The United States saw a good run of positive economic data releases this week.
The Federal Reserve Bank of Philadelphia announced on Thursday that its Manufacturing Index soared to 28.0 this August, easily beating the 19.7 median forecast by analysts. This is its best reading since March 2011 when it reached 43.4.
Sales of existing homes reached 5.15 million in July, a 10-month high, according to the US National Association of Realtors. Meanwhile, July Housing Starts rose 1.09 million and July Building Permits increased 1.05 million. Flash Manufacturing PMI rose to 58.0 in August, the highest reading since April 2010.
In the United Kingdom, the MPC Asset Purchase Facility Votes remain unchanged at 0-0-9. However, the MPC Official Bank Rate Votes moved to a different beat with a surprising 2-0-7. Martin Weale and Ian McCafferty dissented and voted in favor of a rate hike. The Confederation of British Industry also surprised with a much healthier manufacturing outlook as the Industrial Order Expectations reached 11, nearly triple of what analysts expected.
In Canada, Foreign Securities Purchases revealed an outflow of CAD1.07 billion in June. Retail Sales and its core reading remain healthy in June with 1.1 percent and 1.5 percent increase respectively. On the other hand, CPI dipped 0.2 percent in July.
Gold sellers pulled off a decent downside attack which led to a new low in this week’s decline. Now that they have broken short-term support, sellers can set their sights at $1,240 and below. To counter the bearish momentum, buyers need to push price back toward $1,350.
Oil fared worse than Gold as the former got its fourth consecutive weekly decline this week. The easy breach of $93 would pave the way for an attack on the $90-$91 area. The 15-month low sits just above the $91 level.
EURUSD’s 180-pip drop this week succeeded 5 other weekly declines since the 1.3700 gave bulls severe headaches. Sellers are now likely looking at a possible move toward 1.30-1.31 ahead of possible stronger support around 1.2700. We could see fireworks happen when price revisits the 1.3000 psychological level.
GBPUSD completed its seventh consecutive weekly decline after sellers continued to dominate in the 1.66-1.67 area. Looking at the current price action, it won’t be surprising if GBPUSD will continue to drop 500 more pips in the coming months.
USDJPY soared nearly 200 pips this week after buyers made a successful control of the 103 level. Sellers were driven away from as far up as 104.18, and we could see more volatility around the 104 area in the coming week.
The Week Ahead
This week, we’ll see news activity increase towards the end of the week as August draws to a close.
On Monday, there will only be Germany’s Ifo Business Climate; Belgium’s NBB Business Climate; and US New Home Sales. UK banks will observe the Summer Bank Holiday.
On Tuesday, we’ll have New Zealand’s Trade Balance; UK BBA Mortgage Approvals; US Durable Goods Orders, S&P/CS Composite-20 HPI and US CB Consumer Confidence.
Wednesday will be unusually quiet with only a few economic releases particularly Australia’s Construction Work Done and Gfk German Consumer Climate.
Economic releases pick up the pace on Thursday, starting with Australia’s Private Capital Expenditures; Germany’s Preliminary CPI; Spain’s Flash CPI; Eurozone M3 Money Supply ; UK CBI Realized Sales; Switzerland’s Employment Level; Canada’s Current Account; and US Preliminary GDP, Pending Home Sales, and Unemployment Claims.
Finally August ends on Friday with a heavy flurry of activity including New Zealand’s ANZ Business Confidence and Building Consents; Japan’s Household Spending, Retail Sales, Preliminary Industrial Production, and Tokyo Core CPI; Australia’s Private Sector Credit; Germany’s Retail Sales; UK Nationwide HPI; Eurozone CPI Flash Estimate; Switzerland’s KOF Economic Barometer; Canada’s RMPI, IPPI, and GDP; and US Core PCE Price Index, Chicago PMI, Personal Spending, and Revised UoM Consumer Sentiment.