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Greeks Say No to Eurozone; Euro Gaps Down for Second Week

Greece has just edged closer to Euro exit after a Greek referendum ended with “No” votes gaining the upper hand. The referendum centered on whether to accept or reject the creditors’ terms regarding the latest aid package. On Monday’s opening, the EURUSD gapped for a second straight Monday and therefore EURUSD could revisit the 2015 lows in the near future if bearishness persists in the market. In the mean time, lines between the Greek government and creditors are open and discussions are still ongoing.

In Japan, Retail Sales data was much better at 3 percent, while analysts expected a 2.1 percent gain. This is the second straight monthly gain. The Preliminary Industrial Production sagged 2.2 percent. Average Cash Earnings grew 0.6 percent, a tad below the 0.7 percent forecast.

Germany’s Retail Sales advanced 0.5 percent as median estimates for flat growth in May, and April’s reading was revised lower to 1.3 percent from the initial 1.7 percent. Unemployment Change showed a decline of 1,000 compared to an expected 5,000 decline.

Spain’s Unemployment Change also declined below forecast at 94,700.

In the United States, the Chicago PMI for June improved but at 49.4, it is below 50 and lower than anticipated. Non-Farm Employment Change was published one day earlier on Thursday due to US Independence Day celebrations. Employers added 223,000 jobs in June, which is lower than the forecast of 231,000. Bureau of Labor Statistics also announced a 5.3 percent Unemployment Rate, a better-than-expected improvement from May’s 5.5 percent. Meanwhile, Jobless Claims filed in the previous week was 11,000 higher than the 270,000 forecast. Factory Orders dipped one percent.

Commodities

Gold continues its bearish path as it struggles to get through the $1,200 level. The vulnerability of the $1,100 increases and we could see that area will get attacked in the coming week.

Oil seems well protected around the $60 level, so sellers pounced and pressured Oil lower throughout the week. We could see a quick attack on the $50 level soon.

Currency Pairs

Monday’s gap in EURUSD set the stage for a bearish week. With the Greek referendum “No” result, we could see more volatility in the coming week. Avoid buying dips.

GBPUSD started the week with a gap and was significantly bearish the entire week. Sellers easily cut through 1.56 and therefore we could see more downside moves in the coming week.

USDJPY closed the week virtually unchanged, but we have seen the fourth lowest weekly high in the process, nevertheless. Any weakness would be more evident if the 121-122 area fails to hold.

The Week Ahead

Monday’s news will be sparsely scattered throughout the day, starting with Australia’s MI Inflation Gauge and ANZ Job Advertisements; then Germany’s Factory Orders; Switzerland’s CPI; Canada’s Ivey PMI and Bank of Canada’s Business Outlook Survey and US ISM Non-Manufacturing PMI.

Tuesday will be kicked off with New Zealand’s NZIER Business Confidence, followed RBA Rate Announcement and Statement; Switzerland’s Foreign Currency Reserves; UK’s Halifax HPI, Manufacturing Production and Industrial Production; Euro Summit; Canada and US Trade Balance; US JOLTS Job Openings.

Wednesday will be much shorter than usual with Japan’s Current Account; UK Annual Budget Release; Canada’s Building Permits; and US FOMC Meeting Minutes.

Thursday will have Japan’s Core Machinery Orders; Australia’s jobs data; China’s CPI and PPI; UK BOE Official Bank Rate, Asset Purchase Facility, and MPC Rate Statement; Canada’s NHPI; and US Jobless Claims.

Friday will wind down the week with Australia’s Home Loans; China’s New Loans; UK Trade Balance; Canada’s jobs data; and Fed Chair Yellen’s speech.

Greece Reaches No Deal; US Existing Home Sales Bounce Back

The debt issue on Greece remains a big question mark for the markets. Despite previous high-level discussions on the issue, several officials expressed uncertainty. IMF’s Lagarde had said, “there’s enormous work” that still needs to be done. Various Eurogroup meetings happened throughout the week, but ultimately no deal was reached between the Greek government and top officials involved. Banks in Greece are closed (small cash withdrawals allowed) and would stay so until July 6, or until officials take drastic steps to end the stalemate. The Greek government imposed the bank restrictions in order to “protect the financial system”. German Chancellor Angela Merkel expressed willingness for further talks with Greece’s Prime Minister Alexis Tsipras “if he actually wants to”. The Greek PM has called for a referendum on July 5 to discuss the terms offered by the creditors, and request for a bailout extension.

All Flash Manufacturing PMI and Flash Services PMI from Germany, France, and the Eurozone came in better than forecast, unlike in the previous instances.

Germany’s Ifo Business Climate fell to its lowest in the last four months to 107.4 as the Greek risk weighs down on business confidence.

In the United States, the National Association of Realtors reported that Existing Home Sales came in slightly better at 5.35 million May, its best level since November 2009. Unemployment Claims was spot on at 271,000. Personal Spending for May edged up 0.9 percent, while Personal Income matched the previous month with a 0.5 percent increase. Meanwhile, the Revised University of Michigan Consumer Sentiment surged to a five-month high of 96.1 in June, due to improving labor market outlook.

Commodities

Gold continues to have problems breaking through the $1,200 level. Therefore, last week’s warning about the vulnerability of the lower part of $1,100 remains.

Not much has changed in oil as it ping-ponged between $58 and $62 this week. Long-term downtrend remains intact. A move below $56 would ignite further weakness.

Currency Pairs

The break of 1.1300 and 1.1200 speaks volumes about EURUSD’s possibility in moving lower after this week. This eventuality would test the strength of possible support area around 1.08 to 1.10.

Like EURUSD, GBPUSD suffered a bearish week after the 1.5900 level formed a layer of defense from buyers and stuck with this defense throughout the week. Immediate support would come into play around 1.5600-60, if bears are interested to head that way.

USDJPY seems magnetized by the 124 level but somehow it found its way back down to 123 all throughout the week. Sellers might grow impatient and try to push this pair down toward 120 again.

 The Week Ahead

Monday’s news activity will kick off early starting with Japan’s Retail Sales and Prelim Industrial Production, followed by Germany’s Prelim CPI; Spain’s Flash CP; UK Net Lending to Individuals; Canada’s RPMI and IPPI; and US Pending Home Sales.

On Tuesday, news activity will pick up, with New Zealand’s Building Consents; Japan’s Average Cash Earnings; Australia’s Private Sector Credit and ANZ Business Confidence; Germany’s Retail Sales and Unemployment Change; Switzerland KOF Economic Barometer; UK Final GDP and Current Account; Eurozone Jobless Rate and CPI Flash Estimate; Canada’s GDP; and US Chicago PMI and CB Consumer Confidence.

Wednesday will have Australia’s Building Approvals; Japan’s Tankan indices; China’s Manufacturing PMI and HSBC Manufacturing PMI; Spain, Italy, Germany, UK, France and Eurozone Manufacturing PMI; UK BOE Financial Stability Report; and US ADP Non-Farm Employment Change and ISM Manufacturing PMI. Canada will observe Canada Day.

Thursday will have Australia’s Trade Balance; Spain’s Unemployment Change; UK Halifax HPI and Construction PMI; ECB Monetary Policy Meeting Accounts; US Non-Farm Employment Change, Jobless Rate, Factory Orders, and Jobless Claims.

Friday’s activity will be brief with Australia’s Retail Sales; China’s HSBC Services PMI; Spain, Italy, France, Germany, UK, and Eurozone Services PMI; Eurozone Retail Sales. The US will observe Independence Day.

Concessions Could Break Greek Deadlock

In Greece, it has been a defining week as back and forth negotiations continue. In a crisis meeting, Greek PM Tsipras offered a reforms package in an attempt to break the deadlock and receive further aid. Aside from foreign creditors, Greece owes the IMF a debt installment of 1.5 billion Euros ($1.7 billion). IMF’s Lagarde said the June 30 payment deadline for Greece is “definitive”.

All three central banks this week announced no change in their respective rates. The US Federal Reserve, Bank of England, and Swiss National Bank kept their rates at less than 0.25 percent, 0.75 percent, and -0.75 percent, respectively. The BOE MPC also voted unanimously to keep the Asset Purchase Facility unchanged. Meanwhile, the Federal Reserve Board still expects a moderate expansion in economic activity.

A flurry of news has been published in the United States. The Philly Fed Manufacturing Index, Building Permits, Current Account, and Jobless Claims all came in better than forecast. Industrial Production slipped 0.2 percent in May, its third consecutive monthly decline. One economist has declared the factory sector is in a technical recession as IP posted disappointing figures for six straight months.

ZEW Economic Sentiment in Germany and Eurozone were both down this June (31.5 and 53.7, respectively).

In the UK, Claimant Count Change was much weaker than anticipated at -6,500. Meanwhile, Average Earnings Index edged higher by 2.7 percent. CPI was spot on at 0.1 percent, while PPI Input and RPI came in lower at -0.9 percent and 1 percent, respectively.

Commodities

Gold attempted to break the $1,200 level but fell short of doing so. Nevertheless, the yellow metal is on to its second bullish week and we could see more upside attempts. The lower $1,100s remain vulnerable, though.

Oil has seen no change. It remains confined in a tight range close to the $59. We need a strong stimulus to break either side of this consolidation. Long-term downtrend remains intact.

Currency Pairs

EURUSD posted its third bullish weekly close but the overall distance traveled is actually meager. We still need to see a push through 1.1400 before expecting higher ground. Bulls are very much in favor at this time.

Another strong weekly finish put GBPUSD on a higher ground and closer to the 1.6000 level. Expect a retracement back towards 1.5600 if sellers return to the game.

USDJPY posted a bearish weekly inside bar with a close in mid-122s. The attempt through 124 has been pushed down mid-week, so buyers need to try again this week. Further upside failures could more buyers in “abandon ship” mode.

 The Week Ahead

Following a jam-packed week, the last full week of June would be rather brief compared to its usual form.

On Monday, the news releases will be in the form of BOJ Monthly Report; Eurogroup meetings and Euro Summit; and US Existing Home Sales. China will celebrate the Dragon Boat Festival.

Tuesday will have more activity, including China’s HSBC Manufacturing PMI; Flash Manufacturing PMI and Flash Service PMI from Germany, France, and the Eurozone; UK CBI Industrial Order Expectations; US Durable Goods Orders, Flash Manufacturing PMI, and New Home Sales.

Wednesday will be brief but start early with BOJ’s Monetary Policy Meeting Minutes, followed by Germany’s Ifo Business Climate; SNB Quarterly Bulletin; US Final GDP.

Thursday will also be brief with GfK German Consumer Climate; Eurogroup meetings; US Jobless Claims, Core PCE Price Index, Personal Spending, and Personal Income.

Friday ends the week with New Zealand’s Trade Balance; Japan’s Tokyo Core CPI and Household Spending; Germany’s Import Prices; Eurozone M3 Money Supply and Private Loans; and US Revised UoM Consumer Sentiment.

RBNZ Surprises with Rate Cut; Australia’s Jobs Data Shows Improvement

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.

Commodities

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.

Currency Pairs

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.

Australia Releases Weak Economic Data; US Jobs Data Mixed

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.

Commodities

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.

Currency Pairs

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.

Aussie PCE, Japan’s House Spending sink; US Data Mostly Negative

The latest news from Japan showed Household Spending surprisingly weakened 1.3 percent. Meanwhile, Australia’s Priv ate Capital Expenditure sunk faster than expected (-4.4 percent), and the previous reading revised higher from -2.2 percent to -1.7 percent.

In Canada, the central bank decided on Wednesday to keep its Overnight Rate unchanged at 0.75 percent. Current Account and RMPI, particularly the latter, came in better than forecast (-CAD17.5 billion and 3.8 percent, respectively). GDP slid 0.2 percent in the first quarter, compared to a 0.2 percent expectation. The previous reading for GDP was revised lower to -0.1 percent from a flat reading.

In the United States, Jobless Claims for the prior week increased to 282,000 that is 11,000 higher than its median forecast. The April Chicago PMI disappointed with a drop to 46.2, which is near the 6-year low. Meanwhile, the Prelim GDP decline in the first quarter was a tad lower than expected, -0.7 percent.

Commodities

Gold followed a bearish path for the second week in a row after sellers overpowered buyers in the lower part of $1,200 in the prior week. $1,200 remains sticky and trades below this level remain attractive. We could see more of the same this week.

Oil saw more volatility after the continuous selling starting the week. A big jump pushed prices back through $60 on Friday and the week ended just above this level. The support area indeed got tested and we would now have to wait if we’ll get a follow through move through $60.

Currency Pairs

Unlike the dive of nearly 450 pips seen in the prior week, EURUSD was contented to trade in a much narrower range this week. The pair stayed close to 1.1000; this could likely get sticky this week too.

GBPUSD had another gloomier week. Unlike EURUSD, GBPUSD slid considerably for the second week, moved through 1.5400, and looks interested in attacking 1.5000 again. 1.50-1.52 would prove a critical area for both sides.

Back-to-back weekly advances pushed USDJPY through 124 this week. This is an area well past all recent resistance and is the highest reached since 2003. If this pair would retrace, we can look for support to come in around 120-122.

The Week Ahead

To start June, Monday will be more active than usual with news releases such as Japan’s Capital Spending; Australia’s Building Approvals, MI Inflation Gauge, and Company Operating Profits; China’s Manufacturing PMI and Non- Manufacturing PMI; Germany’s Prelim CPI; Spain, Italy, Switzerland, and UK Manufacturing PMI; and US ISM and Final Manufacturing PMI, and Personal Spending and Income. New Zealand will observe the Queen’s Birthday.

Tuesday will start early with New Zealand’s Overseas Trade Index; Australia’s Current Account, Cash Rate Announcement and Rate Statement; Japan’s Average Cash Earnings; UK Construction PMI and Net Lending to Individuals; Spain and Germany’s Employment Change ; Eurozone CPI Flash Estimate; and US Factory Orders.

Wednesday will stay very busy with Australia’s GDP; Spain, UK, Germany, France, and Italy Services PMI; Eurozone Retail Sales and Unemployment Rate; ECB Minimum Bid Rate Announcement; US ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI; US and Canada Trade Balance.

Thursday will offer Australia’s Retail Sales and Trade Balance; Eurozone Retail Sales;; BOE Official Bank Rate and Asset Purchase Facility announcement; Canada’s Ivey PMI; and US Jobless Claims and Revised Nonfarm Productivity.

Friday’s activity will decline considerably, but traders will surely monitor news such as German Factory Orders; Switzerland’s Foreign Currency Reserves; UK Halifax HPI; Canada and US jobs data; and OPEC meetings.

German ZEW Economic Sentiment Slid Hard; US Data Mostly Negative

The latest Japan Core Machinery Orders, a measure of new private sector purchase orders for machines, surprised with a surge of 2.9 percent in March. Prelim GDP edged up 0.6 percent in the first quarter of the year.

German ZEW Economic Sentiment saw a dramatic decline to 41.9 (53.3 previously) this month, while EZ ZEW Economic Sentiment made a more modest decline to 61.2 (64.8 previously).

In the United Kingdom, the MPC Asset Purchase Facility and Official Bank Rate votes remained unchanged. Meanwhile, Consumer Price Index surprisingly dipped 0.1 percent in April, when analysts were expecting no change. This is the first time it fell since the 1960s. PPI Input gained 0.4 percent in April. Retail Sales grew 1.2 percent on clothing demand, following a 0.7 percent decline in March.

In the United States, Jobless Claims for the prior week stood at 274,000. Building Permits and Housing Starts beat forecasts, while Flash Manufacturing PMI, Philly Fed Manufacturing Index, and Existing Home Sales all came in lower than forecast.

Commodities

Gold retraced part of the prior week’s advance after selling ensued around the $1,230s early in the week. Price is now back near the $1,200 level and would threaten another move below it. Resistance remains around $1,280 to $1,300.

Oil had another volatile week as both sides battle for control around the $60 area. Support has thickened around $55 to $58, and we will see if this area would get tested this week.

Currency Pairs

EURUSD dived nearly 450 pips this week after sellers stepped in at the 1.1460s. Price is back down to test the 1.1000 level. Let’s see if this area would become a solid support zone.

GBPUSD has formed a 400-pip bearish weekly inside bar. Sellers dominated after the prior week’s “Goldilocks” advance through 1.5800. A strong move through 1.5400 would expose 1.5000-1.5100.

Finally, USDJPY made a decisive move this week. The pair moved higher by 230 pips and made a firm weekly close just above 121.50. If Dollar strength continues, we could see a new high soon.

The Week Ahead

Monday will be short of several vital economic news, as many major banks will be closed. Germany, Switzerland, and France will observe Whit Monday. The UK will observe the Spring Bank Holiday, while the United States will observe Memorial Day. Only Japan’s Trade Balance and BOJ Monthly Report will be the most important news to be released today.

The pace will pick up slightly on Tuesday with New Zealand’s Trade Balance; Switzerland’s Employment Level; US Durable Goods Orders, S&P/CS Composite-20 HPI, New Home Sales, CB Consumer Confidence, and Richmond Manufacturing Index.

Wednesday will open up with BOJ Monetary Policy Meeting Minutes, followed by Australia’s Construction Work Done; Gfk German Consumer Climate; and Bank of Canada’s Rate Announcement and Statement. The G7 will start its 3-day meeting today.

Thursday will start quite early with Japan’s Retail Sales; Australia’s Private Capital Expenditure; Switzerland’s Trade Balance; UK Second Estimate GDP, BBA Mortgage Approvals, and Prelim Business Investment; Canada’s Current Account and RMPI; US Jobless Claims and Pending Home Sales.

Friday will have New Zealand’s Building Consents; Japan’s Household Spending, Jobless Rate, Prelim Industrial Production, and Tokyo Core CPI; New Zealand’s ANZ Business Confidence; Germany’s Retail Sales; France Consumer Spending; Spain’s Flash CPI; Eurozone M3 Money Supply and Private Loans; Canada’s GDP; US Prelim GDP, Chicago PMI, and Revised UoM Consumer Sentiment.

BOE Rate Put on Hold; Chinese Data Disappoint

The Bank of England decided to keep status quo in terms of its Official Bank Rate and Asset Purchase Facility. The Official Bank Rate stays at 0.50 percent.

In other news from the United Kingdom, the Manufacturing Production and Industrial Production came in better than expected at 0.4 percent and 0.5 percent respectively. The Average Earnings Index was also better at 1.9 percent, while Claimant Count Change was worse at -12,600. The March Jobless Rate stood at 5.5 percent, as expected.

Some data from China came in lower than expected, particularly Fixed Asset Investment (12 percent), New Loans (CNY708 billion), M2 Money Supply (10.1 percent), and Retail Sales (10 percent). The Industrial Production came in close to expectations at 5.9 percent.

In the United States, Retail Sales was flat in April. Empire State Manufacturing Index stood at 3.1, Capacity Utilization Rate at 78.2 percent, while Prelim UoM Consumer Sentiment came in much lower than expected at 88.6. Jobless Claims for the prior week improved to 264,000. Meanwhile, Industrial Production surprisingly dipped in April by 0.3 percent.

Commodities

Gold moved to its highest level in two months as the $1,200 level held completely this week. The next area of resistance would come around $1,280 to $1,300.

Oil tried to test the prior week’s high but failed easily mid-week. The close just below $60 would be in favor of bears who would want to pounce black gold lower and through $55.

Currency Pairs

Just like Gold, EURUSD powered to new highs after a successful test around the 1.1100 area. If bulls are enthusiastic, they can move toward 1.1500 in the coming weeks.

GBPUSD also powered higher and broke through the 1.5800 level. Friday was a retracement day where the pair closed near 1.5700. This latter level should hold next week so the pair can move much higher soon.

USDJPY remained happy in consolidation mode around the 120 level. The weekly close around 119.20 adds to the bearish sentiment, which could snowball soon.

The Week Ahead

Monday will be a very brief news day with Japan’s Core Machinery Orders; Switzerland’s Retail Sales; Germany’s Bundesbank Monthly Report; and US NAHB Housing Market Index. Meanwhile, Canada will observe Victoria Day today.

Tuesday will get more active with New Zealand’s PPI Input, PPI Output, and Inflation Expectations; Australia’s CB Leading Index and Monetary Policy Meeting Minutes Germany’s ZEW Economic Sentiment; Eurozone Final CPI; UK RPI, HPI, CPI, and PPI Input; and US Building Permits and Housing Starts.

Wednesday will be brief yet active with Japan’s Prelim GDP; Australia’s Westpac Consumer Sentiment; Germany’s PPI; UK MPC Official Bank Rate and Asset Purchase Facility Votes; Canada’s Wholesale Sales; and US FOMC Meeting Minutes.

Thursday will remain active with Australia’s MI Inflation Expectations; China’s HSBC Flash Manufacturing PMI; Germany, France, and Eurozone Flash Manufacturing PMI and Flash Services PMI; UK Retail Sales and CBI Industrial Order Expectations; ECB Monetary Policy Meeting Accounts; US Jobless Claims, Flash Manufacturing PMI, Philly Fed Manufacturing Index, and Existing Home Sales.

Friday will feature BOJ’s Monetary Policy Statement and Press Conference; UK’s Public Sector Net Borrowing; Germany’s Ifo Business Climate; Canada’s CPI and Retail Sales; and US CPI. ECB’s Draghi, BOE’s Carney, and BOJ’s Kuroda will also give a speech.

RBA Cuts Rate to 2 Pct; Aussie Building Approvals Surge

RBA slashes Cash Rate to 2 percent.  The Reserve Bank of Australia decided to reduce its Cash Rate by 25 percentage points to 2 percent.

In other news from Australia, Building Approvals surged surprisingly by 2.8 percent in March, when median expectations was for a drop of 1.7 percent. Job Advertisements climbed 2.3%, while Trade Balance came in weaker –AU$1.32 billion. Meanwhile, Retail Sales was slightly weaker at 0.3 percent for the month of March.

In the United Kingdom, Construction PMI for April slowed dramatically to 54.2, its weakest since June 2013, according to the latest news from M arkit.

New Zealand Employment Change was a tad weaker at 0.7 percent, while the Jobless Rate came in higher at 5.8 percent. Meanwhile, Australia’s Employment Change stood at -2.9 percent while Jobless Rate came in as expected at 6.2 percent.

US Jobless Claims came in 17,000 lower than forecast at 265,000 during the previous week. Non-Farm Employment Change came in at 223,000 in April, according to the Bureau of Labor Statistics.

US and Canada Trade balance were much weaker than expected, -$51.4 billion and –CAD3 billion, respectively. US Jobless Rate came in line with forecast at 5.4 percent while Canada’s Jobless Rate stayed at 6.8 percent in April. Canada lost 19,700 jobs in April.

Commodities

Gold has been confined in a $22 range just below the $1,200 level. There is a long-term support around $1,180 and this could be playing a role on the current moves on Gold. Buyers need to break through a growing resistance around $1,220.

Oil spiked through $62 this week. But when the dust settled, Friday ended just slightly above the Monday open. Resistance around $58 has so far turned support, so we can expect a follow-through move higher if price stays above $60.

Currency Pairs

EURUSD enjoyed its fourth bullish weekly close after the pair aimed for 1.1400. The pair fell a few pips short of this level and then retraced close to the weekly open. The current move may have enough momentum to try and break 1.1400 this coming week.

GBPUSD powered back higher as buyers helped push the pair higher to form a weekly outside range and the highest weekly close on over two months. 1.56 to 1.59 is the next key area if the pair decides to move higher.

USDJPY printed a bearish weekly close but some indicators are hinting of a possible move higher. Having said that, this pair has been consolidating for over a month now, so it could still be swayed to either side. 120 could be the key to the upcoming directional change.

The Week Ahead

Monday will again be very compact this week but very impactful with Australia’s NAB Business Confidence; Eurogroup Meetings; BOE Official Bank Rate and Asset Purchase Facility announcement.

Tuesday will get started quite early with UK’s BRC Retail Sales Monitor; Australia’s Home Loans and Annual Budget Release; UK Manufacturing and Industrial Production; ECOFIN Meetings; and US JOLTS Job Openings.

Wednesday will be very busy with New Zealand’s FPI and RBNZ Financial Stability Report; Japan’s Current Account and Bank Lending; China’s Industrial Production, M2 Money Supply and New Loans; France, Italy, and Germany Prelim GDP; UK BOE Inflation Report, Inflation Letter, Flash, GDP, Claimant Count Change and Jobless Rate; US Retail Sales and Import Prices.

Thursday’s action will start very early as well with New Zealand’s Business NZ Manufacturing Index and Retail Sales; Canada’s NHPI; US PPI and Jobless Claims.

Friday will end the week with Switzerland’s PPI; Canada’s Manufacturing Sales and Foreign Securities Purchases; US Empire State Manufacturing Index, Industrial Production, Prelim UoM Consumer Sentiment, and Capacity Utilization Rate.

Third Straight Weekly Advance for EURUSD, Oil Comes Closer to $60

The US Federal Reserve decided on Wednesday to leave the Federal Funds Rate at less than 0.25 percent. The Reserve Bank of New Zealand followed up on Thursday with a similar decision, holding its Official Cash Rate at 3.50 percent.

In other US news, the latest Advance GDP report showed the first-quarter growth was nearly zero. The 0.2 percent growth is much weaker than the one percent growth median estimate. The prior reading was cut back to 2.2 percent from 2.6 percent.

Meanwhile, CB Consumer Confidence declined to 95.2 in April after posting 101.4 in March. On the other hand, Jobless Claims for the previous week showed 262,000 Americans filed for their unemployment insurance claims last week, compared to median forecast of 290,000.

US Employment Cost Index advanced 0.7 percent, but Personal Spending grew only 0.4 percent. ISM Manufacturing PMI stayed at 51.5 in April for the second month. This is the weakest reading in nearly two years, according to ISM.

In other news, Retail Sales in Germany and Japan showed surprise drops. Japan Retail Sales sunk 9.7 percent while Germany’s Retail Sales dropped 2.3 percent. Meanwhile, Eurostat said Eurozone Jobless Rate remained at 11.3 percent for the second month on March.

Commodities

Gold managed to get through the $1,200 level during the first half of the week, but sellers quickly faded the move and controlled the latter part of the week. The result is Gold formed a lower weekly low and close, endangering the current mini range.

Oil made another headway into the resistance and came closer to the $60 this week. We may well see the $60-$80 range prove critical in the month of May. Of course, a test of the $50 is still in the table.

Currency Pairs

EURUSD saw a spectacular week as it printed its third straight weekly advance. This time, it blew past the 1.1200 level with a 470 pip weekly range in favor of bulls. Any retracement should find some support around 1.1000.

GBPUSD posted a shocking turn as the pair reversed nearly 400 pips after failing to touch the 1.5500 level. This puts a significant blow to the pair and puts the 1.5000 back in play.

USDJPY thwarted a break to the downside and surprised with a 180-pip move through 120, which helped the pair end the week above that psychological level. This pair remains in a very tight range so it would be interesting to see what happens in the next few weeks.

The Week Ahead

This week, Monday will be a very brief news day with Australia’s Building Approvals and ANZ Job Ads; China’s HSBC Manufacturing PMI; Spain, Italy and Germany Manufacturing PMI; and US Factory Orders. Japan will observe Greenery Day, while the UK will observe May Day.

Tuesday will get busy as usual, starting with Australia’s Trade Balance and RBA Cash Rate Announcement and Statement; UK Construction PMI and Halifax HPI; EU Economic Forecast; US and Canada Trade Balance; US ISM Non-Manufacturing PMI.

Wednesday will also be busy with New Zealand’s Jobless Rate and Employment Change; Australia’s Retail Sales; China’s HSBC Services PMI; UK Services PMI; Eurozone Retail Sales; Canada’s Ivey PMI; US ADP Non-Farm Employment Change, US Preliminary Unit Labor Costs and Nonfarm Productivity and Fed Chair Yellen’s speech.

On Thursday, we will see the announcement of Australia’s jobs data; Germany’s Factory Orders; Switzerland’s Foreign Currency Reserves; UK Parliamentary Elections; Canada’s Building Permits; and US Jobless Claims.

Friday will showcase RBA’s Monetary Policy Statement; China’s Trade Balance; Germany and UK Trade Balance; and US and Canada jobs reports.