All central banks, the Bank of England, European Central Bank, and Reserve Bank of Australia, decided in line with expectations this week, keeping their respective rates unchanged at 0.50 percent, 2.00 percent, and 0.05 percent, respectively. BOE’s Asset Purchase Facility was also unchanged at GBP375 billion.
Meanwhile, Australia had a rough week with the release of some surprisingly weak economic readings. Building Approvals for April surprised with a 4.4 percent decline, compared to the -1.7 percent estimate. The trade deficit grew bigger than anticipated to –AUD3.89 billion, its worst ever since February 2008. Meanwhile, GDP in the first quarter gained 0.9 percent while Retail Sales was flat back in April.
In other news, Spain, Switzerland, and Italy Manufacturing PMI were better than expected (55.8 vs 54.4, 49.4 vs 48.2, and 54.8 vs 53.1, respectively). UK Manufacturing PMI and Services PMI fell short of expectations (52.0 vs 52.7, and 56.5 vs 59.2 respectively), but UK Construction PMI fared better at 55.9 (vs 55.1 forecast).
In the United States, Core PCE Price Index grew just 0.1 percent. Personal Spending was flat (vs 0.2 percent expected), while Personal Income grew 0.4 percent. ISM Manufacturing PMI stood at 52.9, while the ISM Non-Manufacturing PMI disappointed with a decline to 55.7. Construction Spending jumped 2.2 percent in April, while the previous reading was revised higher to 0.5 percent. US Jobless Rate went back to 5.5 percent in May. Non-Farm Employment Change came in better at 280,000.
Gold posted its third consecutive bearish week, achieving its lowest weekly close since mid-March. It is now on track to attack the lower $1,100s. Bulls would need to take the yellow metal back through $1,200 to negate further downside moves.
Oil sellers pushed for a move through $60 in the last few days of the week, forcing the first weekly close below that level in four weeks. Sellers might then look for a move toward $55 where potential support could come in.
EURUSD has gone higher after the move below 1.1000 lasted very quickly in the prior week. Price could be aiming for a test of the 1.13-1.14 area in the coming week. A support around 1.12 is needed to make this happen.
Like Gold, GBPUSD clinched its third consecutive bearish week, after a move through 1.5400 was denied by sellers. The challenge for bulls now is whether they can hold 1.50-1.51 as support to prevent a move back into the mid-1.40s.
USDJPY blasted to new highs after resistance around 125 proved very fleeting. Continued Dollar strength (or JPY weakness) could push this pair toward 130 soon. Will 125 turn into a support area in the coming weeks?
The Week Ahead
Monday will start the week with Japan’s Current Account, Final GDP, and Bank Lending; China’s Trade Balance; Germany’s Industrial Production and Trade Balance; and Canada’s Housing Starts and Building Permits. Today, some states in Australia will observe the Queen’s Birthday.
On Tuesday, there will be UK’s BRC Retail Sales Monitor; Japan’s Consumer Confidence; China’s CPI and PPI; Australia’s NAB Business Confidence, ANZ Job Ads, and Home Loans; UK’s Trade Balance; and US JOLTS Job Openings.
Wednesday will be very brief but active with Japan’s Core Machinery Orders; Australia’s Westpac Consumer Sentiment; UK’s NIESR GDP Estimate, Manufacturing and Industrial Production; US Federal Budget Balance.
Thursday will be the most news-packed this week with the release of Reserve Bank of New Zealand’s Rate Announcement, Statement, Press Conference, and Monetary Policy Statement; Japan’s BSI Manufacturing Index; China’s New Loans and Fixed Asset Investment; Australia’s Jobs Data and MI Inflation Expectations; ECB Monthly Bulletin; Canada’s NHPI; US Retail Sales, Import Prices, Jobless Claims, and Business Inventories.
Friday caps the week with the release of New Zealand’s Business NZ Manufacturing Index; Eurozone’s Industrial Production; US PPI and Preliminary UoM Consumer Sentiment.