After the ECB rate decision last week, two more central banks announced their interest rate decisions this week. The Reserve Bank of Australia published their unchanged rate decision on Tuesday (2.50 percent), while the Bank of England announced on Thursday that they are maintaining the current values of the Official Bank Rate (0.50%) and the Asset Purchase Facility (GBP375 billion).
In Canada, the employment outlook showed some bright prospects in September. Unemployment Rate improved to 6.8 percent from 7 percent in August. Employment Change came in nearly quadruple of expectations at 74,100, following an 11,000 decline in August. Ivey PMI advanced to 58.6, while Building Permits sunk more than quadruple its estimate (-27.3 percent) after posting double-digit gains in the previous three months. USDCAD still trades near multi-year highs.
In contrast to Canada’s positive jobs data, Australia’s September Employment Change decline 29,700 as employers slashed jobs. The previous month’s reading was revised severely lower from 121,000 to only 32,100. The Jobless Rate inched up to 6.1 percent as expected.
Gold bottomed out at $1,182 and ended the week with a strong finish well above the $1,200 level. If bulls can keep this up on the coming week, they would be able to tackle the next problem area at $1,250-$1,300. There’s still a long way to go, and therefore bulls must keep supporting price in the coming weeks.
Oil had its second volatile week after the $90 breach has been sustained this week. Price reached a new 26-month low as it approached $83. Resistance has piled up above the $90 level now, and bulls might have a hard time breaching that zone. We could see new multi-year lows in the weeks ahead.
EURUSD bulls are in deep trouble as price dived heavily on Friday, closing in on the 1.2500 level. The pair has closed with a bearish bias on 11 of the last 12 weeks, and this is a serious cause for concern. Avoid buying this bear train.
GBPUSD trading this week has been overall positive but the pair still sits close to multi-week lows. Buyers need to complete a strong break of 1.6200 so they can nullify the bear momentum further. They must aim for a move past the 1.6642 September high soon.
JPY strength finally prevailed this week after USD blasted away with six bullish weeks in the last seven weeks. The pair sunk more than 200 pips as buyers failed to capture the 110 level. Further declines could find support around 105.
The Week Ahead
Monday would be quite except for China’s Trade Balance data and the Eurogroup meetings. Banks in Japan, Canada, and the United States are on holiday (in observance of Health-Sports Day, Thanksgiving Day, and Columbus Day, respectively).
Tuesday will have an increased uptick in news activity with Australia’s NAB Business Confidence; Switzerland’s PPI; China’s New Loans; UK CPI, PPI Input, and RPI; Germany’s ZEW Economic Sentiment; Eurozone Industrial Production and ZEW Economic Sentiment; and ECOFIN meetings.
Wednesday would get busy as usual with Australia’s Westpac Consumer Sentiment and New Motor Vehicle Sales; China’s PPI and CPI; ECB Draghi’s speech; UK Average Earnings Index, Jobless Rate, and Claimant Count Change; US Retail Sales, PPI, Empire State Manufacturing Index, Business Inventories, and Beige Book.
Thursday will start early with New Zealand’s Business NZ Manufacturing Index; Australia’s MI Inflation Expectations; Eurozone Final CPI; Bundesbank Weidmann’s speech; Canada’s Manufacturing Sales and Foreign Securities Purchases; US Jobless Claims, Capacity Utilization Rate, Industrial Production, Philly Fed Manufacturing Index, and NAHB Housing Market Index.
Friday’s spotlight will be on the North American session particularly on Canada’s CPI, and US Building Permits, Housing Starts, Preliminary UoM Consumer Sentiment and Fed Yellen’s speech.