The Bank of England was the lone central bank active this week and announced an unchanged position in terms of interest rates. They left the Official Bank Rate at 0.50 percent. While the Asset Purchase Facility remained the same at GBP375 billion
In terms of PMI data, the US and UK posted weak readings. UK Construction PMI was slightly weaker at 57.6 while Services PMI was much weaker at 55.8. Meanwhile, US ISM Non-Manufacturing PMI was weak at 56.2 Canada led the pack with a better-than-expected Ivey PMI of 55.4.
In the United States, jobs outlook looks better with current published readings. December’s Non-Farm Employment Change was better than forecast at 252,000, while the Unemployment Rate improved a notch to 5.6 percent. Trade Balance deficit improved to an 11-month low, -$39 billion, thanks to lower crude oil prices. Meanwhile, the latest report from the Department of Labor showed the Jobless Claims rose to a slightly higher-than-expected 294,000 claims.
Gold carved a bullish week to start the new year and it was a key milestone as it ended above the $1,200 level. The next area of resistance is the nearby $1,250 area ahead of $1,350. Another bullish week could set the tone for the entire month.
Oil has now printed its sixth weekly loss out of seven, and there seems to be no end in sight so far. A bearish weekly close below the $50 mark last week could spur this commodity to head for the $30 in short notice.
EURUSD posted its fourth weekly consecutive loss after buyers failed to secure the 1.2000 level. The weekly low at 1.1753 blasted through the multi-year low set on June 2010 at 1.1875 and this opens up the pair into further losses ahead.
USDJPY suffered its first considerable loss in the past four weeks after bulls encountered selling pressure at and above the key 120 level. We would likely see this back and forth movement in the next few weeks.
GBPUSD also carved its fourth consecutive weekly loss just like EURUSD. But unlike the latter, Cable has yet to break its own key level at 1.5000. Buyers should take this opportunity to swing price back toward 1.5500 so they can negate further bearish pressures.
The Week Ahead
Monday will be very quiet except for a few news releases, particularly Australia’s ANZ Job Ads and Home Loans; and Bank of Canada’s Business Outlook Survey. There will be a bank holiday in Japan due to ‘Coming of Age Day.’
Tuesday will produce more activity with Japan’s Current Account and Bank Lending; UK CPI, RPI, and PPI Input; China’s Trade Balance and New Loans; Italy’s Industrial Production; US JOLTS Job Openings and Federal Budget Balance.
Wednesday will be busy, starting with the European Justice Court Ruling on the legality of the European Stability Mechanism and Fiscal Compact. Other news will follow like Eurozone Industrial Production; US Retail Sales, Import Prices, and Business Inventories.
Thursday will have Japan’s Core Machinery Order; Australia’s Unemployment Rate and Employment Change; US PPI, Jobless Claims, Philly Fed Manufacturing Index, and Empire State Manufacturing Index.
Finally, Friday will cap the week with Japan’s Tertiary Industry Activity; Switzerland’s PPI; UK Retail Sales; Eurozone Final CPI; US CPI, Capacity Utilization Rate, Industrial Production, and Preliminary UoM Consumer Sentiment.