Federal Reserve Chair Janet Yellen made her testimony in the Semiannual Monetary Policy Report before the House Financial Services Committee in Washington last Tuesday. In her debut as the Fed Chair, Yellen said the Fed is committed to stay the course and continue trimming the monthly bond purchases. She emphasized that she does not plan to make any sudden changes to the monetary policy as the recovery from the labor market is still incomplete.
In other news, Japan’s Core Machinery Orders declined 15.7 percent, nearly four times as expected in December, reversing from the 9.3 percent gain in the previous month. Tertiary Industry Activity eased 0.4 percent.
China’s Trade Balance surpassed expectations as it registered CNY31.9 billion versus CNY24.2 billion expected. This is the second best reading in the last 15 months. CPI remained at 2.5 percent for the second month.
In Australia, the Bureau of Statistics reported that Employment Change for January decreased 3,700, while analysts expected a 15,300 advance. In contrast, Employment Change declined 23,000 last December. The Unemployment Rate rose to 6 percent, the worst in over 10 years.
In the United States, Unemployment Claims rose 339,000 compared to the 331,000 forecast. Meanwhile, Preliminary University of Michigan Consumer Sentiment.
Gold outpaced Oil this week as the former broke the $1,300 level successfully. Buyers would need to contend with potential sellers around $1,350-$1,400 next.
Oil took a huge breather this week around the $100 level, following four straight weeks of gains. Bears are likely very jittery at this point as bullish momentum could drive price toward $104-$106 very soon. Sellers should prevent the floodgates of $100 from opening to the upside.
We have just seen two consecutive weekly gains for EURUSD but the pair still needs to contend with the sellers around 1.3700. This pair needs to play catch-up with GBPUSD as there are still topside barriers in the form of previously monthly highs.
GBPUSD showed remarkable gains this week, giving the pair a total of 7 straight daily gains since the 1.6250 level held in the prior week. Expect a few tests of the 1.6700 level to happen in the coming days or weeks.
USDJPY saw a pretty much uneventful week as the pair failed to capitalize on last week’s bullish reversal. Sellers around 102.50 took charge and pulled this pair down. If price will continue to find problems advancing through 103, we could see attempts to break the 100 level.
The Week Ahead
The week will start out with only a few news highlights for Monday, particularly Australia’s New Motor Vehicle Sales for January; Japan Prelim GDP; and Eurogroup meetings. US banks are closed to commemorate President’s Day (Washington’s birthday).
Tuesday will provide more action in the form of Monetary Policy Meeting Minutes from the RBA and Monetary Policy Statement from BOJ; Euro-area Current Account; UK CPI, RPI, and PPI Input; Germany and Euro-area ZEW Economic Sentiment; Canada’s Foreign Securities Purchases; US TIC Long-term Purchases, Empire State Manufacturing Index, and NAHB Housing Market Index.
On Wednesday, there are Australia’s CB Leading Index and Wage Price Index; UK Claimant Count Change, Unemployment Rate, MPC Asset Purchase Facility and Official Bank Rate votes; Switzerland’s ZEW Economic Expectations Survey; Canada Wholesale Sales; US PPI, Building Permits, Housing Starts, Fed’s Meeting Minutes.
Thursday’s action begins with New Zealand’s PPI Input and Output; Japan’s Trade Balance; China’s HSBC Flash Manufacturing PMI; Germany’s PPI; Flash Manufacturing PMI and Flash Services PMI for Euro-area, France, and Germany; UK CB Industrial Order Expectations; US Unemployment Claims, CPI, Philly Fed Manufacturing Index, and speech from Fed Chair Yellen.
Friday will remain active with BOJ’s Monetary Policy Meeting; UK Retail Sales and Public Sector Net Borrowing; G20 Meetings; EU Economic Forecasts; Canada’s CPI and Retail Sales; and US Existing Homes Sales.