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Currency Trends & Insights

EURUSD

US, UK Jobless Claims Shine; US UoM, AUS Jobs Slide

The United States had a slew of mixed data this week, highlighted by the release of the US Unemployment Claims and the Preliminary University of Michigan Consumer Sentiment. Jobless Claims breached the 300,000 mark and registered only 292,000 claims in the prior week compared to a 332,000 forecast. On the other hand, the preliminary reading of University of Michigan Consumer Sentiment hit 76.8, the first below-80 reading and the lowest since April. The US Census Bureau reported that Retail Sales increased by 0.2 percent, while the Department of Labor said Producer Price Index rose 0.3 percent.

In other news, UK’s Claimant Count Change improved to -32,600 in August, better than the expected -21,200 reading. This followed a -36,300 reading back in July. The Unemployment Rate saw a minor improvement to 7.7 percent.

In Australia, the Bureau of Statistics announced a surprise second monthly decline in August, sliding 10,800 when analysts were expecting an increase of 10,200. The Unemployment Rate came in as-expected at 5.8 percent.

Statistics Canada publicized that Building Permits surged in July, following a sharp decline in  June. Newly-issued Building Permits amounted to CAD8 billion or 20.7 percent, putting it in a consistent upward trend with six advances out of the last seven months.

Finally, the Reserve Bank of New Zealand decided on Thursday to leave the Official Cash Rate unchanged at 2.50 percent. In his statement, RBNZ Governor Wheeler said the local economic recovery is getting more “broad-based” and the board sees a possible rate hike sometime next year.

Commodities

Gold had a very tough week as buyers failed to recapture a solid foothold above $1,400. Price did not even touch the $1,400 level despite trading just $6 away from it on Monday. Price went pretty much all downhill since then, and it nearly crossed the $1,300 border as bulls struggled to create an efficient barricade on $1,350 and $1,320. The weak bounce to and close around $1,325 puts bulls in serious danger next week. More supporters are required to buoy price early next week.

Oil performed slightly better than Gold this week as the $108 area continued to magnetize both buyers and sellers. Bulls are in a better position here, so they must promptly lay the foundation next week and aim for higher prices. Topside resistance remains at the $110-$112.50 area.

Currency Pairs

EURUSD traded well bid this week after reaching a 1.3103 low in the prior week. If bullish momentum has indeed been boosted, we could see price propel higher even before mid-week. But raging bulls should proceed with caution when the 1.3400-1.3500 is reached.

GBPUSD led the majors this week and flew high with more than 270 pips. The pair inched closer to the 1.5900 level and closed the week with a very strong finish at 1.5875. Bulls should anticipate potential price caps as sellers try to limit further upside moves. The coming week will be an interesting test on the current bullish momentum’s strength.

USDJPY traded barbs this week as the pair just bobbed up and down in a 160-pip range above 99.00. Although the week closed in the bears’ favor, the pair stayed comfortably above the 99.00 level. Furthermore, potential support could limit further declines in prices. Potential corral is found at 98.50-99.00 to 100.50-110.00.

The Week Ahead

On Monday, New Zealand kicks off the brand new week with the release of Westpac Consumer Sentiment; UK Rightmove HPI; China’s Foreign Direct Investment; Eurozone Consumer Price Index; Italy’s Trade Balance; Canada’s Foreign Securities Purchases; US Capacity Utilization Rate, Empire State Manufacturing Index, and Industrial Production.

On Tuesday, traders will keep an eye on Australia’s Monetary Policy Meeting Minutes; China’s CB Leading Index; Eurozone’s Current Account; UK’s RPI, PPI Input, CPI, and HPI; Eurozone ZEW Economic Sentiment; Canada’s Manufacturing Sales; US CPI and TIC Long-Term Purchases.

On Wednesday, there will be New Zealand’s Current Account; Australia’s MI Leading Index; UK MPC Asset Purchase Facility and Official Bank Rate Votes; and US Housing Starts, Building Permits, FOMC Statement, Federal Funds Rate, and Economic Projections.

Thursday gets to become the busiest again this week with a flurry of economic data releases such as New Zealand Gross Domestic Product; Japan’s Trade Balance; Reserve Bank of Australia’s Bulletin and Annual Report; Switzerland’s Trade Balance, Libor Rate, and SNB Monetary Policy Assessment; UK Retail Sales and CBI Industrial Order Expectations; Canada’s Wholesale Sales; US Jobless Claims, Current Account, Philly Fed Manufacturing Index, and Existing Home Sales.

Friday ends the week with UK Public Sector Net Borrowing, Canada’s Consumer Price Index; and Eurozone Consumer Confidence.

Central Banks Held Rates Steady, US Jobs Data Mixed

It was a very busy week as four central banks made interest rate announcements. The Reserve Bank of Australia, Bank of Canada, Bank of England, and the European Central Bank all maintained their respective rates. RBA’s Cash Rate was held at 2.50 percent, BOC held its Overnight Rate at 1 percent, while both ECB and BOE held rates at 0.50 percent. BOE’s Asset Purchase Facility was also maintained at GBP375 billion.

The UK had quite a stellar week as Manufacturing PMI, Construction PMI, and Services PMI topped their respective estimates (57.2, 59.1, and 60.5, respectively).

US Non-Farm Employment Change missed expectations for its August reading, increasing 169,000 compared to its 178,000 estimate. August Unemployment Rate improved slightly to 7.3 percent, according to the Bureau of Labor Statistics.

Meanwhile, Canada’s Employment Change increased 59,200 in August, while the Unemployment Rate also improved, from 7.2 percent to 7.1 percent. Ivey PMI jumped to 51.0 from 48.4 in the previous month.

Commodities

Gold’s $1,400 level has been pivotal in this week’s trading, but in the end bears were able to close the week slightly on their side. Next week, focus will remain on whether the level can put a lid on price. Near-term areas to watch are $1,350 and $1,430-50.

Oil had another volatile week, and like last week bulls had the upper hand. Unlike the other week, though, bulls completely dominated in this week’s trading, making deep discount buys since early Monday and pushing price upward through $110. In the process, weekly price closed at the highest level since May 2011. It would be fascinating to see whether bulls can continue the momentum next week.

Currencies

EURUSD weakness persisted this week but bears had trouble getting through the 1.3100 level. The pair bounced on Friday but it was not enough to reverse the weekly decline. Key areas to watch next week are 1.3000-1.31000 and 1.3300.

The downside trendline capping USDJPY since May has been duly broken this week. But after the brief excursion above 100.00, the pair has been slammed down very hard on Friday. Price reached a 98.53 low before it was able to close the week just above 99.00. Bulls should make another attempt at closing above 100.00 next week.

GBPUSD had a pretty smooth ride upward, thanks to several favorable data released this week. The steady climbed started near 1.5500 and the pair rose all the way up through 1.5650, topping just ahead of 1.5700. The August top at 1.5716 is looming and bulls should try to blast through it this coming week.

The Week Ahead

The second week of September will turn out to be evenly busy.

On Monday, watch out for Japan’s Current Account and Final GDP; Australia’s Job Advertisements and Home Loans; China’s PPI, CPI and New Loans; Switzerland’s Retail Sales; and Canada’s Building Permits.

On Tuesday, traders will keep an eye on Japan’s Monetary Policy Meeting Minutes and Tertiary Industry Activity; Australia’s NAB Business Confidence and MI Inflation Expectations; China’s Industrial Production and Fixed Asset Investment; BOE Credit Conditions Survey; US JOLTS Job Openings.

On Wednesday, there will be Japan’s BSI Manufacturing Index; Australia’s Westpac Consumer Sentiment; UK Claimant Count Change and Unemployment Rate.

On Thursday, RBNZ will have its Rate Announcement and Monetary Policy Statement. Other noteworthy releases include Japan’s Core Machinery Orders; Australia’s Jobs data; ECB Monthly Bulletin; UK’s Inflation Report Hearings; US Unemployment Claims and Import Prices.

Friday ends the week with New Zealand’s Business NZ Manufacturing Index; Switzerland’s PPI; ECOFIN Meetings and Eurogroup Meetings; US Retail Sales, PPI, and Preliminary UoM Consumer Sentiment.

Raft of Economic Data Ends the Month of August

The final week of August started out very quietly but this all changed as the week wore on.

Orders for US Durable Goods tumbled greater than estimated after three continued monthly advances. Purchase orders for durable goods fell 7.3 percent in July led by capital goods and aircraft, according to the Census Bureau. Core Durable Goods Orders eased for the second month at minus 0.6 percent.

US CB Consumer Confidence climbed to 81.5 in August from last month’s 81.0 reading. This is the third index reading above the 80 level.

US Pending Home Sales contracted, according to the latest report from the National Association of Realtors. Pending sales of existing homes declined 1.3 percent in July, a greater decline than forecast. The rise in mortgage rates is causing concern, putting pressure on Pending Home Sales which has now declined for the second month.

The US economy grew more than expected in the second quarter of this year, the Bureau of Economic Analysis said on Thursday. Preliminary Gross Domestic Product advanced 2.5 percent, compared to the median estimate of 2.2 percent.

US Core PCE Price Index, Personal Spending, and Personal Income all came in at 0.1 percent in July. All were also below their respective forecasts.

In other news, Private Capital Expenditure in Australia surged 4.0 percent (seasonally adjusted) in the June quarter 2013. This puts it back in the black after capital expenditure of private business slumped 4.1 percent in the first quarter of this year.

Meanwhile, in the United Kingdom, the Confederation of British Industry reported Wednesday that CBI Realized Sales jumped to 27 in August, following July’s equally-impressive advance to 17.

Commodities

Bullish momentum in Gold fizzled out as the week progressed. Gold advanced for five days since August 22, but the fifth day saw a marked about-face after price met sellers around the $,1420-50 area. From there, it was all downhill until the Friday close, when bulls had still attempted to print a weekly close above $1,400—but failed. Next week, bulls should strive for a move back up; otherwise, expect $1,350-80 or even lower.

Oil became active and perky this week as news and speculation about a potential attack on Syria has been doing the rounds throughout the internet. From $105.80s on Tuesday, price shot up past $112 before closing the day in the mid-$109s. Expect further volatility in the coming days or weeks.

Currencies

EURUSD failed to capitalize on the recent consolidation this week and slipped through 1.3300 and even 1.3200 before New York closed on Friday. If bearish momentum continues next week, the pair will target the 1.3100 level, ahead of which is where the 200-day MA lies.

USDJPY remained range-bound below the 99.00 level for a fourth straight week. Risk aversion in relation to the potential attack on Syria could provide a lift to JPY in the following weeks. Trading range has tightened up further; hence expect a burst of volatility soon.

Despite a bullish close on Monday, it was all downhill for GBPUSD throughout this week after bulls failed to make price close above 1.5600 since Thursday. Next week, bulls need to move it back above 1.5600 so they can attack stops toward a break of 1.5700.

The Week Ahead

The start of the new month sees a barrage of economic data this week.

On Monday, there will be New Zealand Overseas Trade Index; Japan’s Capital Spending; Australia’s Building Approvals and Company Operating Profits; China’s HSBC Final Manufacturing PMI; Spain’s, UK’s, and Italy’s Manufacturing PMI; Switzerland’s SVME PMI. Canada and the US are on holiday to celebrate Labor Day.

On Tuesday, traders will focus on China’s Non-Manufacturing PMI; Australia’s Current Account, Retail Sales, Interest Rate Announcement, and RBA Rate Statement; Spain’s Unemployment Change; UK Construction PMI; and US ISM Manufacturing PMI.

Australia kicks off Wednesday with the GDP data, followed by UK Halifax HPI; Spain Italy, and UK Services PMI; Eurozone Retail Sales; US and Canada Trade Balance; US Beige Book; BOC Rate Announcement and Statement.

On Thursday, there will be Australia’s Trade Balance; BOJ’s Press Conference and Monetary Policy Statement; BOE’s and ECB’s Rate Announcement and Statement; US Unemployment Claims, ISM Non-Manufacturing, and Factory Orders.

Finally on Friday, the week closes with Germany’s Trade Balance and Industrial Production; Switzerland’s CPI; UK Trade Balance and Manufacturing Production; US Non-Farm Employment Change and Unemployment Rate; Canada’s Ivey PMI, Employment Change and Unemployment Rate.

Federal Reserve Open Market Committee: QE Could Be Tapered Later This Year

According to the latest Federal Reserve Federal Open Market Committee Meeting Minutes, majority of the FOMC participants were “broadly comfortable” with the tapering of the asset purchases “later this year.” The minutes also noted that domestic economic activity has progressed at a moderate pace during the first half of 2013, labor conditions improved, while jobless rate continues at an elevated pace.

US Unemployment Claims grew more than expected in the prior week at 336,000. Meanwhile, the National Association of Realtors said Existing Home Sales advanced 5.39 million in July, its quickest pace since November 2009. On the other hand, the Census Bureau reported New Home Sales plunged to just 394,000 in July and the June reading was revised down to 455,000 from its initial reading of 497,000.

In other news, Flash Manufacturing PMI and Flash Services PMI data were released across Europe. France had them at 49.7 and 47.7, Germany at 51.3 and 51.0, and Eurozone at 52.0 and 52.4, respectively.

UK’s Second Estimate Gross Domestic Product went up 0.7 percent during the second quarter of the year, thanks to advances in manufacturing, construction, and trade. Preliminary Business Investment also increased, 0.9 percent, during the same period.

 Commodities

Gold marched higher for a third straight week and bulls just missed the $1,400 level a few hours before the week ended. It would be interesting to see if there are remaining bears lurking around and above the $1,400 level. We expect layers of resistance ahead of $1,500. Higher targets include $1,550-$1,630.

Tug-of-war rages on in Oil for a seventh straight week. Infighting between bulls and bears focus mainly between $103 and $108 within the broader $102-$109 range. Overall, the risk is slightly to the downside if the weekly declining peaks are a good indication. Expect the consolidation to persist until we get a decent break out of this range.

Currencies

EURUSD managed to complete its third bullish weekly close despite whipsaw moves during several trading sessions. The pair made a fleeting excursion above 1.3400, but overall the level capped throughout the week. We could see bullish attempts to break beyond this level next week.

Thanks to Dollar recovery, USDJPY has emerged successful in this trading week following last week’s achievement in defending the 96.00 level. To keep the momentum going, bulls need to launch a stronger attack to 100-101.50 starting this coming week.

GBPUSD went from a leader to a laggard after the pair failed to hold on to its gains above the 1.5700 level. This move broke the string of weekly advances which started in the low-1.5200s. Despite this, bulls are still ahead but they need to maintain support at 1.5500 if any attacks surface next week.

The Week Ahead

On Monday, there will only be New Zealand’s Trade Balance and US Durable Goods Orders. UK banks will observe the Summer Bank Holiday.

On Tuesday, traders will only have to look at Germany’s Ifo Business Climate and US CB Consumer Confidence.

Economic releases pick up the pace on Wednesday with Australia’s Construction Work Done; Gfk German Consumer Climate; Eurozone M3 Money Supply; UK CBI Realized Sales and BOE’s Carney speech; and US Pending Home Sales.

On Thursday, there will be Japan Retail Sales; New Zealand’s ANZ Business Confidence; Australia’s Private Capital Expenditures; Germany’s Preliminary CPI; Switzerland’s Employment Level; Canada’s Current Account and RMPI; and US Preliminary GDP and Unemployment Claims.

Finally August ends on Friday with Japan’s Household Spending, Preliminary Industrial Production, and Tokyo Core CPI; Australia’s Private Sector Credit; Germany’s Retail Sales; UK Nationwide HPI and Net Lending to Individuals; and US Chicago PMI and Revised UoM Consumer Sentiment.

Bank of England Votes in Favor of QE and Bank Rate Status Quo

The Bank of England’s Monetary Policy Committee remained in consensus in terms of Asset Purchase Facility and Official Bank Rate votes, but not in terms of forward guidance. The committee voted unanimously in favor of retaining the QE and the bank rate. However, Martin Weale dissented, in favor of a stricter stance with regards above-average inflation.

UK Claimant Count Change has declined for the ninth straight month, decreasing a little over 29,000 in July. Unemployment Rate stood at 7.8 percent for the fourth straight month. Retail Sales increased 1.1 percent, following the prior month’s mild 0.2 percent gain.

In other news, New Zealand posted a surprise increase in the June quarter Retail Trade Survey. According to Statistics New Zealand, Retail Sales rose 1.7 percent, the second strongest reading in the last six quarters. Core Retail Sales was nearly double than expected, 2.3 percent.

The US Empire State and Philly Fed Manufacturing Index both disappointed with readings of 8.2 and 9.3. Analysts were expecting above 10-level readings. The same happened with the Preliminary reading of the University of Michigan Consumer Sentiment, which stood at 80.0 compared to 85.6 expectations by analysts surveyed.

Commodities

Gold launched the week with a good start and ended in the same fashion, maintaining its stance above the $1,300 level all the way through. With fresh momentum on the side of the bulls, they are ready to tackle remaining bear defense lurking around $1,400. Layer of resistances are scattered through $1,500.

Oil completed the week with five straight days of advances, bringing price closer to fulfilling the expected triple top. There is a potential thick layer of defense around $108-$109, so buyers need to be extra vigilant.

Currencies

EURUSD managed a V-shaped recovery after blasting higher by more than 150 pips on Thursday, effectively erasing the losses built on the early part of the week. Bulls will surely aim for a trek above the 1.3400 level this coming week.

USDJPY started the week well bid but a significant turnaround happened on Thursday which thwarted a great bullish advance. Based on this price action, it appears bears remain in control; hence bulls need to act with conviction next week in order to significantly reverse the bearish momentum.

GBPUSD led the majors this week as the pair rocketed above the 1.5600 level after breaking away from the sticky 200-day MA which influenced price for a week. Bullish target this week could go as high as 1.5800-1.5900. Before that, June’s 1.5750 high needs to be taken out of the way.

The Week Ahead

The coming week is rather quiet relative to its normal state.

On Monday, there will only be New Zealand’s PPI Input; Japan’s Trade Balance; Australia’s New Motor Vehicle Sales.

On Tuesday, traders will focus on Australia’s Monetary Policy Meeting Minutes; New Zealand’s Inflation Expectations; Germany’s Producer Price Index; Canada’s Wholesale Sales.

Wednesday is unusually quiet, with just a few key releases such as UK Public Sector Net Borrowing and CBI Industrial Order Expectations; US Existing Home Sales and FOMC Meeting Minutes.

Thursday tops the week with the most releases, particularly Australia’s CB Leading Index; China’s HSBC Flash Manufacturing PMI; Eurozone, France, and Germany Flash Manufacturing PMI and Flash Services PMI; US Unemployment Claims and Flash Manufacturing PMI; Canada’s Retail Sales

Finally on Friday, the week winds down with the release of Germany’s Final GDP; UK Second Estimate GDP, Prelim. Business Investment, and BBA Mortgage Approvals; Canada CPI; and US New Home Sales. The Jackson Hole Symposium, to be held in Wyoming, will also start today and is expected to end on Sunday.

Canada Jobs Data Disappoints; RBA Cuts Rates As Expected

During its board meeting on August 6, the Reserve Bank of Australia under the leadership of Governor Glenn Stevens determined to slash the Cash Rate to 2.50 percent from 2.75 percent. The Board views commodity prices to be at elevated levels. It foresees a pickup in the global growth by 2014.

On Thursday, Australia’s Bureau of Statistics announced a shocking decline in its Employment Change data. The labor force was reduced by 10,200 in July, a big surprise since analysts expected a gain of 6,200 jobs. Unemployment Rate improved a bit, 5.7 percent.

Canada also revealed surprisingly poor jobs data on Friday. Employment Change lost 39,400 jobs in July as there were lesser employment opportunities in government and for the youth. The Unemployment Rate climbed a notch to 7.2 percent.

Building Permits in Canada fell 10.3 percent, more than the -2.5 percent estimate. This decline in June is the first in the last 6 months. Meanwhile, Ivey PMI in July also fell to 48.4, the first decline below the 50 level since November.

Commodities

Gold started off the week quite tepid as it followed through with the selling momentum from the prior week. This changed mid-week as price made a V-shaped recovery enough to enable price to close the week just a tad above the weekly open and the embattled $1,300 level. There’s a lot of work ahead for the bulls: lots of wood to chop through $1,350. If they succeed, bears could scramble for the exits as $1,400 would become vulnerable by then.

The potential double top mentioned last week materialized quite well, but price opted to bounce soon after the double top’s bottom broke and price reached slightly beyond the $102 level. Unlike in Gold, oil buyers did not have enough time to recover all the losses, but they managed to close the week just above $105. Near-term areas to watch are $106-$108 and $100-$102.

Currencies

EURUSD finally made a march upward this week, but price quickly reversed after touching 1.3400. Overall, this gives bulls control of the pair in four out of the last five weeks, and this gets them closer to their mid-term goal of reaching 1.3700. To achieve this, they need to keep the momentum on their side in the next few weeks.

With the inability to move higher from 99, sellers obviously saw no option but to dump price lower throughout the week. The pair slid 330 pips and fleetingly visited the upper-95.00s. This puts 93.00-94.00 in serious danger in the next few weeks.

GBPUSD had a volatile week, featuring a near-330-pip whipsaw on Wednesday during the time of BOE Governor Carney’s speech and release of the BOE Inflation Report. Thanks to this price action, GBPUSD caught up with EURUSD, and the former is on track to move toward 1.5700.

The Week Ahead

It’s pretty much all about Japan on Monday with the slew of economic releases such as Japan’s Preliminary GDP, CGPI, and Revised Industrial Production. Switzerland’s Retail Sales and US Federal Budget Balance will follow late in the day

On Tuesday, there are Japan’s Core Machinery Orders and BOJ Monetary Policy Meeting Minutes; Australia’s NAB Business Confidence; New Zealand REINZ HPI; UK CPI, RPI and PPI Input; Germany’s ZEW Economic Sentiment; Eurozone Industrial Production and ZEW Economic Sentiment; US Retail Sales, Business Inventories, and Import Prices.

Busy Wednesday starts early with New Zealand Retail Sales; Australia’s Westpac Consumer Sentiment and Wage Price Index; France and Germany GDP; France Non-Farm Payrolls (Prelim); Switzerland’s PPI; UK Claimant Count Change, MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes, Unemployment Rate, and Average Earnings Index; Eurozone Flash GDP; US PPI.

On Thursday, there are New Zealand’s Business NZ Manufacturing Index; Australia’s MI Inflation Expectations; UK Retail Sales; US CPI, Unemployment Claims, TIC Long-term Purchases, Empire State Manufacturing Index, Philly Fed Manufacturing Index, Industrial Production and NAHB Housing Market Index.

Finally, Friday releases come in the form of Eurozon Current Account, Trade Balance, and CPI; Canada’s Manufacturing Sales; US Housing Starts, Prelim. Unit Labor Costs, Prelim. Nonfarm Productivity, Building Permits, and UoM Consumer Sentiment.

RBNZ Hawkish Bias Emerges; Dollar Weakness Persists Ahead of US Rate Announcement

The Reserve Bank of New Zealand decided to maintain its Official Cash Rate at 2.5 percent as widely expected by analysts surveyed. RBNZ Chief Graeme Wheeler pointed out the elevated house price inflation seen specifically Auckland and Christchurch, and this suggests a mild bias to hike rates by next year. RBNZ expects rates to stay the same for the rest of this year.

In other news, Japan’s Shinzo Abe took victory in the Upper House elections held last Sunday. 74 of the 121 Upper House seats went to Abe’s Liberal Democratic Party as well as the coalition partner, the New Komeito, providing them a favorable majority in the Upper House, and thereby ceasing the parliamentary stalemate which has been ongoing for the last 6 years.

The labor market in Spain exhibited a sign of improvement. Jobless rate fell to 26.3 percent in the June quarter. This follows seven consecutive quarters of unwelcome advances.

Orders of durable goods in the United Stated surged 4.2 last June, rising much more than 1.1 percent expectations, according to a Census Bureau report on Friday. Meanwhile, Core Durable Goods was flat for the same period.

Commodities

Gold finished a strong week in favor of the bulls. The bullish week started early with the break through $1,300 on Monday. $1,350 was attacked early as well, but it was surprisingly well protected for four straight days. Bulls should see a break of this level next week if they can continue supporting $1,300 against further attacks.

After four straight weeks of bullish exuberance, oil finally printed a bearish week soon after price encountered difficulties sustaining the lofty $108 level. Sellers did not waste time and started the bearish momentum on early Monday, depressing price through several levels and closed the week in the mid-$104s. Downside, the key area to watch is $102-$104.

Currencies

Another triumphant week ensued for EURUSD as buyers managed to course through 1.3200 with ease. Now, the pair is set to break the 1.3300 level and continued bullish momentum would see price visit the 1.3400 area soon. On the downside, sellers would have to contend with the strong support around 1.3150-1.3200.

As expected, USDJPY continued to have a difficult time trading through 100.00-50 and this led to a downside move this week. Support around 99 quickly crumbled and this prompted a dash towards 97.95 before the week closed at 98.27. The outlook remains bearish especially if 97-98 fails to hold the line for the bulls.

Just like EURUSD, GBPUSD rose for the third consecutive week on the back of a weak Dollar and to some extent the favorable UK GDP data. The next area of interest is 1.5550-1.5600 ahead of 1.5700. Buyers must remain vigilant as 1.5150-1.5300 is still vulnerable.

The Week Ahead

Monday will begin early with Japan’s Retail Sales; followed by UK’s Net Lending to Individuals, Mortgage Approvals, M4 Money Supply, and CBI Realized Sales; and US Pending Home Sales.

Tuesday will get more active with New Zealand’s Building Consents; Japan’s Household Spending, Preliminary Industrial Production, and Unemployment Rate; Germany’s Gfk Consumer Climate and Preliminary CPI; Spain’s Flash GDP; Eurozone Retail PMI; Canada IPPI and RMPI; US S&P/CS Composite-20 HPI and CB Consumer Confidence.

Wednesday will see the release of UK BRC Shop Price Index and Gfk Consumer Confidence; Japan Manufacturing PMI and Housing Starts; New Zealand’s ANZ Business Confidence; Germany’s Retail Sales and Unemployment Change; Italy’s Unemployment Rate; Eurozone CPI Flash Estimate and Unemployment Rate; US ADP Non-Farm Employment Change, Advance GDP, Chicago PMI, FOMC Statement and Federal Funds Rate.

Thursday will witness the greatest action of the week with China’s Manufacturing PMI and HSBC Final Manufacturing PMI; UK Halifax HPI; Spain, UK, and Italy Manufacturing PMI; Eurozone Final Manufacturing PMI; UK’s BOE and Eurozone’s ECB Rate Announcements and Statements; US Unemployment Claims, ISM and Final Manufacturing PMI.

Friday ends the week with Japan’s Monetary Base; Australia’s PPI; US Unemployment Rate, Non-Farm Employment Change, Core PCE Price Index, and Factory Orders.

Bernanke Perpetuates the QE-Taper Guessing Game

Bernanke testified on the Semiannual Monetary Policy Report before the House Financial Services Committee and the Senate Banking Committee on Wednesday and Thursday, respectively. The central theme of his fairly dovish testimony was that the pace of bond purchases does not move on a preset course, and “highly accommodative policy is appropriate for the foreseeable future.” He expressed that the stimulus could cease around this time in the subsequent year assuming that the economy advances as expected.

In other news, the United States Empire State Manufacturing Index jumped to 9.5 in July, while the US Philly Fed Manufacturing Index also did very well and surged to 19.8.

Bank of England’s Monetary Policy Committee voted 9-0-0 in favor of keeping the Official Bank Rate at 0.50 percent and Asset Purchase Facility at GBP375 billion. Meanwhile, UK Claimant Count Change fell by 21,200 in June, a three-year high.

Bank of Canada on Wednesday maintained its overnight rate target at 1 percent, with the Bank Rate at 1.25 percent and the deposit rate at 0.75 percent, respectively.

Commodities

Gold went up despite the very tight trading range encountered this week. The $1,300 level continued to suppress bullish enthusiasm but the downside was easily capped at $1,270. Bulls should ensure a strong push higher next week; otherwise, bears would seize any opportunity to sink price back through the $1,200 level.

Another solid trading week transpired in oil as price reached for its third fresh weekly highs, this time rising through the $108 level. Additional bullish support should come in around $105-$107 to prop up price further into the new week and through the coming new month.

Currencies

It was a tough week for EURUSD as the pair moved around a tight range, trading very close to the 200-day MA all throughout the week. The pair managed to trade mostly above the 1.3100 level. Bernanke’s testimony didn’t ruffle too many feathers and the pair could see a continuation of the climb next week. For that to happen, bulls must conquer 1.3200 convincingly, ideally before mid-week.

USDJPY bulls attempted to take out the 100.00-50 area for nearly two weeks and they succeeded this time. However, the advance has not been easy for buyers, and so they are still expected to gather enough support to push for a key break of 101.50 in the coming week.

GBPUSD beat EURUSD this week as the former was able to form a higher weekly high and close, breaking through the 1.5200 level at the same time. If the pair successfully pushes above 1.5300, not much is expected to be in the way towards the 200-day MA around 1.5588.

The Week Ahead

Monday is all quiet except for the release of the US Existing Home Sales data.

Tuesday is a little bit more active with UK’s BBA Mortgage Approvals; Canada’s Retail Sales; US HPI and Richmond Manufacturing Index; Eurozone Consumer Confidence.

Wednesday sees the release of New Zealand and Japan Trade Balance; Australia CPI; China’s HSBC Flash Manufacturing PMI; France, Germany, and Eurozone Flash Manufacturing and Services PMI; UK CBI Industrial Order Expectations; US Flash Manufacturing PMI and New Home Sales.

On Thursday, New Zealand’s central bank will announce its rates. This will be followed in the afternoon by Spain’s Unemployment Rate; Germany’s Ifo Business Climate; Eurozone M3 Money Supply; UK Preliminary GDP; US Unemployment Claims and Durable Goods Orders.

Friday quiets down significantly, with only Tokyo Core CPI, Germany’s Import Prices, and US Revised UoM Consumer Sentiment.

Dollar Slumps as US FOMC Minutes Create Confusion

The latest US Federal Open Market Committee Meeting Minutes published on Wednesday revealed that there is no urgent need to end the $85 billion monthly bond-buying program, based on the information acquired since May. The minutes noted moderate economic activity coupled with improvement in the labor and housing market while unemployment rate stayed elevated. About half of the policy board prefers to end the stimulus program by year-end, but many of them concede that labor market improvement is warranted before tapering the stimulus.

In other news, China’s Producer Price Index slumped 2.7 percent and has stayed subdued since March 2012. On the other hand, Consumer Price Index surprised to the upside with a 2.7 percent gain, the fastest pace in four months.

Australia’s Employment Change data saw a gain of 10,300 locals employed in June, way better than the nearly flat forecast by analysts surveyed. Unemployment Rate ticked up to 5.7 percent in June, the highest since October 2009.

 Commodities

Gold’s new trading week started out quiet but the pace picked up on Thursday after the US FOMC Meeting Minutes. The volatility enabled gold to climb just two pips short of $1,300 and close the week around $1,285. Gold is now ready to step up the pace and aim for $1,350-$1,400.

It was a solid trading week for Oil bulls as price thrusted further up and closed the week at the $105.50s. However the run-up seems overdone and price is vulnerable to quick declines. Bulls should support price around $102-$104 to keep the momentum going.

 Currencies

EURUSD buyers launched a significant effort this week, breaking the three consecutive weekly declining streak and averting a potential black hole below the 1.2800 area. The volatility caused by the US FOMC Meeting Minutes and Bernanke’s speech helped the pair spike through 1.3200 before ending the week around 1.3066. Upside target right now is the strong break of 1.3400.

USDJPY manifested some weakness this week after what was pretty much a one-way street since mid-June. The 101.50 level posed some problems and price turned around from this area, sinking quickly below 100. Sellers will have to chop their way through 97-98 in order to reach 94-95.

GBPUSD finally traded in the green this week after registering three straight weekly drops that saw price nearly touch the 1.4800 critical level. The pair managed to close above 1.5100; however a break of 1.5300 is needed to keep the momentum on the side of the bulls.

 The Week Ahead

The coming week will be quite active with Tuesday and Wednesday posting the greatest activities.

Monday’s Asian session comes out with its first release in the form of Australia’s New Motor Vehicle Sales, followed by China’s Fixed Asset Investment, GDP, Industrial Production, Retail Sales and NBS presscon; Switzerland’s PPI; US Retail Sales, Empire State Manufacturing Index, Business Inventories. Japan will observe Marine Day this day.

On Tuesday, New Zealand will start off with the release of CPI, then Australia’s Monetary Policy Meeting Minutes; UK PPI Input, RPI, HPI, and CPI, and BOE Inflation Letter; Germany’s ZEW Economic Sentiment; Eurozone CPI, ZEW Economic Sentiment, and Trade Balance; Canada’s Manufacturing Sales; US CPI, Capacity Utilization Rate, Industrial Production, and TIC Long-Term Purchases.

Wednesday starts off early with Japan’s BOJ Monetary Policy Meeting Minutes; UK Claimant Count Change, MPC Official Bank Rate Votes, MPC Asset Purchase Facility Votes, Average Earnings Index, Unemployment Rate; Switzerland ZEW Economic Expectations; Canada’s Foreign Securities Purchases, BOC Rate Statement and Announcement; US Housing Starts, Building Permits, Beige Book, and Fed. Reserve Chairman Bernanke’s Testimony.

Thursday will begin with Australia’s CB Leading Index and NAB Quarterly Business Confidence; Eurozone Current Account; UK Retail Sales; Canada Wholesale Sales; US Unemployment Claims, CB Leading Index, and Fed. Chairman Bernanke’s Testimony.

Friday quiets down significantly and will only see the release of Germany’s PPI, Spain’s HPI, and Canada’s CPI. Today will also be the first day of the two-day G20 meetings.

Central Banks Kept Rates Unchanged, Dollar Strength Resumes

Central bank rate announcements and the widely-popular US employment data were the focus for the past week.

The European Central Bank and the Bank of England both left their respective rates unchanged. Both BOE and the ECB kept the rates at 0.50 percent. The Asset Purchase Facility created and utilized by the BOE remained at GBP375 billion.

The Australian central bank, RBA, declared an unchanged cash rate on Wednesday. Reserve Bank of Australia left the rate at the ultra-low 2.75 percent as the policymakers pointed to signs of pickup in the local housing market and consolation for local exporters as the Aussie dollar weakened against other currencies, particularly the US dollar, precipitated by the rate slashes that began sometime in the latter part of 2011. The consensus from the board, led by Governor Stevens, is an outlook for improvement in the following year joined by depreciation of the Australian dollar “over time.” Stevens believes the local currency remains “at a high level.”

Australian Bureau of Statistics published a 0.1 percent increase in Retail sales in May and a better-than-expected Trade Balance for May, AUD0.67 billion.

In other news, Automatic Data Processing reported on Wednesday a better-than-forecast 188,000 climb in June’s US ADP Non-Farm Employment Change. Median expectation was for a climb of 161,000, subsequent to May’s 134,000 gain. On Friday, the US dollar caught a second wind as the Non-Farm Employment Change data from the Bureau of Labor Statistics revealed an even stronger 195,000 reading. Unemployment rate stood at 7.6 percent in June.

Commodities

Gold had a very quiet trading during the first four days of the week. But this all changed on Friday as the yellow metal burst downward after the $1,250-60 area failed to give way to the ailing bulls. The week closed down and inside the prior week’s much larger range. The $1,180-$1,200 area is back in trouble.

Currencies

EURUSD sellers encountered relatively weaker resistance as they moved further down since the 1.3100 level broke the other week. Since 1.2900 and 1.3000 psychological level was also left in the dust, the next target is the break of 1.2700-1.2800.

With the benefit of Dollar strength, USDJPY was able to rise this week, climbing in 4 out of the 5 trading days. The weekly close above the 101 level is an indication for a possible return to the upper-103s. In the interim, the 100 level must hold.

Just like EURUSD, GBPUSD declined heavily this week, sinking nearly 450 pips after 1.5300 held well and the 1.5000 along with the 1.4900 level got pulverized. If 1.4800 yields to pressure, sellers will set their sights on 1.4100-1.4200.

The Week Ahead

This coming week, economic data are pretty much evenly spread out but generally, it will be much quieter compared to the prior week.

On Monday, there will be releases such as Japan’s Current Account, AUD ANZ Job Advertisements; Germany’s Trade Balance and Industrial Production; Canada’s Building Permits and Bank of Canada’s Business Outlook Survey.

Tuesday starts very early with the release of New Zealand’s NZIER Business Confidence; followed by UK’s BRC Retail Sales Monitor, Australia’s NAB Business Confidence; China’s CPI; Switzerland’s Retail Sales; UK’s Manufacturing Production and Trade Balance; and ECOFIN Meetings.

On Wednesday, traders can expect some action during the release of Australia’s Westpac Consumer Sentiment; China’s Trade Balance; France’s Industrial Production; FOMC Meeting Minutes and US Federal Reserve Chairman Bernanke’s speech.

On Thursday, Japan’s comes out with Core Machinery Orders, followed by Australia’s MI Inflation Expectations, Employment Change, and Unemployment Rate; BOJ Monetary Policy Statement and BOJ Press conference; ECB Monthly Bulletin; United States Unemployment Claims and Federal Budget Balance.

Friday ends the week with the release of Australia’s Home Loans; Eurozone Industrial Production; US PPI and Preliminary UoM Consumer Sentiment.