The Spanish National Statistics Institute announced a continued weakness in the country’s Flash Consumer Price Index. The December figure declined 1.1 percent, its sixth straight negative reading, and the biggest decline ever recorded since 2011.
Friday, January 2, was kept busy by data mostly out of Europe. Markit published a weaker than expected UK Manufacturing PMI, as the December figure decreased to 52.5, or the lowest reading in the last three months. The Bank of England reported that Net Lending to Individuals increased to GBP3.3 billion (the biggest in the last 4 months), while M4 Money Supply was flat for the second month in a row in November.
Meanwhile, in the United States, ISM reported that Non-Manufacturing PMI declined to 55.5, surprising analysts whose median forecast was 57.6. The December data is the lowest reading since June’s 55.3 reading. The latest report from the Department of Labor showed the Jobless Claims rose to 298,000, which was 11,000 higher than forecast. Chicago PMI came in much weaker than anticipated at 58.3.
Gold continues to trade inside a tight range below the important $1,200 level, with one instance where price shot through toward $1210 fleetingly. We do not suggest taking any position right now; better wait for price to stabilize above $1,200.
Oil is poised to continue its bearish drop after sinking five out of the last six weeks. The $50 level would be critical and all eyes are on it right now. Unless we see certain signs, the $30-$40 area seems to be a definite possibility right now.
EURUSD completed its third bearish consecutive week previously and we could see a strong push below 1.2000 very soon. This will put the multi-year low set on June 2010 at 1.1875 in very critical danger.
USDJPY last traded in the 120s, close to the new multi-year high set on December at 121.83. We expect the 120-121 area to become a pivot in the coming weeks and months.
GBPUSD bears are roaring right now as they made a freefall move – as predicted – on the last day of December through the 1.5500 level. If that level is not revisited this coming week, we could see increased push toward 1.5100.
The Week Ahead
Monday will only have a few news announcements on the pipeline, namely Germany’s Preliminary CPI; Spain’s Unemployment Change; Switzerland’s SVME PMI; and UK Construction PMI. US FOMC Member William will give a speech in a Boston conference entitled “Housing, Unemployment, and Monetary Policy".
Tuesday will open with Australia’s Trade Balance; China’s HSBC Services PMI; Services PMI from Spain, Italy, and the UK; UK BOE Credit Conditions Survey; Canada’s RMPI and IPPI; New Zealand’s GDT Price Index; and US ISM Non-Manufacturing PMI and Factory Orders.
Wednesday will be more active with Germany’s Retail Sales and Unemployment Change; Switzerland’s Foreign Currency Reserves; Eurozone CPI Flash Estimate and Jobless Rate; Canada Trade Balance and Ivey PMI; US ADP Non-Farm Employment Change, Trade Balance, and FOMC Meeting Minutes.
Thursday will begin with Australia’s Building Approvals; Eurozone Retail Sales and PPI; BOE Official Bank Rate and MPC Rate Statement; Canada’s NHPI; and US Jobless Claims.
Friday will be the highlight of the week, starting early with New Zealand’s Retail sales; China’s PPI and CPI; France’s Industrial Production; UK Manufacturing Production, Trade Balance, and Industrial Production; Canada’s Building Permits, Jobless Rate, and Employment Change; and US Jobless Rate, Non-Farm Payroll, and Average Hourly Earnings.