There were a flurry of disappointing figures seen this week, particularly in the United States and Canada.
The US Philly Fed Manufacturing Index posted a remarkable decline as severe winter weather affected manufacturing activity. It dropped 6.3 compared to the median forecast of 9.2. In line with this, the Empire State Manufacturing Index came in less than half of forecast at 4.5 December’s TIC Long-Term Purchases showed a bigger drop than the November figure, -$45.9 billion versus -$28 billion. The NAHB Housing Market Index also showed a surprise decline of 46 (versus 56 expected). Meanwhile, the latest Fed Minutes show the policymakers have plans to amend rate guidance as the unemployment rate eases.
In the same vein, Canada’s economic figures were predominantly weak. The Foreign Securities Purchases report on Tuesday showed a surprise contraction of CAD4.28 billion (versus CAD9.97 billion forecast). Wholesale Sales for December declined 1.4 percent, its biggest contraction in 6 months. Meanwhile, both headline and core figures of Retail Sales were down, -1.8 percent and -1.4 percent, respectively.
In other news the UK MPC Asset Purchase Facility and Official Bank Rate votes showed no change. The Claimant Count Change beat its expectation for the 12th consecutive month, while the Unemployment Rate ticked up to 7.2%.
Gold took a rest well above the $1300 after creating an impressive $57 rally through the $1,300 level last week. The serious challenge for the bullish momentum is up ahead, whereby a break through $1,360s would give bulls a ticket to attack a major resistance area at the low $1,400s.
Oil charged further north this week, following a pause around the $100 in the last week. Monday saw tame price action, then price jolted higher by more than $2 to close at the upper-$102s. The rest of the week saw back-and-forth movement in price, but it eventually settled the week at $102.35. Sellers need to bring price back below $100 to negate the bullish momentum.
Six straight weeks of tug-of-war has past and EURUSD now shows some enthusiasm to move in a single direction. Despite the weekly tight range, bulls emerged as winners this week – for the third straight week, in fact. There is still a great deal of forest wood to chop ahead of 1.39-1.40, though.
GBPUSD buyers have retreated after clinching new highs in the previous week. The pair has not retraced about half of its advance since February 4, and this could progress if 1.6600 breaks in the coming week.
USDJPY trade with a much wider trading range this week, yet the pair remains stuck below the mid-$102s for the third straight week. There are some bullish hints in price action, and if it plays out, we may see this pair visit $103.50-$104 in the next week or so.
The Week Ahead
There will be a dearth of economic news highlights for the coming Monday. With no significant news to watch out for in Asia and North America, the focus will be on Europe, particularly Germany’s Ifo Business Climate and Eurozone CPI figures.
Tuesday will provide slightly more action with Zealand’s Inflation Expectations; UK CBI Realized Sales, BBA Mortgage Approvals, and Nationwide HPI; EU Economic Forecasts; and US S&P/CS Composite-20 HPI and CB Consumer Confidence.
Wednesday will be unusually less active with Australia’s Construction Work Done; GfK German Consumer Climate; UK Second Estimate GDP and Preliminary Business Investment; UK MPC member Broadbent’s speech; and US New Home Sales.
Thursday’s action starts early with New Zealand’s Trade Balance; Australia’s Private Capital Expenditure; Switzerland’s GDP; Germany’s CPI and Unemployment Change; Eurozone’s M3 Money Supply; Canada’s Current Account; US Unemployment Claims and Durable Goods Orders.
Friday will be the most active day this week with New Zealand’s ANZ Business Confidence and Building Consents; Japan’s Preliminary Industrial Production, Household Spending, Retail Sales, and Tokyo Core CPI; Australia’s Private Sector Credit; Switzerland’s KOF Economic Barometer; Germany’s Retail Sales; France’s Consumer Spending; Eurozone Unemployment Rate and CPI Flash Estimate; Spain’s HPI; Canada GDP; US Chicago PMI, Prelim GDP, Revised UoM Consumer Sentiment Pending Home Sales; and speeches from FOMC’s Fisher, Kocherlakota, and Stein, and BOE’s Carney.