The Federal Reserve in the United States on Wednesday decided to keep interest rates unchanged. The Federal Open Market Committee continued with its bond-buying reduction for its fifth straight meeting, now just $35 billion. In her press conference, Federal Reserve’s Janet Yellen noted that “economic activity is rebounding in the current quarter and will continue to expand at a moderate pace” and that the Fed will likely “reduce the pace of asset purchases in further measured steps”. Further, she said that interest rates would stay accomodatively low for a “considerable time” once the buying ceases.
Meanwhile, the Swiss National Bank also kept its Libor rate unchanged. The UK’s MPC also voted no change for its Asset Purchase Facility and Official Bank Rate.
In Canada, data released by Statistics Canada showed Foreign Securities Purchases increased CAD10.13 billion in April. This is more than double what analysts have projected. April Wholesale Sales also came in better than forecast at 1.2 percent.
Gold buyers indeed showed that they can muster the strength to break through the $1,300 level again. Price made a strong dash northward on Thursday and closed the week well above the $1,300 level. This is a strong signal from bulls that they have the ball in their territory. Potential resistance still up ahead until $1,350.
Oil hovered just above the $107 level as it stayed inside last week’s much-wider range. Price is currently eating through resistance in the area, and we could see it take some time before moving further northward. The $110-$112 area is the key resistance up ahead.
EURUSD ended with an inside day with bullish close this week. This is the first bullish close in three weeks and it gives bulls a chance to redeem themselves ahead of a potentially very critical downside break. There are lots of potential resistances up above, so they better be ready next week. Bulls must conquer the 1.3600-1.3700 area soon.
GBPUSD has achieved its third bullish weekly close this week, after a relatively easy battle to conquer the 1.7000 level. We could still see some intense action around this level next week, so keep that in mind. Buyers should continue to provide support so they can catapult themselves to fresher territory in the coming weeks and months.
USDJPY went idle this week, trading right close to the 102 level for the whole week. This could be an indication that buyers want to revisit the upper-102s in the coming week… or is this just a break before the next downleg? We’ll find out next week. Lots of support remain below 102.
The Week Ahead
On Monday, the news releases will be in the form of China’s HSBC Flash Manufacturing PMI; BOJ Kuroda’s speech; Flash Manufacturing PMI and Flash Service PMI from Germany, France, and the Eurozone; UK BOE Credit Conditions Survey; US Flash Manufacturing PMI and Existing Home Sales.
On Tuesday, news activity will start late with Switzerland’s Trade Balance; Germany’s Ifo Business Climate; UK BOE Gov Carney’s speech and BBA Mortgage Approvals; US S&P/CS Composite-20 HPI, New Home Sales, and CB Consumer Confidence.
Wednesday will be abbreviated compared to previous sessions and will only have Gfk German Consumer Climate; UK Nationwide HPI and CBI Realized Sales; US Final GDP, and Durable Goods Orders.
Thursday will also be brief with the EU Economic Summit; UK BOE Financial Stability Report; US Jobless Claims, Personal Income, and Personal Spending.
Friday ends the week with New Zealand’s Trade Balance; Japan’s Tokyo Core CPI, Retail Sales and Household Spending; Germany’s Import Prices and Preliminary CPI; Switzerland’s KOF Economic Barometer; Spain’s Flash CPI; UK Current Account and Final GDP; EU Economic Summit; Canada’s RMPI and IPPI; and US Revised UoM Consumer Sentiment.