The Bank of Canada and Bank of England both decided in line with expectations this week, keeping the rate at 1 percent and 0.50 percent, respectively. However, the European Central Bank diverged by slashing its Minimum Bid Rate down to 0.15 percent, when the market was expecting a reduction to 0.10 percent.
In the United States, the Non-Farm Employment Change came nearly in line with expectations (217,000 versus 214,000 forecast). Unemployment Rate for May remained at 6.3 percent. The April Trade Balance, meanwhile, reached -$47.2 billion, the worst reading in over 2 years, as exports decrease 0.2 percent and Americans increased purchase of business equipment, automobiles and consumer goods made from abroad.
Meanwhile, Australia had a very rough week with the release of some surprisingly weak economic readings. Building Approvals for April surprised with a 5.6 percent decline, its third negative monthly reading in a row. Trade Balance declined for the first time in 5 months (-AUD0.12 billion versus AUD0.40 billion forecast). On the bright side, Company Operating Profits, Current Account, and GDP came in better than forecast.
Gold had a very uneventful week after posting a decline of over $50 during the prior week. Gold traded within a very tight $17 range this week, bobbing up and down on both sides of $1,250. Bulls would likely push for a move back to the $1,300.
The bearish inside week in the previous week paved way to another sell-down this week. However, the reversal on Thursday gave some life to price and helped reduce the bearish casualty this week. If we don’t see a retest of the 101.50 next week, we could see another test of $104.
The extreme volatility on Thursday in EURUSD ended with a bullish tone as Draghi and the ECB decided to cut rates less than expected. This enabled the pair to clinch its second consecutive bullish week. If momentum continues next week, we could see price gain back toward 1.3800.
GBPUSD posted a bullish inside week just above the 1.6800 level. It was a clear win for bulls, as continued decline through 1.6700 would force a move toward 1.6500. Buyers must take out resistance just above the 1.6900 level.
We finally saw a considerable upmove in USDJPY after last week’s silent trading below the 102 level. The pair posted 4 bullish daily closes this week, and it nearly reached the 103 level in the process. Based on recent price action, we could see bulls challenge sellers beyond 104.
The Week Ahead
On Monday, the news releases will be very few: Japan’s Current Account, Bank Lending, and Final GDP; and Canada’s Housing Starts. Today, some states in Australia will observe the Queen’s Birthday, while France, Germany, and Switzerland will observe Whit Monday.
On Tuesday, there will be UK’s BRC Retail Sales Monitor; Japan’s Tertiary Industry Activity; Australia’s NAB Business Confidence and Home Loans; China’s New Loans, CPI and PPI; France’s Industrial Production; UK’s Manufacturing Production; and US JOLTS Job Openings.
Wednesday will be very brief and start early with Japan’s BSI Manufacturing Index, Australia’s Westpac Consumer Sentiment; New Zealand’s REINZ HPI; UK Unemployment Rate and Claimant Count Change; US Federal Budget Balance.
Thursday will be the most news-packed day this week with the release of Reserve Bank of New Zealand’s Rate Announcement, Statement, Press Conference, and Monetary Policy Statement; Australia’s Employment Data and MI Inflation Expectations; ECB Monthly Bulletin; Canada’s NHPI; US Retail Sales, Import Prices, Unemployment Claims, and Business Inventories.
Friday ends the week with the release of Business NZ Manufacturing Index; BOJ’s Monetary Policy Statement; China’s Industrial Production and Fixed Asset Investment; Canada’s Manufacturing Sales; US PPI and Preliminary UoM Consumer Sentiment.