Central bank rate announcements and the widely-popular US employment data were the focus for the past week.
The European Central Bank and the Bank of England both left their respective rates unchanged. Both BOE and the ECB kept the rates at 0.50 percent. The Asset Purchase Facility created and utilized by the BOE remained at GBP375 billion.
The Australian central bank, RBA, declared an unchanged cash rate on Wednesday. Reserve Bank of Australia left the rate at the ultra-low 2.75 percent as the policymakers pointed to signs of pickup in the local housing market and consolation for local exporters as the Aussie dollar weakened against other currencies, particularly the US dollar, precipitated by the rate slashes that began sometime in the latter part of 2011. The consensus from the board, led by Governor Stevens, is an outlook for improvement in the following year joined by depreciation of the Australian dollar “over time.” Stevens believes the local currency remains “at a high level.”
Australian Bureau of Statistics published a 0.1 percent increase in Retail sales in May and a better-than-expected Trade Balance for May, AUD0.67 billion.
In other news, Automatic Data Processing reported on Wednesday a better-than-forecast 188,000 climb in June’s US ADP Non-Farm Employment Change. Median expectation was for a climb of 161,000, subsequent to May’s 134,000 gain. On Friday, the US dollar caught a second wind as the Non-Farm Employment Change data from the Bureau of Labor Statistics revealed an even stronger 195,000 reading. Unemployment rate stood at 7.6 percent in June.
Gold had a very quiet trading during the first four days of the week. But this all changed on Friday as the yellow metal burst downward after the $1,250-60 area failed to give way to the ailing bulls. The week closed down and inside the prior week’s much larger range. The $1,180-$1,200 area is back in trouble.
EURUSD sellers encountered relatively weaker resistance as they moved further down since the 1.3100 level broke the other week. Since 1.2900 and 1.3000 psychological level was also left in the dust, the next target is the break of 1.2700-1.2800.
With the benefit of Dollar strength, USDJPY was able to rise this week, climbing in 4 out of the 5 trading days. The weekly close above the 101 level is an indication for a possible return to the upper-103s. In the interim, the 100 level must hold.
Just like EURUSD, GBPUSD declined heavily this week, sinking nearly 450 pips after 1.5300 held well and the 1.5000 along with the 1.4900 level got pulverized. If 1.4800 yields to pressure, sellers will set their sights on 1.4100-1.4200.
The Week Ahead
This coming week, economic data are pretty much evenly spread out but generally, it will be much quieter compared to the prior week.
On Monday, there will be releases such as Japan’s Current Account, AUD ANZ Job Advertisements; Germany’s Trade Balance and Industrial Production; Canada’s Building Permits and Bank of Canada’s Business Outlook Survey.
Tuesday starts very early with the release of New Zealand’s NZIER Business Confidence; followed by UK’s BRC Retail Sales Monitor, Australia’s NAB Business Confidence; China’s CPI; Switzerland’s Retail Sales; UK’s Manufacturing Production and Trade Balance; and ECOFIN Meetings.
On Wednesday, traders can expect some action during the release of Australia’s Westpac Consumer Sentiment; China’s Trade Balance; France’s Industrial Production; FOMC Meeting Minutes and US Federal Reserve Chairman Bernanke’s speech.
On Thursday, Japan’s comes out with Core Machinery Orders, followed by Australia’s MI Inflation Expectations, Employment Change, and Unemployment Rate; BOJ Monetary Policy Statement and BOJ Press conference; ECB Monthly Bulletin; United States Unemployment Claims and Federal Budget Balance.
Friday ends the week with the release of Australia’s Home Loans; Eurozone Industrial Production; US PPI and Preliminary UoM Consumer Sentiment.