Forex News

Currency Trends & Insights

General

Cheaper Gas Spurs US Retail Sales Higher; UK Jobless Rate Stuck at 6%

The Census Bureau in the United States reported that Retail Sales gained 0.3 percent in October, slightly higher than forecasted. American consumers rejoiced as cheaper gasoline enabled them to shop and dine more ahead of the Christmas holiday season. Broad-based gains were noted as 11 out of 13 categories monitored showed growth. Consequently, consumer confidence rose as seen in the latest C onsumer Sentiment index by University of Michigan; the index hit 89.3 this November.

Meanwhile, US Jobless Claims rose 290,000 last week, according to the Department of Labor. JOLTS Job Openings for September came in at 4.74 million. Import Prices declined less than expected, minus 1.3 percent.

In other news, UK’s Office for National Statistics said Claimant Count Change reduced by 20,400, which was lesser than anticipated. UK Jobless Rate stayed at 6 percent for the second month in a row in September. Average Earnings Index came in at one percent.

In Japan, the Current Acct improved in September to JPY0.41 trillion. However, the Cabinet Office reported that Consumer Confidence weakened to 38.9 in October, while analyst looked for a 40.6 median reading. M2 Money Stock advanced 3.2 percent, its 8th consecutive month in the 3 percent level.

Commodities

Gold bulls struggled in their campaign but ultimately managed to come out on top this week. Buyers fought hard for the first four days but they were able to push price $47 higher on Friday, overcoming short-term resistance in the area. They still need a very strong move through the $1,200 level though.

Oil posted its seventh straight bearish weekly close as another attempt to break $80 failed easily on Monday. This bearish move gave oil a fresh 4-year low, but it is now approaching key support around $67 to $70.

Currency Pairs

EURUSD seemed to have tracked Gold’s movement this week based on their similar price actions. The pair consolidated the whole week except the drive higher on Friday. Potential sellers around the 1.2600-1.2900 area are what bulls need to take care of.

A big smackdown happened in GBPUSD this week following three straight weekly declines through the 1.6000 level. The 1.5591 low reached on Friday is the lowest price seen since early September 2013. A move toward 1.5500 is still on track.

USDJPY’s bullish momentum has continued unabated for the fourth week. However, price range has been decreasing and so we could see near-term dips in the coming days and weeks. Buying opportunities could come around 110-113.

The Week Ahead

Monday will get active early with New Zealand’s Retail Sales, followed by the following: Japan’s Prelim GDP; Australia’s New Motor Vehicle Sales; German Bundesbank’s Monthly Report; Canada’s Foreign Securities Purchases; US Empire State Manufacturing Index, Capacity Utilization Rate, and Industrial Production. ECB’s Draghi is also expected to give a speech.

On Tuesday, there will be Australia’s CB Leading Index and RBA’s Monetary Policy Meeting Minutes; UK CPI, RPI, PPI, and HPI; ZEW Economic Sentiment for Germany and the Eurozone; and US PPI and NAHB Housing Market Index.

Wednesday will be abbreviated yet packed with BOJ Monetary Policy Statement and Press Conference; UK’s MPC Asset Purchase Facility and Official Bank Rate Votes; Switzerland’s Economic Expectations; US Building Permits, Housing Starts, and FOMC Meeting Minutes.

Thursday will be up early with New Zealand’s PPI Input and PPI Output; Japan’s Trade Balance; China’s HSBC Flash Manufacturing PMI; Flash Manufacturing PMI and Flash Services PMI for Germany, France, and the Eurozone; UK CBI Industrial Order Expectations and Retail Sales; Canada’s Wholesale Sales; US CPI, Flash Manufacturing PMI, Jobless Claims, Existing Home Sales, and Philly Fed Manufacturing Index.

Friday will be the least active day this week with New Zealand’s Credit Card Spending; ECB’s Draghi’s speech; UK Public Sector Net Borrowing; and US CPI.

Oil & Gold Reach New Lows, USD Continues its Rally Upwards

The Reserve Bank of Australia decided to leave its Cash Rate at a record-low 2.50 percent for the 15th consecutive month to counterbalance the strength of the Australian dollar and spur jobs.

The European Central Bank and Bank of England also kept their respective rates steady (0.05 percent and 0.50 percent). ECB’s Draghi made clear the central bank’s intention to bring back ECB’s balance sheet to its March 2012 levels and projected unanimity within its governing council.

On the employment front, New Zealand’s Unemployment Rate eased to 5.4 percent in the September quarter, its 5.5-year low, as more migrants get jobs and Canterbury rebuilding continues. On the other hand, Australia’s Unemployment Rate remained steady at 6.2 percent for the second month, while Employment Change gathered 24,100 more jobs in October.

In North America, Canada gained jobs for the third time in four months in October, adding 43,100 jobs after September’s 74,100 gain. Statistics Canada reported Unemployment Rate eased to pre-2009/early-2009 levels to 6.5 percent in October. In Contrast, US Non-Farm Employment Change saw a gain of 214,000 compared to a median estimate of 235,000, while Unemployment Rate edged slightly lower to 5.8 percent.

In other news, Australia’s Bldg Approvals sags 11 percent in September, much weaker than the -0.9 percent forecast and a huge turnaround from August‘s 3.4 percent gain. The September decline was the weakest reading since July 2012. Trade deficit increased to –AUD2.26 billion in September, while Retail Sales edged 1.2 percent higher.

Italy’s Manufacturing PMI was the lone decliner among the countries who published Manufacturing PMI on Tuesday. Data showed it fell to 49.0 on October, below the 50 level for the second time in three months. Top Manufacturing PMI came from Switzerland (SVME PMI) and UK, while US ISM Manufacturing PMI came in at 59.0.

Commodities

Gold bears rejoiced as they were able to push Gold to a new 4-year low this week. However, profit takers may have pushed price to complete a considerable reversal candle. We’ll find out this week if we will see stops squeezed higher through the $1,200 level, or bearish momentum would reign further this November.

Oil posted another considerable weekly decline and this time it hit a new near-3 year low just below $76. The weekly price action is much weaker compared to that of Gold but Oil posted four consecutive higher lows which could indicate a short-term attempt through the $80 mark.

Currency Pairs

EURUSD posted another multi-year low for the second week as Dollar’s bullish momentum continues to chug along nicely. The pair hit a 1.2356 low on Friday before it closed the week at 1.2454. Bulls could encounter sellers between 1.2500 and 1.2700.

GBPUSD hit a new 1-year low as buyers have a difficult time keeping a firm footing in the 1.6000 level. The next few bullish attempts should bear better results; else, we could see prolonged bearishness in this pair.

USDJPY has set another multi-year high for the third straight month this week as JPY bears unlock their inhibitions. The pair made a bullish close for the third straight week, and came close to the 116 level in the process. Any dips are expected to be shallow, so opportunities will likely be available in the coming days.

The Week Ahead

This Monday, Australia will start the ball rolling with their issuance of Home Loans data. This will be followed shortly by China’s CPI and PPI; Canada’s Housing Starts.

Tuesday will start quite early with Japan’s Current Account and Bank Lending; Australia’s NAB Business Confidence and HPI; and China’s New Loans. The day won’t be too busy thanks to the observance of a few holidays around the world (Armistice Day for France, Remembrance Day for Canada, and Veterans Day for the United States).

Wednesday will start off very early with New Zealand’s RBNZ Financial Stability Report and RBNZ Governor Wheeler’s speech. A few hours later, we will hear about Tertiary Industry Activity and M2 Money Supply; Australia’s Westpac Consumer Sentiment and Wage Price index; UK jobs data (Jobless Rate, Claimant Count Change, and Average Earnings Index), BOE Inflation Report, and BOE Carney’s speech.

Thursday will be mildly busy with New Zealand’s Business NZ Manufacturing Index and FPI; Australia’s MI Inflation Expectations; Japan’s Core Machinery Orders; China’s Retail Sales, Fixed Asset Investment, and Industrial Production; Switzerland’s PPI; Canada’s NHPI;; US Jobless Claims and JOLTS Job Openings.

Finally, Friday will cap the week with the announcement of French, Italian, and German Prelim GDP; Eurozone Final CPI and Flash GDP; Canada’s Manufacturing Sales; US Import Prices, Retail Sales, Business Inventories, and Prelim UoM Consumer Sentiment.

Fed Exits QE as Expected; BOJ Shocks with QE Expansion

Several key news events this week have been foreshadowed by Federal Reserve’s exit on its (QE) on Wednesday and more importantly, the surprise QE decision by the Bank of Japan on Friday.

The Reserve Bank of New Zealand on Wednesday decided to keep its Official Cash Rate at 3.50 percent. The central bank made a less-dovish hint as it dropped the word “neutral” from its BC Rate Statement. Meanwhile, Statistics Canada said Retail Sales posted its second monthly decline following six monthly advances. Retail sales and its core reading both slipped 0.3 percent in August, with 7 of the 11 subsectors posting sales declines. Consumer Price Index and its core reading both nudged up 0.1 percent.

The Bank of Japan surprised the markets on Friday as it decided to expand its own QE policy. BOJ Governor Kuroda along with several policymakers won the decision to expand monetary stimulus to assist the central bank in its inflation and growth aims.

In the United States, CB Consumer Confidence jumped to 94.5 in October, a seven-year high as US consumers enjoy cheaper gas and improved job market conditions. The September reading was also positively revised to 89.0 from 86.0. Jobless Claims for the prior week stood at 287,000. Chicago PMI advanced to 66.2 in October, beating median expectations of 60.2. Advance GDP came in better than expected at 3.5 percent.

Commodities

Gold bears made a statement this week as they pushed yellow gold $74 lower, breaking the triple bottom clearly. The weekly close at $1,172 was the lowest weekly close in about 4 years, and this could set a precedent in the coming weeks or months. November could provide the clues as to the near-term direction of Gold.

Oil posted a milder price action compared to Gold as the former stayed inside the range set two weeks ago. $80 remains pivotal as traders decide on where to push price. A descending triangle is forming, so we might see a short-term upside pop.

Currency Pairs

EURUSD ended the week with another bearish close, as buyers failed to gain foothold above the 1.2600-1.2700 area. The pair is set to reach July 2012’s 1.2041 low if bulls won’t act this November.

GBPUSD also printed its second bearish weekly close but the former is doing a little better as it hangs on the 1.6000 psychological level. Bulls still need a strong push higher so they can reduce the bearish momentum that lingers on this pair.

USDJPY bulls pushed forward, aided by BOJ’s decision to expand QE on early Friday. The pair surged 330 pips, and other JPY pairs did well too. With not much resistance in sight, price could move up to as high as 120-122 in the coming weeks or months.

The Week Ahead

Starting Sunday (November 2), clocks will be moved backward by 1 hour to implement DST (Daylight Savings Time shift) exit in Canada and the United States.

This Monday, we’ll witness the release of Australia’s Building Approvals and ANZ Job Advertisements; China’s Non- Manufacturing PMI and HSBC Final Manufacturing PMI; Switzerland’s SVME PMI; Spain, Italy and UK Manufacturing PMI; and US ISM Manufacturing PMI.

Tuesday is a big day for Australia with its Retail Sales, Trade Balance, and RBA Rate Announcement and Statement. This will be followed by Spain’s Unemployment Change; UK Halifax HPI and Construction PMI; Canada and US Trade Balance; US Factory Orders; and New Zealand’s GDT Price Index.

Wednesday will start early with New Zealand’s Employment Change, Jobless rate, and Labor Cost Index; Japan’s Average Cash Earnings; China’s HSBC Services PMI; UK, Spain and Italy Services PMI; Eurozone Retail Sales; US ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI.

On Thursday, investors will be alert with a lot of economic releases to digest. There will be BOJ Monetary Policy Meeting Minutes, which will be followed by Australia’s jobs data; Germany’s Factory Orders; Eurogroup Meetings; UK Manufacturing and Industrial Production, Asset Purchase Facility and Rate Announcement, and Statement; ECB Rate Announcement and Press Conference; Canada’s Building Permits and Ivey PMI; US Jobless claims, Prelim Nonfarm Productivity and Prelim Unit Labor Costs.

Friday will remain active with RBA’s Monetary Policy Statement; France’s Industrial Production; Switzerland’s Foreign Currency Reserves and Retail Sales; UK Trade Balance; ECOFIN Meetings; Canada and US jobs data. US Fed Yellen will also give a speech.

BOC Maintains Rate at 1 Percent; 25 Banks Fail EBA Bank Stress Test

The Bank of Canada on Wednesday decided to keep its overnight rate target at 1 percent. The central bank made a less-dovish hint as it dropped the word “neutral” from its BC Rate Statement. Meanwhile, Statistics Canada said Retail Sales posted its second monthly decline following six monthly advances. Retail sales and its core reading both slipped 0.3 percent in August, with 7 of the 11 subsectors posting sales declines. Consumer Price Index and its core reading both nudged up 0.1 percent.

The latest EU-wide bank stress test conducted by the European Banking Authority (EBA) and led by the ECB revealed 25 out of 123 banks, including Banca Monte dei Paschi di Siena SpA of Italy, failed the test. Nearly half of banks that failed were reportedly required to increase capital. The stress test is done to assess “resilience of EU banks to adverse economic developments, so as to understand remaining vulnerabilities, complete the repair of the EU banking sector and increase confidence.”

Recent Trade Balance data revealed in New Zealand and Japan showed deficits of both countries advanced. New Zealand more than doubled its trade deficit to –NZD1,350 million,, while Japan posted –JPY1.07 trillion.

China’s GDP and Industrial Production improved more than anticipated (7.3 percent and 8 percent, respectively).

In the United States, Jobless Claims grew to 283,000 in the prior week. This was higher than expectations and the previous week’s reading.

Commodities

Gold has just printed a clearer-looking triple bottom this week after posting a bullish outside bar on Wednesday. Bears are now more at risk; hence, they must try to breach the $1,300 level as soon as possible. More problems are up ahead until $1,400.

Oil posted its fourth consecutive weekly decline. Unlike the past three weeks, though, Oil made a less-considerable downside move this time, traded a much-tighter $3 range, and stayed afloat above $81 upon the weekly close. Expect sellers around $84-$85 this time.

 Currency Pairs

EURUSD reversed the previous week’s gains as the 1.2800 area capped the pair while 1.2700 failed to gain support from bulls. Price is now below 1.2700, the midpoint of the current short-term potential range between 1.2500 and 1.2900. Potential divergence could play out if price recedes again, and we could see some bulls buy at discount prices.

GBPUSD traded in a relatively tighter range this week as bulls try to hamper another bear assault at the 1.6000 psychological level. Bulls need a strong weekly close above 1.6200 this time. Plenty of resistance remain at 1.6300-1.6500.

USDJPY bulls were supportive this week as they helped reverse the losses posted in the prior week. Now that 108 has been taken out, they should try to maintain their composure and keep this level well protected. If successful, they can attack the upper 109s again.

 The Week Ahead

Starting Sunday (October 26), clocks will be moved backward by 1 hour to implement DST (Daylight Savings Time shift) exit in Switzerland, most European countries, and the United Kingdom.

This Monday, New Zealand will celebrate Labor Day. Economic data release will start in the European session with Germany’s Ifo Business Climate; Eurozone M3 Money Supply; UK’s CBI Realized Sales; and US Pending Home Sales.

On Tuesday, there will only be a few economic releases such as Japan’s Retail Sales; US CB Consumer Confidence, Durable goods Orders, and S&P/CS Composite-20 HPI.

Wednesday will start with Japan’s Preliminary Industrial Production, and then followed by New Zealand’s ANZ Business Confidence; UK net Lending to Individuals; Canada’s IPPI and RMPI; US FOMC Statement and Federal Funds Rate will follow this.

Economic data release for a very busy Thursday will start very early with New Zealand’s RBNZ Interest Rate Announcement and Statement. This will be followed by Australia’s Import Prices; UK Nationwide HPI Germany Prelim CPI; Switzerland’s KOF Economic Barometer; Spain’s Flash GDP; Germany’s Unemployment Change; US Advance GDP, Jobless Claims, and Fed Yellen’s speech.

A busy Friday will cap off the week starting with New Zealand’s Building Consents. This will be followed shortly by Japan’s Household Spending, Jobless Rate, Tokyo Core CPI, BOJ Monetary Policy Statement, BOJ Outlook Report, and Press Conference; Australia’s PPI; Germany’s Retail Sales; France’s Consumer Spending; Eurozone CPI Flash Estimate and Jobless Rate; Canada’s GDP; and US Employment Cost Index, Personal Spending, Chicago PMI, and Revised UoM Consumer Sentiment.

Oil Continues its Drop, USD Weakens

The United States has had an overall positive week according to the latest slew of economic data.

The US Census Bureau reported a weaker than expected Retail Sales reading of -0.3 percent (core -0.2 percent) for September. At the same time, the Labor Department issued a similarly weak PPI (-0.1 percent) for the same month. Meanwhile, the October Empire State Manufacturing Index came in less than a third of median expectations (6.2 versus 20.3). On the other hand, the Philly Fed Manufacturing Index ticked higher to 20.7 in October, and it has been above the 20 level for the fourth straight month. Jobless Claims stood at 264,000 for the previous week, while Industrial Production and Capacity Utilization Rate were also slightly better than anticipated (1 percent and 79.3 percent, respectively).

China’s September PPI also came in weaker (-1.8 percent) similar to the US. Meanwhile, Chinese CPI grew less than forecast (1.6 percent versus 1.7 percent forecast).

In Europe, German ZEW Economic Sentiment posted an overwhelming surprise as it plunged to negative territory for the very first time in almost 2 years. The October reading of the index dropped to -3.6 after a better-than-expect 6.9 reading back in September. The Eurozone ZEW Economic Sentiment came in weaker too at 4.1 (versus 7.1 forecast). The Eurozone Industrial Production dropped slightly more than expected at -1.8 percent.

Commodities

Gold bulls kept the pace for the second week as they search for higher ground beyond the $1,200 level. The sky would continue to open up if price can reach the $1,300 level. The $1,180 area remains a triple bottom at risk of breaking.

Another week, another decline. Oil saw its third consecutive volatile week as it sought out any brave buyers until $80. Price breached this level shortly on Thursday until buyers decided to step in. The weekly close above $80 is just the first step in dealing with the serious decline in black gold. Tons of sellers are expected to camp out around the $90s.

Currency Pairs

EURUSD has closed bullish for the second week amidst weakness in the Dollar. The pair is poised for a retest of the 1.2900 level if bulls can maintain support around 1.2800 this week. Support lies at 1.2500-1.2600.

GBPUSD posted a fleeting move through 1.5800 but the week ended with a huge reversal candle that closed the week just below 1.6100. Bulls should snatch the opportunity and keep the momentum on their side. Plenty of resistance until 1.6500-50.

USDJPY saw a tug of war between USD and JPY supporters but ultimately the JPY supporters won the week, albeit with a strong battle. USD bulls fought back mid-week and this prevent a freefall through $105. The pair remains well above the 200-SMA which is located at 103.23, however we could still see volatility in the coming weeks in favor of JPY.

The Week Ahead

Monday is going to be quite again, with only German Bundesbank’s Monthly Report and Canada’s Wholesale Sales giving a jolt in activity. US FOMC member Powell is also expected to give a speech.

Tuesday will begin with Australia’s Monetary Policy Meeting Minutes. This will be followed shortly by China’s Industrial Production, Gross Domestic Product, Retail Sales, Fixed Asset Investment, and NBS press conference; Switzerland’s Trade Balance; UK Public Sector Net Borrowing; and US Existing Home Sales.

Wednesday will get very busy with Japan’s Trade Balance; Australia’s CPI and Trimmed Mean CPI; UK MPC Asset Purchase Facility and Official Bank Rate Votes; Canada’s Retail Sales, CPI, Overnight Rate Announcement, BOC Rate Statement, BOC Monetary Policy Report and BOC press conference.

Early Thursday, RBA Governor Stevens will provide a speech, followed shortly by New Zealand’s CPI; Australia’s NAB Quarterly Business Confidence; China’s HSBC Flash Manufacturing PMI; France, Germany, Eurozone Flash Manufacturing PMI and Services PMI; Spain’s Jobless Rate; UK Retail Sales and BBA Mortgage Approvals; EU Economic Summit; US Flash Manufacturing PMI.

Friday will be brief with New Zealand’s Balance; GfK Germany Consumer Climate; UK Prelim GDP; EU Economic Summit (day 2); and US New Home Sales.

England and Australia Hold Rates; Canadian Data Net-Positive

After the ECB rate decision last week, two more central banks announced their interest rate decisions this week. The Reserve Bank of Australia published their unchanged rate decision on Tuesday (2.50 percent), while the Bank of England announced on Thursday that they are maintaining the current values of the Official Bank Rate (0.50%) and the Asset Purchase Facility (GBP375 billion).

In Canada, the employment outlook showed some bright prospects in September. Unemployment Rate improved to 6.8 percent from 7 percent in August. Employment Change came in nearly quadruple of expectations at 74,100, following an 11,000 decline in August. Ivey PMI advanced to 58.6, while Building Permits sunk more than quadruple its estimate (-27.3 percent) after posting double-digit gains in the previous three months. USDCAD still trades near multi-year highs.

In contrast to Canada’s positive jobs data, Australia’s September Employment Change decline 29,700 as employers slashed jobs. The previous month’s reading was revised severely lower from 121,000 to only 32,100. The Jobless Rate inched up to 6.1 percent as expected.

Commodities

Gold bottomed out at $1,182 and ended the week with a strong finish well above the $1,200 level. If bulls can keep this up on the coming week, they would be able to tackle the next problem area at $1,250-$1,300. There’s still a long way to go, and therefore bulls must keep supporting price in the coming weeks.

Oil had its second volatile week after the $90 breach has been sustained this week. Price reached a new 26-month low as it approached $83. Resistance has piled up above the $90 level now, and bulls might have a hard time breaching that zone. We could see new multi-year lows in the weeks ahead.

Currency Pairs

EURUSD bulls are in deep trouble as price dived heavily on Friday, closing in on the 1.2500 level. The pair has closed with a bearish bias on 11 of the last 12 weeks, and this is a serious cause for concern. Avoid buying this bear train.

GBPUSD trading this week has been overall positive but the pair still sits close to multi-week lows. Buyers need to complete a strong break of 1.6200 so they can nullify the bear momentum further. They must aim for a move past the 1.6642 September high soon.

JPY strength finally prevailed this week after USD blasted away with six bullish weeks in the last seven weeks. The pair sunk more than 200 pips as buyers failed to capture the 110 level. Further declines could find support around 105.

The Week Ahead

Monday would be quite except for China’s Trade Balance data and the Eurogroup meetings. Banks in Japan, Canada, and the United States are on holiday (in observance of Health-Sports Day, Thanksgiving Day, and Columbus Day, respectively).

Tuesday will have an increased uptick in news activity with Australia’s NAB Business Confidence; Switzerland’s PPI; China’s New Loans; UK CPI, PPI Input, and RPI; Germany’s ZEW Economic Sentiment; Eurozone Industrial Production and ZEW Economic Sentiment; and ECOFIN meetings.

Wednesday would get busy as usual with Australia’s Westpac Consumer Sentiment and New Motor Vehicle Sales; China’s PPI and CPI; ECB Draghi’s speech; UK Average Earnings Index, Jobless Rate, and Claimant Count Change; US Retail Sales, PPI, Empire State Manufacturing Index, Business Inventories, and Beige Book.

Thursday will start early with New Zealand’s Business NZ Manufacturing Index; Australia’s MI Inflation Expectations; Eurozone Final CPI; Bundesbank Weidmann’s speech; Canada’s Manufacturing Sales and Foreign Securities Purchases; US Jobless Claims, Capacity Utilization Rate, Industrial Production, Philly Fed Manufacturing Index, and NAHB Housing Market Index.

Friday’s spotlight will be on the North American session particularly on Canada’s CPI, and US Building Permits, Housing Starts, Preliminary UoM Consumer Sentiment and Fed Yellen’s speech.

US NFP, Jobs Data Lifts Dollar Further

The status quo decision from the ECB was expected, and as usual, the US jobs data stole the spotlight this week.

The European Central Bank decided to keep its Minimum Bid Rate unchanged at an ultra-low 0.05 percent for the second time. ECB’s Draghi expressed intention of continued purchase of assets over the coming two years, at least, to bid up inflation and the euro-area’s economic growth.

In the United States, there was a slew of important economic data released this week. Among the highlights was the Trade balance data which improved slightly further for the third month to -$40.1 billion. The September Unemployment Rate improved to 5.9 percent, while Jobless Claims improved for the prior week. The Non-Farm Employment Change saw a boost of 248,000 workers in September, clearly beating analyst forecast. The prior month’s reading was also revised higher by 38,000 to 180,000.

In Japan, Unemployment Rate improved in August to 3.5 percent. Meanwhile, Retail Sales improved 1.2 percent year-on-year, while Household Spending slid 4.5 percent, its fifth straight monthly decline. Preliminary Industrial Production surprisingly dipped 1.5 percent. Finally, Average Cash Earnings grew better than expected but the prior reading was revised down to 2.4 percent.

Commodities

After taking a short pause last week, Gold resumed its nosedive this week by slicing through and closing below the key $1,200 level. What is separating Gold from new multi-year lows right now is the double bottom support at the low-$1180s. If this area breaks, we could see $1,000 hit for the first time in 5 years.

Oil had quite a volatile week, but eventually bears won with a strong weekly finish below the important $90 level. Price is now headed to the $82-$85 area where potential supports may lie. Unlike Gold bulls, oil bulls have a better chance at salvaging their ship before it becomes way too late. They must conquer $90 first.

Currency Pairs

EURUSD bulls are in deep trouble as price dived heavily on Friday, closing in on the 1.2500 level. The pair has closed with a bearish bias on 11 of the last 12 weeks, and this is a serious cause for concern. Avoid buying this bear train.

We could now consider Monday’s marginal bullish close a consolation for GBPUSD bulls as this pair has turned very bearish for the rest of the week. With the 1.6000 level smashed open, we could see 1.5700 revisited soon. Indicators are showing some divergence so an alternative scenario is a slower downside move will happen in the next few days or weeks.

Unlike USDCHF, USDJPY has not created a new multi-year high this week as the yen was confined by Wednesday’s top at 110.07. Nevertheless, this pair remains bullish and we could well see newer highs throughout October.

The Week Ahead

This Monday, a significant number of Australian banks will observe Labor Day. Chinese banks will also be closed to observe National Day. On the news front, there will be ANZ Job Ads; Germany Factory Orders; and Canada’s Ivey PMI.

Tuesday will open up early with New Zealand’s NZIER Business Confidence. This will be followed by Japan’s BOJ Monetary Policy Statement and Press Conference; RBA interest rate announcement and statement; Switzerland’s Foreign Currency Reserves and CPI; UK Halifax HPI, BOE Credit Conditions Survey, NIESR GDP Estimate and Manufacturing Production; Canada’s Building Permits; and US JOLTS Job Openings.

Wednesday would be unusually quiet with only a few news events. These are Japan’s Current Account; China’s HSBC Services PMI; Switzerland’s Jobless Rate; and Canada’s Housing Starts. The day will be topped off with US FOMC Meeting Minutes.

Thursday would be a lot more active with Japan’s Core Machinery Orders; Australia’s Unemployment Rate and Employment Change; Germany’s Trade Balance; UK Asset Purchase Facility, interest rate announcement and statement; Canada’s NHPI; US Jobless Claims. It will also host the first day of G20 meetings.

Friday will end the way with Japan’s Monetary Policy Meeting Minutes and Tertiary Industry Activity; Australia’s Home Loans; France and Italy Industrial Production; China’s New Loans; UK Trade Balance; Canada’s BOC Business Outlook Survey, Unemployment Rate and Employment Change; and US Import Prices. Friday will also hold Day 2 of the G20 meetings and Day 1 of IMF meetings.

Gold & EURUSD Continue their Downwards Trend This Week

The US Federal Reserve decided in their latest Federal Open Market Committee meeting to keep rates unchanged as economic activity is “expanding at a moderate pace”, “labor market conditions improved somewhat”, household spending “appears to be rising moderately and business fixed investment is advancing.” The Committee declared that a highly accommodative stance continues to be “appropriate” as it seeks to “foster maximum employment and price stability.”

In other US news, Unemployment Claims grew at a slower pace below the 300,000 level for the third time in five weeks. CPI and PPI were flat. Empire State Manufacturing index climbed to 27.5 this September, beating median forecast of 16.4. Meanwhile, Treasury International Capital data for July showed a drop of $18.6 billion, which was a magnitude similar to June’s drop. Current Account has improved to -$99 billion and previous release was revised better to -$102 billion.

Switzerland’s SNB kept the Libor rate below 0.25 percent.

In the UK, the MPC gave no surprises as the Asset Purchase Facility votes and Official Bank Rate votes remain unchanged. MPC members Martin Weale and Ian McCafferty voted in favor of raising interest rates by 25 basis points to 0.75 percent.

In Scotland’s referendum, a majority of Scots voted “No” on Thursday, indicating most are against Scotland becoming an independent country and discontinuing the use of British Pound as main currency. However, another referendum could manifest again as the recent result was a close call.

Commodities

Gold had another rough week as buyers were unable to pass the initial hurdle at $1,250. This marks the third consecutive downweek and price is getting closer to medium-term support around $1,200. This could probably be the last chance for bulls to redeem themselves before a downspiral toward $1,000.

Oil saw volatility in a $4 range as bulls attempt to reverse the course of black gold. Ultimately, sellers around $94 and $95 won and they were able to press price back down and this left Oil largely unchanged this week. The battle at $92 is expected to rage on.

 Currency Pairs

Another selldown happened on EURUSD this week as the pair was unable to get even close to the 1.3000 level. Dollar strength pulled this price down by nearly 170 pips to a price area that could give bulls some assistance. 1.2700-1.2750 is a very important support area.

Unlike EURUSD, GBPUSD has continued to trend higher this week. The pair hit a near-2 week high of 1.6523 on Friday. Nevertheless, price was nearly unchanged this week. Buyers need to get a concrete foothold above 1.6500 to keep the ball on their court.

USDJPY went on to climb for the third straight week and it is now hitting a major multi-year down-trendline, which dates back to 2002. Will this trendline influence this pair? We will soon find out. Bulls ideally will post a control tower at 106-107 to prevent large price retracements.

The Week Ahead

This week will have a relatively mild news activity ahead of September’s closing in the following week.

On Monday, New Zealand kicks off the brand new week with Westpac Consumer Sentiment. This will be followed by German Bundesbank’s Monthly Report; ECB Draghi’s speech; US and Existing Home Sales.

On Tuesday, traders will keep an eye on China’s HSBC Flash Manufacturing PMI; Flash Manufacturing PMI and Flash Services PMI from France, Germany, and the Eurozone; UK BBA Mortgage Approvals and Public Sector Net Borrowing; Canada’s Retail Sales; and US Flash Manufacturing PMI. Japan will observe Autumnal Equinox Day today.

Wednesday will be unusually brief with New Zealand’s Trade Balance; Australia’s CB Leading Index and RBA Financial Stability Review; Germany’s Ifo Business Climate; and US New Home Sales.

Thursday will also be abbreviated and only publish a few releases such as RBA Governor Stevens’ speech; UK Nationwide HPI; Eurozone Private Loans and M3 money Supply; UK CBI Realized Sales; US Durable Goods Orders and Jobless Claims.

Friday will end the week quietly again. This time, we’ll only see Japan’s Tokyo Core CPI; GfK German Consumer Climate; US GDP and Revised UoM Consumer Sentiment.

China, Germany Trade Balance Beat Forecasts, Gold and Oil Drop

The Reserve Bank of New Zealand kept its Official Cash Rate unchanged at 3.50 percent for the second time but it also hinted on potential rate hikes in the future. Without mentioning any timeframe, the bank said, “We expect some further policy tightening will be necessary to keep future average inflation near the target 2 per cent midpoint.” The central bank noted that the local housing market is expected to cold down, amidst robust net migration. The next Monetary Policy Statement release would be on December 11 while the next interest rate announcement would be on October 30.

Meanwhile, there was a showdown of trade balance data this week. China’s Trade Balance came out much greater than forecast at CNY49.8 billion (CNY40.8 billion forecast). Germany also beat forecast with a EUR22.2 billion trade balance in July. On the other hand, trade balance of France and the UK came out weaker than anticipated, -EUR5.5 billion and -10.2 billion, respectively.

In Canada, the statistics bureau announced that July Building Permits was surprisingly strong. The 11.8 percent advance helped press prolong the two-digit gains for the third straight month

On the other hand, August Housing Starts was slightly weaker than anticipated at 192,000.

Commodities

Gold toppled down this week. Price dropped $44 and broke through mentioned support at $1,240-$1,250 easily. Bears will get more excited and target $1,180-$1,200 next. Bulls should really prevent this from happening.

Oil reached new lows this week just like Gold, but the weakness in the former was less pronounced. Having said that, Oil is at risk of breaking a major support level at $90. If broken, this would open up a move toward $77-$86. Buyers must be careful not to catch a falling knife here.

Currency Pairs

EURUSD has finally shown some signs of life this by printing its first bullish weekly close in the past 9 weeks. Bulls need a lot of catching up to do as the pair has been down over 600 pips since July. First target is taking back control of the 1.3000 level. This level would be a major test for them.

GBPUSD opened up the week with a massive gap but the pair recovered well to close the week strongly in the black. Price needs to get back to 1.6500 to negate a lot of the bearish pressure that has built up in the last several weeks. At the same time, buyers must prevent a break of the 1.6000 level.

USDJPY was flawless this week as the pair closed in the black for five straight days and closed above the 107 level. The pair is now well above the multi-month resistance around 105.50. With the steep upclimb, we can now expect a decent retracement to at least the 106s.

The Week Ahead

Monday will be very brief and only showcase Australia’s New Motor Vehicle Sales; Switzerland’s PPI; US Empire State Manufacturing Index, Industrial Production, and Capacity Utilization Rate; Japan will observe Respect-for-the-Aged Day.

Tuesday will get quite busy starting with Australia’s Monetary Policy Meeting Minutes; UK’s RPI, PPI Input, CPI, and HPI; Eurozone and German ZEW Economic Sentiment; Canada’s Manufacturing Sales; US PPI and TIC Long-Term Purchases. BOC Governor Poloz will also give a speech.

Wednesday will begin early with New Zealand’s Current Account; Australia’s MI Leading Index; Italy’s Trade Balance; UK Claimant Count Change, Jobless Rate, MPC Asset Purchase Facility and Official Bank Rate Votes; Eurozone Final CPI; and US CPI, NAHB Housing Market Index, Current Account, FOMC Statement, Federal Funds Rate, and Economic Projections.

Thursday will be equally busy with New Zealand’s GDP; Switzerland’s Libor Rate and SNB Monetary Policy Assessment; UK Retail Sales, CBI Industrial Order Expectations, and Scottish Independence Vote; ECB’s Targeted LTRO; Canada’s Foreign Securities Purchases; US Jobless Claims, Building Permits, Housing Starts, Philly Fed Manufacturing Index, and Fed Chair Yellen’s speech.

Friday ends the week very quietly with only Canada’s Consumer Price Index and Wholesale Sales in the main cards.

European Central Bank Surprised with an Interest Rate Cut, USD Remains Strong

There was a lot of information to digest this week as four major central banks released their interest rate decisions and statements.

The Bank of England, Reserve Bank of Australia, and the Bank of Canada all decided in keeping their respective interest rates unchanged (0.50 percent, 2.50 percent, and 1 percent, respectively).

Meanwhile, the spotlight was on the European Central Bank as they strayed from the pack and announced on Thursday a surprise cut in its benchmark interest rate to 0.05 percent from 0.15 percent. It also slashed its deposit rate by 10 basis points to -0.20 percent from -0.10 percent. The ECB “will purchase a broad portfolio of simple and transparent securities” in line with its plan to incite economic growth and hold against possible deflation. Draghi hinted on QE-style action in the coming months, and said “the governing council is unanimous in its commitment to using additional unconventional instruments.”

In other news, Manufacturing PMI in the UK, Spain, and Italy all came in weaker than expected. Spain and UK Services PMI, however, beat expectations.

Germany’s Factory Orders showed a strong rebound in July, rising 4.6 percent after posting two consecutive monthly declines.

Commodities

Gold resumed its decline this week after a successful bear defense of the $1,300 level. Price indeed rolled down further toward $1,250, reaching a weekly low of $1,257. Expect increase bearish pressure in the coming week toward potential support area at $1,240-$1,250.

Oil mirrored the prior week’s price range after the $96 level successfully held in the first three days. Price is nearing the 69-week low set on January in the low-$91s. If price breaks the $90-$91 area, price could tailspin to a swift toward $84-$86.

 Currency Pairs

USD is on a strong roll right now and EURUSD is manifesting this clearly. The pair is now in an 8-week losing streak after the 1.3000 level easily got broken this week. The weekly close at 1.2950 is very bearish; however, long-term support is just around the corner at 1.2750-1.2800.

GBPUSD dropped big time this week. Price went down nearly 370 pips, its widest trading range in close to 30 weeks. The easy break of 1.6500 imposes a serious concern in bulls’ minds. The 1.6000-1.6200 area is now at risk.

USDJPY resumed its advance this week after making a temporary pause around the 104 level. The strong bullish weekly close this week indicates there is a possibility of this pair moving to new highs. If it does not, bulls should create support in the 104-105 zone.

The Week Ahead

The second week of September will be evenly busy throughout the week.

On Monday, keep an eye on Japan’s Current Account and Final GDP; Australia’s ANZ Job Advertisement; China’s Trade Balance; Switzerland’s Retail Sales, CPI, and Jobless Rate; Germany’s Trade Balance; UK Halifax HPI; and Canada’s Building Permits.

On Tuesday, traders will look forward to the release of Japan’s BOJ Monetary Policy Meeting Minutes and Tertiary Industry Activity; Australia’s NAB Business and Home Loans; UK Trade Balance, NIESR GDP Estimate, and Manufacturing Production; Canada’s Housing Starts; US JOLTS Job Openings.

On Wednesday, there will be Japan’s Core Machinery Orders; Australia’s Westpac Consumer Sentiment; China’s New Loans; France’s Industrial Production; UK Inflation Report Hearings.

On Thursday, RBNZ will have its Rate Announcement, Press conference, and Monetary Policy Statement. Other economic releases include Japan’s BSI Manufacturing Index; Australia’s MI Inflation Expectations and Jobs data; China’s CPI and PPI; ECB Monthly Bulletin; Spain’s HPI; US Unemployment Claims.

Friday ends the week with New Zealand’s FPI and Business NZ Manufacturing Index; BOJ Kuroda’s speech; Eurogroup Meetings; US Retail Sales, Import Prices, and Preliminary UoM Consumer Sentiment