High-level talks and meetings continued this week as November drew to a close.
Obama and leaders of the US Congress stayed optimistic regarding the budget deal but both parties continue to push for a compromise agreement. Senate Democratic leader Reid expressed disappointment at the pace of the ongoing talks, with just a few weeks remaining before the fiscal cliff takes effect.
Eurogroup meetings discussed Greece, Spain, Ireland, and Portugal. Eurogroup head Juncker will reportedly step down this December or in early 2013. Juncker said he does not think Ireland or Portugal will be treated equally with Greece with respect to their loans.
Bank of England made a surprising decision to name Bank of Canada Governor Carney as the successor to current BOE Governor King. Carney’s appointment came as a surprise since BOE Deputy Paul Tucker was widely expected to take King’s position. Bank of Canada, meanwhile, will start its search for a new Governor.
There were also a lot of economic releases this week, but it was relatively a mixed bag. Most notably, US Durable Goods Orders, Conference Board Consumer Confidence, and Pending Home Sales came in better than expected.
In the commodities front, Gold failed to capitalize and follow up on last week’s gains, falling by $47 in the first three days towards $1,705. $1,700 continues to support price but demand needs to pick up soon and drive price back up above $1,750 to reduce chances of giving the advantage to sellers.
It was a slightly different story for oil as it mustered the strength to finish the week at a higher price, closing just below $89.00 after falling nearly $3 in the first three days of the week. Oil still needs a positive close above $90.00 to unlock higher prices.
EURUSD’s Monday trading was relatively quiet and a push below 1.2900 followed on Tuesday after price failed to gain a foothold on 1.3000. The drive downwards continued until Wednesday, but buyers showed up in the 1.2880 lows. Consequently, price mustered enough demand to climb back up towards 1.3000, closing the week just a few pips below this important level. This pair remains bullish as long as bears cannot drive price back below 1.2900. 1.3100 and 1.3200 are possible upside targets.
USDJPY finally consolidated after making strong gains in the past two weeks. On Friday, the pair tried to push beyond last week’s high but failed in the process. Bullish bias still remains but further consolidation cannot be ruled out at this point.
Just like EURUSD, GBPUSD mellowed down and made a brief foray below the 1.6000 level, moving down to as low as 1.5961. Buyers forced a move higher until month-end when EURGBP buying foiled further upside attempts. The upside is very much open now, with 1.6160 the near-term target for bulls.
EURAUD continues its negative influence on AUDUSD, forcing the latter to create 5 straight higher highs and lows the entire week. 1.0400 is the near-term support and bears need to move past this level to unlock a move towards 1.0300.
The Week Ahead
The first full week of December comes in full blast as it is filled with numerous important economic releases and high-level speeches. Monday starts off with Australia’s Retail Sales data; China’s Non-Manufacturing PMI and HSBC Flash Final Manufacturing PMI; Bank of Japan Shirakawa’s speech, Switzerland’s Retail Sales; UK Manufacturing PMI; Eurogroup meetings; and US ISM Manufacturing PMI. On Tuesday, Australia’s Building Approvals, Interest Rate announcement and Rate Statement; Spain’s Unemployment Change; UK Construction PMI; Bank of Canada’s Rate Announcement and Statement. Wednesday, there is Australia’s GDP, RBA Deputy Governor Lowe’s speech; UK Services PMI; Spain’s 10-year bond auction; US ADP Nonfarm employment change and ISM Non-Manufacturing PMI. On Thursday, New Zealand RBNZ’s Rate Announcement, Rate Statement, and press conference; Australia’s Unemployment Rate and Employment Change; Switzerland’s CPI; UK’s Asset Purchase Facility, Rate Announcement and Statement; ECB’s Rate Announcement and press conference; Canada’s Building Permits and Ivey PMI; US Unemployment claims. On Friday, Australia’s Trade Balance, Switzerland’s Foreign Currency Reserves, UK’s Manufacturing Production; ECB President Draghi’s speech; Canada’s Unemployment Rate and Employment Change; US Non-Farm Employment Change, Unemployment Rate, and Preliminary University of Michigan Consumer Sentiment. German Bundesbank President Weidmann will also give a speech on Friday.