Bank of Canada on Wednesday decided to maintain its overnight rate target at 1 percent. In the BOC Rate Statement, Governor Stephen Poloz dropped the central bank’s bias for future interest rate hikes.
In other news, the much-awaited jobs reports from the United States have finally been released on Tuesday. Non-Farm Employment Change disappointed with an increase of only 148,000, while analysts expected a gain of 182,000. Bureau of Labor Statistics reported that the Unemployment rate eased slightly to 7.2 percent. Meanwhile, JOLTS Job Openings increased to 3.88 million in August, from 3.81 million during the prior month. On the other hand, Jobless Claims increased to 350,000 in the prior week, versus 343,000 expectations.
In the United Kingdom, Public Sector Net Borrowing improved to GBP9.4 billion. The August reading was revised better to GBP10.8 billion from GBP11.5 billion.
On Thursday, Statistics New Zealand said the Trade Balance data improved to –NZD199 million in the September quarter, a huge drop in deficit compared to the previous quarters –NZD1.234 billion trade deficit.
Gold continued to advance this week, coming off a successful reversal from the $1,251 low in the prior week. Price closed right at $1,350, a critical area that gave problem to the bulls for many weeks prior. The next objective for bulls is to break through $1,400-$1,450.
Oil sank the most this week compared to the five weekly declines that past. We could attribute this to the overwhelming pressure which led to the successful break of the bullish defenses around $100-$101. The question now is whether the $95-98 area would cause a temporary halt in the relatively steady decline seen since early September.
EURUSD have successfully kept the pair afloat this week, easily averting a lone takedown attempt around 1.3650 in the early part of the week. We’ve now seen back-to-back weekly advances, and we expect this to continue as long as 1.3600-1.3800 holds. Next upside target is 1.4000-1.4250.
GBPUSD had a very tough week lagging behind its lifelong rival, EURUSD. GBPUSD failed to take advantage of the prior week’s 330-pip advance. Instead, the pair languished in consolidation throughout the entire week. Price needs a serious punch-through of 1.6250; otherwise, sellers might get ambitious and target 1.5800-1.6000.
USDJPY declined for a second consecutive week as the 98-99 area continued to pose problems for all bulls. This puts price closer to breaking the 10-week low at 96.56. If a successful break occurs, the next downside target would come in around 93.80.
The Week Ahead
This Monday, New Zealand will celebrate Labor Day. Economic data release start in the European session with UK’s CBI Realized Sales; US Industrial Production and Capacity Utilization Rate, and Pending Home Sales.
On Tuesday, Reserve Bank of Australia Governor Stevens will give a speech in the early part of the Asian session. Then there will be Japan’s Household Spending and Retail Sales; Germany’s Gfk Consumer Climate; UK net Lending to Individuals; Canada’s IPPI and RMPI; US PPI, Retail Sales, Consumer Confidence, and S&P/CS Composite-20 HPI.
Wednesday will start off with Japan’s Preliminary Industrial Production. This will be followed by Germany’s Preliminary CPI and Unemployment Change; Switzerland’s KOF Economic Barometer; Spain’s Flash GDP; US ADP Non-Farm Employment Change, CPI, FOMC Statement, and Federal Funds Rate.
Economic data release for a very busy Thursday will start very early with New Zealand’s RBNZ Interest Rate Announcement and Statement, Building Consents, ANZ Business Confidence. This will be followed by Australia’s Private Sector Credit; Japan’s BOJ Monetary Policy Statement, BOJ Outlook Report, and Press Conference; Germany’s Retail Sales; France’s Consumer Spending; Eurozone Unemployment Rate and CPI Flash Estimate; Canada’s GDP; US Jobless Claims and Chicago PMI.
Finally, Friday will have Australia’s PPI; China’s HSBC Final Manufacturing PMI and Manufacturing PMI; Switzerland’s SVME PMI; UK Manufacturing PMI; and US ISM Manufacturing PMI.