Forex News

Currency Trends & Insights

Analysis

Bank of England Confident in The Country’s Economic Recovery

After the release of the Bank of England’s Monetary Policy Committee Meeting Minutes in the prior week, news wires broadcasted on early Thursday that BOE Chief Carney does not find a reason to provide more QE, given that the economic recovery has “strengthened and broadened.”

In other news, New Zealand’s statistics agency revealed last Wednesday that the Trade Balance weakened further and more than expected in August. The trade deficit ballooned to NZD1.191 billion. This is the worst trade deficit since late-2008.

In the UK, CBI Realized Sales soared to 34 in September. Analysts were upbeat but were only expecting 24. Meanwhile, Current Account was weaker than expected at –GBP13 billion.

In the United States, Unemployment Claims continued to beat its forecast for the fourth consecutive week (305,000 versus 319,000 forecast).

US Pending Home Sales declined more than expected in August, according to the National Association of Realtor’s latest report. Sales declined 1.6 percent (analysts expected a 0.9 percent decline).

The Revised University of Michigan Consumer Sentiment posted its second straight reading below the 80-level, 77.5.

Commodities

Not much happened in Gold this week and there are signs of a possible move back into the $1,400s. Gold bulls successfully defended the $1,300 for five straight days, and this means they got a tiny headstart for next week’s trading. Before they get too complacent, they must strike down potential sellers at and ahead of the $1,400 level. A break of $1,430 is the upside target.

Oil was a different story as price was down for the third straight week. The weekly close below $103 was a strong statement against bears, and they should gear up for next week. There is still time for them to shore up price back into the $105s. That’s their goal for this coming week.

Currency Pairs

EURUSD has been very quiet this week. In fact, its 101-pip weekly trading range is one of the lowest in many weeks. This pair lags behind GBPUSD but is still poised to move higher if it can make a good close above 1.3600.

GBPUSD went on to complete its fourth straight bullish week, closing comfortably above the 1.6100 level for the first time since early January. Bulls are looking for a break through 1.6400 in the coming weeks.

USDJPY’s 127-pip weekly range was not enough to break out of the prior week’s range. The pair continues to find problems moving away from 98 and reaching the 100.00 level. Price action-wise, the chart looks ugly and we could see 95-96 soon.

The Week Ahead

The brand new week ushers in the month of October starting on Tuesday.

On Monday, the market will have relatively fewer economic releases to look at compared to previous end-of-month days. New Zealand will have Building Consents. This will be followed by Japan’s Retail Sales and Preliminary Industrial Production; ANZ Business Confidence; Australia’s Private Sector Credit; China’s HSBC Final Manufacturing PMI; Germany’s Retail Sales; UK Net Lending to Individuals; Eurozone CPI Flash Estimate; Canada’s GDP; and US Chicago PMI.

Japan will open up Tuesday with Household Spending and Tankan Indices. China will observe National Day but Manufacturing PMI will be out. Other news include Australia’s Retail Sales, Interest Rate Announcement and Statement; Spain’s Manufacturing PMI; Germany’s Unemployment Change; and US ISM Manufacturing PMI.

On Wednesday, there will be Australia’s Trade Balance and Building Approvals; UK Construction PMI and Halifax HPI; ECB’s Interest Rate Announcement and press conference; and US ADP Non-Farm Employment Change.

On Thursday, worthy news to watch out for come in the form of China’s Non-Manufacturing PMI; Italy, UK, and Spain Services PMI; Eurozone Retail Sales; US Jobless Claims, Factory Orders, and ISM Non- Manufacturing PMI.

On Friday, the market will only have a couple of key economic data to look at, particularly BOJ’s Monetary Policy Statement and press conference; Germany’s PPI; and US Non-Farm Employment Change, Jobless Rate; and Canada’s Ivey PMI.

US Federal Reserve Puts off QE Tapering

According to the latest Minutes from the US Federal Reserve’s Federal Open Market Committee policymakers opted to wait for further evidence before they put the tapering option on the table. There was no change in the forward guidance as well as on the Federal Funds Rate (less than 0.25 percent rate).

The Federal Reserve Bank of Philadelphia announced that its Manufacturing Index surged to 22.3 in September, the strongest expansion since March 2011.

Meanwhile, US TIC Long-term Purchases surprised to the upside as purchases went up $31.1 billion. This is the first advance since January.

In other news, the Swiss National Bank held its LIBOR rate unchanged at less than 0.25 percent. SNB affirmed its protection of the minimum EURCHF rate at 1.20.

Minutes from the Bank of England’s Monetary Policy Committee showed a consensus among the officials to retain the status quo in terms of policy. MPC policymakers voted 0-0-9 to keep the asset purchase facility and Official Bank Rate unchanged.

 Commodities

Gold had a very volatile week with the US FOMC’s “no taper” announcement mid-week. Price had traded below $1,300 several hours prior the FOMC announcement and found support at $1,291. And then the FOMC announcement drove price higher toward $1,367 just ahead of the New York close one hour later. With the absence of follow-through momentum, price slid back down and ended the week at $1,325, the same closing price printed during the prior week. If the latest price action is an indication of inherent weakness, we could see price drift further down toward $1,250-70.

Oil bulls are in bad shape as price printed its second consecutive weekly close last week – and below $105 to boot. It is the first weekly close below $105 since mid-August and we could see further declines next week. $102-$103 could be seen next week.

Currency Pairs

Majors had an amazing run-up this week and EURUSD was no exception as it flew high past 1.3500 for the first time since early February. The pair started the week with a gap up and launched higher by 200 pips on Wednesday. The strong weekly close above 1.3500 could indicate a possible move toward 1.3600-50 quickly.

Like EURUSD, GBPUSD flew high on Wednesday but more than 50 percent evaporated by Friday after sellers dominated after the FOMC announcement. The only consolation for bulls was that the pair held firm just above the 1.6000 psychological levels. The near-term topside goals come at 1.6250-1.6300, while sellers want to bring price back towards 1.5700.

USDJPY enjoyed a nice bullish weekly close despite the gap-down seen on Monday. The FOMC announcement on Wednesday pulled the pair from 99.32 to a low of 97.75, but price reversed strongly on Thursday.  Not much price movement was seen on Friday and the week closed near the high at 99.35. Bulls should aim to gate crash through 100.00 in the coming week.

The Week Ahead

On Monday, a host of Flash Manufacturing PMI and Flash Services PMI data will be released and they will come from China, France, Germany, Euro-zone, and US (Flash Manufacturing PMI only). A host of speeches will also come from top officials such as ECB President Mario Draghi, SNB Chairman Thomas Jordan, MPC Member Ben Broadbent, and US FOMC Member William Dudley.

 

On Tuesday, the market will only have a couple of key economic data to look at, particularly Germany’s Ifo Business Climate, UK BBA Mortgage Approvals, Canada’s Retail Sales, US S&P/CS Composite-20 HPI, and US CB Consumer Confidence.

 

Wednesday starts early with New Zealand’s Trade Balance, RBA’s Financial Stability Review, Germany’s Gfk Consumer Climate, UK CBI Realized Sales, US Durable Goods Orders, and US New Home Sales.

 

Thursday news release will start somewhat late as the Asian session will be devoid of important economic data. ECB will release M3 Money Supply, then this will be followed by UK’s Current Account and Final GDP; US Jobless Claims, Final GDP, and Pending Home Sales.

 

Friday will be the most jam-packed news day in the coming week, starting with Japan’s Tokyo CPI; New Zealand’s ANZ Business Confidence; Germany’s Prelim. CPI; France Consumer Spending; Switzerland’s KOF Economic Barometer; ECB Draghi’s speech; US Core PCE Price Index, Personal Income, Personal Spending, and Revised UoM Consumer Sentiment. FOMC Members Rosengren, Evans, and Dudley will also give their respective speeches.

US, UK Jobless Claims Shine; US UoM, AUS Jobs Slide

The United States had a slew of mixed data this week, highlighted by the release of the US Unemployment Claims and the Preliminary University of Michigan Consumer Sentiment. Jobless Claims breached the 300,000 mark and registered only 292,000 claims in the prior week compared to a 332,000 forecast. On the other hand, the preliminary reading of University of Michigan Consumer Sentiment hit 76.8, the first below-80 reading and the lowest since April. The US Census Bureau reported that Retail Sales increased by 0.2 percent, while the Department of Labor said Producer Price Index rose 0.3 percent.

In other news, UK’s Claimant Count Change improved to -32,600 in August, better than the expected -21,200 reading. This followed a -36,300 reading back in July. The Unemployment Rate saw a minor improvement to 7.7 percent.

In Australia, the Bureau of Statistics announced a surprise second monthly decline in August, sliding 10,800 when analysts were expecting an increase of 10,200. The Unemployment Rate came in as-expected at 5.8 percent.

Statistics Canada publicized that Building Permits surged in July, following a sharp decline in  June. Newly-issued Building Permits amounted to CAD8 billion or 20.7 percent, putting it in a consistent upward trend with six advances out of the last seven months.

Finally, the Reserve Bank of New Zealand decided on Thursday to leave the Official Cash Rate unchanged at 2.50 percent. In his statement, RBNZ Governor Wheeler said the local economic recovery is getting more “broad-based” and the board sees a possible rate hike sometime next year.

Commodities

Gold had a very tough week as buyers failed to recapture a solid foothold above $1,400. Price did not even touch the $1,400 level despite trading just $6 away from it on Monday. Price went pretty much all downhill since then, and it nearly crossed the $1,300 border as bulls struggled to create an efficient barricade on $1,350 and $1,320. The weak bounce to and close around $1,325 puts bulls in serious danger next week. More supporters are required to buoy price early next week.

Oil performed slightly better than Gold this week as the $108 area continued to magnetize both buyers and sellers. Bulls are in a better position here, so they must promptly lay the foundation next week and aim for higher prices. Topside resistance remains at the $110-$112.50 area.

Currency Pairs

EURUSD traded well bid this week after reaching a 1.3103 low in the prior week. If bullish momentum has indeed been boosted, we could see price propel higher even before mid-week. But raging bulls should proceed with caution when the 1.3400-1.3500 is reached.

GBPUSD led the majors this week and flew high with more than 270 pips. The pair inched closer to the 1.5900 level and closed the week with a very strong finish at 1.5875. Bulls should anticipate potential price caps as sellers try to limit further upside moves. The coming week will be an interesting test on the current bullish momentum’s strength.

USDJPY traded barbs this week as the pair just bobbed up and down in a 160-pip range above 99.00. Although the week closed in the bears’ favor, the pair stayed comfortably above the 99.00 level. Furthermore, potential support could limit further declines in prices. Potential corral is found at 98.50-99.00 to 100.50-110.00.

The Week Ahead

On Monday, New Zealand kicks off the brand new week with the release of Westpac Consumer Sentiment; UK Rightmove HPI; China’s Foreign Direct Investment; Eurozone Consumer Price Index; Italy’s Trade Balance; Canada’s Foreign Securities Purchases; US Capacity Utilization Rate, Empire State Manufacturing Index, and Industrial Production.

On Tuesday, traders will keep an eye on Australia’s Monetary Policy Meeting Minutes; China’s CB Leading Index; Eurozone’s Current Account; UK’s RPI, PPI Input, CPI, and HPI; Eurozone ZEW Economic Sentiment; Canada’s Manufacturing Sales; US CPI and TIC Long-Term Purchases.

On Wednesday, there will be New Zealand’s Current Account; Australia’s MI Leading Index; UK MPC Asset Purchase Facility and Official Bank Rate Votes; and US Housing Starts, Building Permits, FOMC Statement, Federal Funds Rate, and Economic Projections.

Thursday gets to become the busiest again this week with a flurry of economic data releases such as New Zealand Gross Domestic Product; Japan’s Trade Balance; Reserve Bank of Australia’s Bulletin and Annual Report; Switzerland’s Trade Balance, Libor Rate, and SNB Monetary Policy Assessment; UK Retail Sales and CBI Industrial Order Expectations; Canada’s Wholesale Sales; US Jobless Claims, Current Account, Philly Fed Manufacturing Index, and Existing Home Sales.

Friday ends the week with UK Public Sector Net Borrowing, Canada’s Consumer Price Index; and Eurozone Consumer Confidence.

Central Banks Held Rates Steady, US Jobs Data Mixed

It was a very busy week as four central banks made interest rate announcements. The Reserve Bank of Australia, Bank of Canada, Bank of England, and the European Central Bank all maintained their respective rates. RBA’s Cash Rate was held at 2.50 percent, BOC held its Overnight Rate at 1 percent, while both ECB and BOE held rates at 0.50 percent. BOE’s Asset Purchase Facility was also maintained at GBP375 billion.

The UK had quite a stellar week as Manufacturing PMI, Construction PMI, and Services PMI topped their respective estimates (57.2, 59.1, and 60.5, respectively).

US Non-Farm Employment Change missed expectations for its August reading, increasing 169,000 compared to its 178,000 estimate. August Unemployment Rate improved slightly to 7.3 percent, according to the Bureau of Labor Statistics.

Meanwhile, Canada’s Employment Change increased 59,200 in August, while the Unemployment Rate also improved, from 7.2 percent to 7.1 percent. Ivey PMI jumped to 51.0 from 48.4 in the previous month.

Commodities

Gold’s $1,400 level has been pivotal in this week’s trading, but in the end bears were able to close the week slightly on their side. Next week, focus will remain on whether the level can put a lid on price. Near-term areas to watch are $1,350 and $1,430-50.

Oil had another volatile week, and like last week bulls had the upper hand. Unlike the other week, though, bulls completely dominated in this week’s trading, making deep discount buys since early Monday and pushing price upward through $110. In the process, weekly price closed at the highest level since May 2011. It would be fascinating to see whether bulls can continue the momentum next week.

Currencies

EURUSD weakness persisted this week but bears had trouble getting through the 1.3100 level. The pair bounced on Friday but it was not enough to reverse the weekly decline. Key areas to watch next week are 1.3000-1.31000 and 1.3300.

The downside trendline capping USDJPY since May has been duly broken this week. But after the brief excursion above 100.00, the pair has been slammed down very hard on Friday. Price reached a 98.53 low before it was able to close the week just above 99.00. Bulls should make another attempt at closing above 100.00 next week.

GBPUSD had a pretty smooth ride upward, thanks to several favorable data released this week. The steady climbed started near 1.5500 and the pair rose all the way up through 1.5650, topping just ahead of 1.5700. The August top at 1.5716 is looming and bulls should try to blast through it this coming week.

The Week Ahead

The second week of September will turn out to be evenly busy.

On Monday, watch out for Japan’s Current Account and Final GDP; Australia’s Job Advertisements and Home Loans; China’s PPI, CPI and New Loans; Switzerland’s Retail Sales; and Canada’s Building Permits.

On Tuesday, traders will keep an eye on Japan’s Monetary Policy Meeting Minutes and Tertiary Industry Activity; Australia’s NAB Business Confidence and MI Inflation Expectations; China’s Industrial Production and Fixed Asset Investment; BOE Credit Conditions Survey; US JOLTS Job Openings.

On Wednesday, there will be Japan’s BSI Manufacturing Index; Australia’s Westpac Consumer Sentiment; UK Claimant Count Change and Unemployment Rate.

On Thursday, RBNZ will have its Rate Announcement and Monetary Policy Statement. Other noteworthy releases include Japan’s Core Machinery Orders; Australia’s Jobs data; ECB Monthly Bulletin; UK’s Inflation Report Hearings; US Unemployment Claims and Import Prices.

Friday ends the week with New Zealand’s Business NZ Manufacturing Index; Switzerland’s PPI; ECOFIN Meetings and Eurogroup Meetings; US Retail Sales, PPI, and Preliminary UoM Consumer Sentiment.

Raft of Economic Data Ends the Month of August

The final week of August started out very quietly but this all changed as the week wore on.

Orders for US Durable Goods tumbled greater than estimated after three continued monthly advances. Purchase orders for durable goods fell 7.3 percent in July led by capital goods and aircraft, according to the Census Bureau. Core Durable Goods Orders eased for the second month at minus 0.6 percent.

US CB Consumer Confidence climbed to 81.5 in August from last month’s 81.0 reading. This is the third index reading above the 80 level.

US Pending Home Sales contracted, according to the latest report from the National Association of Realtors. Pending sales of existing homes declined 1.3 percent in July, a greater decline than forecast. The rise in mortgage rates is causing concern, putting pressure on Pending Home Sales which has now declined for the second month.

The US economy grew more than expected in the second quarter of this year, the Bureau of Economic Analysis said on Thursday. Preliminary Gross Domestic Product advanced 2.5 percent, compared to the median estimate of 2.2 percent.

US Core PCE Price Index, Personal Spending, and Personal Income all came in at 0.1 percent in July. All were also below their respective forecasts.

In other news, Private Capital Expenditure in Australia surged 4.0 percent (seasonally adjusted) in the June quarter 2013. This puts it back in the black after capital expenditure of private business slumped 4.1 percent in the first quarter of this year.

Meanwhile, in the United Kingdom, the Confederation of British Industry reported Wednesday that CBI Realized Sales jumped to 27 in August, following July’s equally-impressive advance to 17.

Commodities

Bullish momentum in Gold fizzled out as the week progressed. Gold advanced for five days since August 22, but the fifth day saw a marked about-face after price met sellers around the $,1420-50 area. From there, it was all downhill until the Friday close, when bulls had still attempted to print a weekly close above $1,400—but failed. Next week, bulls should strive for a move back up; otherwise, expect $1,350-80 or even lower.

Oil became active and perky this week as news and speculation about a potential attack on Syria has been doing the rounds throughout the internet. From $105.80s on Tuesday, price shot up past $112 before closing the day in the mid-$109s. Expect further volatility in the coming days or weeks.

Currencies

EURUSD failed to capitalize on the recent consolidation this week and slipped through 1.3300 and even 1.3200 before New York closed on Friday. If bearish momentum continues next week, the pair will target the 1.3100 level, ahead of which is where the 200-day MA lies.

USDJPY remained range-bound below the 99.00 level for a fourth straight week. Risk aversion in relation to the potential attack on Syria could provide a lift to JPY in the following weeks. Trading range has tightened up further; hence expect a burst of volatility soon.

Despite a bullish close on Monday, it was all downhill for GBPUSD throughout this week after bulls failed to make price close above 1.5600 since Thursday. Next week, bulls need to move it back above 1.5600 so they can attack stops toward a break of 1.5700.

The Week Ahead

The start of the new month sees a barrage of economic data this week.

On Monday, there will be New Zealand Overseas Trade Index; Japan’s Capital Spending; Australia’s Building Approvals and Company Operating Profits; China’s HSBC Final Manufacturing PMI; Spain’s, UK’s, and Italy’s Manufacturing PMI; Switzerland’s SVME PMI. Canada and the US are on holiday to celebrate Labor Day.

On Tuesday, traders will focus on China’s Non-Manufacturing PMI; Australia’s Current Account, Retail Sales, Interest Rate Announcement, and RBA Rate Statement; Spain’s Unemployment Change; UK Construction PMI; and US ISM Manufacturing PMI.

Australia kicks off Wednesday with the GDP data, followed by UK Halifax HPI; Spain Italy, and UK Services PMI; Eurozone Retail Sales; US and Canada Trade Balance; US Beige Book; BOC Rate Announcement and Statement.

On Thursday, there will be Australia’s Trade Balance; BOJ’s Press Conference and Monetary Policy Statement; BOE’s and ECB’s Rate Announcement and Statement; US Unemployment Claims, ISM Non-Manufacturing, and Factory Orders.

Finally on Friday, the week closes with Germany’s Trade Balance and Industrial Production; Switzerland’s CPI; UK Trade Balance and Manufacturing Production; US Non-Farm Employment Change and Unemployment Rate; Canada’s Ivey PMI, Employment Change and Unemployment Rate.

Federal Reserve Open Market Committee: QE Could Be Tapered Later This Year

According to the latest Federal Reserve Federal Open Market Committee Meeting Minutes, majority of the FOMC participants were “broadly comfortable” with the tapering of the asset purchases “later this year.” The minutes also noted that domestic economic activity has progressed at a moderate pace during the first half of 2013, labor conditions improved, while jobless rate continues at an elevated pace.

US Unemployment Claims grew more than expected in the prior week at 336,000. Meanwhile, the National Association of Realtors said Existing Home Sales advanced 5.39 million in July, its quickest pace since November 2009. On the other hand, the Census Bureau reported New Home Sales plunged to just 394,000 in July and the June reading was revised down to 455,000 from its initial reading of 497,000.

In other news, Flash Manufacturing PMI and Flash Services PMI data were released across Europe. France had them at 49.7 and 47.7, Germany at 51.3 and 51.0, and Eurozone at 52.0 and 52.4, respectively.

UK’s Second Estimate Gross Domestic Product went up 0.7 percent during the second quarter of the year, thanks to advances in manufacturing, construction, and trade. Preliminary Business Investment also increased, 0.9 percent, during the same period.

 Commodities

Gold marched higher for a third straight week and bulls just missed the $1,400 level a few hours before the week ended. It would be interesting to see if there are remaining bears lurking around and above the $1,400 level. We expect layers of resistance ahead of $1,500. Higher targets include $1,550-$1,630.

Tug-of-war rages on in Oil for a seventh straight week. Infighting between bulls and bears focus mainly between $103 and $108 within the broader $102-$109 range. Overall, the risk is slightly to the downside if the weekly declining peaks are a good indication. Expect the consolidation to persist until we get a decent break out of this range.

Currencies

EURUSD managed to complete its third bullish weekly close despite whipsaw moves during several trading sessions. The pair made a fleeting excursion above 1.3400, but overall the level capped throughout the week. We could see bullish attempts to break beyond this level next week.

Thanks to Dollar recovery, USDJPY has emerged successful in this trading week following last week’s achievement in defending the 96.00 level. To keep the momentum going, bulls need to launch a stronger attack to 100-101.50 starting this coming week.

GBPUSD went from a leader to a laggard after the pair failed to hold on to its gains above the 1.5700 level. This move broke the string of weekly advances which started in the low-1.5200s. Despite this, bulls are still ahead but they need to maintain support at 1.5500 if any attacks surface next week.

The Week Ahead

On Monday, there will only be New Zealand’s Trade Balance and US Durable Goods Orders. UK banks will observe the Summer Bank Holiday.

On Tuesday, traders will only have to look at Germany’s Ifo Business Climate and US CB Consumer Confidence.

Economic releases pick up the pace on Wednesday with Australia’s Construction Work Done; Gfk German Consumer Climate; Eurozone M3 Money Supply; UK CBI Realized Sales and BOE’s Carney speech; and US Pending Home Sales.

On Thursday, there will be Japan Retail Sales; New Zealand’s ANZ Business Confidence; Australia’s Private Capital Expenditures; Germany’s Preliminary CPI; Switzerland’s Employment Level; Canada’s Current Account and RMPI; and US Preliminary GDP and Unemployment Claims.

Finally August ends on Friday with Japan’s Household Spending, Preliminary Industrial Production, and Tokyo Core CPI; Australia’s Private Sector Credit; Germany’s Retail Sales; UK Nationwide HPI and Net Lending to Individuals; and US Chicago PMI and Revised UoM Consumer Sentiment.

Bank of England Votes in Favor of QE and Bank Rate Status Quo

The Bank of England’s Monetary Policy Committee remained in consensus in terms of Asset Purchase Facility and Official Bank Rate votes, but not in terms of forward guidance. The committee voted unanimously in favor of retaining the QE and the bank rate. However, Martin Weale dissented, in favor of a stricter stance with regards above-average inflation.

UK Claimant Count Change has declined for the ninth straight month, decreasing a little over 29,000 in July. Unemployment Rate stood at 7.8 percent for the fourth straight month. Retail Sales increased 1.1 percent, following the prior month’s mild 0.2 percent gain.

In other news, New Zealand posted a surprise increase in the June quarter Retail Trade Survey. According to Statistics New Zealand, Retail Sales rose 1.7 percent, the second strongest reading in the last six quarters. Core Retail Sales was nearly double than expected, 2.3 percent.

The US Empire State and Philly Fed Manufacturing Index both disappointed with readings of 8.2 and 9.3. Analysts were expecting above 10-level readings. The same happened with the Preliminary reading of the University of Michigan Consumer Sentiment, which stood at 80.0 compared to 85.6 expectations by analysts surveyed.

Commodities

Gold launched the week with a good start and ended in the same fashion, maintaining its stance above the $1,300 level all the way through. With fresh momentum on the side of the bulls, they are ready to tackle remaining bear defense lurking around $1,400. Layer of resistances are scattered through $1,500.

Oil completed the week with five straight days of advances, bringing price closer to fulfilling the expected triple top. There is a potential thick layer of defense around $108-$109, so buyers need to be extra vigilant.

Currencies

EURUSD managed a V-shaped recovery after blasting higher by more than 150 pips on Thursday, effectively erasing the losses built on the early part of the week. Bulls will surely aim for a trek above the 1.3400 level this coming week.

USDJPY started the week well bid but a significant turnaround happened on Thursday which thwarted a great bullish advance. Based on this price action, it appears bears remain in control; hence bulls need to act with conviction next week in order to significantly reverse the bearish momentum.

GBPUSD led the majors this week as the pair rocketed above the 1.5600 level after breaking away from the sticky 200-day MA which influenced price for a week. Bullish target this week could go as high as 1.5800-1.5900. Before that, June’s 1.5750 high needs to be taken out of the way.

The Week Ahead

The coming week is rather quiet relative to its normal state.

On Monday, there will only be New Zealand’s PPI Input; Japan’s Trade Balance; Australia’s New Motor Vehicle Sales.

On Tuesday, traders will focus on Australia’s Monetary Policy Meeting Minutes; New Zealand’s Inflation Expectations; Germany’s Producer Price Index; Canada’s Wholesale Sales.

Wednesday is unusually quiet, with just a few key releases such as UK Public Sector Net Borrowing and CBI Industrial Order Expectations; US Existing Home Sales and FOMC Meeting Minutes.

Thursday tops the week with the most releases, particularly Australia’s CB Leading Index; China’s HSBC Flash Manufacturing PMI; Eurozone, France, and Germany Flash Manufacturing PMI and Flash Services PMI; US Unemployment Claims and Flash Manufacturing PMI; Canada’s Retail Sales

Finally on Friday, the week winds down with the release of Germany’s Final GDP; UK Second Estimate GDP, Prelim. Business Investment, and BBA Mortgage Approvals; Canada CPI; and US New Home Sales. The Jackson Hole Symposium, to be held in Wyoming, will also start today and is expected to end on Sunday.

Canada Jobs Data Disappoints; RBA Cuts Rates As Expected

During its board meeting on August 6, the Reserve Bank of Australia under the leadership of Governor Glenn Stevens determined to slash the Cash Rate to 2.50 percent from 2.75 percent. The Board views commodity prices to be at elevated levels. It foresees a pickup in the global growth by 2014.

On Thursday, Australia’s Bureau of Statistics announced a shocking decline in its Employment Change data. The labor force was reduced by 10,200 in July, a big surprise since analysts expected a gain of 6,200 jobs. Unemployment Rate improved a bit, 5.7 percent.

Canada also revealed surprisingly poor jobs data on Friday. Employment Change lost 39,400 jobs in July as there were lesser employment opportunities in government and for the youth. The Unemployment Rate climbed a notch to 7.2 percent.

Building Permits in Canada fell 10.3 percent, more than the -2.5 percent estimate. This decline in June is the first in the last 6 months. Meanwhile, Ivey PMI in July also fell to 48.4, the first decline below the 50 level since November.

Commodities

Gold started off the week quite tepid as it followed through with the selling momentum from the prior week. This changed mid-week as price made a V-shaped recovery enough to enable price to close the week just a tad above the weekly open and the embattled $1,300 level. There’s a lot of work ahead for the bulls: lots of wood to chop through $1,350. If they succeed, bears could scramble for the exits as $1,400 would become vulnerable by then.

The potential double top mentioned last week materialized quite well, but price opted to bounce soon after the double top’s bottom broke and price reached slightly beyond the $102 level. Unlike in Gold, oil buyers did not have enough time to recover all the losses, but they managed to close the week just above $105. Near-term areas to watch are $106-$108 and $100-$102.

Currencies

EURUSD finally made a march upward this week, but price quickly reversed after touching 1.3400. Overall, this gives bulls control of the pair in four out of the last five weeks, and this gets them closer to their mid-term goal of reaching 1.3700. To achieve this, they need to keep the momentum on their side in the next few weeks.

With the inability to move higher from 99, sellers obviously saw no option but to dump price lower throughout the week. The pair slid 330 pips and fleetingly visited the upper-95.00s. This puts 93.00-94.00 in serious danger in the next few weeks.

GBPUSD had a volatile week, featuring a near-330-pip whipsaw on Wednesday during the time of BOE Governor Carney’s speech and release of the BOE Inflation Report. Thanks to this price action, GBPUSD caught up with EURUSD, and the former is on track to move toward 1.5700.

The Week Ahead

It’s pretty much all about Japan on Monday with the slew of economic releases such as Japan’s Preliminary GDP, CGPI, and Revised Industrial Production. Switzerland’s Retail Sales and US Federal Budget Balance will follow late in the day

On Tuesday, there are Japan’s Core Machinery Orders and BOJ Monetary Policy Meeting Minutes; Australia’s NAB Business Confidence; New Zealand REINZ HPI; UK CPI, RPI and PPI Input; Germany’s ZEW Economic Sentiment; Eurozone Industrial Production and ZEW Economic Sentiment; US Retail Sales, Business Inventories, and Import Prices.

Busy Wednesday starts early with New Zealand Retail Sales; Australia’s Westpac Consumer Sentiment and Wage Price Index; France and Germany GDP; France Non-Farm Payrolls (Prelim); Switzerland’s PPI; UK Claimant Count Change, MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes, Unemployment Rate, and Average Earnings Index; Eurozone Flash GDP; US PPI.

On Thursday, there are New Zealand’s Business NZ Manufacturing Index; Australia’s MI Inflation Expectations; UK Retail Sales; US CPI, Unemployment Claims, TIC Long-term Purchases, Empire State Manufacturing Index, Philly Fed Manufacturing Index, Industrial Production and NAHB Housing Market Index.

Finally, Friday releases come in the form of Eurozon Current Account, Trade Balance, and CPI; Canada’s Manufacturing Sales; US Housing Starts, Prelim. Unit Labor Costs, Prelim. Nonfarm Productivity, Building Permits, and UoM Consumer Sentiment.

Fed, ECB, BOE Rates Unchanged, US Jobs Data Disappoints

The US Federal Reserve, European Central Bank, and the Bank of England all decided to leave rates unchanged this week. The Fed left its rate at less than 0.25 percent, while the ECB and BOE declared they have held their respective rates at 0.50 percent.

The US Non-Farm Employment Change, one of the key economic data releases this week, showed on Friday that there were 162,000 new Americans employed in July, according to the US Bureau of Labor Statistics. The ADP Non-Farm Employment Change released Wednesday was way off with a 200,000 reading. Unemployment rate stood at 7.4 percent, and Average Hourly Earnings eased 0.1 percent for the same period.

The National Association of Realtors said US Pending Home Sales eased 0.4 percent in June after posting a 5.8 percent gain last May.

US ISM Manufacturing PMI leapt to 55.4 in July from June’s 50.9 reading.

In other news, UK Manufacturing PMI and Construction PMI improved considerably in July, rising 54.6 and 57.0 respectively, reports from Markit showed.

Japan’s Household Spending surprisingly declined in June. Consumer spending eased 0.4 percent when analysts expected a modest 1.2 percent gain, on the back of May’s 1.6 percent decline. Unemployment Rate improved slightly to 3.9 percent from the previous month’s 4.1 percent, while June’s Preliminary Industrial Production contracted 3.3 percent, following May’s 1.9 percent advance.

Commodities

Gold has been moving lower for most of the week until Friday’s US jobs data came along. Price broke through the recent consolidation and touched a $1,283 low before it popped higher. The upside pop enabled Gold to close the week above the $1,300 level, after testing support below the level. Bulls escaped the drop through the consolidation this time, but the considerable task of breaking through the consolidation top situated at $1,347 is up ahead.

Potential double top has been printed in Oil after price drove toward the July 19 high and reversed quickly. With the weekly close just below $107, price could try to revisit $105 early next week. Price could stay in the $102-$108 area for quite some time.

Currencies

It was another tough and relatively whipsaw-y week for EURUSD as the pair moved quite erroneously by mid-week after the recent ranges got pulverized on both sides. Control changed hands between bulls and bears, but ultimately price ended up virtually unchanged for the week. Slight advantage goes to the buyers based on their performance on Friday. 1.3400-50 remains as the key upside area to break.

USDJPY bulls raged on Thursday to bring price nearly 200 pips higher, but Friday’s US jobs data spoiled the ascent and erased about half of Thursday’s gains. Bulls should continue to support price around the 97.50-98.50 area in the coming week.

GBPUSD was down all throughout the week except on Friday when bulls tried to salvage price from the 1.5102 lows off of the release of the weaker-than-expected US jobs data. That data pop higher managed to recover more than half of the week’s decline but it was not enough to make price close above the 1.5300 level. Next week, buyers should aim for a move back toward 1.5400-50.

The Week Ahead

Unlike the previous weeks, Monday will be relatively active with the release of Australia’s Retail Sales; UK Halifax HPI; Spain, Italy, the UK, and Euro-area Services PMI; Euro-area Retail Sales; US ISM Non-Manufacturing PMI

Tuesday activity will come in the form of UK BRC Retail Sales Monitor; Australia’s Trade Balance, Interest Rate Announcement and Statement, and HPI; UK Manufacturing and Industrial Production and NIESR GDP Estimate; Germany Factory Orders; Canada and US Trade Balance; US JOLTS Job Openings.

Wednesday starts early with New Zealand Employment Change and Unemployment Rate; followed by Australia’s Home Loans; Switzerland’s SECO Consumer Climate and Consumer Price Index; BOE Carney speech and BOE Inflation Report; Canada’s Ivey PMI and Building Permits.

On Thursday, there are Japan’s Current Account, Bank Lending, and Monetary Policy Statement; Australia’s Employment Change and Unemployment Rate; China’s Trade Balance; Germany’s Trade Balance; ECB Monthly Bulletin; Canada’s NHPI; and US Unemployment Claims.

Friday ends the week with RBA Monetary Policy Statement; China’s New Loans, Fixed Asset Investment, Industrial Production, Retail Sales, PPI and CPI; UK Trade Balance; and Canada jobs data.

RBNZ Hawkish Bias Emerges; Dollar Weakness Persists Ahead of US Rate Announcement

The Reserve Bank of New Zealand decided to maintain its Official Cash Rate at 2.5 percent as widely expected by analysts surveyed. RBNZ Chief Graeme Wheeler pointed out the elevated house price inflation seen specifically Auckland and Christchurch, and this suggests a mild bias to hike rates by next year. RBNZ expects rates to stay the same for the rest of this year.

In other news, Japan’s Shinzo Abe took victory in the Upper House elections held last Sunday. 74 of the 121 Upper House seats went to Abe’s Liberal Democratic Party as well as the coalition partner, the New Komeito, providing them a favorable majority in the Upper House, and thereby ceasing the parliamentary stalemate which has been ongoing for the last 6 years.

The labor market in Spain exhibited a sign of improvement. Jobless rate fell to 26.3 percent in the June quarter. This follows seven consecutive quarters of unwelcome advances.

Orders of durable goods in the United Stated surged 4.2 last June, rising much more than 1.1 percent expectations, according to a Census Bureau report on Friday. Meanwhile, Core Durable Goods was flat for the same period.

Commodities

Gold finished a strong week in favor of the bulls. The bullish week started early with the break through $1,300 on Monday. $1,350 was attacked early as well, but it was surprisingly well protected for four straight days. Bulls should see a break of this level next week if they can continue supporting $1,300 against further attacks.

After four straight weeks of bullish exuberance, oil finally printed a bearish week soon after price encountered difficulties sustaining the lofty $108 level. Sellers did not waste time and started the bearish momentum on early Monday, depressing price through several levels and closed the week in the mid-$104s. Downside, the key area to watch is $102-$104.

Currencies

Another triumphant week ensued for EURUSD as buyers managed to course through 1.3200 with ease. Now, the pair is set to break the 1.3300 level and continued bullish momentum would see price visit the 1.3400 area soon. On the downside, sellers would have to contend with the strong support around 1.3150-1.3200.

As expected, USDJPY continued to have a difficult time trading through 100.00-50 and this led to a downside move this week. Support around 99 quickly crumbled and this prompted a dash towards 97.95 before the week closed at 98.27. The outlook remains bearish especially if 97-98 fails to hold the line for the bulls.

Just like EURUSD, GBPUSD rose for the third consecutive week on the back of a weak Dollar and to some extent the favorable UK GDP data. The next area of interest is 1.5550-1.5600 ahead of 1.5700. Buyers must remain vigilant as 1.5150-1.5300 is still vulnerable.

The Week Ahead

Monday will begin early with Japan’s Retail Sales; followed by UK’s Net Lending to Individuals, Mortgage Approvals, M4 Money Supply, and CBI Realized Sales; and US Pending Home Sales.

Tuesday will get more active with New Zealand’s Building Consents; Japan’s Household Spending, Preliminary Industrial Production, and Unemployment Rate; Germany’s Gfk Consumer Climate and Preliminary CPI; Spain’s Flash GDP; Eurozone Retail PMI; Canada IPPI and RMPI; US S&P/CS Composite-20 HPI and CB Consumer Confidence.

Wednesday will see the release of UK BRC Shop Price Index and Gfk Consumer Confidence; Japan Manufacturing PMI and Housing Starts; New Zealand’s ANZ Business Confidence; Germany’s Retail Sales and Unemployment Change; Italy’s Unemployment Rate; Eurozone CPI Flash Estimate and Unemployment Rate; US ADP Non-Farm Employment Change, Advance GDP, Chicago PMI, FOMC Statement and Federal Funds Rate.

Thursday will witness the greatest action of the week with China’s Manufacturing PMI and HSBC Final Manufacturing PMI; UK Halifax HPI; Spain, UK, and Italy Manufacturing PMI; Eurozone Final Manufacturing PMI; UK’s BOE and Eurozone’s ECB Rate Announcements and Statements; US Unemployment Claims, ISM and Final Manufacturing PMI.

Friday ends the week with Japan’s Monetary Base; Australia’s PPI; US Unemployment Rate, Non-Farm Employment Change, Core PCE Price Index, and Factory Orders.