Central bank announcements dotted most of the week and all these central banks decided to maintain their respective rates. To wit, the Reserve Bank of Australia left its Cash Rate at 2.50 percent; Bank of Canada left its Overnight Rate at 1 percent; Bank of England maintained its Official Bank Rate at 0.50 percent; and the European Central Bank decided to keep its Minimum Bid Rate at 0.25 percent.
In the United States, Non-Farm Employment Change and Unemployment Rate manifested positive surprises: the former increased 203,000 and the latter improved to 7 percent. Jobless Claims came in below 300,000 for the first time in 12 months, posting 298,000 last week. ISM Manufacturing PMI rose to 58.4 but ISM Non-Manufacturing PMI eased to 53.9. Preliminary University of Michigan Consumer Sentiment soared to 82.5 after posting a revised 75.1 reading last October. Meanwhile, New Home Sales increased 25.4 percent to an annualized pace of 444,000 in October.
In other news, Canada’s Building Permits jumped 7.4 percent in October (CAD7.2 billion), according to the latest data from Statistics Canada. Employment Change came in almost double of its November forecast, 21,600. The Unemployment Rate stayed at 6.9 percent for a third straight month.
Gold resumed its downside course this week, but bulls continued to resist declines throughout the week. The back-and-forth price movements were confined in the $1210-$1250 area for most of the week. We do not expect any changes in the price movement next week, but bears could still impose their strength, so bulls should keep that in mind.
Oil had a much better week in terms of price action as “black gold” sprung up nearly $6 after a lackluster November. Price could challenge the $99-$100 area if we do not see substantial retreat in price in the coming days.
EURUSD had another good run this week, posting its fourth straight bullish weekly close not to mention gaining a foothold of 1.3700 by the end of the week. This recent activity threatens more bears as the 1.3831 October high draws near. We expect a pullback towards the 1.3600s as a healthy retreat.
GBPUSD painted a different picture as the pair broke its streak of weekly gains this time. The pair rose through the 1.6400 level but it did not manage to hold above it. 1.6300 must continue to gain support in the coming weeks, otherwise GBPUSD would lag behind the other major currencies.
USDJPY slid for most of the week, but an impressive run-up last Friday managed to give this pair a bullish weekly close and sixth straight bullish week. The 103.72 May 2013 high, which is also the 4-year high, is now close by and is in danger of getting run over soon. If the JPY weakness continues.
The Week Ahead
Monday will be back with a busy Asian session. We will witness the release of Japan’s Current Account and Final GDP; Australia’s ANZ Job Ads; China’s CPI and PPI; Germany’s Trade Balance, succeeded by Switzerland’s Retail Sales; Eurogroup Meetings; Germany’s Industrial Production; BOE Governor Carney’s speech; US FOMC Bullard’s speech.
Tuesday will start early with Japan’s BSI Manufacturing Index and Tertiary Industry Activity; Australia’s NAB Business Confidence and Home Loans; China’s New Loans, Fixed Asset Investment and Industrial Production; UK, Italy, and France Industrial Production; UK Manufacturing Production and NIESR GDP Estimate; and US JOLTS Job Openings.
Wednesday will be a very brief news day with Australia’s Westpac Consumer Sentiment; Japan’s Core Machinery Orders; and US Federal Budget Balance. UK MPC Member Weale and US Treasury Secretary Lew will also give their respective speeches.
Thursday is a big day as New Zealand and Switzerland will announce their respective interest rates announcements and monetary policy statements. Australia will be out with MI Inflation Expectations and jobs data, while the United States will release Retail Sales, Jobless Claims, and Import Prices.
Finally, Friday will cap the week with New Zealand’s Business NZ Manufacturing Index; Switzerland’s PPI; US PPI; and UK MPC Member Dale’s speech.