Greece Stays in EU as Bailout Vote Passes, Euro Declines

The lawmakers in the Greek government approved the bailout agreement on Thursday, allowing the country to remain as a member of the Eurozone. The latest austerity measures have been approved as part of the 86 billion euro aid.

In its latest decision, the ECB’s Minimum Bid Rate stayed at 0.05 percent as expected. However, Bank of Canada reduced its Overnight Rate by 25 percentage points to 0.50 percent as the bank acknowledged the bigger contraction seen in the first half of the year. This is the second rate cut for BOC this year.

In Europe, the German ZEW Economic Sentiment missed estimates and declined to 29.7 from 31.5 from June. The Eurozone counterpart also declined, from 53.7 to 42.7.

UK CPI is flat but PPI Input slipped -1.3 percent, worse than the 0.7 percent dip expected. Jobless Rate increased back to 5.6 percent in July, after two consecutive months of stay at 5.5 percent.

In the United States, the main and core readings of Retail Sales surprisingly declined in May (-0.3 percent and -0.1 percent, respectively). Jobless Claims for the prior week was 3,000 less than expected at 281,000. The Philly Fed Manufacturing Index sank to 5.7 after posting 15.2 in June. Building Permits and Housing Starts increased In June (1.34M and 1.17M respectively). This housing starts figure is the second best reading since late 2007 as builders did more apartment projects. The UoM Consumer Sentiment stayed above 90 at 93.3, but this is lower than the median forecast of 96.

Commodities

Gold is now on its fourth weekly decline as buyers failed to push price back through $1,200. The strong bearish weekly close could signal that price is still willing to move further downward. We now have a weekly triple bottom close to getting broken.

Oil posted its fifth weekly decline and it’s now closer to breaking the $50 level. The triple bottom is getting closer to becoming a reality. Buyers need to be careful and seek support around that key $50 level.

Currency Pairs

Out of five daily closes, EURUSD slipped for four days, giving the pair a very bearish weekly close. This close is in fact its lowest close in at least the past 12 weeks. This pair is likely to revisit the double bottom in the early part of this year.

Although GBPUSD closed higher this week, it showed signs that price is having trouble in the upper-1.56s. 1.5600 could remain attractive to both sellers and buyers.

The significant turnaround in the prior week paved the way for USDJPY to gather momentum higher this week. Resistance remains around 124, then the June 5 high below 126.

The Week Ahead

Monday will mostly be quiet except for the release of China’s New Loans; Germany’s PPI and Bundesbank Monthly Report; and Canada’s Wholesale Sales. Japanese banks will observe Marine Day.

Activity will pick up slightly on Tuesday starting with the publication of Policy Meeting Minutes from BOJ and RBA. This will be followed by the release of Switzerland’s Trade Balance; and UK Public Sector Net Borrowing.

Wednesday’s will have more news activity with Australia’s CPI and Trimmed Mean CPI; UK MPC Asset Purchase and Official Bank Rate votes; and US Existing Home Sales.

Thursday will have New Zealand’s RBNZ Rate Announcement and Statement; Japan’s Trade Balance; China’s CB Leading Index; Greek Government Debt Crisis Vote; Spain’s Jobless Rate; UK Retail Sales; Buba Weidmann’s speech; Canada’s Retail Sales; and US Jobless Claims.

Friday ends the week with New Zealand’s Trade Balance; China’s Markit Flash Manufacturing PMI; France, Germany, and Eurozone Flash Manufacturing and Services PMI; US New Home Sales and Flash Manufacturing PMI.

About Jessica

Jessica has been a trader in the forex market for the last decade. She specializes in technical analysis and writes for several forex blogs about the topic.