The Reserve Bank of New Zealand decided to slash the Official Cash Rate by 25 basis points to 3.25 percent. In his statement, RBNZ Governor Graeme Wheeler stated the rate reduction was done in view of weak dairy prices, low inflation, falling business and consumer confidence.
In Australia, the Bureau of Statistics reported improved jobs data. Employment Change increased 42,000 in May, while the Jobless rate eased to 6 percent. Home Loans increased 1 percent in April.
In the United States, the Jobless Claims for the prior week came close to expectations (279,000 versus 277,000 forecast). Retail Sales benefitted from lower fuel prices and continued job growth, and rose 1.2 percent in May (core reading 1 percent). Meanwhile, the Preliminary UoM Consumer Sentiment edged up to 94.6 (up from 90.7 in May) on upbeat consumers.
After three consecutive bearish weeks, Gold paused with an inside bar and traded just below the $1,200 level this week. This is a very strong area of contention as any strong move on either direction could make a big impact in the medium term. Bulls are still looking for a move through $1,300.
We’ve seen volatility on Oil around $60 for the sixth consecutive week. Sellers have defended the upper-$61 for a second week, while bulls have protected the $56 during that same period. As such, the $59-$60 would remain pivotal this coming week.
EURUSD posted another bullish week for the second week, but sellers continue to prevent a move close to 1.14. We could see another stab at that level until it yields to bullish pressure, which is aiming initially at the 1.15 to 1.17 area.
Finally, GBPUSD showed a bullish turn after three consecutive weeks of decline. The weekly close at mid-1.55 could be a serious signal that bulls have woken up.
USDJPY showed very little movement last week, allowing the pair to form its second consecutive inside bar. Traders might be waiting for the FOMC rate announcement, which is coming this week. Bias remains up for now.
The Week Ahead
Monday will start the week during the European session with Switzerland’s Retail Sales and PPI; Canada’s Manufacturing Sales; and US Empire State Manufacturing Index, Industrial Production, Capacity Utilization Rate, and NAHB Housing Market Index
Tuesday’s activity will start with RBA’s Monetary Policy Meeting Minutes and New Motor Vehicle Sales; Switzerland’s PPI; UK CPI, RPI, and PPI Input; German and Eurozone ZEW Economic Sentiment; Canada’s Foreign Securities Purchases; US Building Permits and Housing Starts.
Wednesday will be very brief but meaty, specifically with New Zealand’s Current Account; Japan’s Trade Balance; Australia’s MI Leading Index; UK Claimant Count Change, Average Earnings Index, Jobless Rate, and MPC Asset Purchase Facility Votes and Official Bank Rate Votes; Switzerland’s ZEW Economic Expectations; Eurozone Final CPI; Canada’s Wholesale Sales. The day would be capped by US FOMC Statement, Federal Funds Rate, FOMC Economic Projections, and Press Conference.
Thursday will start early with New Zealand’s GDP; Switzerland’s Trade Balance, SNB Financial Stability Report, Libor Rate Announcement, Press Conference, and Monetary Policy Assessment; UK Retail Sales; Targeted LTRO; Eurogroup meetings; US CPI, Unemployment Claims, Current Account, and Philly Fed Manufacturing Index.
Friday ends the week with only a couple of economic releases such as BOJ Monetary Policy Statement and Press Conference; Eurozone Current Account; ECOFIN meetings; UK Public Sector Net Borrowing; Canada’s CPI and Retail Sales.