On Tuesday, the Reserve Bank of Australia left the Cash Rate unchanged at 2 percent. Meanwhile, the Bank of England kept its Official Bank Rate at 0.50 percent. The latest Official Bank Rate votes surprisingly showed only one policymaker out of nine, Ian McCafferty, saw the need to raise rates. Analysts expected two BOE MPC members would want to hike rates. The Asset Purchase Facility (APF) and APF votes came in line with expectations (GBP375 billion and 0-0-9, respectively). BOE Governor Carney hinted that the first rate hike could happen next year but would be “data dependent”.
On the global employment front, New Zealand’s Employment Change fared lower than forecast at 0.3 percent, while the Unemployment Rate came in at 5.9 percent, as expected. On the other hand, Australia’s Employment Change was much stronger as employers added 38,500 jobs in July, but the Jobless Rate slipped to 6.3 percent from 6.1 percent. In the United States, Non-Farm Employment Change was 7,000 below the 222,000 forecast, while the previous reading has been revised higher to 231,000. US Jobless Rate remained fixed at 5.3 percent for the second month in July, according to the latest Bureau of Labor Statistics data. Canada’s Jobless Rate stayed at 6.8 percent for the sixth straight month.
In other news, Australia’s Retail Sales and Trade Balance came in better than forecast. Home Loans were lower at 4.4 percent, while previous reading was revised lower to -7.3 percent.
In the United States, ISM Manufacturing PMI and ISM Manufacturing Prices slipped to 52.7 and 44.0, respectively. However, ISM Non-Manufacturing PMI jumped to 60.3, its best reading since 2005.
Gold posted its second weekly inside bar after price hovered just below the $1,100 area. We could then see a bounce toward $1,150-$1,200 initially. However, downtrend remains firm as long as price stays below $1,250.
Oil tracked lower again this week, printing its eighth straight weekly bearish close. The triple bottom is now fully in play, and we could see fireworks in the coming days or weeks. Price is looking for new lows – new multi-year lows, in fact. It is now staring at a possibility of price heading for the $30-$35 zone.
EURUSD has been sticking close to the 1.100 level for several weeks now. With the pair’s failure to create a new weekly low, we can see bulls attempt for a move toward 1.1400 again. This area is possibly rich in armies of sellers.
GBPUSD traders are battling within a tight range for the fifth week now. If this pair wants to track higher, it should take out the 1.5700 this week so it can head to 1.5900. Otherwise, GBPUSD would stay in a range, which could trade as low as 1.5400.
Slowly but surely, USDJPY has been moving higher toward 125 for the past couple of weeks. The pair remains content, for now, in staying below 125 (although this figure has been touched twice this week). If it continues to march higher, the June 5 high below 126 is the next target.
The Week Ahead
Monday will offer Japan’s Current Account, Consumer Confidence, and BOJ Monthly Report; and speeches from US FOMC Member Lockhart and Fischer.
Tuesday will start quite early with UK’s BRC Retail Sales Monitor. This will be followed by Australia’s NAB Business Confidence and HPI; China’s New Loans; Germany and Eurozone ZEW Economic Sentiment; Canada’s Housing Starts; and US Prelim Unit Labor Costs and Prelim Nonfarm Productivity.
Wednesday will get busy with Japan’s BOJ Monetary Policy Meeting Minute; Australia’s Wage Price Index and Westpac Consumer Sentiment; China’s Industrial Production, Retail Sales, and Fixed Asset Investment; UK Average Earnings Index, Jobless Rate, and Claimant Count Change; and JOLTS Job Openings
Thursday will be critical again for Greece as its set for another Debt Crisis Vote. Other important news to watch out for include New Zealand’s Business NZ Manufacturing Index and FPI; Japan’s Core Machinery Orders; Australia’s MI Inflation Expectations; France’s CPI; ECB Monetary Policy Meeting Accounts; US Jobless Claims, Retail Sales, Business Inventories and Import Prices.
Friday will have moderate news activity with New Zealand’s Retail Sales; Germany’s Prelim GDP; Eurozone Flash GDP; Eurogroup Meetings; Canada’s Manufacturing Sales; US PPI, TIC Long-Term Purchases, Empire State Manufacturing Index, Industrial Production, Capacity Utilization Rate, and Prelim UoM Consumer Sentiment.