Forex News

Currency Trends & Insights

EURUSD

Busy Week Ends August Well for US; NZ Posts Poorer Trade Balance Data

Statistics New Zealand reported that exported goods’ value sold in July declined 3.3 percent compared to a year ago, and this put the Trade Balance to –NZD692 million, far weaker than the –NZD475 million expected by analysts. Moreover, the June data was revised down slightly, from NZD247 million to NZD242 million.

In the United States, Durable Goods Orders surged 22.6 percent in July as commercial aircraft demand increased on record bookings. The actual number was almost thrice what analysts have expected. The core reading dipped 0.8 percent following a 1.9 percent increase in June. The June headline reading, meanwhile, has been revised higher to 1.7 percent from 0.7 percent.

The Conference Board in the US reported that Consumer Confidence hiked to 92.4 in August, staying above the 90 level for the second consecutive month. Meanwhile, Prelim GDP rose 4.2 percent while Pending Home Sales jumped 3.3 percent in July. Chicago PMI and Revise University of Michigan Consumer Sentiment were also in the green at 64.3 and 82.5, respectively.

Commodities

Gold printed an inside bar this week as bulls struggled to gain a foothold of the $1,300 level. Price traded within a $22 range and it barely closed in the green. The lack of bullish confidence to break through $1,300 is a concern, but bulls can still make up for lost time in the coming week. If they don’t, we could see price roll down further toward $1,250.

Oil also closed to the upside with an inside bar this week, but the former considerably fared much better in terms of weekly close. That does not mean Oil is out of harm’s way; Bears are targeting a break of $93 so they can ease their way toward $90-$91. Bulls need a move back through $100 to feel a bit safer.

Currency Pairs

EURUSD’s downside gap this week has been very concerning especially if we consider the fact that it happened after 6 weeks of consecutive declines. The pair is now approaching the 1.30-1.31 area which it has never seen since mid-July of 2013. We need to see a weekly bullish close above 1.3200-1.3300 in the coming week to trim the ever-growing bearish momentum.

Unlike EURUSD, GBPUSD was able to close in the green this week, the first time it ever did since the June-July transition. The preferable scenario for this pair is to see a strong close through 1.6600 and 1.6700.

USDJPY had seen an interesting situation this week as price closed the week in the red but comparatively higher than last week’s close. This could be an indication of a tug-of-war which I alluded to during the prior week, as USD and Yen supporters vie for control. Price action-wise though, bulls won and they are aiming for 105 right now.

The Week Ahead

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

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

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

China will kick off Wednesday with the Non-Manufacturing PMI, followed by Australia’s GDP data and RBA Governor Stevens’ speech; UK Halifax HPI; Italy, Spain, and UK Services PMI; Eurozone Retail Sales; BOC Rate Announcement and Statement; and US Factory Orders and Beige Book.

Thursday will remain busy with Australia’s Retail Sales and Trade Balance; BOJ’s Press Conference and Monetary Policy Statement; BOE’s and ECB’s Rate Announcement and Statement; US Unemployment Claims, ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, and Trade Balance; and Canada Trade Balance.

Finally on Friday, the week will end with Japan’s BOJ Monthly Report; Germany’s Industrial Production; Switzerland’s Foreign Currency Reserves; US Non-Farm Employment Change and Unemployment Rate; Canada’s Ivey PMI, Employment Change and Unemployment Rate.

EU, UK & Australia Interest Rates on Hold; Canada, NZ, Australia Jobs Outlook Diverge

All three major central banks who met this week have decided to maintain their respective rates. The Reserve Bank of Australia, European Central Bank, and Bank of England all maintained their rates (2.50 percent, 0.15 percent, and 0.50 percent, respectively).

On the global employment front, New Zealand led with a better-than-expected Unemployment Rate of 5.8%, while the Employment Change grew 0.4 percent (versus 0.7 percent forecast). Canada’s Employment Change grew only 0.2k (versus 25.4k forecast), with the Unemployment Rate coming in at 7 percent as expected. Meanwhile, Australia posted the worst statistics among the three as the Australian Bureau of Statistics reported that Employment Change declined 0.3k (when analysts expected a 13.5k advance) and Unemployment Rate soared to 6.4 percent, the highest reading since late-2002. Spain’s Unemployment Change posted -29.8k (-116.3k forecast).

Commodities

Gold made a strong recovery this week after suffering from three consecutive weekly declines. Price took out the $1,300 level quite easily and is now looking to cement support in that area. If it can do this successfully, then we can expect a move to test sellers around $1,350-$1,400.

Oil ended the week in the middle of $97 after a $2 decline which transpired. Price action showed a marked contrast from the previous week’s $5 drop. Bulls have a chance to bring price back up toward $100. Otherwise, bears can swing this back to their control and aim for a break of $95-$96 this week.

Currency Pairs

EURUSD hit its fourth straight weekly decline this week; however it has become apparent that bulls are getting more restless. If we can get a weekly close above 1.3400, we could see bulls fight back very soon.

GBPUSD continued to decline this week, marking its fourth consecutive weekly decline. The weekly close ended near the weekly low, indicating there is still a lot of bearish momentum in this pair. Sellers are still on track to reach 1.6700 if their control over this pair persists throughout the week.

USDJPY saw a tug of war between the USD and JPY as each jostled for supremacy in this week’s price movements. JPY got the upper hand, though, and this enabled the pair to close the week in its favor. However, 102 seems to be providing support so anything can happen this week. Bulls want a move through 103, while bears need a decisive break below 102.

The Week Ahead

Monday will largely be quiet with only a few economic releases, such as Japan’s Tertiary Industry Activity; Switzerland’s Retail Sales; and Canada’s Housing Starts.

Tuesday will start quite early with UK’s BRC Retail Sales Monitor. This will be followed by Australia’s NAB Business Confidence and HPI; China’s New Loans; Germany and Eurozone ZEW Economic Sentiment; and US JOLTS Job Openings.

Wednesday will get very busy with Japan’s BOJ Monetary Policy Meeting Minutes and Prelim GDP; Australia’s Wage Price Index and Westpac Consumer Sentiment; China’s Industrial Production and Fixed Asset Investment; UK Average Earnings Index, Jobless Rate, and Claimant Count Change, as well as BOE Inflation Report; Eurozone’s Industrial Production; US Retail Sales and Business Inventories.

Thursday will be equally as busy with New Zealand’s Business NZ Manufacturing Index and Retail Sales; Japan’s Core Machinery Orders; Australia’s MI Inflation Expectations; France’s Prelim GDP and Prelim Non-Farm Payrolls; ECB Monthly Bulletin; Eurozone CPI and Flash GDP; US Jobless Claims and Import Prices.

Friday, meanwhile, will have moderate news activity with UK’s Second Estimate GDP; Canada’s Manufacturing Sales; US PPI, TIC Long-Term Purchases, Empire State Manufacturing Index, Industrial Production, Capacity Utilization Rate, and Prelim UoM Consumer Sentiment.

Fed Puts Rate on Hold Again; US Unemployment Rate Retrogresses

The US Federal Reserve has decided on Wednesday to keep rates on hold as expected. Spotlight was then focused on US jobs numbers which came out weaker than expected. The Bureau of Labor Statistics reported that Non-Farm Employment Change grew less than expected in July, 209,000 versus 231,000 forecast. The actual number was lower than the 218,000 ADP Non-Farm Employment Change published on Wednesday. The surprise came from the Unemployment Rate number, which worsened to 6.2 percent, following three consecutive months of better-than-actual readings.

In other US news, Pending Home Sales dipped 1.1 percent in June, following a 6 percent advance in the prior month. The July CB Consumer Confidence index improved further to 90.9 in July, the highest reading since January of 2008. Chicago PMI fell 10 points to 52.6 in July.

In other news, Australia’s Building Approvals for June dropped 5 percent, following the 10.3 percent increase in May. Meanwhile, PPI surprised with a 0.1 percent dip in June.

Commodities

Gold formed its third consecutive bearish weekly candle after sellers managed to push the price down through the $1,300 level. If this level holds in the coming weeks, expect a move toward $1,250 or even lower.

After last week’s inside bar, Oil dropped like a waterfall as sellers piled in through stops below $100. Price declined just a little over $5 to reach the lower $97s, prices unseen since early-February of this year. A thick zone of resistance may have now formed above $100, so bears may have an easier time pounding oil in the next few days or weeks. If bearish momentum will persist, downside target will be $90-$91.

Currency Pairs

EURUSD hit its third bearish weekly close this week (nearly hitting the mentioned area at 1.3300-50), although Friday’s price action eradicated most of the week’s decline. The move is not surprising considering this pair has been relentlessly on-sided since the start of July. Bulls have an opportunity to recover, but the acid test just right at 1.3500. This level is followed by thick resistance in 1.3600-1.3700.

Bearish sentiment has been more pronounced in GBPUSD than EURUSD, as we have witnessed nearly 100 pips of decline in Sterling this week. Sellers are looking to target 1.6700, but bulls may have a chance to thwart that if the Dollar will decline in the coming week.

USDJPY finally posted two bearish days to contrast from the 9 consecutive bullish days behind it. Sellers came in at the 103 level however the decline has been relatively weak, as price managed to close the week not far behind at 102.60. This could indicate more bullish moves will come in the next few days.

The Week Ahead

Monday will have a spattering of news throughout the day, starting with Australia’s Retail Sales and ANZ Job Ads; Spain’s Unemployment Change; Switzerland’s SVME PMI; and UK’s Construction PMI. Australian banks will be closed to observe Bank Holiday, while Canadian banks observe Civic Day.

Tuesday will have improved news activity with Australia’s Trade Balance and RBA’s Rate Announcement and Statement; UK Halifax HPI and Services PMI; Spain and Italy Services PMI; Eurozone Retail Sales; US Factory Orders and ISM Non-Manufacturing PMI.

Wednesday will have a moderate news activity but will start early with New Zealand’s jobs data; Germany’s Factory Orders; Switzerland’s CPI; UK Manufacturing Production and Industrial Production; Italy’s Prelim GDP; US and Canada Trade Balance;

After Thursday’s jobs data from Australia, the market will focus on Europe with the release of ECB and BOE rate announcements and statements. These will be followed by Canada’s Building Permits and Ivey PMI; and US Jobless Claims.

Friday will still be lively in the news front with Japan’s Current Account and BOJ Monetary Policy Statement and BOJ presscon; Australia’s Home Loans and RBA Monetary Policy Statement; China’s Trade Balance; Germany and UK Trade Balance; France’s Industrial Production; Canada jobs data; and US Prelim Nonfarm Productivity and Prelim Unit Labor Costs.

EURUSD 9 Consecutive Daily Decline, the GBPUSD down for a Second Consecutive Week

The Reserve Bank of New Zealand has decided on Thursday to raise its Official Cash Rate by 25 percentage points to 3.50 percent to contain inflation which currently remains moderate. Reserve Bank Governor Graeme Wheeler stated that amidst the backdrop of weak commodity prices, the New Zealand Dollar’s current level is “unjustified and unsustainable and there is potential for a significant fall”. He said the OCR’s future hiking path is dependent on “the assessment of the impact of the tightening in monetary policy to date, and the implications of future economic and financial data for inflationary pressures.” Meanwhile, the June Trade Balance has beaten expectations, posting NZ$247 million, its second straight monthly surplus.

In the United States, another mixed bag of data was published this week. June Existing Home Sales came in slightly better than forecast at 5.04 million, but New Home Sales registered a much weaker reading (406k vs 485k expected). June Durable Goods Orders and its core reading were both up (0.7 percent and 0.8 percent, respectively). Finally, Jobless Claims trumped expectations for a third straight week (284k vs 310k forecast).

In other news, UK Public Sector Net Borrowing and CBI Realized Sales posted better readings. However, CBI Industrial Order Expectations registered a reading of 2, the third weakest reading in the last 6 months.

Commodities

Gold sat nearly unchanged this week, with just a slight bearish bias although price closed above the $1,300 level. Gold have been pounded by sellers all week, but bulls managed to eke out a substantial gain on Friday after price declined to as low as $1,287 on Thursday. They need to exert more next week to prevent a repeat of this week’s price action. Target remains a break of $1,250.

Oil posted an inside bar this week, as buyers and sellers attempted to gain control. Price ended pretty much unchanged and closed the week just below the $102 area. This puts oil at risk of another round of selling toward $100 in the coming week, unless buyers will act early and push price toward $104 in the first few trading sessions.

Currency Pairs

A EURUSD weekly close above 1.3550-1.3600 never happened, and the pair progressed to clinch what looks like a 9-consecutive daily decline amid the significant bearish tone in this pair. This pair is on track to visit 1.3300-50 in the coming week or so unless bulls will do something to thwart it.

GBPUSD followed EURUSD down for a second consecutive week as the former’s 1.7000 level failed to hold the selling attacks. If bearish momentum intensifies, this pair could easily reach 1.6600-1.6700 in the coming week. On the bright side, there is an opportunity to reclaim the 1.7000 level on that same week.

USDJPY averted another selldown this week thanks to five straight bullish daily closes. Bulls will have to complete the control of 102 next week so they can tackle 103 and 104 and get out of the current consolidation. On the downside, they must keep a strong support at 101.

The Week Ahead

Monday’s news activity will be very brief with only US Flash Services PMI and Pending Home Sales on the cards.

Tuesday will have much more activity with Japan’s Household Spending, Jobless Rate, and Retail Sales; Australia’s HIA New Home Sales; UK’s Net Lending to Individuals, Mortgage Approvals, and M4 Money Supply; US S&P/CS Composite-20 HPI and CB Consumer Confidence.

Wednesday will be very busy starting with New Zealand’s Building Consents; Japan’s Preliminary Industrial Production; Germany’s Prelim CPI; Switzerland’s KOF Economic Barometer; Spain’s Flash CPI and Flash GDP; Canada’s RMPI; US ADP Non-Farm Employment Change, Advance GDP, FOMC Statement and Federal Funds Rate.

Thursday will offer Australia’s Building Approvals and Import Prices; Japan’s Average Cash Earnings; Germany’s Retail Sales and Unemployment Change; UK Nationwide HPI; France’s Consumer Spending; Eurozone CPI Flash Estimate and Jobless Rate; Canada’s GDP; US Unemployment Claims Employment Cost Index, and Chicago PMI.

Friday will end the week with considerable activity, particularly China’s Manufacturing PMI and HSBC Final Manufacturing PMI; Australia’s PPI; BOJ Kuroda’s speech; Spain, UK, and Italy Manufacturing PMI; Eurozone Final Manufacturing PMI; US Unemployment Rate, Non-Farm Employment Change, Core PCE Price Index, Personal Spending, ISM Manufacturing PMI, and Revised UoM Consumer Sentiment.

Canada Puts Rate on Hold; US Registers Mixed Data

The Bank of Canada has decided to keep its overnight rate unchanged at 1 percent. Accordingly, the deposit rate is set at 0.75 percent while the bank rate is at 1.25 percent. The Bank has noted that CPI and core CPI have moved up in recent months, and they attributed it to temporary effects rather than domestic factors. Inflation is projected to stay near 2 percent in the following two years.

Meanwhile, the US published a mixed bag of data this week. Both July readings of the Empire State Manufacturing Index and Philly Fed Manufacturing Index surged (25.6 and 23.9, respectively), but Housing Starts and Building Permits came in lower than expected (0.89 million and 0.96 million, respectively). Jobless Claims for the prior week came in lower than expected for a second week in a row at just 302,000. On the other hand, TIC Long-Term Purchases increased in May to a lower-than-expected $19.4 billion, following a revised lower reading for April (-$41.2 billion).

In other news, UK Claimant Count Change came in much better than expected in June (-36,300 versus -27.100 expected). Meanwhile, the May Jobless rate, as expected, registered a slight dip to 6.5 percent from 6.6 percent.

Commodities

We finally saw good resistance in Gold as price posted its first weekly loss in seven weeks. Although price declined, bulls were able to hold on to the $1,300 level, and this could indicate that they are still in control. They need another push toward $1,400 to avoid a move back close to $1,250.

Oil moved opposite of Gold, as the former made a substantial reversal this week off of the critical $99-$100 area. From peeking transiently below $99, price zoomed up close to $104, before closing the week below $103. This move has essentially negated the risk for further declines, but bulls should stay focused so as not to waste the current opportunity to bring price back above $105.

Currency Pairs

The risk of EURUSD visiting 1.3500 has been materialized this week as bulls failed to take out resistance around 1.3650. Current price action opens up to a move toward 1.3300-50 in the next two weeks. What can turn this around is a strong weekly close above 1.3550-1.3600 at the very least.

GBPUSD buyers attempted to create a bullish weekly close, but selling overwhelmed their efforts as the week drew to a close. The 1.7100 continues to attract a tug-of-war for the control of the remaining part of July. Bulls should gun for another run toward 1.7200, unless they want an increased pressure on 1.7000.

USDJPY traded this week with just a 70-pip trading range; however sellers have stayed dominant throughout the process. We could be seeing a setup for a large move down, unless buyers have a different idea in mind. Bulls should not waste time; they must gain a foothold above 103 as soon as possible.

The Week Ahead

Monday will mostly be quiet except for the release of Germany’s Bundesbank Monthly Report. Japanese banks will observe Marine Day.

Activity will pick up slightly on Tuesday starting with RBA Governor Stevens’ speech. This will be followed by Switzerland’s Trade Balance; UK Public Sector Net Borrowing and CBI Industrial Order Expectations; US CPI and Existing Home Sales.

Wednesday’s news activity will be a notch higher with Australia’s CPI; UK MPC Asset Purchase and Official Bank Rate votes, BBA Mortgage Approvals, and CBI Realized Sales; Canada’s Retail Sales; and Eurozone Consumer Confidence.

Thursday will register the most news activity starting very early with New Zealand’s RBNZ Rate Announcement and Statement, and Trade Balance; Japan’s Trade Balance; China’s HSBC Flash Manufacturing PMI; France, Germany, and Eurozone Flash Manufacturing and Services PMI; UK Retail Sales; US Flash Manufacturing PMI and New Home Sales.

Friday ends the week with Japan’s Tokyo Core CPI; New Zealand’s ANZ Business Confidence; Germany’s GfK Consumer Climate and Ifo Business Climate; Eurozone Private Loans and M3 Money Supply; UK Prelim GDP; and US Durable Goods Orders.

Australia, Canada Jobless Rates Worsen; Canada Got Mixed Bag of Data

The focal point this week was on the employment outlook in several parts of the world. In Australia, the Bureau of Statistics reported employers hired 15,900 more people in June, compared a 5,100 decline in May. The Jobless Rate ticked higher from 5.9 percent to 6 percent.

Meanwhile, Canada saw a dimmer jobs outlook as Statistics Canada reported a surprise 9,400 decline in Employment Change. Analysts were expecting another month of increased hiring (median forecast 20,700). The Unemployment Rate also ticked higher in June to 7.1 percent.

In other news, Canada’s Building Permits got a surprise surge in May, attributed to shopping malls and multi-dwellings in Vancouver and Toronto. Permits surged 13.8 percent, the strongest seen since late-2013. The June Housing Starts came in slightly better than expected, while Ivey PMI sank further below 50 to 46.9, the worst reading since December.

Commodities

Gold bulls were able to maintain control of price this week, etching the sixth straight weekly bullish close well above the $1,300 level. We could be seeing a hardened support just above $1,300 for a potential move back toward $1,400. This is important in order to prevent another breakdown toward $1,250.

Meanwhile, Oil has made big moves in the past few weeks, sliding about $7 in three successive bearish weeks. Bulls will now have to contend with further selling pressure as price breaks apart the $100 barrier. Since the move toward $100 has come much earlier than expected, we can now expect the risk of a move back down to the $90-$95 area.

Currency Pairs

EURUSD trading activity has eased this week despite the marginal bullish weekly close above 1.3600. This move is more favorable to bears than bulls, hence bulls should keep pushing price up. A break of 1.3700 is important to reduce the bearish tone. The more price stays unchanged, the higher the risk of this pair visiting 1.3500.

GBPUSD traded in the upper part of the prior week’s 170-pip range, giving back some gains after comfortable five-week winning streak. Although the retreat was minimal, bears could still unleash a barrage of selling pressure in the coming weeks, so buyers must prepared to defend the 1.7100 level.

The significant gathering of USDJPY sellers this week enabled this pair to fulfill another bearish week – this time price closed at its lowest since mid-November of 2013. Could this be the beginning of the end? Last possible bulwark could sit around the 100-101 area. Beyond that, we could see a quick trip toward 95-98. All this selling pressure won’t dissipate unless bulls take out the 103 level.

The Week Ahead

Monday is mostly quiet except for the release of Japan’s Revised Industrial Production; China’s New Loans; and Eurozone’s Industrial Production and ECB Draghi’s speech.

Activity will pick up significantly on Tuesday with UK BRC Retail Sales Monitor; Australia’s New Motor Vehicle Sales and RBA’s Monetary Policy Meeting Minutes; BOJ’s Monetary Policy Statement and presscon; Switzerland’s CPI; UK PPI Input, PPI and RPI; Germany and Eurozone ZEW Economic Sentiment; US Retail Sales, Empire State Manufacturing Index,, Business Inventories, Import Prices, and Fed Yellen’s testimony before the US Senate Banking Committee.

A very busy Wednesday will start early with New Zealand’s CPI; China’s Fixed Asset Investment, GDP, Industrial Production, and NBS presscon; UK Claimant Count Change, Average Earnings Index, and Unemployment Rate; Canada’s Manufacturing Sales, BOC Rate Announcement and Statement, presscon, and Monetary Policy Report; US PPI, Capacity Utilization Rate, Industrial Production, TIC Long-Term Purchases, and Beige Book.

Thursday will start with Australia’s CB Leading Index and NAB Quarterly Business Confidence; Eurozone CPI; Canada Foreign Securities Purchases; US Unemployment Claims, Housing Starts, Building Permits, and Philly Fed Manufacturing Index

Friday ends the week with BOJ’s Monetary Policy Meeting Minutes; Canada CPI and Wholesale Sales; and US preliminary UoM Consumer Sentiment.

Rates on Australia, Eurozone Unchanged, US Jobs Situation Improved

The latest release from the US Bureau of Labor Statistics showed Non-Farm Employment Change increased 288,000 in June, with more than half of the fresh jobs offering better than average wages. The latest increase mirrors that of April’s data, and is the 4th consecutive monthly increase above the 200,000 level. The Unemployment Rate also improved to 6.1 percent from 6.3 percent in the previous month. Meanwhile, Pending Home Sales surged 6.1 percent in May (versus 1.4 percent expectations), the most in over four years.

In other news, the European Central Bank and Reserve Bank of Australia both decided to keep rates unchanged (0.15 percent and 2.50 percent, respectively).

In Australia, the Australian Bureau of Statistics declared Building Approvals rose 9.9 percent in May, following three consecutive monthly declines. Retail Sales posted another marginal dip in May, while the Trade Balance widened to –A$1.91 billion as exports declined.

Commodities

Gold saw another tight range trading week as bulls and bears get attracted to the $1,300 level. Majority of the trading activity has been above the level, but we could clearly see the level’s magnetism. We could continue to see the same thing in the coming week, but bulls should take the chance to keep their support at this level so they can keep pushing northward.

Oil hit its second straight downweek as the $107 level continued to prevent any upside push. Price pierced through and closed the week below the critical support at $104, opening up doors for a move back toward the $100 level in the coming weeks.

Currency Pairs

EURUSD made a considerable effort to reach and break the 1.3700 level this week, however they ultimately failed. Not only that, the 60-pip drop on Thursday gave the pair a bearish weekly close below the critical 1.3650 area. This puts the 1.3500 level at risk of another attack in the coming weeks. Bulls must prevent this from happening.

GBPUSD achieved its fifth consecutive bullish weekly close on the back of an easy but strong push through the 1.7100 level. If buyers can protect this level from downside attacks, they can continue to push for higher highs.

USDJPY mirrored the prior week’s trading range, but this time the pair closed higher – just above the 102 level. Could bulls keep this up in the coming week? For them to do that, the key is for 102 to hold throughout this coming week, while they push for a break of 103 as soon as possible.

The Week Ahead

Monday’s news will be sparsely scattered throughout the day, starting with Australia’s ANZ Job Advertisements; Germany’s Industrial Production; Eurogroup meetings; Canada’s Building Permits, Ivey PMI, and Bank of Canada’s Business Outlook Survey.

Tuesday will be kicked off with New Zealand’s NZIER Business Confidence, followed by Japan’s Current Account; Germany’s Trade Balance; Switzerland’s Retail Sales and CPI; UK’s Halifax HPI, Manufacturing Production and Industrial Production; ECOFIN meetings; US JOLTS Job Openings.

On Wednesday, traders will expect some volatility with Australia’s Westpac Consumer Sentiment; China’s PPI and CPI; Canada’s Housing Starts; FOMC Meeting Minutes.

Thursday will be fully-packed with New Zealand’s Business NZ manufacturing Index; Japan’s Core Machinery Orders and Tertiary Industry Activity; Australia’s jobs data and MI Inflation Expectations; China’s Trade balance and New Loans; ECB Monthly Bulletin; UK Trade Balance, Official Bank Rate and MPC Rate Statement; US Jobless Claims.

Friday ends the week with a significant decline in news activity. There will only be Australia’s Home Loans; Canada’s jobs data; and US Federal Budget Balance.

US Publishes Record GDP Slump; Japan Household Spending Slides on Sales Tax Hike

The better-than-expected readings from US June CB Consumer Confidence and May New Home Sales released on Tuesday were quickly overshadowed by the simultaneous Wednesday release of the Final GDP and Durable Goods Orders. The Bureau of Economic Analysis reported that Final GDP shrank 2.9 percent during the first quarter of this year, its biggest decline since the early part of 2009 or the period when the Great Recession was cooling down. The Census Bureau said Durable Goods Orders surprised with a 1 percent decline in May, while Core Durable Goods Orders slid by a marginal 0.1 percent following a 0.3 percent gain in April. Durable goods orders, particularly for machinery, computers and electronic products, appliances and components, transportation, electrical equipment, and defense capital goods fell on weaker demand.

Meanwhile, Japan’s statistics bureau said May consumer prices jumped 3.4 percent in May, marking its fastest advance in 32 years, as an effect of higher sales tax as well as utility charges. This squeezed consumers’ budgets and household spending slumped 8 percent, following a 4.6 percent decline in the previous month.

In other news, China Flash Manufacturing PMI came in better than expected and above the 50 level. On the other hand, Flash Manufacturing PMI and Flash Services PMI for Germany, France, and Eurozone came in weaker than expected. US Flash Manufacturing and Services PMI also showed better-than-expected readings.

Commodities

Like Oil, Gold struggled to push northward last week and keep the momentum on the bulls’ side. However, unlike Oil, Gold was able to make a very marginal bullish weekly close just above the $1,300 level. Gold bulls must try another push toward $1,350 and the critical $1,400. Support is expected to come in around $1,250-80.

Oil bulls tried to test the bearish stronghold right at the $107 level last week, but they were quickly negated by the opposing forces. Overall, price struggled to move northward as expected and traded most of the week within the prior week’s trading range. The bearish weekly close could be a sign that bulls are not strong enough to push price higher, so we could see more zigzagging action around the current price levels next week.

Currency Pairs

After the nerve-wrecking past few weeks, EURUSD has managed to pull off its second straight bullish weekly close just ahead of the ECB Rate Announcement in this coming week. Buyers need to concentrate on a collective push through 1.3800 and toward the resistance highs just ahead of 1.4000. They cannot afford a weekly bearish close towards 1.3500 in the coming week.

GBPUSD fared better than its rival EURUSD as the former clinched its fourth consecutive bullish weekly close this week. The inside week received subdued activity around the new highs, though. Bulls must continue to keep their foothold of the 1.7000.

If we would stop for a while and consider the prior week as a bearish week (since it was barely a bullish weekly close anyway), USDJPY has hit its third consecutive bearish weekly close and it is in critical danger of making a solid push toward multi-month lows. The $100-$101 area is a must-hold for bulls to thwart off this extremely serious threat.

The Week Ahead

Monday’s news activity will kick off early starting with New Zealand’s Building Consents. This will be followed by Japan’s Prelim Industrial Production; Australia’s HIA New Home Sales and MI Inflation Gauge; Germany’s Retail Sales; Eurozone M3 Money Supply, CPI Flash Estimate, and Private Loans; UK Net Lending to Individuals; Canada’s GDP; US Chicago PMI and Pending Home Sales.

On Tuesday, news activity will start quite early as well with Japan’s Tankan indices and Average Cash Earnings; China’s Manufacturing PMI and HSBC Manufacturing PMI; RBA Rate Announcement and Statement; Spain, Italy and Eurozone Manufacturing PMI; Swiss SVME PMI; Germany’s Unemployment Change; UK Manufacturing PMI; and US ISM Manufacturing PMI. Canadian banks will be close to observe Canada Day.

Wednesday will be shorter than usual with Australia’s Trade Balance; UK Nationwide HPI and Construction PMI; Spain’s Unemployment Change; US ADP Non-Farm Employment Change, Factory Orders, and Fed Yellen’s speech.

News activity will pick up on Thursday with China’s Non-Manufacturing PMI and HSBC Services PMI; Australia’s Building Approvals and Retail Sales; Italy, UK and Spain Services PMI; ECB Minimum Bid Rate Announcement and Presscon; Canada’s Trade Balance; US Trade Balance, Jobless Claims, Jobless Rate and ISM Non-Manufacturing PMI.

Friday ends the week with a much abbreviated news session with only RBA Assistant Governor Edey’s speech; Germany’s Factory Orders; and UK Halifax PMI.

New Zealand Hikes Rate as Expected; Australia’s Jobs Data Mixed but Gloomy

The Reserve Bank of New Zealand decided in line with expectations this week, raising the Official Cash Rate by 25 basis points to 3.25 percent. The central bank noted that it will continue reducing the stimulus amid the acceleration seen in the local economy. RBNZ Governor Graeme Wheeler zeroed in on inflation, saying “it is important that inflation expectations remain contained and that interest rates return to a more neutral level.”

In the United States, the Jobless Claims for the prior week grew to 317,000, more than anticipated. This puts the Jobless Claims in an upside path for the second consecutive month.

Meanwhile, data released by the Australian Bureau of Statistics on Thursday showed that 4,800 jobs were removed from the economy in May, while the Unemployment Rate stayed at 5.8 percent for the third month in a row. ANZ Job Advertisements complements the bureau’s data, as the former surprisingly dropped 5.6 percent in May, its first decline since January and the worst since May 2011.

Commodities

Gold made some progress last week after bears struggled to break through the mid-$1,250s during the prior week. Now, it’s the turn of the buyers to show they can muster the strength to break through the $1,300 level again. Potential resistance still up ahead until $1,350, so they should be careful.

After a brief selldown through $102, Oil recovered last week and made a quick dash to break through the multi-month highs. Price closed the week well above the resistance, after reaching as high as the $107s. This week, we’ll wait for a possible retracement back to the $104-$105 area or for a possible continuation of the upmove. As mentioned in the previous weeks, $110-$112 is the key resistance up ahead.

Currency Pairs

EURUSD has moved to the opposite direction of what GBPUSD has taken. This pair is now on the verge of a selldown to multi-month lows if bulls won’t be able to defend the 1.3500 level again in the coming weeks. Resistance remains at 1.3800.

The bullish inside week mentioned previously has snowballed into increased bullish momentum this week. Essentially, bulls successfully defended the mid-1.6700s for several weeks and went on to clinch the 1.7000 level, the highest this pair has reached since August 2009. We expect some major battle around this area before it gets resolved in either direction.

The 102 level in USDJPY continues to attract both buyers and sellers as the pair continues in its merry consolidation path. Bears clearly won last week, but they need to take advantage of the recent bearish tone to attack the 100 level again.

The Week Ahead

On Monday, the news releases will be scattered throughout the day, but activity will be concentrated on the North American session: New Zealand’s Westpac Consumer Sentiment; RBA Assistant Governor Kent’s speech; BOJ Monthly Report; Eurozone CPI; Canada’s Foreign Securities Purchases; US TIC Long-Term Purchases, Empire State Manufacturing Index; Capacity Utilization Rate, Industrial Production and NAHB Housing Market Index.

On Tuesday, news activity will start with RBA’s Monetary Policy Meeting Minutes and New Motor Vehicle Sales; Switzerland’s PPI; UK CPI, RPI, and PPI Input; Germany’s ZEW Economic Sentiment; US Building Permits, CPI, and Housing Starts.

Wednesday will be abbreviated compared to previous sessions but will still be packed with New Zealand’s Current Account; Japan’s Trade Balance; Australia’s CB Leading Index; UK MPC Asset Purchase Facility Votes and Official Bank Rate Votes; Switzerland’s ZEW Economic Expectations; Canada’s Wholesale Sales; US Current Account, FOMC Statement, Federal Funds Rate, and FOMC Economic Projections.

Thursday will start early with New Zealand’s GDP; Switzerland’s SNB Financial Stability Report, Libor Rate Announcement, Press Conference, and Monetary Policy Assessment; UK Retail Sales and CBI Industrial Order Expectations; US Jobless Claims and Philly Fed Manufacturing Index.

Friday ends the week with only a couple of economic releases such as BOJ Kuroda’s speech; Eurozone Account; UK Public Sector Net Borrowing; Canada’s CPI and Retail Sales.

European Central Bank Unleashes Surprise Rate Cut Move; US Trade Balance Worsens

The Bank of Canada and Bank of England both decided in line with expectations this week, keeping the rate at 1 percent and 0.50 percent, respectively. However, the European Central Bank diverged by slashing its Minimum Bid Rate down to 0.15 percent, when the market was expecting a reduction to 0.10 percent.

In the United States, the Non-Farm Employment Change came nearly in line with expectations (217,000 versus 214,000 forecast). Unemployment Rate for May remained at 6.3 percent. The April Trade Balance, meanwhile, reached -$47.2 billion, the worst reading in over 2 years, as exports decrease 0.2 percent and Americans increased purchase of business equipment, automobiles and consumer goods made from abroad.

Meanwhile, Australia had a very rough week with the release of some surprisingly weak economic readings. Building Approvals for April surprised with a 5.6 percent decline, its third negative monthly reading in a row. Trade Balance declined for the first time in 5 months (-AUD0.12 billion versus AUD0.40 billion forecast). On the bright side, Company Operating Profits, Current Account, and GDP came in better than forecast.

 Commodities

Gold had a very uneventful week after posting a decline of over $50 during the prior week. Gold traded within a very tight $17 range this week, bobbing up and down on both sides of $1,250. Bulls would likely push for a move back to the $1,300.

The bearish inside week in the previous week paved way to another sell-down this week. However, the reversal on Thursday gave some life to price and helped reduce the bearish casualty this week. If we don’t see a retest of the 101.50 next week, we could see another test of $104.

Currency Pairs

The extreme volatility on Thursday in EURUSD ended with a bullish tone as Draghi and the ECB decided to cut rates less than expected. This enabled the pair to clinch its second consecutive bullish week. If momentum continues next week, we could see price gain back toward 1.3800.

GBPUSD posted a bullish inside week just above the 1.6800 level. It was a clear win for bulls, as continued decline through 1.6700 would force a move toward 1.6500. Buyers must take out resistance just above the 1.6900 level.

We finally saw a considerable upmove in USDJPY after last week’s silent trading below the 102 level. The pair posted 4 bullish daily closes this week, and it nearly reached the 103 level in the process. Based on recent price action, we could see bulls challenge sellers beyond 104.

The Week Ahead

On Monday, the news releases will be very few: Japan’s Current Account, Bank Lending, and Final GDP; and Canada’s Housing Starts. Today, some states in Australia will observe the Queen’s Birthday, while France, Germany, and Switzerland will observe Whit Monday.

On Tuesday, there will be UK’s BRC Retail Sales Monitor; Japan’s Tertiary Industry Activity; Australia’s NAB Business Confidence and Home Loans; China’s New Loans, CPI and PPI; France’s Industrial Production; UK’s Manufacturing Production; and US JOLTS Job Openings.

Wednesday will be very brief and start early with Japan’s BSI Manufacturing Index, Australia’s Westpac Consumer Sentiment; New Zealand’s REINZ HPI; UK Unemployment Rate and Claimant Count Change; US Federal Budget Balance.

Thursday will be the most news-packed day this week with the release of Reserve Bank of New Zealand’s Rate Announcement, Statement, Press Conference, and Monetary Policy Statement; Australia’s Employment Data and MI Inflation Expectations; ECB Monthly Bulletin; Canada’s NHPI; US Retail Sales, Import Prices, Unemployment Claims, and Business Inventories.

Friday ends the week with the release of Business NZ Manufacturing Index; BOJ’s Monetary Policy Statement; China’s Industrial Production and Fixed Asset Investment; Canada’s Manufacturing Sales; US PPI and Preliminary UoM Consumer Sentiment.