The Reserve Bank of Australia, European Central Bank, and Bank of England all decided to leave their respective interest rates unchanged this week. RBA left its Cash Rate at 2.50 percent, while the ECB and BOE left their rates at 0.25 percent and 0.50 percent, respectively. ECB’s Draghi expressed no willingness to further the central bank’s stimulus measures, but at the same time talked about a possible June action in light of low inflation and a strong forex rate.
In other news, Australia’s Building Approvals dipped 3.5 percent in March, giving this data its 5th decline in the last 6 months. Trade Balance slipped below the 1 billion mark for the first time in 3 months in March at AUD0.73 billion. Employment Change came in almost double of forecast in April while Jobless Rate was unchanged at 5.8 percent.
In contrast, New Zealand Jobless Rate stood at 6 percent for the second month, while Employment Change increased slightly to 0.9 percent.
Spanish Unemployment Change came in more than double its forecast at -111,565.
Gold bolted the $1,300 level on Monday and reached a high of $1,315. This turned out to be the high of the week as price pretty much declined from then on. This price action indicates Gold is not yet prepared to move higher and it still prefers range trading. Keep an eye on $1,250-80.
Oil saw mild trading action this week, closing virtually unchanged compared to last week’s close. Price topped out just above 101 on the third daily attempt on Friday after 2 consecutive days of misses. 102-104 likely has more lurking sellers.
EURUSD has been slammed lower this week, particularly on Thursday and Friday after the pair failed to thrust through the key 1.40 level. Price dropped 250 pips on those 2 days, and closed the week near the week’s low at 1.3757. If momentum carries forward, we’ll likely see an attack on 1.3600.
GBPUSD reached another new high this week, but the pair ended close to its weekly low just like EURUSD. The first attempt at 1.70 failed and it was followed by heavy selling that reached the mid-1.6800s. Bulls must contain this selling by fortifying 1.6700-1.6850.
USDJPY bulls remain vulnerable as they fail to break through 103. If we look back, this pair has been in consolidation since February, but in the last several weeks, we have seen dominance of bears thanks to their strong defense of the 103 level. If their dominance continues, we could see a move toward 100 in the next week or so.
The Week Ahead
This week, Monday will be a very brief news day with Japan’s Current Account; Australia’s NAB Business Confidence; Switzerland’s Retail Sales; and US Federal Budget Balance.
Tuesday will get started quite early with UK’s BRC Retail Sales Monitor; Australia’s Annual Budget Release, HPI and Home Loans; China’s Industrial Production and New Loans; Germany’s ZEW Economic Sentiment; US Retail Sales and Import Prices.
Wednesday will get busy very early with New Zealand’s RBNZ Financial Stability Report and Retail Sales; UK BOE Inflation Report, Claimant Count Change and Jobless Rate; Switzerland’s ZEW Economic Expectations; and US PPI.
Thursday’s action will start very early as well with New Zealand’s Business NZ Manufacturing Index and Annual Budget Release; Japan’s Prelim GDP and BOJ Kuroda’s speech; Australia’s New Motor Vehicle Sales; France and Germany Prelim GDP; Euro-area CPI and Flash GDP; Canada’s Manufacturing Sales; US CPI, Jobless Claims, Empire State Manufacturing Index, Industrial Production, and Philly fed Manufacturing Index.
On Friday, news activity will significantly decrease with Japan’s Revised Industrial Production; France Prelim Non-farm Payrolls; Canada’s Foreign Securities Purchases; and US Building Permits, Housing Starts, and Prelim UoM Consumer Sentiment.