 high and reversed quickly. With the weekly close just below $107, price could try to revisit $105 early next week. Price could stay in the $102-$108 area for quite some time.

Currencies

It was another tough and relatively whipsaw-y week for EURUSD as the pair moved quite erroneously by mid-week after the recent ranges got pulverized on both sides. Control changed hands between bulls and bears, but ultimately price ended up virtually unchanged for the week. Slight advantage goes to the buyers based on their performance on Friday. 1.3400-50 remains as the key upside area to break.

USDJPY bulls raged on Thursday to bring price nearly 200 pips higher, but Friday’s US jobs data spoiled the ascent and erased about half of Thursday’s gains. Bulls should continue to support price around the 97.50-98.50 area in the coming week.

GBPUSD was down all throughout the week except on Friday when bulls tried to salvage price from the 1.5102 lows off of the release of the weaker-than-expected US jobs data. That data pop higher managed to recover more than half of the week’s decline but it was not enough to make price close above the 1.5300 level. Next week, buyers should aim for a move back toward 1.5400-50.

The Week Ahead

Unlike the previous weeks, Monday will be relatively active with the release of Australia’s Retail Sales; UK Halifax HPI; Spain, Italy, the UK, and Euro-area Services PMI; Euro-area Retail Sales; US ISM Non-Manufacturing PMI

Tuesday activity will come in the form of UK BRC Retail Sales Monitor; Australia’s Trade Balance, Interest Rate Announcement and Statement, and HPI; UK Manufacturing and Industrial Production and NIESR GDP Estimate; Germany Factory Orders; Canada and US Trade Balance; US JOLTS Job Openings.

Wednesday starts early with New Zealand Employment Change and Unemployment Rate; followed by Australia’s Home Loans; Switzerland’s SECO Consumer Climate and Consumer Price Index; BOE Carney speech and BOE Inflation Report; Canada’s Ivey PMI and Building Permits.

On Thursday, there are Japan’s Current Account, Bank Lending, and Monetary Policy Statement; Australia’s Employment Change and Unemployment Rate; China’s Trade Balance; Germany’s Trade Balance; ECB Monthly Bulletin; Canada’s NHPI; and US Unemployment Claims.

Friday ends the week with RBA Monetary Policy Statement; China’s New Loans, Fixed Asset Investment, Industrial Production, Retail Sales, PPI and CPI; UK Trade Balance; and Canada jobs data.

RBNZ Hawkish Bias Emerges; Dollar Weakness Persists Ahead of US Rate Announcement

The Reserve Bank of New Zealand decided to maintain its Official Cash Rate at 2.5 percent as widely expected by analysts surveyed. RBNZ Chief Graeme Wheeler pointed out the elevated house price inflation seen specifically Auckland and Christchurch, and this suggests a mild bias to hike rates by next year. RBNZ expects rates to stay the same for the rest of this year.

In other news, Japan’s Shinzo Abe took victory in the Upper House elections held last Sunday. 74 of the 121 Upper House seats went to Abe’s Liberal Democratic Party as well as the coalition partner, the New Komeito, providing them a favorable majority in the Upper House, and thereby ceasing the parliamentary stalemate which has been ongoing for the last 6 years.

The labor market in Spain exhibited a sign of improvement. Jobless rate fell to 26.3 percent in the June quarter. This follows seven consecutive quarters of unwelcome advances.

Orders of durable goods in the United Stated surged 4.2 last June, rising much more than 1.1 percent expectations, according to a Census Bureau report on Friday. Meanwhile, Core Durable Goods was flat for the same period.

Commodities

Gold finished a strong week in favor of the bulls. The bullish week started early with the break through $1,300 on Monday. $1,350 was attacked early as well, but it was surprisingly well protected for four straight days. Bulls should see a break of this level next week if they can continue supporting $1,300 against further attacks.

After four straight weeks of bullish exuberance, oil finally printed a bearish week soon after price encountered difficulties sustaining the lofty $108 level. Sellers did not waste time and started the bearish momentum on early Monday, depressing price through several levels and closed the week in the mid-$104s. Downside, the key area to watch is $102-$104.

Currencies

Another triumphant week ensued for EURUSD as buyers managed to course through 1.3200 with ease. Now, the pair is set to break the 1.3300 level and continued bullish momentum would see price visit the 1.3400 area soon. On the downside, sellers would have to contend with the strong support around 1.3150-1.3200.

As expected, USDJPY continued to have a difficult time trading through 100.00-50 and this led to a downside move this week. Support around 99 quickly crumbled and this prompted a dash towards 97.95 before the week closed at 98.27. The outlook remains bearish especially if 97-98 fails to hold the line for the bulls.

Just like EURUSD, GBPUSD rose for the third consecutive week on the back of a weak Dollar and to some extent the favorable UK GDP data. The next area of interest is 1.5550-1.5600 ahead of 1.5700. Buyers must remain vigilant as 1.5150-1.5300 is still vulnerable.

The Week Ahead

Monday will begin early with Japan’s Retail Sales; followed by UK’s Net Lending to Individuals, Mortgage Approvals, M4 Money Supply, and CBI Realized Sales; and US Pending Home Sales.

Tuesday will get more active with New Zealand’s Building Consents; Japan’s Household Spending, Preliminary Industrial Production, and Unemployment Rate; Germany’s Gfk Consumer Climate and Preliminary CPI; Spain’s Flash GDP; Eurozone Retail PMI; Canada IPPI and RMPI; US S&P/CS Composite-20 HPI and CB Consumer Confidence.

Wednesday will see the release of UK BRC Shop Price Index and Gfk Consumer Confidence; Japan Manufacturing PMI and Housing Starts; New Zealand’s ANZ Business Confidence; Germany’s Retail Sales and Unemployment Change; Italy’s Unemployment Rate; Eurozone CPI Flash Estimate and Unemployment Rate; US ADP Non-Farm Employment Change, Advance GDP, Chicago PMI, FOMC Statement and Federal Funds Rate.

Thursday will witness the greatest action of the week with China’s Manufacturing PMI and HSBC Final Manufacturing PMI; UK Halifax HPI; Spain, UK, and Italy Manufacturing PMI; Eurozone Final Manufacturing PMI; UK’s BOE and Eurozone’s ECB Rate Announcements and Statements; US Unemployment Claims, ISM and Final Manufacturing PMI.

Friday ends the week with Japan’s Monetary Base; Australia’s PPI; US Unemployment Rate, Non-Farm Employment Change, Core PCE Price Index, and Factory Orders.

Bernanke Perpetuates the QE-Taper Guessing Game

Bernanke testified on the Semiannual Monetary Policy Report before the House Financial Services Committee and the Senate Banking Committee on Wednesday and Thursday, respectively. The central theme of his fairly dovish testimony was that the pace of bond purchases does not move on a preset course, and “highly accommodative policy is appropriate for the foreseeable future.” He expressed that the stimulus could cease around this time in the subsequent year assuming that the economy advances as expected.

In other news, the United States Empire State Manufacturing Index jumped to 9.5 in July, while the US Philly Fed Manufacturing Index also did very well and surged to 19.8.

Bank of England’s Monetary Policy Committee voted 9-0-0 in favor of keeping the Official Bank Rate at 0.50 percent and Asset Purchase Facility at GBP375 billion. Meanwhile, UK Claimant Count Change fell by 21,200 in June, a three-year high.

Bank of Canada on Wednesday maintained its overnight rate target at 1 percent, with the Bank Rate at 1.25 percent and the deposit rate at 0.75 percent, respectively.

Commodities

Gold went up despite the very tight trading range encountered this week. The $1,300 level continued to suppress bullish enthusiasm but the downside was easily capped at $1,270. Bulls should ensure a strong push higher next week; otherwise, bears would seize any opportunity to sink price back through the $1,200 level.

Another solid trading week transpired in oil as price reached for its third fresh weekly highs, this time rising through the $108 level. Additional bullish support should come in around $105-$107 to prop up price further into the new week and through the coming new month.

Currencies

It was a tough week for EURUSD as the pair moved around a tight range, trading very close to the 200-day MA all throughout the week. The pair managed to trade mostly above the 1.3100 level. Bernanke’s testimony didn’t ruffle too many feathers and the pair could see a continuation of the climb next week. For that to happen, bulls must conquer 1.3200 convincingly, ideally before mid-week.

USDJPY bulls attempted to take out the 100.00-50 area for nearly two weeks and they succeeded this time. However, the advance has not been easy for buyers, and so they are still expected to gather enough support to push for a key break of 101.50 in the coming week.

GBPUSD beat EURUSD this week as the former was able to form a higher weekly high and close, breaking through the 1.5200 level at the same time. If the pair successfully pushes above 1.5300, not much is expected to be in the way towards the 200-day MA around 1.5588.

The Week Ahead

Monday is all quiet except for the release of the US Existing Home Sales data.

Tuesday is a little bit more active with UK’s BBA Mortgage Approvals; Canada’s Retail Sales; US HPI and Richmond Manufacturing Index; Eurozone Consumer Confidence.

Wednesday sees the release of New Zealand and Japan Trade Balance; Australia CPI; China’s HSBC Flash Manufacturing PMI; France, Germany, and Eurozone Flash Manufacturing and Services PMI; UK CBI Industrial Order Expectations; US Flash Manufacturing PMI and New Home Sales.

On Thursday, New Zealand’s central bank will announce its rates. This will be followed in the afternoon by Spain’s Unemployment Rate; Germany’s Ifo Business Climate; Eurozone M3 Money Supply; UK Preliminary GDP; US Unemployment Claims and Durable Goods Orders.

Friday quiets down significantly, with only Tokyo Core CPI, Germany’s Import Prices, and US Revised UoM Consumer Sentiment.

Slew of Favorable US Data Continues while the USD Strengthens

It was another favorable week for the United States with the release of several forecast-beating economic data.

The US Census Bureau announced that the Durable Goods Orders increased 3.6 percent in May, led by demand for trucks and cars, while Core Durable Goods Orders inched up 0.7 percent.

The Standard & Poor’s/Case-Shiller Composite-20 House Price Index rose by most in the last seven years to 12.1 percent in April, beating the median forecast of 10.6 percent. The current reading is the eleventh straight monthly climb.

The Consumer Confidence report showed an advance to 81.4 in June, stronger than the 75.2 estimate. This was a huge jump from the previous revised reading of 74.3 (down from the initial reading of 76.2).

The US New Home Sales also increased in May to 476,000, beating its respective forecast for the second straight month. Sales have now been maintained in the 400,000 level for the fifth straight month.

The University of Michigan Consumer Sentiment capped the week with an 84.1 reading for June, keeping the sentiment index in the 80 level for the second month.

Meanwhile, the notable weak US data results came from Final GDP and Chicago PMI. Both came in weaker than expected at 1.8 percent and 51.6, respectively.

In other news, Statistics New Zealand reported a growth of NZD41 million in Overseas Merchandise Trade—the weakest gain in four months. Exports slid 7.8 percent, led by the 48 percent export decline of crude oil. Analysts were expecting an NZD412 million advance.

In Japan, Preliminary Industrial Production surprised with a 2 percent gain in May, a METI report showed last Friday. The fifth consecutive monthly gain came as a surprise since analysts were expecting a mere 0.2 percent advance after a substantial 1.7 percent growth in April. Retail Sales edged up 0.8 percent in April, following a -0.2 percent reading back in March and three more monthly declines. Housing starts jumped 14.5 percent.

Commodities

Gold declined significantly for another week, sinking $121 this time ($122 last week). After moving down to $1,1180, price made a quick up burst during the final two hours on Friday, climbing $47 to create this week’s only positive daily close at $1,233—near the midpoint of this week’s decline. Bulls should consolidate their efforts for a very quick move toward $1,400 this coming week.

Oil moved opposite to Gold for the entire week. On Friday, the climb above the $97 level lost support, pulling price back to the $96s where it ended during the Friday close. Nevertheless, it was an up week for Oil and another test of $97-$99 could happen again in the subsequent days.

Currencies

EURUSD made a follow-through decline this week after registering a 315-pip bearish engulfing candlestick in the previous week. The 1.3000 level is in very serious danger of getting blown out in the coming week. Bulls must fortify their defenses at the said level.

USDJPY made an impressive, albeit slow, recovery since June 17, printing positive closes in 8 of the last 10 trading days. The pair comfortably closed above 99 on Friday, and this sets up a possible march toward the 100-101 area in the coming weeks. Buyers must remain supportive of any price declines.

Except for Monday, GBPUSD bears trashed a lot of bulls throughout this week, sinking price through the 1.5200 level before closing the week slightly above this level. Based on the current price action, the pair is poised to make another attack on the 1.5000-1.5150 area. Buyers should vehemently oppose further declines in the new week.

 The Week Ahead

The coming week is the start of a new month; hence it will be evenly lively with a slew of economic data releases.

Monday features the release of Japan’s Tankan data; China, Italy, Spain, and the UK Manufacturing PMI and Swןtzerland PMI; Eurozone PMI, Unemployment Rate, and CPI Flash Estimate; and US ISM Manufacturing PMI.

On Tuesday, there are Japan’s Average Cash Earnings; RBA Rate Announcement and RBA Rate Statement; UK Construction PMI; and US Factory Orders.

Wednesday sees the release of Australia’s Trade Balance and Retail Sales; Eurozone, UK, Italy, and Spain Services PMI; Eurozone Retail Sales; Canada and US Trade Balance; US Unemployment Claims, ADP Employment data, and ISM Non-Manufacturing PMI.

Thursday features the release of Australia’s Building Approvals; UK Asset Purchase Facility; BOE and ECB Rate Announcement and Statement.

Finally on Friday, the market will witness the release of Switzerland’s CPI; German Factory Orders; Canada Ivey PMI; and US and Canada Employment Data.