The US dominated the economic news arena this week and it was a mixed bag.
US Pending Home Sales kicked off the week and it surprised to the downside, declining 0.6 percent in October. Based on the data given by National Association of Realtors, this is the fifth straight monthly decline.
US Building Permits were slightly higher at 0.97 million (versus 0.94 million expectations) for September, and breached the 1 million-mark in October (1.03 million versus 0.94 million expectation). The October reading is the highest in more than five years. S&P/CS Composite-20 HPI continued to increase for the third straight month with a 13.3 percent gain. Meanwhile, CB Consumer Confidence declined to a seven-month low in November (70.4 versus 72.2 forecast).
According to the US Census Bureau, Durable Goods Orders along with its core reading contracted on October. Purchase orders for durable goods declined 2 percent while purchase orders for core durable goods eased 0.1 percent during the same period.
On the other hand, US Jobless Claims improved for the second consecutive week. Only 316,00 Americans filed for unemployment benefits last week (analysts expected 331,000). Chicago PMI stayed above the 60 level for the second month in November at 63.0. Revised University of Michigan Consumer Sentiment rose to 75.1 in November.
In other news, New Zealand posted a Trade Balance of –NZD168 million, its lowest October trade deficit since the mid-1990s. This is the fourth straight trade deficit posted, but it has significantly declined since August.
Australian Bureau of Statistics reported that, after three consecutive quarterly declines, Construction Work Done surged a seasonally adjusted 2.7 percent in the September quarter. Meanwhile, Private Capital Expenditures also remained robust in the September quarter, surprising analysts with a 3.6 percent advance.
After the strong bearish performance during the previous week, Gold took a breather this week and struggled to close in on the $1,200 level. Price pretty much stayed close to $1,250 throughout the week, and some eager bulls seem to have intervened as if they are seeing bargains. They will need to tackle potential seller ahead of $1,300 and perhaps above this level.
Oil went on to close down for the third straight week. Despite the last-ditch rally on Friday, price closed the week below $93 signifying sellers still have consistent control. Buyers must certainly exert more effort as there are a lot of wood to chop until $95.
The activity in EURUSD was subdued last week as bulls found it hard to take out the 1.3600 level for three consecutive days. If this indicates limited upside potential, we may see the pair drift down towards 1.3400-1.3500.
GBPUSD continued to outpace EURUSD for a third straight week as the former surged past its own tough resistance (1.6250-1.6300) with ease. The strong weekly close at 1.6367 gives the pair the extra jolt it needs to take on higher prices.
Meanwhile, USDJPY made another impressive run higher, giving the pair its fifth straight weekly advance. Now that 102 has completely been taken out, we could see an attack on the 103 level. The 60-month high comes in at 103.72.
The Week Ahead
Unlike the past few weeks, Monday will be relatively packed with news. It will begin with New Zealand’s Overseas Trade Index, succeeded by Australia’s Building Approvals and Company Operating Profits; China’s HSBC Final Manufacturing PMI; Japan’s Capital Spending and BOJ Kuroda speech; Manufacturing PMI for Spain, Switzerland (SVME), Italy, UK, and the US. Fed Chairman Bernanke will also give a speech not long after the start of the US session.
UK’s BRC Retail Sales Monitory will kick off Tuesday, followed by Australia’s Retail Sales, Current Account, and RBA Rate Announcement and Statement; China’s Non-Manufacturing PMI; Japan’s Average Cash Earnings; Spain’s Unemployment Change; UK’s Halifax HPI and Construction PMI.
Wednesday will have Australia’s GDP; Spain, Italy, and UK Services PMI; Eurozone Retail Sales; Canada Trade Balance, BOC Rate Announcement and Statement; US ADP Non-Farm Employment Change, Trade Balance, New Home Sales, ISM Non-Manufacturing PMI, and Beige Book.
On busy Thursday, there will be Australia’s Trade Balance; UK Autumn Forecast Statement, Asset Purchase Facility, Official Bank Rate and MPC Rate Statement; ECB Rate Announcement and press conference; Canada’s Building Permits and Ivey PMI; US Preliminary GDP, Jobless Claims, and Factory Orders.
Finally, Friday will remain active with the release of Switzerland’s Foreign Currency Reserves and CPI; UK Consumer Inflation Expectations; Germany’s Factory Orders; Canada and US jobs data; US Core PCE Price Index, Personal Spending, Personal Income, and Prelim UoM Consumer Sentiment.