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US Publishes Record GDP Slump; Japan Household Spending Slides on Sales Tax Hike

The better-than-expected readings from US June CB Consumer Confidence and May New Home Sales released on Tuesday were quickly overshadowed by the simultaneous Wednesday release of the Final GDP and Durable Goods Orders. The Bureau of Economic Analysis reported that Final GDP shrank 2.9 percent during the first quarter of this year, its biggest decline since the early part of 2009 or the period when the Great Recession was cooling down. The Census Bureau said Durable Goods Orders surprised with a 1 percent decline in May, while Core Durable Goods Orders slid by a marginal 0.1 percent following a 0.3 percent gain in April. Durable goods orders, particularly for machinery, computers and electronic products, appliances and components, transportation, electrical equipment, and defense capital goods fell on weaker demand.

Meanwhile, Japan’s statistics bureau said May consumer prices jumped 3.4 percent in May, marking its fastest advance in 32 years, as an effect of higher sales tax as well as utility charges. This squeezed consumers’ budgets and household spending slumped 8 percent, following a 4.6 percent decline in the previous month.

In other news, China Flash Manufacturing PMI came in better than expected and above the 50 level. On the other hand, Flash Manufacturing PMI and Flash Services PMI for Germany, France, and Eurozone came in weaker than expected. US Flash Manufacturing and Services PMI also showed better-than-expected readings.

Commodities

Like Oil, Gold struggled to push northward last week and keep the momentum on the bulls’ side. However, unlike Oil, Gold was able to make a very marginal bullish weekly close just above the $1,300 level. Gold bulls must try another push toward $1,350 and the critical $1,400. Support is expected to come in around $1,250-80.

Oil bulls tried to test the bearish stronghold right at the $107 level last week, but they were quickly negated by the opposing forces. Overall, price struggled to move northward as expected and traded most of the week within the prior week’s trading range. The bearish weekly close could be a sign that bulls are not strong enough to push price higher, so we could see more zigzagging action around the current price levels next week.

Currency Pairs

After the nerve-wrecking past few weeks, EURUSD has managed to pull off its second straight bullish weekly close just ahead of the ECB Rate Announcement in this coming week. Buyers need to concentrate on a collective push through 1.3800 and toward the resistance highs just ahead of 1.4000. They cannot afford a weekly bearish close towards 1.3500 in the coming week.

GBPUSD fared better than its rival EURUSD as the former clinched its fourth consecutive bullish weekly close this week. The inside week received subdued activity around the new highs, though. Bulls must continue to keep their foothold of the 1.7000.

If we would stop for a while and consider the prior week as a bearish week (since it was barely a bullish weekly close anyway), USDJPY has hit its third consecutive bearish weekly close and it is in critical danger of making a solid push toward multi-month lows. The $100-$101 area is a must-hold for bulls to thwart off this extremely serious threat.

The Week Ahead

Monday’s news activity will kick off early starting with New Zealand’s Building Consents. This will be followed by Japan’s Prelim Industrial Production; Australia’s HIA New Home Sales and MI Inflation Gauge; Germany’s Retail Sales; Eurozone M3 Money Supply, CPI Flash Estimate, and Private Loans; UK Net Lending to Individuals; Canada’s GDP; US Chicago PMI and Pending Home Sales.

On Tuesday, news activity will start quite early as well with Japan’s Tankan indices and Average Cash Earnings; China’s Manufacturing PMI and HSBC Manufacturing PMI; RBA Rate Announcement and Statement; Spain, Italy and Eurozone Manufacturing PMI; Swiss SVME PMI; Germany’s Unemployment Change; UK Manufacturing PMI; and US ISM Manufacturing PMI. Canadian banks will be close to observe Canada Day.

Wednesday will be shorter than usual with Australia’s Trade Balance; UK Nationwide HPI and Construction PMI; Spain’s Unemployment Change; US ADP Non-Farm Employment Change, Factory Orders, and Fed Yellen’s speech.

News activity will pick up on Thursday with China’s Non-Manufacturing PMI and HSBC Services PMI; Australia’s Building Approvals and Retail Sales; Italy, UK and Spain Services PMI; ECB Minimum Bid Rate Announcement and Presscon; Canada’s Trade Balance; US Trade Balance, Jobless Claims, Jobless Rate and ISM Non-Manufacturing PMI.

Friday ends the week with a much abbreviated news session with only RBA Assistant Governor Edey’s speech; Germany’s Factory Orders; and UK Halifax PMI.

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.

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.

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.

Fed & Swiss National Bank Stay on Hold; US Data Mixed

Speeches by various central bank governors and key policy members dotted the whole week, but the US took center stage again after the release of the FOMC Statement and Federal Funds Rate on Wednesday.

The Fed Funds Rate was put on hold at less than 0.25 percent, as expected. Fed Chair Janet Yellen hinted that the Fed may begin to raise the interest rate as soon as April of next year.

Meanwhile, the Swiss National Bank declared on Thursday that it is putting its Libor Rate on hold at less than 0.25 percent. SNB vowed to fully defend the cap it has set on Swiss franc at 1.20 per Euro.

In the United Kingdom, the MPC Asset Purchase Facility and Official Bank Rate votes came in as expected, both at 0-0-9 (on hold). The Unemployment Rate stood at 7.2 percent in January, while Claimant Count Change improved further in February at -34,600.

In other news, the German and Euro-area ZEW Economic Sentiment surprised to the downside. The German data slipped for the third consecutive month now 46.6, the weakest level seen in the last 6 months.

In the United States, TIC Long-term Purchases increased but much less than forecast, $7.3 billion versus $23.4 billion. Existing Home Sales dropped to 4.60 million, while Philly Fed Manufacturing Index more than doubled this March at 9.0.

Commodities

Gold made a massive rejection this week, reversing ahead of the $1,400 level right off the bat last Monday. This is a technical warning that bulls should heed. If price breaks $1,300 in the coming week, Gold could be bound for a move toward $1,100-$1,200.

Oil took a breather this week after the massive volatility seen in the prior week. Oil hit a new marginal low but price stayed above $98 for most of the week. Price could try to retest $100-$102 next week.

Currency Pairs

EURUSD saw bears dominate this week, and this pair traded within a range of nearly 200 pips. The pair was able to close the week just below the 1.3800 level, and this could mean bears should not be taken too lightly despite the new high printed in the prior week. Pay attention as this is the first major drop after the pair’s 6 consecutive bullish weekly closes.

Unlike EURUSD, GBPUSD posted its second weekly decline after struggling to take hold of the 1.6700 level. This puts GBPUSD on track to a possible test of 1.6250-1.6300 in the coming week or two.

USDJPY averted a breakdown of the critical 101 level last week and traded to the upside with a weekly trading range of 140 pips. However, the pair remains in consolidation, and bulls still need to exert considerable effort to conquer the resistance at 104.

 The Week Ahead

The last full week of March will be light in terms of important news activity.

Monday will have only China, Germany, US, Euro-area, and France Flash Manufacturing PMI; Germany’s Bundesbank Monthly report; and Belgium’s NBB Business Climate.

Activity picks up slightly on Tuesday, with a speech from RBA Deputy Governor Lowe; UK Nationwide HPI, CPI, PPI Input, RPI, BBA Mortgage Approvals, and CBI Realized Sales; US S&P/CS HPI, New Home Sales, and CB Consumer Confidence.

Wednesday will be the day of the release of RBA’s Financial Stability Review; Germany’s Gfk Consumer Climate; and US Durable Goods data and bank stress test results.

Thursday’s action will start very early with New Zealand’s Trade Balance; UK Retail Sales; US Jobless Claims, Final GDP, and Pending Home Sales.

Finally on Friday, we will witness the release of Japan’s Tokyo and National Core CPI, Household Spending, Unemployment Rate, and Retail Sales; UK Current Account and Final GDP; and US Personal Spending, Personal Income, Core PCE Price Index, and the revised reading of University of Michigan’s Consumer Sentiment.

New Zealand Reserve Bank Puts Rates Ahead of Other Developed Nations; Australia, Japan Data Surprise

The entire week was dotted with a flurry of economic releases, but Thursday was the most action-packed day of this week, particularly with the RBNZ Rate Announcement and Statement, better-than-expected Japanese Core Machinery Orders and Australian Employment Change data.

The Reserve Bank of New Zealand declared on Thursday that it is putting its Official Cash Rate ahead of other developed nations, hiking its rate for the first time since 2010 by 25 basis points to 2.75 percent. New Zealand’s central bank expressed plans to hike its rate further in the near future and discard stimulus much faster than earlier anticipated as it aims to reign in on inflationary prices.

Japan’s Core Machinery Orders surged 13.4 percent in January, nearly erasing the 15.7 percent decline seen in the previous month.

Australia’s Employment Change also came in much higher than forecast, 47,300, while the Unemployment Rate remained at 6 percent.

In the United States, 315,000 Americans claimed unemployment benefits last week, better than the 334,000 forecast and the lowest level since late-November. On the other hand, the Preliminary University of Michigan Consumer Sentiment Index declined to 79.9 in March, its lowest level in four months.

Commodities

Gold pushed higher once again this week, rising for the sixth straight weekly session and closing in on the $1,400 even further. Price surged $55 and closed just $5 off its $1,387.51 high. Now that the $1,400 level is just a stone’s throw away, bulls keep their calm and make another decent push. Expect declines to hold around $1,340-60.

Last week’s intense volatility in Oil was followed by another volatile week, but this time it was purely to the downside. The $103 easily discouraged buyers starting Monday and price sank for the first three days before it tried to rebound on Thursday and Friday. The $100 level has been broken cleanly; bulls need to make a concerted effort to push price back above this critical level.

Currency Pairs

EURUSD, like Gold, completed its sixth consecutive weekly advance, keeping the pair close to the coveted 1.4000 level. The volatility seen on Thursday spoiled the attempt at 1.40. Nevertheless, the pair has closed the week strong, just above 1.3900. Late-buyers could come in ar ound 1.3700-1.3800.

GBPUSD saw a different story as this pair struggled to keep its presence above the 1.6700 level for the fourth straight week. Dollar strength put this pair much closer to 1.6600 for majority of the week. Further weakness would encourage bears to aim for a retest of 1.6200-1.6300.

It took USDJPY just 1 week to bring price back into the consolidative region that span 101.70-102.80. The rally seen last week toward 104 proved very short-lived as sellers overpowered buyers for 6 straight days, putting this pair at risk of a move to 99-100 soon.

The Week Ahead

Monday will have only New Zealand’s Westpac Consumer Sentiment and Australia’s New Motor Vehicle Sales during the morning session. Focus will be on news releases during the Europe and US session, particularly on  Eurozone’s CPI; German Bundesbank Monthly Report; Canada’s Foreign Securities Purchases; US Empire State Manufacturing Index, TIC Long-term Purchases, Industrial Production, and finally US NAHB Housing Market index.

On Tuesday, Australia’s central bank will reveal its Policy Meeting Minutes, followed in the afternoon by Euro-area and Germany’s ZEW Economic Sentiment; Canada’s Manufacturing Sales; and US CPI, Housing Starts, and Building Permits. We’ll witness back-to-back speeches of BOC Governor Poloz and BOE Governor Carney later in the day.

Wednesday will be the day of the release of New Zealand’s Current Account; Japan’s Trade Balance; BOJ Kuroda’s speech; UK Unemployment Rate, Claimant Count Change, Annual Budget Release, and MPC Asset Purchase and Official Bank Rate votes; Canada’s Wholesale Sales; SNB Jordan’s speech; and US Current Account, FOMC Statement and Rate Announcement and Press Conference.

Thursday’s action will start very early with New Zealand’s Gross Domestic Product report; Switzerland’s SNB Libor Rate Announcement and Monetary Policy Assessment; EU Economic Summit; US Jobless Claims, Existing Home Sales, Philly Fed Manufacturing Index.

Finally on Friday, we will witness the release of Australia’s CB Leading Index; Euro-area Current Account; UK Public Sector Net Borrowing; Canada’s CPI and Retail Sales.