The status quo decision from the ECB was expected, and as usual, the US jobs data stole the spotlight this week.
The European Central Bank decided to keep its Minimum Bid Rate unchanged at an ultra-low 0.05 percent for the second time. ECB’s Draghi expressed intention of continued purchase of assets over the coming two years, at least, to bid up inflation and the euro-area’s economic growth.
In the United States, there was a slew of important economic data released this week. Among the highlights was the Trade balance data which improved slightly further for the third month to -$40.1 billion. The September Unemployment Rate improved to 5.9 percent, while Jobless Claims improved for the prior week. The Non-Farm Employment Change saw a boost of 248,000 workers in September, clearly beating analyst forecast. The prior month’s reading was also revised higher by 38,000 to 180,000.
In Japan, Unemployment Rate improved in August to 3.5 percent. Meanwhile, Retail Sales improved 1.2 percent year-on-year, while Household Spending slid 4.5 percent, its fifth straight monthly decline. Preliminary Industrial Production surprisingly dipped 1.5 percent. Finally, Average Cash Earnings grew better than expected but the prior reading was revised down to 2.4 percent.
After taking a short pause last week, Gold resumed its nosedive this week by slicing through and closing below the key $1,200 level. What is separating Gold from new multi-year lows right now is the double bottom support at the low-$1180s. If this area breaks, we could see $1,000 hit for the first time in 5 years.
Oil had quite a volatile week, but eventually bears won with a strong weekly finish below the important $90 level. Price is now headed to the $82-$85 area where potential supports may lie. Unlike Gold bulls, oil bulls have a better chance at salvaging their ship before it becomes way too late. They must conquer $90 first.
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.
We could now consider Monday’s marginal bullish close a consolation for GBPUSD bulls as this pair has turned very bearish for the rest of the week. With the 1.6000 level smashed open, we could see 1.5700 revisited soon. Indicators are showing some divergence so an alternative scenario is a slower downside move will happen in the next few days or weeks.
Unlike USDCHF, USDJPY has not created a new multi-year high this week as the yen was confined by Wednesday’s top at 110.07. Nevertheless, this pair remains bullish and we could well see newer highs throughout October.
The Week Ahead
This Monday, a significant number of Australian banks will observe Labor Day. Chinese banks will also be closed to observe National Day. On the news front, there will be ANZ Job Ads; Germany Factory Orders; and Canada’s Ivey PMI.
Tuesday will open up early with New Zealand’s NZIER Business Confidence. This will be followed by Japan’s BOJ Monetary Policy Statement and Press Conference; RBA interest rate announcement and statement; Switzerland’s Foreign Currency Reserves and CPI; UK Halifax HPI, BOE Credit Conditions Survey, NIESR GDP Estimate and Manufacturing Production; Canada’s Building Permits; and US JOLTS Job Openings.
Wednesday would be unusually quiet with only a few news events. These are Japan’s Current Account; China’s HSBC Services PMI; Switzerland’s Jobless Rate; and Canada’s Housing Starts. The day will be topped off with US FOMC Meeting Minutes.
Thursday would be a lot more active with Japan’s Core Machinery Orders; Australia’s Unemployment Rate and Employment Change; Germany’s Trade Balance; UK Asset Purchase Facility, interest rate announcement and statement; Canada’s NHPI; US Jobless Claims. It will also host the first day of G20 meetings.
Friday will end the way with Japan’s Monetary Policy Meeting Minutes and Tertiary Industry Activity; Australia’s Home Loans; France and Italy Industrial Production; China’s New Loans; UK Trade Balance; Canada’s BOC Business Outlook Survey, Unemployment Rate and Employment Change; and US Import Prices. Friday will also hold Day 2 of the G20 meetings and Day 1 of IMF meetings.