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European Central Bank Unleashes Surprise Rate Cut Move; US Trade Balance Worsens

The Bank of Canada and Bank of England both decided in line with expectations this week, keeping the rate at 1 percent and 0.50 percent, respectively. However, the European Central Bank diverged by slashing its Minimum Bid Rate down to 0.15 percent, when the market was expecting a reduction to 0.10 percent.

In the United States, the Non-Farm Employment Change came nearly in line with expectations (217,000 versus 214,000 forecast). Unemployment Rate for May remained at 6.3 percent. The April Trade Balance, meanwhile, reached -$47.2 billion, the worst reading in over 2 years, as exports decrease 0.2 percent and Americans increased purchase of business equipment, automobiles and consumer goods made from abroad.

Meanwhile, Australia had a very rough week with the release of some surprisingly weak economic readings. Building Approvals for April surprised with a 5.6 percent decline, its third negative monthly reading in a row. Trade Balance declined for the first time in 5 months (-AUD0.12 billion versus AUD0.40 billion forecast). On the bright side, Company Operating Profits, Current Account, and GDP came in better than forecast.

 Commodities

Gold had a very uneventful week after posting a decline of over $50 during the prior week. Gold traded within a very tight $17 range this week, bobbing up and down on both sides of $1,250. Bulls would likely push for a move back to the $1,300.

The bearish inside week in the previous week paved way to another sell-down this week. However, the reversal on Thursday gave some life to price and helped reduce the bearish casualty this week. If we don’t see a retest of the 101.50 next week, we could see another test of $104.

Currency Pairs

The extreme volatility on Thursday in EURUSD ended with a bullish tone as Draghi and the ECB decided to cut rates less than expected. This enabled the pair to clinch its second consecutive bullish week. If momentum continues next week, we could see price gain back toward 1.3800.

GBPUSD posted a bullish inside week just above the 1.6800 level. It was a clear win for bulls, as continued decline through 1.6700 would force a move toward 1.6500. Buyers must take out resistance just above the 1.6900 level.

We finally saw a considerable upmove in USDJPY after last week’s silent trading below the 102 level. The pair posted 4 bullish daily closes this week, and it nearly reached the 103 level in the process. Based on recent price action, we could see bulls challenge sellers beyond 104.

The Week Ahead

On Monday, the news releases will be very few: Japan’s Current Account, Bank Lending, and Final GDP; and Canada’s Housing Starts. Today, some states in Australia will observe the Queen’s Birthday, while France, Germany, and Switzerland will observe Whit Monday.

On Tuesday, there will be UK’s BRC Retail Sales Monitor; Japan’s Tertiary Industry Activity; Australia’s NAB Business Confidence and Home Loans; China’s New Loans, CPI and PPI; France’s Industrial Production; UK’s Manufacturing Production; and US JOLTS Job Openings.

Wednesday will be very brief and start early with Japan’s BSI Manufacturing Index, Australia’s Westpac Consumer Sentiment; New Zealand’s REINZ HPI; UK Unemployment Rate and Claimant Count Change; US Federal Budget Balance.

Thursday will be the most news-packed day this week with the release of Reserve Bank of New Zealand’s Rate Announcement, Statement, Press Conference, and Monetary Policy Statement; Australia’s Employment Data and MI Inflation Expectations; ECB Monthly Bulletin; Canada’s NHPI; US Retail Sales, Import Prices, Unemployment Claims, and Business Inventories.

Friday ends the week with the release of Business NZ Manufacturing Index; BOJ’s Monetary Policy Statement; China’s Industrial Production and Fixed Asset Investment; Canada’s Manufacturing Sales; US PPI and Preliminary UoM Consumer Sentiment.

Global, US Data Mixed; US Durable Goods, Chicago PMI Improved

The latest news from Japan showed Household Spending and Preliminary Industrial Production posted more weakness than analysts expected. Household spending dipped 4.6 percent (compared to a forecast of -3.4 percent), while Preliminary Industrial Production slipped 2.5 percent after gaining 0.7 percent in the prior month. These weaknesses come right after the previous month’s sales tax hike issued by the government, and raise some critical questions about the current economic recovery.

In other news, France’s Consumer Spending unexpectedly slipped 0.3 percent in April, while Germany’s Unemployment Change came in more than expected at 24,000. Australia’s Construction Work Done improved in the March quarter, but Private Capital Expenditure dipped much more than anticipated.

In the United States, Jobless Claims for the prior week increased less than anticipated (300,000 versus 321,000 forecast). Pending Home Sales rose less than expected, but Durable Goods Orders, S&P/CS Composite-20 HPI, Flash Services PMI all came in better than forecast. Chicago Purchasing Managers’ Index moved up to 65.5 in May, the highest level reached since October, thanks to improved demand.

Commodities

We finally saw Gold break its consolidation which has stood for more than five weeks. Gold dived through stops below the $1,300 level and closed below $1,250 on Friday. Next week, it will be the buyers’ turn to prove whether they can also control price and make a recovery back through $1,300.

After two impressive weekly advances, Oil posted an inside week and decline back below the $103 level. Bulls should try again to close above $104 next week. Otherwise, sellers would try to push price toward $99 again.

Currency Pairs

After three weeks of decline, EURUSD bulls could only muster a very marginal weekly bullish advance with just over 80 pips of trading range. This indicates there isn’t a lot of participation from a considerable number of bulls. They should do more next week and attempt a move back through 1.3800. If not, we would see 1.3400 again.

GBPUSD fared worse than EURUSD this week, as the former’s near-120 pip decline on Wednesday served a technical blow to the aching bulls. Bears might take a much longer glimpse at the 1.6600s next week. A move back above 1.6900-50 would negate the recent bearish momentum, though.

No follow-through move has been seen so far after USDJPY posted its first bullish weekly close last week. Sellers camped around 102 easily thwarted bulls throughout the week, but we have seen some buying in the low-101s as well. We could see another confrontation at the 102 level next week.

The Week Ahead

Monday will be more active than usual with news releases such as Japan’s Capital Spending; Australia’s Building Approvals and Company Operating Profits; Germany’s Prelim CPI; Spain, Italy, Switzerland, and UK Manufacturing PMI; UK Net Lending to Individuals; and US ISM Manufacturing PMI.

Tuesday will start early with New Zealand’s Overseas Trade Index; China’s Non-Manufacturing PMI; Australia’s Retail Sales, Current Account, Cash Rate Announcement and Rate Statement; Japan’s Average Cash Earnings; UK Nationwide HPI and Construction PMI; Eurozone CPI Flash Estimate and Unemployment Rate; and US Factory Orders.

Wednesday will stay busy with Australia’s GDP; Spain, UK, and Italy Services PMI; G7 Meetings; US ADP Non-Farm Employment Change; US and Canada Trade Balance; US Ism Non-Manufacturing PMI; BOC Rate Statement and Announcement.

Thursday will offer more central bank action via ECB and BOE rate announcements and statements, along with other news particularly Australia’s Trade Balance; China’s HSBC Services PMI; Eurozone Retail Sales; G7 Meetings; Canada’s Building Permits and Ivey PMI; and US Jobless Claims.

Friday’s activity will decline significantly, but traders will surely monitor news such as German Trade Balance; Switzerland’s Foreign Currency Reserves and CPI; UK Trade Balance; Canada and US jobs data.

Global Flash Manufacturing PMI Mixed; Japan Core Machinery Orders Tripled

The latest Japan Core Machinery Orders, a measure of new private sector purchase orders for machines, jumped three times its estimate in March. Orders increased 19.1 percent versus 6.1 percent forecast, and the previous month’s revised -4.6 percent.

In the United Kingdom, the MPC Asset Purchase Facility and Official Bank Rate votes remained unchanged. Meanwhile, Consumer Price Index rose 1.8 percent in April following a 1.6 percent gain in March. On the other hand, PPI Input dropped 1.1 percent during the same month. Retail Sales rose 1.3 percent.

In other news, the Flash Manufacturing PMI for Japan, China, and the US fared better than estimates, while that for Germany, France, and the Eurozone were all weaker than expected.

In the United States, Jobless Claims for the prior week increased more than anticipated (326,000 versus 312,000 forecast). Existing Home sales rose less than expected, but New Home sales were better in April.

Commodities

Gold continues to trot along close to the $1,300 level just as it has done for more than five weeks now. The stakes become higher as the price range got narrower this week. $1,260 and $1,320 are the key areas of concern. Bulls and bears need to break one of these areas very soon.

Oil printed its second weekly bullish close after a successful break of the $104 finally stuck on Friday. Price is now poised to break northward ahead of stronger resistance in the $108-$112 area.

Currency Pairs

EURUSD saw terrible price action for the third straight week as buyers failed to regain control of the 1.3700 level. Although the weekly trading range was narrow, this pair is still at risk of continuation downmove toward 1.3300-1.3400.

GBPUSD ended the week lower as the 89-pip upside attack through the 1.6900 last Wednesday has been extinguished completely by declines seen on Thursday and Friday. Sellers sent the pair back below 1.6900 and closed the week in the 1.6830s. Bulls need to stop this and defend the 1.6800 level. Otherwise, GBPUSD could run the risk of moving below 1.6600-1.6700 again in the coming weeks.

USDJPY secured its first bullish weekly close this week thanks to three straight daily gains up until Friday. The pair made a dash northward on Wednesday after price bottomed out at the low-100.80s. The dash higher fell short of closing above the 102 level, though. Next week, this pair needs a strong close above the 103 and attack potential sellers in the mid-104s.

The Week Ahead

Monday will again be a very brief news day as the UK will observe the Spring Bank Holiday, while the United States observe Memorial Day. Critical news to watch out for today will be New Zealand’s Trade Balance; BOJ Monetary Policy Meeting Minutes; Gfk German Consumer Climate; and ECB President Draghi’s speech.

Tuesday will start during the European session with Switzerland’s Trade Balance and Employment Level; UK BBA Mortgage Approvals; US Durable Goods Orders, S&P/CS Composite-20 HPI, CB Consumer Confidence, and Richmond Manufacturing Index.

BOJ Kuroda’s speech will open up Wednesday’s Asian session, followed by the release of New Zealand’s ANZ Business Confidence; Australia’s Construction Work Done; France Consumer Spending; Germany’s Jobless Change; Eurozone M3 Money Supply; Spain’s HPI; and UK CBI Realize Sales.

Thursday will start quite early with Japan’s Retail Sales; Australia’s Private Capital Expenditure; Canada’s Current Account; US Preliminary GDP, Jobless Claims, and Pending Home Sales. France, Switzerland, and Germany will observe Ascension Day.

This coming Friday, we will have New Zealand’s Building Consents; Japan’s Household Spending, Prelim Industrial Production, and Tokyo Core CPI; Germany’s Retail Sales; Canada’s GDP and RMPI; US Core PCE Price Index, Personal Income, Personal Spending, Chicago PMI, and Revised UoM Consumer Sentiment.

Australia, EU, UK Keep Rates Unchanged; Aussie, Kiwi Job Data Diverged

The Reserve Bank of Australia, European Central Bank, and Bank of England all decided to leave their respective interest rates unchanged this week. RBA left its Cash Rate at 2.50 percent, while the ECB and BOE left their rates at 0.25 percent and 0.50 percent, respectively. ECB’s Draghi expressed no willingness to further the central bank’s stimulus measures, but at the same time talked about a possible June action in light of low inflation and a strong forex rate.

In other news, Australia’s Building Approvals dipped 3.5 percent in March, giving this data its 5th decline in the last 6 months. Trade Balance slipped below the 1 billion mark for the first time in 3 months in March at AUD0.73 billion. Employment Change came in almost double of forecast in April while Jobless Rate was unchanged at 5.8 percent.

In contrast, New Zealand Jobless Rate stood at 6 percent for the second month, while Employment Change increased slightly to 0.9 percent.

Spanish Unemployment Change came in more than double its forecast at -111,565.

Commodities

Gold bolted the $1,300 level on Monday and reached a high of $1,315. This turned out to be the high of the week as price pretty much declined from then on. This price action indicates Gold is not yet prepared to move higher and it still prefers range trading. Keep an eye on $1,250-80.

Oil saw mild trading action this week, closing virtually unchanged compared to last week’s close. Price topped out just above 101 on the third daily attempt on Friday after 2 consecutive days of misses. 102-104 likely has more lurking sellers.

Currency Pairs

EURUSD has been slammed lower this week, particularly on Thursday and Friday after the pair failed to thrust through the key 1.40 level. Price dropped 250 pips on those 2 days, and closed the week near the week’s low at 1.3757. If momentum carries forward, we’ll likely see an attack on 1.3600.

GBPUSD reached another new high this week, but the pair ended close to its weekly low just like EURUSD. The first attempt at 1.70 failed and it was followed by heavy selling that reached the mid-1.6800s. Bulls must contain this selling by fortifying 1.6700-1.6850.

USDJPY bulls remain vulnerable as they fail to break through 103. If we look back, this pair has been in consolidation since February, but in the last several weeks, we have seen dominance of bears thanks to their strong defense of the 103 level. If their dominance continues, we could see a move toward 100 in the next week or so.

The Week Ahead

This week, Monday will be a very brief news day with Japan’s Current Account; Australia’s NAB Business Confidence; Switzerland’s Retail Sales; and US Federal Budget Balance.

Tuesday will get started quite early with UK’s BRC Retail Sales Monitor; Australia’s Annual Budget Release, HPI and Home Loans; China’s Industrial Production and New Loans; Germany’s ZEW Economic Sentiment; US Retail Sales and Import Prices.

Wednesday will get busy very early with New Zealand’s RBNZ Financial Stability Report and Retail Sales; UK BOE Inflation Report, Claimant Count Change and Jobless Rate; Switzerland’s ZEW Economic Expectations; and US PPI.

Thursday’s action will start very early as well with New Zealand’s Business NZ Manufacturing Index and Annual Budget Release; Japan’s Prelim GDP and BOJ Kuroda’s speech; Australia’s New Motor Vehicle Sales; France and Germany Prelim GDP; Euro-area CPI and Flash GDP; Canada’s Manufacturing Sales; US CPI, Jobless Claims, Empire State Manufacturing Index, Industrial Production, and Philly fed Manufacturing Index.

On Friday, news activity will significantly decrease with Japan’s Revised Industrial Production; France Prelim Non-farm Payrolls; Canada’s Foreign Securities Purchases; and US Building Permits, Housing Starts, and Prelim UoM Consumer Sentiment.

Fed Funds Rate Remains Unchanged; US Jobs Data Topped Estimates

The US Federal Reserve on Wednesday decided to leave the Federal Funds Rate at less than 0.25 percent. The Fed noted that there was a pickup in activity and the economy is gaining further momentum. It expressed that it would continue the process of reducing its bond purchases.

Aside from the Fed’s rate announcement, the biggest draw this week was the US Bureau of Labor Statistics’ release of the jobs data. BLS reported that Non-Farm Employment Change for April increased by 288,000, the biggest monthly advance since 2012. The prior reading was also revised higher, from 192,000 to 203,000. Moreover, the Unemployment Rate improved from 6.7 percent in March to 6.3 percent.

In other US news, Pending Home Sales for March came in over 3 times better than anticipated. Meanwhile, Chicago PMI surged past the 60 level to 63.0 in April, its best level in the last 6 months. On the other hand, Jobless Claims for the previous week increased for the second week in a row. 344,000 Americans filed for their unemployment insurance claims last week, compared to median forecast of 317,000.

In other news, Spanish Unemployment Rate ticked higher, German Unemployment Change declined and beat forecast for the fifth month, while Italian Unemployment Rate and the Eurozone Unemployment Rate for March were unchanged.

Commodities

Gold failed to close the week above $1,300 this time, but price indicated that $1,275 has become a support zone for bulls. It would be good to see a strong advance through $1,320-30 in the coming week, followed by a weekly close near the highs or on new highs.

Oil is now on its second weekly decline after the 100 level gave way easily to selling pressure. The weekly low below 99 could indicate price is ready to travel to 96-97 in the coming weeks.

Currency Pairs

Overall, it was a good week for EURUSD which has now clinched its second bullish weekly close in a row. The bullish picture for this week was untainted despite Friday’s volatility brought about by the US jobs numbers. In the coming week, we could see the 1.3950s challenged by eager bulls.

GBPUSD closed lower on Friday, but that did not stop the pair from printing its fourth consecutive bullish weekly close. Now, it is possible that we will see a strong footing above 1.6900 in the coming week or so.

Despite the volatility on Friday, USDJPY has remained locked in consolidation and it has now been so for nearly 2 weeks. The 102 level continues to exert influence and bulls aren’t strong enough to push price through 103. Expect the same action if both sides won’t be able to exert some dominance.

The Week Ahead

Monday offers several key economic news such as Australia’s Building Approvals and ANZ Job Advertisements; China’s HSBC Final Manufacturing PMI; EU Economic Forecasts; Eurogroup Meetings; and US ISM Non-Manufacturing PMI.

Tuesday will get busy as usual, this time with Australia’s Trade Balance and RBA Cash Rate Announcement and Statement; Services PMI for Italy, UK, Spain; ECOFIN Meetings; US and Canada Trade Balance; Canada’s Ivey PMI.

Wednesday will be a bit less busier with New Zealand’s Jobless Rate and Employment Change; BOJ’s Monetary Policy Meeting Minutes; Australia’s Retail Sales; German’s Factory Orders; Canada’s Building Permits; and US Preliminary Unit Labor Costs and Nonfarm Productivity and Fed Chair Yellen’s speech.

Thursday will have Australia’s jobs data; China’s Trade Balance; Germany’s Industrial Production; Switzerland’s CPI; BOE Asset Purchase Facility and Official Bank Rate votes as well as MPC Rate Statement; ECB’s Minimum Bid Rate and Press conference; US Jobless Claims.

On Friday, the RBA will release its Monetary Policy Statement, followed by China’s CPI and New Loans; Germany’s Trade Balance; UK’s Trade Balance and Manufacturing Production; Canada’s jobs data; US JOLTS Job Openings.

New Zealand Cash Rate Raised, UK Official Bank Rate Unchanged

The Reserve Bank of New Zealand on Thursday raised its Official Cash Rate by another 25 basis points to 3 percent, citing possible continuation of its country’s economic expansion as the global financial condition remains accommodating. Future rate hikes were also alluded to by the central bank.

In the UK, the Monetary Policy Committee or MPC voted to keep the Asset Purchase Facility and Official Bank Rate unchanged. In the news front, Public Sector Net Borrowing came in at GBP4.9 billion, much better than the GBP8.9 billion expected by analysts. The previous reading was also revised better. CBI Realized Sales also came much higher than expected (30 versus 18 forecast); Retail Sales was slightly better; while CBI Industrial Order Expectations declined for the first time in three months.

In the United States, Durable Goods Orders, particularly the Core data, came in much higher than expected. Existing Home Sales slightly better but this was negated by much-weaker New Home Sales. Jobless Claims for the prior week jumped to 329,000, higher by 20,000 compared to its median estimate.

Commodities

Gold declined to new monthly lows this week but somehow buyers managed to resuscitate this on Thursday when it jumped back close to the weekly open. The slight advance on Friday enabled Gold to close the week, surprisingly, higher and back above the $1,300 level. Bulls have the chance of defending $1,300 again, so they can attempt for higher highs.

Oil shied away from reaching new 8-month highs last week after bulls struggled to break the 105 barrier. The lack of upside momentum opened the downside, and sellers quickly pounced on the opportunity and continue to hold control. With $103 down to $101 quickly eradicated, bears are setting their sights on the 96-98 area.

Currency Pairs

EURUSD struggled to find direction again this week as evidenced by the 51-pip weekly trading range. The pair reached a marginal new weekly low but eventually closed the week in the green. Bulls need to have more participation this week so they can revisit the 1.39s.

Although it had a wider weekly trading range, GBPUSD did not fare much better than its rival EURUSD. The former faced headwinds in its quest for new multi-year highs. Bulls should just keep trying to prevent any attempts to revisit or break 1.6700.

USDJPY failed to make a follow-through move again this week, managing just 76 pips of weekly movement, and this was mostly to the downside. 101 and 102 are back on the radar. It seems like buyers will be having a hard time defending the lows and reaching the 104s in the remaining part of April.

The Week Ahead

For Monday, April 28, there will only be a few economic releases such as Japan’s Retail Sales, Germany’s Bundesbank Monthly Report, and US Pending Home Sales.

On Tuesday, news activity will start early with New Zealand’s Trade Balance; Gfk German Consumer Climate and German Preliminary CPI; Eurozone M3 Money Supply; UK Prelim GDP; US CB Consumer Confidence; and Bank of Canada Governor Poloz’s speech. Japan will observe Showa Day today.

Wednesday will have the most activity this week with New Zealand’s Building Consents and ANZ Business Confidence; Japan’s Preliminary Industrial Production, Average Cash Earnings, and Monetary Policy Statement, and BOJ Outlook Report; Germany’s Retail Sales and Unemployment Change; France’s Consumer Spending; Spain’s Flash GDP; US ADP Non-Farm Employment Change, Advance GDP, Chicago PMI, Employment Cost Index, FOMC Statement, and Federal Funds Rate announcement; Canada’s GDP, RMPI, and IPPI.

Thursday will have China’s Manufacturing PMI; Australia’s Import Prices; UK Nationwide HPI, Manufacturing PMI and Net Lending to Individuals; EU Economic Forecasts; US Fed Chair Yellen’s speech, Unemployment Claims, Personal Spending, and ISM Manufacturing PMI.

Friday’s news highlights will include Japan’s Household Spending; Australia’s HIA New Home Sales and PPI; Spain’s and Italy’s Manufacturing PMI; UK Construction PMI; Eurozone Jobless Rate; US Non-Farm Employment Change, Jobless Rate, and Factory Orders.

EURUSD Declines, GBPUSD Climbs to a new Multi Year High

The Bank of Canada on Thursday announced that its overnight rate would be put on hold at exactly 1 percent.

Meanwhile, the United States saw a dominance of favorable news this week. The latest Empire State Manufacturing Index surprisingly declined to 1.3 when analysts forecasted a rise to 8.2 from 5.6 in the previous month. TIC Long-Term Purchase jumped to nearly 3 times its forecast while Philly Fed Manufacturing Index came in almost double its median estimate. Retail Sales, Jobless Claims, Capacity Utilization Rate, and Industrial Production came in better than expected.

In other news, Italy’s Trade Balance rose just over double its forecast at EUR2.62 billion. In the UK, HPI was much better but PPI Input declined further according to its latest data.

Commodities

Gold witnessed a mild decline this week after price failed to secure a spot above the $1,300 level. The $43 drop on Wednesday sealed the fate of buyers this week as they were unable to recover since. Buyers should keep the support at $1,270-80 fully supported to prevent a move back to $1,200 or even lower.

Oil saw a marginal gain this week, giving black gold its second consecutive weekly advance. This advance brings oil closer to the multi-month high set last September. Having said that, bulls need to make sure $104 hold this week. Otherwise, price could dwindle back to the $102s.

Currency Pairs

After rallying over 200 pips in the previous week, EURUSD struggled to keep the momentum up and instead declined this week. The gap followed by a weekly trading range of just over 70 pips, which was unusual, and probably indicates bulls are not prepared to bring price higher. Keep an eye on the 1.3900 level.

GBPUSD had a much better week than EURUSD. The former climbed for the second week in a row and touched a new multi-year high in the process. Will bulls be able to continue control of support around 1.6700? This support area is very important for them.

USDJPY skirted another disaster this week, as price recovered over half of the previous week’s 200-pip drop. This week and throughout the remaining part of April, buyers need to secure a strong foothold above 104 in order to break out of this consolidation.

The Week Ahead

Except for the release of Japan’s Trade Balance, US Chicago Fed National Activity Index, and US CB Leading Index, Monday will be very quiet with New Zealand, Australia, Germany, Switzerland, France, Italy, and the UK celebrating Easter Monday.

Tuesday will have slightly more activity with Australia’s CB Leading Index; Canada’s Wholesale Sales; Euro-area Consumer Confidence; US HPI, Richmond Manufacturing Index, and Existing Home Sales.

On Wednesday, we will witness usual news activity. There will be Australia’s CPI; China’s HSBC Flash Manufacturing PMI; French, German, and Euro-area Flash Manufacturing PMI and Services PMI; UK Public Sector Net Borrowing, CBI Industrial Order Expectations, and MPC Asset Purchase Facility and Official Bank Rate votes; Canada’s Retail Sales; US New Home Sales and Flash Manufacturing PMI.

Thursday will get busy very early with RBNZ’s Official Cash Rate announcement and statement; China’s CB Leading Index; Switzerland’s Trade Balance; Germany’s Ifo Business Climate; UK CBI Realized Sales; US Jobless Claims and Durable Goods Orders.

This Friday, Australia and New Zealand will celebrate ANZAC Day. Italy and will also be on holiday to celebrate Liberation Day. Friday’s news highlights will include Japan’s Tokyo Core CPI and All Industries Activity; UK Retail Sales and BBA Mortgage Approvals; US Flash Services PMI and Revised UoM Consumer Sentiment.

Bank of England Put Rates on Hold; Favorable US, UK Data Seen

The United States and United Kingdom shone as both countries saw a slew of favorable economic news releases this week.

The latest US JOLTS Job Openings data showed a 4.17 million increase following January’s revised 3.87 million gain. Jobless Claims for the prior week was lower at 300,000 (versus 314,000 forecast) while the Federal Budget Balance came out to be just -$36.9 billion when analysts expected -$76.5 billon. Meanwhile, PPI stood at 0.5 percent and the preliminary University of Michigan Consumer Sentiment came in at 82.6.

In the United Kingdom, the latest Manufacturing & Industrial Production came out much better than forecast at 1 percent and 0.9 percent, respectively. UK Trade Balance also came lower than expected at -9.1 billion. Meanwhile, the latest data from the Bank of England showed the Asset Purchase Facility was maintained at GBP375 billion and the Official Bank Rate stayed at 0.50 percent.

Commodities

Gold had a good run as price climbed on the final four days of the week. Now that bulls regained control of the $1,300 level, they must try to aim for a move through $1,350. This area could present itself as the first tough resistance ahead.

Oil had roughly the same action as Gold this week, climbing nearly 4 of the 5 days and creating 5 consecutive higher highs. Price closed in on March 3’s $105.20 high in the process ($104.40 high on Friday), but sellers quickly stepped in and hold down price to close the week close to $103. Bulls should expect more selling toward $102-$103.

Currency Pairs

EURUSD had a decent run-up following what seemed like an imminent drop due to Friday’s bearish price action. The pair’s action started off on Monday in the upper-1.3600s and closed the week just off the 1.3900 level. Bulls may try to challenge the 1.4000 level again soon.

GBPUSD nearly mimicked EURUSD’s price action this week, except the former retraced about 30 percent of the week’s uphill climb during the last two days. To keep the ball firmly in bulls’ hold, 1.6700 should hold in the coming week.

A follow-through decline was seen in USDJPY, coming off a 90-pip drop seen on Friday. The pair cut through 103 and 102 easily and proceeded to challenge the low-101s. A break of 101 could open up 97-99.

The Week Ahead

Monday will have a dearth of news releases, namely China’s New Loans and M2 Money Supply; Euro-area Industrial Production; and US Retail Sales and Business Inventories.

Tuesday will get a lot more active with UK’s BRC Retail Sales Monitor; RBA’s Monetary Policy Meeting Minutes; UK CPI, PPI Input, RPI, and HPI; Germany and Eurozone ZEW Economic Sentiment; Canada’s Manufacturing Sales; US CPI, Empire State Manufacturing Index; NAHB Housing Market Index, and Federal Reserve Chair’s Yellen’s speech.

Wednesday will be very busy and start quite early with New Zealand’s CPI, followed by China’s Industrial Production, GDP and Fixed Asset Investment; BOJ Kuroda’s speech; UK Claimant Count Change and Jobless Rate; Euro-area CPI; Canada’s Foreign Securities Purchases, BOC Monetary Policy Report and Rate Statement and Announcement; US Building Permits and Housing Starts.

Thursday will have lower news activity, with news releases such as BOJ Kuroda’s speech; Australia’s NAB Quarterly Business Confidence index; and New Motor Vehicle Sales; Euro-area Current Account; Germany’s PPI; US Jobless Claims and Philly Fed Manufacturing Index.

Friday will only have Japan’s Tertiary Industry Activity as sole news release. New Zealand, Australia, Switzerland, Germany, the UK, and Canada will be on holiday (Good Friday).

A Third Weekly Decline for EURUSD, EU Interest Rates Unchanged

The first week of April turned up to be fairly busy with a barrage of global news announcements and two central bank rate decisions.

The Reserve Bank of Australia and European Central Bank both decided to leave rates unchanged (2.50 percent and 0.25 percent, respectively).

In other news, the German Unemployment Change slid for the fourth month in March, registering -12,000 compared to median estimates of only -9,000. The Euro-area jobless rate improved slightly as well. Spanish Unemployment Change also made a remarkable improvement (-16,600). However, Italian Monthly Unemployment Rate ticked up slightly to 13 percent.

In Australia, the Australian Bureau of Statistics reported on Wednesday that Building Approvals surprisingly sunk 5 percent in February, beating the median forecast of -1.7 percent. This is the fifth decline in the last 7 months.

Canadian jobs reports were much rosier compared to data for their American counterpart. The US Jobless Rate remained at 6.7 percent with last week’s Jobless Claims beating expectations to the downside (326,000 versus 319,000 forecast). US Non-Farm Employment Change stood at 192,000, down from the previous month’s reading of 197,000. On the other hand, Canada enjoyed a slight improvement in Jobless Rate (6.9 percent versus 7 percent previously) and a big gain in Employment Change (42,900 versus 21,500 estimate and -7,000 in previous month).

Commodities

Gold bulls have a lot more strength in them and they clearly showed it this week. They prevented a third consecutive weekly drop from happening and managed to bring price to a weekly close just above the $1,300 level. The challenge for them right now is to continue the recovery efforts and aim for a weekly close above $1,350-70 this week.

Oil had a rough week, tumbling in the first half of the week, only to rebound and close the week above $101. This was not enough to give bulls their second bullish weekly close, and puts their efforts in jeopardy. The battle in the coming week could be decided at the $101 level.

Currency Pairs

Early this week, EURUSD bulls tried to recover back above the 1.3800 level but they were easily held off by eager bears. This led to a third weekly decline and price is now approaching critical support around 1.3600-50. This is going to be a major test for bulls.

GBPUSD struggled early this week to revisit the critical level at 1.6700. Bears were happy to see this and quickly stepped in to take advantage. The bearish weekly close at 1.6574 could indicate bears are interested in another attack on the 1.6500 level.

USDJPY had a lot of fun this week. It would have been perfect – an all-bulls week – if not for the Friday drop which have made a big dent on the pair’s third bullish weekly close. Price action indicates price is still ready to move up further if 103 holds in the coming week.

The Week Ahead

Monday will be in its usual quiet or less active form. Key news releases will include Australia’s ANZ Job Advertisements; Switzerland’s Foreign Currency Reserves and CPI; and Bank of Canada’s Business Outlook Survey. China will observe Tomb Sweeping Day.

Tuesday will be much more active with NZIER Business Confidence; Japan’s Current Account, Monetary Policy Statement, and BOJ presscon; Australia’s NAB Business Confidence; Switzerland’s Retail Sales; UK’s Industrial and Manufacturing Production; US JOLTS Job Openings; and Canada’s Housing Starts and Building Permits.

Wednesday will have lower activity than Tuesday, with news releases such as Australia’s Westpac Consumer Sentiment, China’s New Loans and M2 Money Supply; UK Trade Balance; and US FOMC Meeting Minutes.

Thursday will get busier with New Zealand’s Business NZ Manufacturing Index; Japan’s Core Machinery Orders; Australia’s Employment data; UK BOE Rate statement and announcement; and US Jobless Claims.

Friday will have BOJ’s Monetary Policy Meeting Minutes; China’s PPI and CPI; and US PPI and preliminary UoM Consumer Sentiment.

NZ Trade Balance, UK Retail Sales Soared; US Data Mixed

The last full week of March turned out to be very busy as a flurry of economic data dotted the entire week, highlighted by a jump in New Zealand Trade Balance and a surprise recovery in UK Retail Sales.

New Zealand’s Trade Balance jumped to NZD818 million, beating analysts’ median forecast of NZD595 million by a hefty margin. This follows a revised NZD286 million from the previous month.

In the United Kingdom, Current Account matched prior data with –GBP22.4 billion. Final GDP stood at 0.7 percent. PPI Input and HPI surprised with a 0.4 percent decline and jump to 6.8 percent, respectively.

In Japan, Household Spending sank 2.5 percent according to the latest data. Tokyo Core CPI inched up to 1 percent. Unemployment Rate improved slightly to 3.6 percent.

US data was generally mixed. Flash Manufacturing PMI, Pending Home Sales, and New Home Sales came in lower than expected, but actual data for Durable Goods Orders and Flash Services PMI were better than expected. Richmond Manufacturing Index dropped further to -7 (versus -1 forecast) while CB Consumer Confidence surprised with an improvement past the 80 level to 82.3. Jobless Claims for the prior week was 311,000. Meanwhile, the revised University of Michigan Consumer Sentiment was flat at 80.0.

Commodities

Gold sank further this week, initiated by the early $27 drop on Monday. Sellers seem to have full control of yellow metal and we could see additional selling next week and move toward $1,100-$1,200.

Oil bucked the trend set by Gold and has continued on to erase the early-March drop through the $100 level. Price has recovered back to the low-$102s and closed the week in the mid-$101s. This puts a possibility of a challenge of the $103 level next week.

Currency Pairs

EURUSD followed the footsteps of Gold and declined for a second week. This time, the pair broke through the 1.3800 level with relative ease as sellers outnumbered buyers. Next potential support comes around 1.3650-1.3700.

Unlike EURUSD, GBPUSD posted a turnaround and erased most of the prior week’s losses. Price rose for five straight days and closed the week off the highs. Stiff resistance remains at 1.6700.

USDJPY followed up with another bullish advance this week. The near-100 pip move in the 11th hour pushed the pair through buy stops close to the 103 level. Buyers must exert considerable effort to conquer the resistance at 104. This coming week could be pivotal for this pair.

The Week Ahead

Daylight Saving Time shift will happen in Switzerland, the UK, and several Eurozone countries. Meanwhile, New Zealand and Australia will exit DST on April 5 (Saturday) and April 6 (Sunday), respectively.

On Monday, New Zealand’s Building Consents and ANZ Business Confidence; Japan’s Preliminary Industrial Production; Australia’s HIA New Home Sales and Private Sector Credit; Germany’s Retail Sales; Switzerland’s KOF Economic Barometer; UK Net Lending to Individuals; Eurozone CPI Flash Estimate; and US Chicago PMI. US Fed Chair Janet Yellen and BOE Governor Carney will also give a speech.

On April 1, Tuesday, we will see the release of Japan’s Tankan Manufacturing and Non-Manufacturing Index; China Manufacturing PMI and HSBC Final Manufacturing PMI; RBA Rate Announcement and Statement; UK Manufacturing PMI; ECOFIN Meetings; and US Final Manufacturing PMI; US Construction Spending, and US ISM Manufacturing PMI.

Wednesday will start off with Australia’s Building Approvals; UK Nationwide HPI and Construction PMI; ECOFIN Meetings; and US ADP Non-Farm Employment Change and Factory Orders.

Thursday will get much busier with Australia’s Retail Sales and Trade Balance; China Non-Manufacturing PMI; UK Services PMI; Eurozone Final Services PMI; ECB Rate Announcement and Press Conference; US and Canada Trade Balance; US Unemployment Claims and ISM Manufacturing PMI.

Friday’s news activity will be very compact with Germany’s Factory Orders; US and Canada Employment data; and Canada’s Ivey PMI.