Similar to the actions of RBNZ and US Federal Reserve last week, the Reserve Bank of Australia, European Central Bank, and the Bank of England all decided to leave rates unchanged this week. Rates for these three central banks will remain at 2.50 percent, 0.25 percent, and 0.50 percent, respectively.
In the United States, the raft of news releases has been a mixed bag. ISM Non-Manufacturing PMI came in better than forecast and the Unemployment Rate improved to 6.6 percent from 6.7 percent. However, Trade Balance, ISM Manufacturing PMI, and Non-Farm Payrolls have been weak. Non-Farm Payrolls for January rose 113,000 compared with expectations for a 185,000 rise.
In the UK, Construction PMI came in much better than anticipated, while both Manufacturing PMI and Services PMI were slightly weaker than forecast.
In other news, unexpected declines were seen in Australia’s Building Approvals (-2.9% vs. -0.3% expected), Spain’s Unemployment Change (113,100 vs. -21,300 expected), and Canada’s Building Permits (-4.1% vs. 2.3% expected). On the other hand, Canada’s Employment Change and Unemployment Rate for January improved (29,400 and 7 percent, respectively).
As expected, not much has changed in Gold in the past week. This week’s price action is virtually a mirror image of last week’s, with the mid- to upper-$1,200s continuing to pose as resistance. Bulls might try to switch up the pace next week. And if they are successful, we could see a move toward $1,300.
Oil left Gold in the dust this week, as the former jolted higher on Friday, closing just above the $100 level. Oil could be setting up for a break to new highs if buyers can maintain support around 98-99 in the coming weeks.
The strong advance in EURUSD seen on Thursday and Friday allowed this pair to recuperate from the prior week’s decline. More than half of that week’s 237 pip decline has been erased in the process, and this gives buyers a chance to bring price back above 1.3700 and challenge the 1.3800 highs again.
A well-established support around 1.6250 has helped GBPUSD bulls mitigate a further decline after the hefty 1-day fall seen on Monday. Aided by the considerable rebound on Friday, this pair is effectively unchanged this week. A follow-through move from the bulls could drive price higher.
Like EURUSD and GBPUSD, USDJPY has experienced a reversal of fortune this week as the pair managed to recover from the decline below 101. Given that there are a lot of wood to chop ahead, price could find trouble advancing through 103.
The Week Ahead
Monday will start the week slowly with the release of Japan’s Current Account; France and Italy Industrial Production; Canada’s Housing Starts; and US Mortgage Delinquencies.
On Tuesday, Japanese banks will be closed to celebrate National Foundation Day. UK will kick things off with BRC Retail Sales Monitor; Australia’s NAB Business Confidence, Home Loans, and HPI; China’s Trade Balance and New Loans; Canada’s Annual Budget Release; US JOLTS Job Openings and testimony of Federal Reserve Chair Janet Yellen.
Wednesday will be slightly busier with Australia’s Westpac Consumer Sentiment; Japan’s Core Machinery Orders and Tertiary Industry Activity; Switzerland’s CPI; Eurozone Industrial Production; BOE Inflation Report and BOE Governor Carney’s Speech; and US Federal Budget Balance.
On Thursday, there will be a raft of news such as Business NZ Manufacturing Index; Australia’s MI Inflation Expectations and jobs data; Switzerland’s PPI; ECB Monthly Bulletin; Canada’s NHPI; US Retail Sales, Jobless Claims, and Business Inventories.
Finally, on Friday, there will still be news to watch out for such as Chinas CPI and PPI; France, Italy, and Germany’s Preliminary GDP; Eurozone Flash GDP; Canada’s Manufacturing Sales; US Import Prices, Capacity Utilization Rate, Industrial Production, and Preliminary UoM Consumer Sentiment.