The latest Consumer Sentiment published by the University of Michigan trumped all forecast for the month of May. The preliminary May figure rallied to 83.7, the best reading since July 2007, following an April reading of 76.4.
Meanwhile, the Conference Board issued its latest Leading Economic Index for the United States and this showed a 0.6 percent gain to 95.0 in April. These two upbeat late-Friday news led the US Dollar to rally against 16 of its actively traded peers and the Dollar Index to advance to its highest in nearly three years.
In other news, US Consumer Price Index slipped more than forecast to 0.4 percent in April, falling for a second month in a row. This contrasts with the minus 0.3 percent forecast and last month’s 0.2 percent decline. On the other hand, US unemployment weekly claims rose more than the median estimate during the prior week. It climbed to 360,000 versus expectations for only 332,000. The earlier week’s reading was revised from 323,000 to 328,000.
Yearly inflation rate in Canada, the 11th biggest economy in the world, slowed to its weakest level in over three years, even declining below the target range of the Bank of Canada. Declining gasoline prices was the main cause, and “price decreases for the purchase of passenger vehicles were also a factor,” according to Statistics Canada on Friday. Five out of the eight major components reported a decrease in April.
Gold has slid more than $90 this week as buyers failed to support price and reach toward the $1400 level the entire week. With five straight days of decline, price will now move closer to the latest low printed last April at $1,321. The yellow metal’s decline this year is closing in on the 20 percent mark.
Growing optimism in the United States had spurred Oil to recover from the mid-week drop and create three straight days of gains, enabling it to close the week virtually unchanged. Price closed the week in the upper-$95 after reaching back towards the mid-$96. Soon, price will have to contend with recurring resistance in the upper-$96s and through the $97 level.
Except for Monday, EURUSD took on a bearish bias and slid all week soon after bears proved that buyers won’t be able to sustain prices above the 1.3000 level. The pair reached as low as 1.2795 before closing the week at 1.2835. Near-term outlook is a bearish move towards 1.2500-1.2600.
Despite the rugged moves this week, USDJPY came out stronger as it reached beyond the 103.00 level last Friday, boosted by favorable US data in the form of University of Michigan’s Consumer Sentiment for May and the CB Leading Economic Index. The pair has rallied higher for the eighth straight month now, hence any corrections, sooner or later, won’t be surprising.
Straight off from Monday’s trading, GBPUSD has already been decidedly bearish. The mid-week correction only afforded more bears to enter or reload their shorts, sinking price further below the 1.5200 level into the week’s close. If momentum continues, next target comes in at the 1.5000-30 area.
The Week Ahead
The new week has key economic releases scattered throughout every single day except Monday, with more releases to be published mid-week as usual.
On Monday, Switzerland, Germany, France, and Canada are all on holiday, with the first three countries observing Whit Monday. Canada will celebrate Victoria Day.
Tuesday jumpstarts the economic week with the release of Australia’s CB Leading Index, and RBA’s Monetary Policy Meeting Minutes; New Zealand’s Inflation Expectations; UK’s PPI, RPI, HPI, and CPI; Germany’s PPI. FOMC’s Bullard and US Treasury’s Lew will also provide speeches.
On Wednesday, there are Japan’s Trade Balance, Monetary Policy Statement, and BOJ Press con; Eurozone Current Account data; UK Retail Sales, Public Sector Net Borrowing, and MPC Meeting Minutes; EU Economic Summit; Canada Retail Sales; US Existing Home Sales and FOMC Meeting Minutes.
Thursday starts off early with Australia’s MI Inflation Expectations; China HSBC Flash Manufacturing PMI; Germany, France, and Eurozone Flash Manufacturing and Services PMI; UK Second Estimate GDP and Preliminary Business Investment; and US Flash Manufacturing PMI, Unemployment Claims, New Home Sales, and HPI.
Finally on Friday, releases will come in the form of New Zealand’s Trade Balance; BOJ Kuroda’s speech; German Final GDP and Consumer Climate; Buba President Weidmann’s speech; US Durable Goods Orders.