Euro & EuroZone News

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.

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.

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.

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.

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.

The Reserve Bank of Australia and the Bank of England both decided to leave rates unchanged (2.25 percent and 0.50 percent, respectively) this week. The Bank of England’s Asset Purchase Facility also remained at GBP375 billion.

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 showed improved data in March. Statistics Canada revealed 28,700 jobs were added while the Jobless Rate remained at 6.8 percent for the second month in a row.

In Spain, the Employment Ministry reported Unemployment Change declined 60,200 in March.

In the United States, the latest FOMC Meeting Minutes revealed a split has occurred between the policymakers about a possible June hike. This happened even before the release of the weak non-farm employment figures.

The US Bureau of Labor Statistics reported that Unemployment Claims last week were 281,000, close to the 283,000 estimate.

Commodities

Gold had a volatile week as it showed a small gap to start the week. Since then, a steady decline through $1,200 ensued but Friday bulls saved the yellow metal from closing the week below this key level. Bulls still has control here, but they have to a stronger statement in the remaining weeks of April

Oil finally managed a weekly close above the key $50 level. This is oil’s third bullish week and it’s almost ready to take on new highs. The next resistance is $54 then $60 up to $65.

 Currency Pairs

EURUSD saw a complete five-day bearish sweep and gave up almost 470 pips to close just above 1.0600. This move destroys the three-week hard-fought attempt to reach a weekly close above 1.1000. This puts the over-a-decade low at risk of getting breached. Watch out!

Pip-wise, GBPUSD showed slightly less damage than EURUSD but the former posted a new lower low for the pair in the process. Sellers will now target 1.4000-1.4200.

USDJPY moved higher this week as bulls gathered momentum through the psychological 120 level. Dollar bulls are surely targeting new highs beyond 122. Watch out for big sellers around that area.

The Week Ahead

Monday will be in its usual quiet form. Key news releases will include Japan’s Core Machinery Orders and Monetary Policy Meeting Minutes; and China’s Trade Balance.

Tuesday will be much more active with New Zealand’s NZIER Business Confidence; Australia’s NAB Business Confidence; China’s New Loans; UK CPI, RPI, HPI, and PPI Input; and US Business Inventories, Retail Sales, and PPI.

Wednesday will have Australia’s Westpac Consumer Sentiment; China’s NBS Press Conference, Fixed Asset Investment, GDP, and Industrial Production; ECB’s rate announcement and press conference; Canada’s Manufacturing Sales; US Empire State Manufacturing Index, Industrial Production, Capacity Utilization Rate, NAHB Housing Market Index; and Canada’s Rate statement and announcement, and press conference.

Thursday will still have adequate activity in the form of with New Zealand’s Business NZ Manufacturing Index; Australia’s Employment data; Switzerland’s PPI; G20 Meetings; US Jobless Claims, Philly Fed Manufacturing Index, Housing Starts and Building Permits.

Friday will showcase Switzerland’s Retail Sales; UK Claimant Count Change, Jobless Rate, and Average Earnings Index; Eurozone Final CPI; G20 meetings; Canada’s CPI, Retail Sales, and Foreign Securities Purchases; US CPI and Prelim UoM Consumer Sentiment.