Euro & EuroZone News

Several key news events this week have been foreshadowed by Federal Reserve’s exit on its (QE) on Wednesday and more importantly, the surprise QE decision by the Bank of Japan on Friday.

The Reserve Bank of New Zealand on Wednesday decided to keep its Official Cash Rate at 3.50 percent. The central bank made a less-dovish hint as it dropped the word “neutral” from its BC Rate Statement. Meanwhile, Statistics Canada said Retail Sales posted its second monthly decline following six monthly advances. Retail sales and its core reading both slipped 0.3 percent in August, with 7 of the 11 subsectors posting sales declines. Consumer Price Index and its core reading both nudged up 0.1 percent.

The Bank of Japan surprised the markets on Friday as it decided to expand its own QE policy. BOJ Governor Kuroda along with several policymakers won the decision to expand monetary stimulus to assist the central bank in its inflation and growth aims.

In the United States, CB Consumer Confidence jumped to 94.5 in October, a seven-year high as US consumers enjoy cheaper gas and improved job market conditions. The September reading was also positively revised to 89.0 from 86.0. Jobless Claims for the prior week stood at 287,000. Chicago PMI advanced to 66.2 in October, beating median expectations of 60.2. Advance GDP came in better than expected at 3.5 percent.

Commodities

Gold bears made a statement this week as they pushed yellow gold $74 lower, breaking the triple bottom clearly. The weekly close at $1,172 was the lowest weekly close in about 4 years, and this could set a precedent in the coming weeks or months. November could provide the clues as to the near-term direction of Gold.

Oil posted a milder price action compared to Gold as the former stayed inside the range set two weeks ago. $80 remains pivotal as traders decide on where to push price. A descending triangle is forming, so we might see a short-term upside pop.

Currency Pairs

EURUSD ended the week with another bearish close, as buyers failed to gain foothold above the 1.2600-1.2700 area. The pair is set to reach July 2012’s 1.2041 low if bulls won’t act this November.

GBPUSD also printed its second bearish weekly close but the former is doing a little better as it hangs on the 1.6000 psychological level. Bulls still need a strong push higher so they can reduce the bearish momentum that lingers on this pair.

USDJPY bulls pushed forward, aided by BOJ’s decision to expand QE on early Friday. The pair surged 330 pips, and other JPY pairs did well too. With not much resistance in sight, price could move up to as high as 120-122 in the coming weeks or months.

The Week Ahead

Starting Sunday (November 2), clocks will be moved backward by 1 hour to implement DST (Daylight Savings Time shift) exit in Canada and the United States.

This Monday, we’ll witness the release of Australia’s Building Approvals and ANZ Job Advertisements; China’s Non- Manufacturing PMI and HSBC Final Manufacturing PMI; Switzerland’s SVME PMI; Spain, Italy and UK Manufacturing PMI; and US ISM Manufacturing PMI.

Tuesday is a big day for Australia with its Retail Sales, Trade Balance, and RBA Rate Announcement and Statement. This will be followed by Spain’s Unemployment Change; UK Halifax HPI and Construction PMI; Canada and US Trade Balance; US Factory Orders; and New Zealand’s GDT Price Index.

Wednesday will start early with New Zealand’s Employment Change, Jobless rate, and Labor Cost Index; Japan’s Average Cash Earnings; China’s HSBC Services PMI; UK, Spain and Italy Services PMI; Eurozone Retail Sales; US ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI.

On Thursday, investors will be alert with a lot of economic releases to digest. There will be BOJ Monetary Policy Meeting Minutes, which will be followed by Australia’s jobs data; Germany’s Factory Orders; Eurogroup Meetings; UK Manufacturing and Industrial Production, Asset Purchase Facility and Rate Announcement, and Statement; ECB Rate Announcement and Press Conference; Canada’s Building Permits and Ivey PMI; US Jobless claims, Prelim Nonfarm Productivity and Prelim Unit Labor Costs.

Friday will remain active with RBA’s Monetary Policy Statement; France’s Industrial Production; Switzerland’s Foreign Currency Reserves and Retail Sales; UK Trade Balance; ECOFIN Meetings; Canada and US jobs data. US Fed Yellen will also give a speech.

After the ECB rate decision last week, two more central banks announced their interest rate decisions this week. The Reserve Bank of Australia published their unchanged rate decision on Tuesday (2.50 percent), while the Bank of England announced on Thursday that they are maintaining the current values of the Official Bank Rate (0.50%) and the Asset Purchase Facility (GBP375 billion).

In Canada, the employment outlook showed some bright prospects in September. Unemployment Rate improved to 6.8 percent from 7 percent in August. Employment Change came in nearly quadruple of expectations at 74,100, following an 11,000 decline in August. Ivey PMI advanced to 58.6, while Building Permits sunk more than quadruple its estimate (-27.3 percent) after posting double-digit gains in the previous three months. USDCAD still trades near multi-year highs.

In contrast to Canada’s positive jobs data, Australia’s September Employment Change decline 29,700 as employers slashed jobs. The previous month’s reading was revised severely lower from 121,000 to only 32,100. The Jobless Rate inched up to 6.1 percent as expected.

Commodities

Gold bottomed out at $1,182 and ended the week with a strong finish well above the $1,200 level. If bulls can keep this up on the coming week, they would be able to tackle the next problem area at $1,250-$1,300. There’s still a long way to go, and therefore bulls must keep supporting price in the coming weeks.

Oil had its second volatile week after the $90 breach has been sustained this week. Price reached a new 26-month low as it approached $83. Resistance has piled up above the $90 level now, and bulls might have a hard time breaching that zone. We could see new multi-year lows in the weeks ahead.

Currency Pairs

EURUSD bulls are in deep trouble as price dived heavily on Friday, closing in on the 1.2500 level. The pair has closed with a bearish bias on 11 of the last 12 weeks, and this is a serious cause for concern. Avoid buying this bear train.

GBPUSD trading this week has been overall positive but the pair still sits close to multi-week lows. Buyers need to complete a strong break of 1.6200 so they can nullify the bear momentum further. They must aim for a move past the 1.6642 September high soon.

JPY strength finally prevailed this week after USD blasted away with six bullish weeks in the last seven weeks. The pair sunk more than 200 pips as buyers failed to capture the 110 level. Further declines could find support around 105.

The Week Ahead

Monday would be quite except for China’s Trade Balance data and the Eurogroup meetings. Banks in Japan, Canada, and the United States are on holiday (in observance of Health-Sports Day, Thanksgiving Day, and Columbus Day, respectively).

Tuesday will have an increased uptick in news activity with Australia’s NAB Business Confidence; Switzerland’s PPI; China’s New Loans; UK CPI, PPI Input, and RPI; Germany’s ZEW Economic Sentiment; Eurozone Industrial Production and ZEW Economic Sentiment; and ECOFIN meetings.

Wednesday would get busy as usual with Australia’s Westpac Consumer Sentiment and New Motor Vehicle Sales; China’s PPI and CPI; ECB Draghi’s speech; UK Average Earnings Index, Jobless Rate, and Claimant Count Change; US Retail Sales, PPI, Empire State Manufacturing Index, Business Inventories, and Beige Book.

Thursday will start early with New Zealand’s Business NZ Manufacturing Index; Australia’s MI Inflation Expectations; Eurozone Final CPI; Bundesbank Weidmann’s speech; Canada’s Manufacturing Sales and Foreign Securities Purchases; US Jobless Claims, Capacity Utilization Rate, Industrial Production, Philly Fed Manufacturing Index, and NAHB Housing Market Index.

Friday’s spotlight will be on the North American session particularly on Canada’s CPI, and US Building Permits, Housing Starts, Preliminary UoM Consumer Sentiment and Fed Yellen’s speech.

The status quo decision from the ECB was expected, and as usual, the US jobs data stole the spotlight this week.

The European Central Bank decided to keep its Minimum Bid Rate unchanged at an ultra-low 0.05 percent for the second time. ECB’s Draghi expressed intention of continued purchase of assets over the coming two years, at least, to bid up inflation and the euro-area’s economic growth.

In the United States, there was a slew of important economic data released this week. Among the highlights was the Trade balance data which improved slightly further for the third month to -$40.1 billion. The September Unemployment Rate improved to 5.9 percent, while Jobless Claims improved for the prior week. The Non-Farm Employment Change saw a boost of 248,000 workers in September, clearly beating analyst forecast. The prior month’s reading was also revised higher by 38,000 to 180,000.

In Japan, Unemployment Rate improved in August to 3.5 percent. Meanwhile, Retail Sales improved 1.2 percent year-on-year, while Household Spending slid 4.5 percent, its fifth straight monthly decline. Preliminary Industrial Production surprisingly dipped 1.5 percent. Finally, Average Cash Earnings grew better than expected but the prior reading was revised down to 2.4 percent.

Commodities

After taking a short pause last week, Gold resumed its nosedive this week by slicing through and closing below the key $1,200 level. What is separating Gold from new multi-year lows right now is the double bottom support at the low-$1180s. If this area breaks, we could see $1,000 hit for the first time in 5 years.

Oil had quite a volatile week, but eventually bears won with a strong weekly finish below the important $90 level. Price is now headed to the $82-$85 area where potential supports may lie. Unlike Gold bulls, oil bulls have a better chance at salvaging their ship before it becomes way too late. They must conquer $90 first.

Currency Pairs

EURUSD bulls are in deep trouble as price dived heavily on Friday, closing in on the 1.2500 level. The pair has closed with a bearish bias on 11 of the last 12 weeks, and this is a serious cause for concern. Avoid buying this bear train.

We could now consider Monday’s marginal bullish close a consolation for GBPUSD bulls as this pair has turned very bearish for the rest of the week. With the 1.6000 level smashed open, we could see 1.5700 revisited soon. Indicators are showing some divergence so an alternative scenario is a slower downside move will happen in the next few days or weeks.

Unlike USDCHF, USDJPY has not created a new multi-year high this week as the yen was confined by Wednesday’s top at 110.07. Nevertheless, this pair remains bullish and we could well see newer highs throughout October.

The Week Ahead

This Monday, a significant number of Australian banks will observe Labor Day. Chinese banks will also be closed to observe National Day. On the news front, there will be ANZ Job Ads; Germany Factory Orders; and Canada’s Ivey PMI.

Tuesday will open up early with New Zealand’s NZIER Business Confidence. This will be followed by Japan’s BOJ Monetary Policy Statement and Press Conference; RBA interest rate announcement and statement; Switzerland’s Foreign Currency Reserves and CPI; UK Halifax HPI, BOE Credit Conditions Survey, NIESR GDP Estimate and Manufacturing Production; Canada’s Building Permits; and US JOLTS Job Openings.

Wednesday would be unusually quiet with only a few news events. These are Japan’s Current Account; China’s HSBC Services PMI; Switzerland’s Jobless Rate; and Canada’s Housing Starts. The day will be topped off with US FOMC Meeting Minutes.

Thursday would be a lot more active with Japan’s Core Machinery Orders; Australia’s Unemployment Rate and Employment Change; Germany’s Trade Balance; UK Asset Purchase Facility, interest rate announcement and statement; Canada’s NHPI; US Jobless Claims. It will also host the first day of G20 meetings.

Friday will end the way with Japan’s Monetary Policy Meeting Minutes and Tertiary Industry Activity; Australia’s Home Loans; France and Italy Industrial Production; China’s New Loans; UK Trade Balance; Canada’s BOC Business Outlook Survey, Unemployment Rate and Employment Change; and US Import Prices. Friday will also hold Day 2 of the G20 meetings and Day 1 of IMF meetings.

The US Federal Reserve decided in their latest Federal Open Market Committee meeting to keep rates unchanged as economic activity is “expanding at a moderate pace”, “labor market conditions improved somewhat”, household spending “appears to be rising moderately and business fixed investment is advancing.” The Committee declared that a highly accommodative stance continues to be “appropriate” as it seeks to “foster maximum employment and price stability.”

In other US news, Unemployment Claims grew at a slower pace below the 300,000 level for the third time in five weeks. CPI and PPI were flat. Empire State Manufacturing index climbed to 27.5 this September, beating median forecast of 16.4. Meanwhile, Treasury International Capital data for July showed a drop of $18.6 billion, which was a magnitude similar to June’s drop. Current Account has improved to -$99 billion and previous release was revised better to -$102 billion.

Switzerland’s SNB kept the Libor rate below 0.25 percent.

In the UK, the MPC gave no surprises as the Asset Purchase Facility votes and Official Bank Rate votes remain unchanged. MPC members Martin Weale and Ian McCafferty voted in favor of raising interest rates by 25 basis points to 0.75 percent.

In Scotland’s referendum, a majority of Scots voted “No” on Thursday, indicating most are against Scotland becoming an independent country and discontinuing the use of British Pound as main currency. However, another referendum could manifest again as the recent result was a close call.

Commodities

Gold had another rough week as buyers were unable to pass the initial hurdle at $1,250. This marks the third consecutive downweek and price is getting closer to medium-term support around $1,200. This could probably be the last chance for bulls to redeem themselves before a downspiral toward $1,000.

Oil saw volatility in a $4 range as bulls attempt to reverse the course of black gold. Ultimately, sellers around $94 and $95 won and they were able to press price back down and this left Oil largely unchanged this week. The battle at $92 is expected to rage on.

 Currency Pairs

Another selldown happened on EURUSD this week as the pair was unable to get even close to the 1.3000 level. Dollar strength pulled this price down by nearly 170 pips to a price area that could give bulls some assistance. 1.2700-1.2750 is a very important support area.

Unlike EURUSD, GBPUSD has continued to trend higher this week. The pair hit a near-2 week high of 1.6523 on Friday. Nevertheless, price was nearly unchanged this week. Buyers need to get a concrete foothold above 1.6500 to keep the ball on their court.

USDJPY went on to climb for the third straight week and it is now hitting a major multi-year down-trendline, which dates back to 2002. Will this trendline influence this pair? We will soon find out. Bulls ideally will post a control tower at 106-107 to prevent large price retracements.

The Week Ahead

This week will have a relatively mild news activity ahead of September’s closing in the following week.

On Monday, New Zealand kicks off the brand new week with Westpac Consumer Sentiment. This will be followed by German Bundesbank’s Monthly Report; ECB Draghi’s speech; US and Existing Home Sales.

On Tuesday, traders will keep an eye on China’s HSBC Flash Manufacturing PMI; Flash Manufacturing PMI and Flash Services PMI from France, Germany, and the Eurozone; UK BBA Mortgage Approvals and Public Sector Net Borrowing; Canada’s Retail Sales; and US Flash Manufacturing PMI. Japan will observe Autumnal Equinox Day today.

Wednesday will be unusually brief with New Zealand’s Trade Balance; Australia’s CB Leading Index and RBA Financial Stability Review; Germany’s Ifo Business Climate; and US New Home Sales.

Thursday will also be abbreviated and only publish a few releases such as RBA Governor Stevens’ speech; UK Nationwide HPI; Eurozone Private Loans and M3 money Supply; UK CBI Realized Sales; US Durable Goods Orders and Jobless Claims.

Friday will end the week quietly again. This time, we’ll only see Japan’s Tokyo Core CPI; GfK German Consumer Climate; US GDP and Revised UoM Consumer Sentiment.

The Reserve Bank of New Zealand kept its Official Cash Rate unchanged at 3.50 percent for the second time but it also hinted on potential rate hikes in the future. Without mentioning any timeframe, the bank said, “We expect some further policy tightening will be necessary to keep future average inflation near the target 2 per cent midpoint.” The central bank noted that the local housing market is expected to cold down, amidst robust net migration. The next Monetary Policy Statement release would be on December 11 while the next interest rate announcement would be on October 30.

Meanwhile, there was a showdown of trade balance data this week. China’s Trade Balance came out much greater than forecast at CNY49.8 billion (CNY40.8 billion forecast). Germany also beat forecast with a EUR22.2 billion trade balance in July. On the other hand, trade balance of France and the UK came out weaker than anticipated, -EUR5.5 billion and -10.2 billion, respectively.

In Canada, the statistics bureau announced that July Building Permits was surprisingly strong. The 11.8 percent advance helped press prolong the two-digit gains for the third straight month

On the other hand, August Housing Starts was slightly weaker than anticipated at 192,000.

Commodities

Gold toppled down this week. Price dropped $44 and broke through mentioned support at $1,240-$1,250 easily. Bears will get more excited and target $1,180-$1,200 next. Bulls should really prevent this from happening.

Oil reached new lows this week just like Gold, but the weakness in the former was less pronounced. Having said that, Oil is at risk of breaking a major support level at $90. If broken, this would open up a move toward $77-$86. Buyers must be careful not to catch a falling knife here.

Currency Pairs

EURUSD has finally shown some signs of life this by printing its first bullish weekly close in the past 9 weeks. Bulls need a lot of catching up to do as the pair has been down over 600 pips since July. First target is taking back control of the 1.3000 level. This level would be a major test for them.

GBPUSD opened up the week with a massive gap but the pair recovered well to close the week strongly in the black. Price needs to get back to 1.6500 to negate a lot of the bearish pressure that has built up in the last several weeks. At the same time, buyers must prevent a break of the 1.6000 level.

USDJPY was flawless this week as the pair closed in the black for five straight days and closed above the 107 level. The pair is now well above the multi-month resistance around 105.50. With the steep upclimb, we can now expect a decent retracement to at least the 106s.

The Week Ahead

Monday will be very brief and only showcase Australia’s New Motor Vehicle Sales; Switzerland’s PPI; US Empire State Manufacturing Index, Industrial Production, and Capacity Utilization Rate; Japan will observe Respect-for-the-Aged Day.

Tuesday will get quite busy starting with Australia’s Monetary Policy Meeting Minutes; UK’s RPI, PPI Input, CPI, and HPI; Eurozone and German ZEW Economic Sentiment; Canada’s Manufacturing Sales; US PPI and TIC Long-Term Purchases. BOC Governor Poloz will also give a speech.

Wednesday will begin early with New Zealand’s Current Account; Australia’s MI Leading Index; Italy’s Trade Balance; UK Claimant Count Change, Jobless Rate, MPC Asset Purchase Facility and Official Bank Rate Votes; Eurozone Final CPI; and US CPI, NAHB Housing Market Index, Current Account, FOMC Statement, Federal Funds Rate, and Economic Projections.

Thursday will be equally busy with New Zealand’s GDP; Switzerland’s Libor Rate and SNB Monetary Policy Assessment; UK Retail Sales, CBI Industrial Order Expectations, and Scottish Independence Vote; ECB’s Targeted LTRO; Canada’s Foreign Securities Purchases; US Jobless Claims, Building Permits, Housing Starts, Philly Fed Manufacturing Index, and Fed Chair Yellen’s speech.

Friday ends the week very quietly with only Canada’s Consumer Price Index and Wholesale Sales in the main cards.

There was a lot of information to digest this week as four major central banks released their interest rate decisions and statements.

The Bank of England, Reserve Bank of Australia, and the Bank of Canada all decided in keeping their respective interest rates unchanged (0.50 percent, 2.50 percent, and 1 percent, respectively).

Meanwhile, the spotlight was on the European Central Bank as they strayed from the pack and announced on Thursday a surprise cut in its benchmark interest rate to 0.05 percent from 0.15 percent. It also slashed its deposit rate by 10 basis points to -0.20 percent from -0.10 percent. The ECB “will purchase a broad portfolio of simple and transparent securities” in line with its plan to incite economic growth and hold against possible deflation. Draghi hinted on QE-style action in the coming months, and said “the governing council is unanimous in its commitment to using additional unconventional instruments.”

In other news, Manufacturing PMI in the UK, Spain, and Italy all came in weaker than expected. Spain and UK Services PMI, however, beat expectations.

Germany’s Factory Orders showed a strong rebound in July, rising 4.6 percent after posting two consecutive monthly declines.

Commodities

Gold resumed its decline this week after a successful bear defense of the $1,300 level. Price indeed rolled down further toward $1,250, reaching a weekly low of $1,257. Expect increase bearish pressure in the coming week toward potential support area at $1,240-$1,250.

Oil mirrored the prior week’s price range after the $96 level successfully held in the first three days. Price is nearing the 69-week low set on January in the low-$91s. If price breaks the $90-$91 area, price could tailspin to a swift toward $84-$86.

 Currency Pairs

USD is on a strong roll right now and EURUSD is manifesting this clearly. The pair is now in an 8-week losing streak after the 1.3000 level easily got broken this week. The weekly close at 1.2950 is very bearish; however, long-term support is just around the corner at 1.2750-1.2800.

GBPUSD dropped big time this week. Price went down nearly 370 pips, its widest trading range in close to 30 weeks. The easy break of 1.6500 imposes a serious concern in bulls’ minds. The 1.6000-1.6200 area is now at risk.

USDJPY resumed its advance this week after making a temporary pause around the 104 level. The strong bullish weekly close this week indicates there is a possibility of this pair moving to new highs. If it does not, bulls should create support in the 104-105 zone.

The Week Ahead

The second week of September will be evenly busy throughout the week.

On Monday, keep an eye on Japan’s Current Account and Final GDP; Australia’s ANZ Job Advertisement; China’s Trade Balance; Switzerland’s Retail Sales, CPI, and Jobless Rate; Germany’s Trade Balance; UK Halifax HPI; and Canada’s Building Permits.

On Tuesday, traders will look forward to the release of Japan’s BOJ Monetary Policy Meeting Minutes and Tertiary Industry Activity; Australia’s NAB Business and Home Loans; UK Trade Balance, NIESR GDP Estimate, and Manufacturing Production; Canada’s Housing Starts; US JOLTS Job Openings.

On Wednesday, there will be Japan’s Core Machinery Orders; Australia’s Westpac Consumer Sentiment; China’s New Loans; France’s Industrial Production; UK Inflation Report Hearings.

On Thursday, RBNZ will have its Rate Announcement, Press conference, and Monetary Policy Statement. Other economic releases include Japan’s BSI Manufacturing Index; Australia’s MI Inflation Expectations and Jobs data; China’s CPI and PPI; ECB Monthly Bulletin; Spain’s HPI; US Unemployment Claims.

Friday ends the week with New Zealand’s FPI and Business NZ Manufacturing Index; BOJ Kuroda’s speech; Eurogroup Meetings; US Retail Sales, Import Prices, and Preliminary UoM Consumer Sentiment

The US Federal Reserve has decided on Wednesday to keep rates on hold as expected. Spotlight was then focused on US jobs numbers which came out weaker than expected. The Bureau of Labor Statistics reported that Non-Farm Employment Change grew less than expected in July, 209,000 versus 231,000 forecast. The actual number was lower than the 218,000 ADP Non-Farm Employment Change published on Wednesday. The surprise came from the Unemployment Rate number, which worsened to 6.2 percent, following three consecutive months of better-than-actual readings.

In other US news, Pending Home Sales dipped 1.1 percent in June, following a 6 percent advance in the prior month. The July CB Consumer Confidence index improved further to 90.9 in July, the highest reading since January of 2008. Chicago PMI fell 10 points to 52.6 in July.

In other news, Australia’s Building Approvals for June dropped 5 percent, following the 10.3 percent increase in May. Meanwhile, PPI surprised with a 0.1 percent dip in June.

Commodities

Gold formed its third consecutive bearish weekly candle after sellers managed to push the price down through the $1,300 level. If this level holds in the coming weeks, expect a move toward $1,250 or even lower.

After last week’s inside bar, Oil dropped like a waterfall as sellers piled in through stops below $100. Price declined just a little over $5 to reach the lower $97s, prices unseen since early-February of this year. A thick zone of resistance may have now formed above $100, so bears may have an easier time pounding oil in the next few days or weeks. If bearish momentum will persist, downside target will be $90-$91.

Currency Pairs

EURUSD hit its third bearish weekly close this week (nearly hitting the mentioned area at 1.3300-50), although Friday’s price action eradicated most of the week’s decline. The move is not surprising considering this pair has been relentlessly on-sided since the start of July. Bulls have an opportunity to recover, but the acid test just right at 1.3500. This level is followed by thick resistance in 1.3600-1.3700.

Bearish sentiment has been more pronounced in GBPUSD than EURUSD, as we have witnessed nearly 100 pips of decline in Sterling this week. Sellers are looking to target 1.6700, but bulls may have a chance to thwart that if the Dollar will decline in the coming week.

USDJPY finally posted two bearish days to contrast from the 9 consecutive bullish days behind it. Sellers came in at the 103 level however the decline has been relatively weak, as price managed to close the week not far behind at 102.60. This could indicate more bullish moves will come in the next few days.

The Week Ahead

Monday will have a spattering of news throughout the day, starting with Australia’s Retail Sales and ANZ Job Ads; Spain’s Unemployment Change; Switzerland’s SVME PMI; and UK’s Construction PMI. Australian banks will be closed to observe Bank Holiday, while Canadian banks observe Civic Day.

Tuesday will have improved news activity with Australia’s Trade Balance and RBA’s Rate Announcement and Statement; UK Halifax HPI and Services PMI; Spain and Italy Services PMI; Eurozone Retail Sales; US Factory Orders and ISM Non-Manufacturing PMI.

Wednesday will have a moderate news activity but will start early with New Zealand’s jobs data; Germany’s Factory Orders; Switzerland’s CPI; UK Manufacturing Production and Industrial Production; Italy’s Prelim GDP; US and Canada Trade Balance;

After Thursday’s jobs data from Australia, the market will focus on Europe with the release of ECB and BOE rate announcements and statements. These will be followed by Canada’s Building Permits and Ivey PMI; and US Jobless Claims.

Friday will still be lively in the news front with Japan’s Current Account and BOJ Monetary Policy Statement and BOJ presscon; Australia’s Home Loans and RBA Monetary Policy Statement; China’s Trade Balance; Germany and UK Trade Balance; France’s Industrial Production; Canada jobs data; and US Prelim Nonfarm Productivity and Prelim Unit Labor Costs.

The Bank of Canada has decided to keep its overnight rate unchanged at 1 percent. Accordingly, the deposit rate is set at 0.75 percent while the bank rate is at 1.25 percent. The Bank has noted that CPI and core CPI have moved up in recent months, and they attributed it to temporary effects rather than domestic factors. Inflation is projected to stay near 2 percent in the following two years.

Meanwhile, the US published a mixed bag of data this week. Both July readings of the Empire State Manufacturing Index and Philly Fed Manufacturing Index surged (25.6 and 23.9, respectively), but Housing Starts and Building Permits came in lower than expected (0.89 million and 0.96 million, respectively). Jobless Claims for the prior week came in lower than expected for a second week in a row at just 302,000. On the other hand, TIC Long-Term Purchases increased in May to a lower-than-expected $19.4 billion, following a revised lower reading for April (-$41.2 billion).

In other news, UK Claimant Count Change came in much better than expected in June (-36,300 versus -27.100 expected). Meanwhile, the May Jobless rate, as expected, registered a slight dip to 6.5 percent from 6.6 percent.

Commodities

We finally saw good resistance in Gold as price posted its first weekly loss in seven weeks. Although price declined, bulls were able to hold on to the $1,300 level, and this could indicate that they are still in control. They need another push toward $1,400 to avoid a move back close to $1,250.

Oil moved opposite of Gold, as the former made a substantial reversal this week off of the critical $99-$100 area. From peeking transiently below $99, price zoomed up close to $104, before closing the week below $103. This move has essentially negated the risk for further declines, but bulls should stay focused so as not to waste the current opportunity to bring price back above $105.

Currency Pairs

The risk of EURUSD visiting 1.3500 has been materialized this week as bulls failed to take out resistance around 1.3650. Current price action opens up to a move toward 1.3300-50 in the next two weeks. What can turn this around is a strong weekly close above 1.3550-1.3600 at the very least.

GBPUSD buyers attempted to create a bullish weekly close, but selling overwhelmed their efforts as the week drew to a close. The 1.7100 continues to attract a tug-of-war for the control of the remaining part of July. Bulls should gun for another run toward 1.7200, unless they want an increased pressure on 1.7000.

USDJPY traded this week with just a 70-pip trading range; however sellers have stayed dominant throughout the process. We could be seeing a setup for a large move down, unless buyers have a different idea in mind. Bulls should not waste time; they must gain a foothold above 103 as soon as possible.

The Week Ahead

Monday will mostly be quiet except for the release of Germany’s Bundesbank Monthly Report. Japanese banks will observe Marine Day.

Activity will pick up slightly on Tuesday starting with RBA Governor Stevens’ speech. This will be followed by Switzerland’s Trade Balance; UK Public Sector Net Borrowing and CBI Industrial Order Expectations; US CPI and Existing Home Sales.

Wednesday’s news activity will be a notch higher with Australia’s CPI; UK MPC Asset Purchase and Official Bank Rate votes, BBA Mortgage Approvals, and CBI Realized Sales; Canada’s Retail Sales; and Eurozone Consumer Confidence.

Thursday will register the most news activity starting very early with New Zealand’s RBNZ Rate Announcement and Statement, and Trade Balance; Japan’s Trade Balance; China’s HSBC Flash Manufacturing PMI; France, Germany, and Eurozone Flash Manufacturing and Services PMI; UK Retail Sales; US Flash Manufacturing PMI and New Home Sales.

Friday ends the week with Japan’s Tokyo Core CPI; New Zealand’s ANZ Business Confidence; Germany’s GfK Consumer Climate and Ifo Business Climate; Eurozone Private Loans and M3 Money Supply; UK Prelim GDP; and US Durable Goods Orders.

The focal point this week was on the employment outlook in several parts of the world. In Australia, the Bureau of Statistics reported employers hired 15,900 more people in June, compared a 5,100 decline in May. The Jobless Rate ticked higher from 5.9 percent to 6 percent.

Meanwhile, Canada saw a dimmer jobs outlook as Statistics Canada reported a surprise 9,400 decline in Employment Change. Analysts were expecting another month of increased hiring (median forecast 20,700). The Unemployment Rate also ticked higher in June to 7.1 percent.

In other news, Canada’s Building Permits got a surprise surge in May, attributed to shopping malls and multi-dwellings in Vancouver and Toronto. Permits surged 13.8 percent, the strongest seen since late-2013. The June Housing Starts came in slightly better than expected, while Ivey PMI sank further below 50 to 46.9, the worst reading since December.

Commodities

Gold bulls were able to maintain control of price this week, etching the sixth straight weekly bullish close well above the $1,300 level. We could be seeing a hardened support just above $1,300 for a potential move back toward $1,400. This is important in order to prevent another breakdown toward $1,250.

Meanwhile, Oil has made big moves in the past few weeks, sliding about $7 in three successive bearish weeks. Bulls will now have to contend with further selling pressure as price breaks apart the $100 barrier. Since the move toward $100 has come much earlier than expected, we can now expect the risk of a move back down to the $90-$95 area.

Currency Pairs

EURUSD trading activity has eased this week despite the marginal bullish weekly close above 1.3600. This move is more favorable to bears than bulls, hence bulls should keep pushing price up. A break of 1.3700 is important to reduce the bearish tone. The more price stays unchanged, the higher the risk of this pair visiting 1.3500.

GBPUSD traded in the upper part of the prior week’s 170-pip range, giving back some gains after comfortable five-week winning streak. Although the retreat was minimal, bears could still unleash a barrage of selling pressure in the coming weeks, so buyers must prepared to defend the 1.7100 level.

The significant gathering of USDJPY sellers this week enabled this pair to fulfill another bearish week – this time price closed at its lowest since mid-November of 2013. Could this be the beginning of the end? Last possible bulwark could sit around the 100-101 area. Beyond that, we could see a quick trip toward 95-98. All this selling pressure won’t dissipate unless bulls take out the 103 level.

The Week Ahead

Monday is mostly quiet except for the release of Japan’s Revised Industrial Production; China’s New Loans; and Eurozone’s Industrial Production and ECB Draghi’s speech.

Activity will pick up significantly on Tuesday with UK BRC Retail Sales Monitor; Australia’s New Motor Vehicle Sales and RBA’s Monetary Policy Meeting Minutes; BOJ’s Monetary Policy Statement and presscon; Switzerland’s CPI; UK PPI Input, PPI and RPI; Germany and Eurozone ZEW Economic Sentiment; US Retail Sales, Empire State Manufacturing Index,, Business Inventories, Import Prices, and Fed Yellen’s testimony before the US Senate Banking Committee.

A very busy Wednesday will start early with New Zealand’s CPI; China’s Fixed Asset Investment, GDP, Industrial Production, and NBS presscon; UK Claimant Count Change, Average Earnings Index, and Unemployment Rate; Canada’s Manufacturing Sales, BOC Rate Announcement and Statement, presscon, and Monetary Policy Report; US PPI, Capacity Utilization Rate, Industrial Production, TIC Long-Term Purchases, and Beige Book.

Thursday will start with Australia’s CB Leading Index and NAB Quarterly Business Confidence; Eurozone CPI; Canada Foreign Securities Purchases; US Unemployment Claims, Housing Starts, Building Permits, and Philly Fed Manufacturing Index

Friday ends the week with BOJ’s Monetary Policy Meeting Minutes; Canada CPI and Wholesale Sales; and US preliminary UoM Consumer Sentiment.