The latest US Federal Open Market Committee Meeting Minutes published on Wednesday revealed that there is no urgent need to end the $85 billion monthly bond-buying program, based on the information acquired since May. The minutes noted moderate economic activity coupled with improvement in the labor and housing market while unemployment rate stayed elevated. About half of the policy board prefers to end the stimulus program by year-end, but many of them concede that labor market improvement is warranted before tapering the stimulus.
In other news, China’s Producer Price Index slumped 2.7 percent and has stayed subdued since March 2012. On the other hand, Consumer Price Index surprised to the upside with a 2.7 percent gain, the fastest pace in four months.
Australia’s Employment Change data saw a gain of 10,300 locals employed in June, way better than the nearly flat forecast by analysts surveyed. Unemployment Rate ticked up to 5.7 percent in June, the highest since October 2009.
Gold’s new trading week started out quiet but the pace picked up on Thursday after the US FOMC Meeting Minutes. The volatility enabled gold to climb just two pips short of $1,300 and close the week around $1,285. Gold is now ready to step up the pace and aim for $1,350-$1,400.
It was a solid trading week for Oil bulls as price thrusted further up and closed the week at the $105.50s. However the run-up seems overdone and price is vulnerable to quick declines. Bulls should support price around $102-$104 to keep the momentum going.
EURUSD buyers launched a significant effort this week, breaking the three consecutive weekly declining streak and averting a potential black hole below the 1.2800 area. The volatility caused by the US FOMC Meeting Minutes and Bernanke’s speech helped the pair spike through 1.3200 before ending the week around 1.3066. Upside target right now is the strong break of 1.3400.
USDJPY manifested some weakness this week after what was pretty much a one-way street since mid-June. The 101.50 level posed some problems and price turned around from this area, sinking quickly below 100. Sellers will have to chop their way through 97-98 in order to reach 94-95.
GBPUSD finally traded in the green this week after registering three straight weekly drops that saw price nearly touch the 1.4800 critical level. The pair managed to close above 1.5100; however a break of 1.5300 is needed to keep the momentum on the side of the bulls.
The Week Ahead
The coming week will be quite active with Tuesday and Wednesday posting the greatest activities.
Monday’s Asian session comes out with its first release in the form of Australia’s New Motor Vehicle Sales, followed by China’s Fixed Asset Investment, GDP, Industrial Production, Retail Sales and NBS presscon; Switzerland’s PPI; US Retail Sales, Empire State Manufacturing Index, Business Inventories. Japan will observe Marine Day this day.
On Tuesday, New Zealand will start off with the release of CPI, then Australia’s Monetary Policy Meeting Minutes; UK PPI Input, RPI, HPI, and CPI, and BOE Inflation Letter; Germany’s ZEW Economic Sentiment; Eurozone CPI, ZEW Economic Sentiment, and Trade Balance; Canada’s Manufacturing Sales; US CPI, Capacity Utilization Rate, Industrial Production, and TIC Long-Term Purchases.
Wednesday starts off early with Japan’s BOJ Monetary Policy Meeting Minutes; UK Claimant Count Change, MPC Official Bank Rate Votes, MPC Asset Purchase Facility Votes, Average Earnings Index, Unemployment Rate; Switzerland ZEW Economic Expectations; Canada’s Foreign Securities Purchases, BOC Rate Statement and Announcement; US Housing Starts, Building Permits, Beige Book, and Fed. Reserve Chairman Bernanke’s Testimony.
Thursday will begin with Australia’s CB Leading Index and NAB Quarterly Business Confidence; Eurozone Current Account; UK Retail Sales; Canada Wholesale Sales; US Unemployment Claims, CB Leading Index, and Fed. Chairman Bernanke’s Testimony.
Friday quiets down significantly and will only see the release of Germany’s PPI, Spain’s HPI, and Canada’s CPI. Today will also be the first day of the two-day G20 meetings.