The US Federal Reserve has decided on Wednesday to keep rates on hold as expected. Spotlight was then focused on US jobs numbers which came out weaker than expected. The Bureau of Labor Statistics reported that Non-Farm Employment Change grew less than expected in July, 209,000 versus 231,000 forecast. The actual number was lower than the 218,000 ADP Non-Farm Employment Change published on Wednesday. The surprise came from the Unemployment Rate number, which worsened to 6.2 percent, following three consecutive months of better-than-actual readings.
In other US news, Pending Home Sales dipped 1.1 percent in June, following a 6 percent advance in the prior month. The July CB Consumer Confidence index improved further to 90.9 in July, the highest reading since January of 2008. Chicago PMI fell 10 points to 52.6 in July.
In other news, Australia’s Building Approvals for June dropped 5 percent, following the 10.3 percent increase in May. Meanwhile, PPI surprised with a 0.1 percent dip in June.
Gold formed its third consecutive bearish weekly candle after sellers managed to push the price down through the $1,300 level. If this level holds in the coming weeks, expect a move toward $1,250 or even lower.
After last week’s inside bar, Oil dropped like a waterfall as sellers piled in through stops below $100. Price declined just a little over $5 to reach the lower $97s, prices unseen since early-February of this year. A thick zone of resistance may have now formed above $100, so bears may have an easier time pounding oil in the next few days or weeks. If bearish momentum will persist, downside target will be $90-$91.
EURUSD hit its third bearish weekly close this week (nearly hitting the mentioned area at 1.3300-50), although Friday’s price action eradicated most of the week’s decline. The move is not surprising considering this pair has been relentlessly on-sided since the start of July. Bulls have an opportunity to recover, but the acid test just right at 1.3500. This level is followed by thick resistance in 1.3600-1.3700.
Bearish sentiment has been more pronounced in GBPUSD than EURUSD, as we have witnessed nearly 100 pips of decline in Sterling this week. Sellers are looking to target 1.6700, but bulls may have a chance to thwart that if the Dollar will decline in the coming week.
USDJPY finally posted two bearish days to contrast from the 9 consecutive bullish days behind it. Sellers came in at the 103 level however the decline has been relatively weak, as price managed to close the week not far behind at 102.60. This could indicate more bullish moves will come in the next few days.
The Week Ahead
Monday will have a spattering of news throughout the day, starting with Australia’s Retail Sales and ANZ Job Ads; Spain’s Unemployment Change; Switzerland’s SVME PMI; and UK’s Construction PMI. Australian banks will be closed to observe Bank Holiday, while Canadian banks observe Civic Day.
Tuesday will have improved news activity with Australia’s Trade Balance and RBA’s Rate Announcement and Statement; UK Halifax HPI and Services PMI; Spain and Italy Services PMI; Eurozone Retail Sales; US Factory Orders and ISM Non-Manufacturing PMI.
Wednesday will have a moderate news activity but will start early with New Zealand’s jobs data; Germany’s Factory Orders; Switzerland’s CPI; UK Manufacturing Production and Industrial Production; Italy’s Prelim GDP; US and Canada Trade Balance;
After Thursday’s jobs data from Australia, the market will focus on Europe with the release of ECB and BOE rate announcements and statements. These will be followed by Canada’s Building Permits and Ivey PMI; and US Jobless Claims.
Friday will still be lively in the news front with Japan’s Current Account and BOJ Monetary Policy Statement and BOJ presscon; Australia’s Home Loans and RBA Monetary Policy Statement; China’s Trade Balance; Germany and UK Trade Balance; France’s Industrial Production; Canada jobs data; and US Prelim Nonfarm Productivity and Prelim Unit Labor Costs.