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US, UK PMI Data Disappoint; Spanish Flash CPI Increase Weakness

The Spanish National Statistics Institute announced a continued weakness in the country’s Flash Consumer Price Index. The December figure declined 1.1 percent, its sixth straight negative reading, and the biggest decline ever recorded since 2011.

Friday, January 2, was kept busy by data mostly out of Europe. Markit published a weaker than expected UK Manufacturing PMI, as the December figure decreased to 52.5, or the lowest reading in the last three months. The Bank of England reported that Net Lending to Individuals increased to GBP3.3 billion (the biggest in the last 4 months), while M4 Money Supply was flat for the second month in a row in November.

Meanwhile, in the United States, ISM reported that Non-Manufacturing PMI declined to 55.5, surprising analysts whose median forecast was 57.6. The December data is the lowest reading since June’s 55.3 reading. The latest report from the Department of Labor showed the Jobless Claims rose to 298,000, which was 11,000 higher than forecast. Chicago PMI came in much weaker than anticipated at 58.3.

Commodities

Gold continues to trade inside a tight range below the important $1,200 level, with one instance where price shot through toward $1210 fleetingly. We do not suggest taking any position right now; better wait for price to stabilize above $1,200.

Oil is poised to continue its bearish drop after sinking five out of the last six weeks. The $50 level would be critical and all eyes are on it right now. Unless we see certain signs, the $30-$40 area seems to be a definite possibility right now.

Currency Pairs

EURUSD completed its third bearish consecutive week previously and we could see a strong push below 1.2000 very soon. This will put the multi-year low set on June 2010 at 1.1875 in very critical danger.

USDJPY last traded in the 120s, close to the new multi-year high set on December at 121.83. We expect the 120-121 area to become a pivot in the coming weeks and months.

GBPUSD bears are roaring right now as they made a freefall move – as predicted – on the last day of December through the 1.5500 level. If that level is not revisited this coming week, we could see increased push toward 1.5100.

The Week Ahead

Monday will only have a few news announcements on the pipeline, namely Germany’s Preliminary CPI; Spain’s Unemployment Change; Switzerland’s SVME PMI; and UK Construction PMI. US FOMC Member William will give a speech in a Boston conference entitled “Housing, Unemployment, and Monetary Policy”.

Tuesday will open with Australia’s Trade Balance; China’s HSBC Services PMI; Services PMI from Spain, Italy, and the UK; UK BOE Credit Conditions Survey; Canada’s RMPI and IPPI; New Zealand’s GDT Price Index; and US ISM Non-Manufacturing PMI and Factory Orders.

Wednesday will be more active with Germany’s Retail Sales and Unemployment Change; Switzerland’s Foreign Currency Reserves; Eurozone CPI Flash Estimate and Jobless Rate; Canada Trade Balance and Ivey PMI; US ADP Non-Farm Employment Change, Trade Balance, and FOMC Meeting Minutes.

Thursday will begin with Australia’s Building Approvals; Eurozone Retail Sales and PPI; BOE Official Bank Rate and MPC Rate Statement; Canada’s NHPI; and US Jobless Claims.

Friday will be the highlight of the week, starting early with New Zealand’s Retail sales; China’s PPI and CPI; France’s Industrial Production; UK Manufacturing Production, Trade Balance, and Industrial Production; Canada’s Building Permits, Jobless Rate, and Employment Change; and US Jobless Rate, Non-Farm Payroll, and Average Hourly Earnings.

Swiss National Bank Starts Negative Interest Rates; UK Publishes Robust Data

The US Federal Reserve decided to put their respective interest rates on hold at 0-0.25 percent. The shocker was the Swiss National Bank’s decision on Thursday to introduce negative interest rates with an initial -0.25 percent.

Meanwhile, the UK led the pack this week with generally stronger than expected data. CPI has been reported by the Office for National Statistics to have gained one percent, its slowest pace since 2002 on lower oil prices. Votes on the MPC Official Bank Rate and Asset Purchase Facility came in as expected (2-0-7 and 0-0-9, respectively), while Unemployment Rate remained steady at 6 percent for the third straight month. Claimant Count Change decreased by 26,900, which was better than forecast and prior reading’s decline. UK Average Earnings Index improved 1.4 percent. Retail Sales, at 1.6 percent, turned out to be much stronger than forecast and the previous reading’s 1 percent gain. CBI Realized Sales surged, to 61, its best reading since 1988 and just over double than the current forecast.

In the United States, the latest report from the Department of Labor showed the Jobless Claims rose to 289,000, which was 8,000 lower than forecast. The NAHB Housing Market Index came in at 57, weaker than forecast and the previous reading. Building Permits and Housing Starts came in close to expectations.

Commodities

Gold slashed through both sides of the important $1,200 level for a second week. However, this time price sellers have won, albeit barely. Expect more moves on both sides of $1200 in the coming weeks.

Oil thrusted down to a new low in the 53s as weakness persists. Major levels have been breached, and we should expect selling momentum ease if buyers can push price back through $70 which looks unlikely as of this time.

Currency Pairs

EURUSD made a strong u-turn this week as it declined 350 pips from top to bottom. The pair encountered selling pressure early this week just above the 1.2550 level, and the move snowballed downward until Friday to new lows. Sellers are now targeting the 1.2000-1.2100 area.

USDJPY made an early dive this week toward the mid-115s, but this got quickly supported by dip-buyers who brought price to the 119s. If buyers control this pair, they will attack 120-121 until year-end.

GBPUSD had trouble finding a clear direction this week, but eventually sellers dominated. The pair closed at the second lowest weekly close in the last five trading weeks. The pair will try to test the 1.5600 level again next week as bears gain more control. This time, a freefall could happen past 1.5500.

The Week Ahead

The coming week will be unusual since Tuesday will be the most packed day ahead of Christmas.

Monday will have Australia’s Westpac Consumer Sentiment; Bank of Japan’s Monthly Report; Eurozone’s Consumer Confidence data; and US Existing Home Sales.

Tuesday will start early with New Zealand’s Trade Balance; France’s Consumer Spending; UK Current Account, Final GDP, and BBA Mortgage Approvals; Canada’s GDP; and US Revised University of Michigan Consumer Sentiment, Durable Goods Orders, Personal Spending, Personal Income, Final GDP, and New Home Sales. Japanese banks will be closed to celebrate the Emperor’s birthday.

Wednesday will be brief with Australia’s CBI Leading Index; Switzerland’s KOF Economic Barometer; and US Jobless Claims.

Thursday is Christmas Day so many countries will be on holiday. The only data coming out are Japan’s Monetary Policy Meeting Minutes and BOJ Kuroda’s speech.

Japan will again take center stage on Friday with the release of Household Spending, Tokyo Core CPI, Preliminary Industrial Production, Jobless Rate, Average Cash Earnings, and Retail Sales.

Four Central Banks Rates Put on Hold; US Non-Farm Payrolls Surge

Four central banks made their respective rate announcements this week and all of them decided to maintain their respective rates. The Reserve Bank of Australia left its Cash Rate at 2.50 percent; Bank of Canada left its Overnight Rate at 1 percent; Bank of England maintained its Official Bank Rate at 0.50 percent; and the European Central Bank decided to keep its Minimum Bid Rate at 0.05 percent.

The Australian Bureau of Statistics reported mostly rosy data. Company Operating Profits turned out to be surprisingly positive in the third quarter with a gain of 0.5 percent, following a previous reading of -7.5 percent. Building Approvals surged 11.4 percent in October, reversing the previous month’s 11.2 percent decline. Current Account deficit decreased to –AUD12.5 billion, Retail Sales edged up 0.4 percent, and Trade Balance improved to –AUD1.32 billion. Meanwhile, GDP inched up 0.3 percent.

In the United States, Non-Farm Employment Change surged 321,000 in November while Jobless Rate stayed at 5.8 percent. Meanwhile, Jobless Claims came in close to expectations at 297,000, following the previous weeks 314,000 reading. ISM Non-Manufacturing PMI improved to 59.3 in November, while ISM Manufacturing PMI came in at 58.7.

Commodities

Gold started the week with a very volatile move as it stretched across a $79 range. Price closed the week just below $1,200. We could see more volatile moves in the coming days, so traders should stay alert. Near-term resistance at $1,250.

Following a quick touch of new lows, Oil struggled to make a footing at the $70 during its first attempt this week. Weakness resumed immediately which sent price lower, ending the week in the mid-65s. As mentioned before, $50 to $60 would serve as the next critical area. Avoid fighting the momentum.

Currency Pairs

EURUSD smashed through recent support this week to achieve new lows and closed nearby. If there are still bulls waiting in line, they should be able to get through the 1.2400-1.2600 zone of sellers to achieve a glimmer of hope in this bearish pair.

USDJPY blasted higher with nearly 400 pips as it hit its seventh consecutive bullish week. The pair is now trading in price levels last seen in July 2007 and it could continue to work its way higher. USDJPY remain a buy potential in dips.

Another tight weekly range was traded in GBPUSD this week as bulls continue to struggle in holding off bearish moves. The pair closed the week into fresh territories and closed it not far away. There is a serious concern for a move toward 1.5000.

The Week Ahead

Monday will be back with a busy Asian session. We will witness the release of Japan’s Current Account, Bank Lending, and Final GDP; Australia’s ANZ Job Advertisements; China’s Trade Balance; Switzerland’s CPI and Retail Sales; Eurogroup Meetings; Germany’s Industrial Production; Canada’s Housing Starts and Building Permits. Italy will observe Immaculate Conception Day.

Tuesday will be news-light as it only has Australia’s NAB Business Confidence; Germany’s Trade Balance; UK Manufacturing Production and NIESR GDP Estimate; ECOFIN Meetings; and US JOLTS Job Openings.

Wednesday will be a very brief but packed news day with Australia’s Westpac Consumer Sentiment and Home Loans; Japan’s BSI Manufacturing Index and Consumer Confidence; China’s New Loans, CPI and PPI; France Industrial Production; UK Trade Balance; and US Federal Budget Balance.

Thursday will be a critical day as New Zealand and Switzerland will announce their respective interest rates announcements and monetary policy statements. Japan will publish its Core Machinery Orders and Tertiary Industry Activity data. Meanwhile, there will be other news releases such as Australia’s MI Inflation Expectations and jobs data; Eurozone Targeted LTRO; Canada’s NHPI; United States Retail Sales, Jobless Claims, and Import Prices.

Friday will cap the week with New Zealand’s Business NZ Manufacturing Index; China’s Industrial Production and Fixed Asset Investment; Eurozone Industrial Production; US PPI and Prelim UoM Consumer Sentiment.

Swiss Rejects Gold Initiative; Oil Price Deteriorates

Switzerland’s pre-referendum projections were upheld as the Swiss voted to reject the Gold Initiative. The “Save our Swiss Gold” initiative was voted down, 73 percent (anti) to 23 percent (pro). The referendum, if passed, involved preventing gold sales, repatriating Swiss-owned gold and storing gold reserves within the country, and mandating that gold must make up at least 20% of the assets ($540 billion in total) held by the SNB.

In the United States, Jobless Claims rose 313,000 in the previous week, greater than the 287,000 projection. Prelim GDP gained 3.9 percent compared to its estimate of only 3.3 percent.

US CB Consumer Confidence declined to 88.7 in November after bouncing to 94.1 in October. Durable Goods Orders and Pending Home Sales dipped surprisingly, -0.9 percent and 458,000 respectively. Meanwhile, Chicago PMI, Revised UoM Consumer Sentiment, and New Home Sales all came in lower than forecast.

In other news, Statistics Canada said September Retail Sales advanced 0.8 percent while the core reading turned flat. Current account deficit was reduced by CAD1.5 billion to 8.4 billion during the third quarter. Gross Domestic Product came in as expected at 0.4 percent.

Commodities

Gold buyers had early trouble setting a strong pace above the $1,200 level. They tried but easily gave up, and this led to a subsequent three-day decline until Friday’s $27 drop. This gave gold its first weekly decline in four weeks. Continued weakness would spell trouble for the yellow metal.

Oil traders saw an $11 decline this week as the $70 level failed to give support to the ailing commodity. Since price is smashing through lower supports, we could see more volatility in the coming weeks. $50 to $60 could be the next critical area.

Currency Pairs

EURUSD managed to close the week higher despite the new multi-year low etched on Monday. The pair could see more consolidation in the same area, but bulls would need to push this higher so they can get out of this price glut. A move through 1.2700 would ease the bearish momentum.

USDJPY printed a weekly inside bar, breaking the five-week streak of higher weekly highs and lows. This could be the first sign of exhaustion in the current strong trend. Nevertheless, any downside moves is likely to be met by buyers. Watch 117-118.

GBPUSD closed the week unchanged as the pair encountered strong resistance above the 1.5800 level. Buyers need to make a second attempt to push through 1.5800. Some indicators are showing divergences, and this could aid the buyers in the coming weeks.

The Week Ahead

This Monday will be relatively packed with news throughout the day. It will begin with New Zealand’s Overseas Trade Index, succeeded by Australia’s Company Operating Profits; China’s Manufacturing PMI and HSBC Final Manufacturing PMI; Japan’s Capital Spending and Final Manufacturing PMI; Manufacturing PMI for Spain, Switzerland (SVME), Italy, UK, and the US. Fed members Dudley and Fischer will also give their respective speeches.

Tuesday will have Australia’s Building Approvals, Current Account, and RBA Rate Announcement and Statement; Japan’s Average Cash Earnings; Spain’s Unemployment Change; UK’s Construction PMI; New Zealand GDT Price Index; and US Fed Chair Yellen’s speech.

Wednesday will have Australia’s GDP; China’s Non-Manufacturing PMI and HSBC Services PMI; Spain, Italy, and UK Services PMI; Eurozone Retail Sales and Final Services PMI; UK Autumn Forecast Statement; Canada BOC Rate Announcement and Statement; US ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI and Beige Book.

Thursday will also be busy with Australia’s Retail Sales and Trade Balance; UK Halifax PMI, Official Bank Rate, Asset Purchase Facility, and MPC Rate Statement; ECB Rate Announcement, Statement, and Press Conference; US Jobless Claims; Canada’s Ivey PMI.

Friday will have a quiet Asian session, followed by gradual pickup in activity from then on. There will be Germany’s Factory Orders; Switzerland’s Foreign Currency Reserves; Canada’s Trade Balance, Employment Change, Jobless Rate, and Labor Productivity; US Non-Farm Employment Change, Trade Balance, Jobless Rate, Factory Orders, and Average Hourly Earnings.

Draghi Sends Euro Lower; US Philly Fed Mfg Index Soars

ECB head Draghi’s speech created market frenzy on Friday that sent the Euro back close to the latest lows. At the 24th European Banking Congress, Draghi expressed concern about inflation, and said the ECB may entertain the idea of increasing its asset purchase to gain a higher inflation.

In the United States, the Federal Reserve Bank of Philadelphia reported that its Manufacturing Index soared to 40.8 this November, more than double its median estimate and the previous reading of 20.7. A reading this high was last seen on March 2011. Empire State Manufacturing Index, in contrast, advanced to 10.2, lower than expected.

Meanwhile, US Jobless Claims rose 291,000 in the previous week, while the prior week’s reading has been modified higher to 293,00 from the initial reading of 290,000. US PPI unexpectedly gained 0.2 percent in October, while CPI was flat. Industrial Production edged lower by 0.1 percent.

In other news, China’s HSBC Flash Manufacturing PMI went flat at 50 this November. Meanwhile, French, German, Eurozone Flash Manufacturing PMI were all weaker, while; corresponding Flash Services PMI were all weaker as well, except for France which slightly topped estimates. The US Flash Manufacturing PMI was also weak at 54.7 (versus 56.2 estimate).

Commodities

Slowly but surely, Gold has etched its third bullish weekly close. Price made a quick peek above $1200 this week but price closed the week just above this level. The next goal for buyers is a strong close above $1,250.

Oil saw a battle for control between buyers and sellers throughout the week but the former emerged as winners as they pulled a 2-day win streak to end the week in the mid-76s. We could see price linger around current rates, as price remains close to the key support around $67 to $70.

Currency Pairs

EURUSD was poised to end the week with a meager positive weekly close but Friday’s drop spoiled this eventuality. The pair sank nearly 200 pips on Friday to a 10-day low, putting the 1.2300 level back in the spotlight. Some indicators are flashing a bullish divergence, so if we don’t see a new low soon, price could swing back toward 1.2700.

Unlike the big smackdown seen in the previous week, GBPUSD was contented to trade within a tight 148-pip range this week. 1.5500 remains on track but we could see a bounce towards 1.5800-1.5900. 1.5588 is the low so far.

USDJPY has achieved five straight bullish weekly closes this week. Price momentum seems to have slowed since the start of November, but bulls remain undeterred. 118 and 120 are the likely key levels moving forward.

The Week Ahead

Asia will be quiet this Monday, particularly because Japan will be on holiday to celebrate Labor Thanksgiving Day. Europe will have Switzerland’s Employment Level and Germany’s Ifo Business Climate.

Tuesday will open up with BOJ’s Monetary Policy Meeting Minutes and BOJ Governor Kuroda’s speech, followed by New Zealand’s Inflation Expectations; UK’s BBA Mortgage Approvals, Inflation Report Hearings; Canada’s Retail Sales; US S&P/CS Composite-20 HPI, and CB Consumer Confidence.

Wednesday will have a lot of economic releases such as Australia’s Construction Work Done; UK’s Second Estimate GDP, Preliminary Business Investment, and CBI Realized Sales; US Durable Goods Orders, Jobless Claims, Core PCE Price Index; Personal Spending; Personal Income; Chicago PMI, New Home Sales, Pending Home Sales, and Revised UoM Consumer Sentiment.

Thursday will be busy but less active than Wednesday with New Zealand’s Trade Balance; Australia’s Private Capital Expenditure and HIA New Home Sales; Germany’s Preliminary CPI, Gfk Consumer Climate, and Unemployment Change; Eurozone Private Loans and M3 Money Supply; and Canada’s Current Account. US will celebrate Thanksgiving Day.

Friday will still be active with New Zealand’s Building Consents and ANZ Business Confidence; Japan’s Household Spending, Tokyo Core CPI, Retail Sales, Jobless Rate, and Preliminary Industrial Production; Australia’s Private Sector Credit; Germany’s Retail Sales; Switzerland’s KOF Economic Barometer; UK’s Nationwide HPI; Eurozone CPI Flash Estimate and Jobless Rate; and Canada’s GDP, IPPI, and RMPI.

Cheaper Gas Spurs US Retail Sales Higher; UK Jobless Rate Stuck at 6%

The Census Bureau in the United States reported that Retail Sales gained 0.3 percent in October, slightly higher than forecasted. American consumers rejoiced as cheaper gasoline enabled them to shop and dine more ahead of the Christmas holiday season. Broad-based gains were noted as 11 out of 13 categories monitored showed growth. Consequently, consumer confidence rose as seen in the latest C onsumer Sentiment index by University of Michigan; the index hit 89.3 this November.

Meanwhile, US Jobless Claims rose 290,000 last week, according to the Department of Labor. JOLTS Job Openings for September came in at 4.74 million. Import Prices declined less than expected, minus 1.3 percent.

In other news, UK’s Office for National Statistics said Claimant Count Change reduced by 20,400, which was lesser than anticipated. UK Jobless Rate stayed at 6 percent for the second month in a row in September. Average Earnings Index came in at one percent.

In Japan, the Current Acct improved in September to JPY0.41 trillion. However, the Cabinet Office reported that Consumer Confidence weakened to 38.9 in October, while analyst looked for a 40.6 median reading. M2 Money Stock advanced 3.2 percent, its 8th consecutive month in the 3 percent level.

Commodities

Gold bulls struggled in their campaign but ultimately managed to come out on top this week. Buyers fought hard for the first four days but they were able to push price $47 higher on Friday, overcoming short-term resistance in the area. They still need a very strong move through the $1,200 level though.

Oil posted its seventh straight bearish weekly close as another attempt to break $80 failed easily on Monday. This bearish move gave oil a fresh 4-year low, but it is now approaching key support around $67 to $70.

Currency Pairs

EURUSD seemed to have tracked Gold’s movement this week based on their similar price actions. The pair consolidated the whole week except the drive higher on Friday. Potential sellers around the 1.2600-1.2900 area are what bulls need to take care of.

A big smackdown happened in GBPUSD this week following three straight weekly declines through the 1.6000 level. The 1.5591 low reached on Friday is the lowest price seen since early September 2013. A move toward 1.5500 is still on track.

USDJPY’s bullish momentum has continued unabated for the fourth week. However, price range has been decreasing and so we could see near-term dips in the coming days and weeks. Buying opportunities could come around 110-113.

The Week Ahead

Monday will get active early with New Zealand’s Retail Sales, followed by the following: Japan’s Prelim GDP; Australia’s New Motor Vehicle Sales; German Bundesbank’s Monthly Report; Canada’s Foreign Securities Purchases; US Empire State Manufacturing Index, Capacity Utilization Rate, and Industrial Production. ECB’s Draghi is also expected to give a speech.

On Tuesday, there will be Australia’s CB Leading Index and RBA’s Monetary Policy Meeting Minutes; UK CPI, RPI, PPI, and HPI; ZEW Economic Sentiment for Germany and the Eurozone; and US PPI and NAHB Housing Market Index.

Wednesday will be abbreviated yet packed with BOJ Monetary Policy Statement and Press Conference; UK’s MPC Asset Purchase Facility and Official Bank Rate Votes; Switzerland’s Economic Expectations; US Building Permits, Housing Starts, and FOMC Meeting Minutes.

Thursday will be up early with New Zealand’s PPI Input and PPI Output; Japan’s Trade Balance; China’s HSBC Flash Manufacturing PMI; Flash Manufacturing PMI and Flash Services PMI for Germany, France, and the Eurozone; UK CBI Industrial Order Expectations and Retail Sales; Canada’s Wholesale Sales; US CPI, Flash Manufacturing PMI, Jobless Claims, Existing Home Sales, and Philly Fed Manufacturing Index.

Friday will be the least active day this week with New Zealand’s Credit Card Spending; ECB’s Draghi’s speech; UK Public Sector Net Borrowing; and US CPI.

Fed Exits QE as Expected; BOJ Shocks with QE Expansion

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.

BOC Maintains Rate at 1 Percent; 25 Banks Fail EBA Bank Stress Test

The Bank of Canada on Wednesday decided to keep its overnight rate target at 1 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 latest EU-wide bank stress test conducted by the European Banking Authority (EBA) and led by the ECB revealed 25 out of 123 banks, including Banca Monte dei Paschi di Siena SpA of Italy, failed the test. Nearly half of banks that failed were reportedly required to increase capital. The stress test is done to assess “resilience of EU banks to adverse economic developments, so as to understand remaining vulnerabilities, complete the repair of the EU banking sector and increase confidence.”

Recent Trade Balance data revealed in New Zealand and Japan showed deficits of both countries advanced. New Zealand more than doubled its trade deficit to –NZD1,350 million,, while Japan posted –JPY1.07 trillion.

China’s GDP and Industrial Production improved more than anticipated (7.3 percent and 8 percent, respectively).

In the United States, Jobless Claims grew to 283,000 in the prior week. This was higher than expectations and the previous week’s reading.

Commodities

Gold has just printed a clearer-looking triple bottom this week after posting a bullish outside bar on Wednesday. Bears are now more at risk; hence, they must try to breach the $1,300 level as soon as possible. More problems are up ahead until $1,400.

Oil posted its fourth consecutive weekly decline. Unlike the past three weeks, though, Oil made a less-considerable downside move this time, traded a much-tighter $3 range, and stayed afloat above $81 upon the weekly close. Expect sellers around $84-$85 this time.

 Currency Pairs

EURUSD reversed the previous week’s gains as the 1.2800 area capped the pair while 1.2700 failed to gain support from bulls. Price is now below 1.2700, the midpoint of the current short-term potential range between 1.2500 and 1.2900. Potential divergence could play out if price recedes again, and we could see some bulls buy at discount prices.

GBPUSD traded in a relatively tighter range this week as bulls try to hamper another bear assault at the 1.6000 psychological level. Bulls need a strong weekly close above 1.6200 this time. Plenty of resistance remain at 1.6300-1.6500.

USDJPY bulls were supportive this week as they helped reverse the losses posted in the prior week. Now that 108 has been taken out, they should try to maintain their composure and keep this level well protected. If successful, they can attack the upper 109s again.

 The Week Ahead

Starting Sunday (October 26), clocks will be moved backward by 1 hour to implement DST (Daylight Savings Time shift) exit in Switzerland, most European countries, and the United Kingdom.

This Monday, New Zealand will celebrate Labor Day. Economic data release will start in the European session with Germany’s Ifo Business Climate; Eurozone M3 Money Supply; UK’s CBI Realized Sales; and US Pending Home Sales.

On Tuesday, there will only be a few economic releases such as Japan’s Retail Sales; US CB Consumer Confidence, Durable goods Orders, and S&P/CS Composite-20 HPI.

Wednesday will start with Japan’s Preliminary Industrial Production, and then followed by New Zealand’s ANZ Business Confidence; UK net Lending to Individuals; Canada’s IPPI and RMPI; US FOMC Statement and Federal Funds Rate will follow this.

Economic data release for a very busy Thursday will start very early with New Zealand’s RBNZ Interest Rate Announcement and Statement. This will be followed by Australia’s Import Prices; UK Nationwide HPI Germany Prelim CPI; Switzerland’s KOF Economic Barometer; Spain’s Flash GDP; Germany’s Unemployment Change; US Advance GDP, Jobless Claims, and Fed Yellen’s speech.

A busy Friday will cap off the week starting with New Zealand’s Building Consents. This will be followed shortly by Japan’s Household Spending, Jobless Rate, Tokyo Core CPI, BOJ Monetary Policy Statement, BOJ Outlook Report, and Press Conference; Australia’s PPI; Germany’s Retail Sales; France’s Consumer Spending; Eurozone CPI Flash Estimate and Jobless Rate; Canada’s GDP; and US Employment Cost Index, Personal Spending, Chicago PMI, and Revised UoM Consumer Sentiment.

Oil Continues its Drop, USD Weakens

The United States has had an overall positive week according to the latest slew of economic data.

The US Census Bureau reported a weaker than expected Retail Sales reading of -0.3 percent (core -0.2 percent) for September. At the same time, the Labor Department issued a similarly weak PPI (-0.1 percent) for the same month. Meanwhile, the October Empire State Manufacturing Index came in less than a third of median expectations (6.2 versus 20.3). On the other hand, the Philly Fed Manufacturing Index ticked higher to 20.7 in October, and it has been above the 20 level for the fourth straight month. Jobless Claims stood at 264,000 for the previous week, while Industrial Production and Capacity Utilization Rate were also slightly better than anticipated (1 percent and 79.3 percent, respectively).

China’s September PPI also came in weaker (-1.8 percent) similar to the US. Meanwhile, Chinese CPI grew less than forecast (1.6 percent versus 1.7 percent forecast).

In Europe, German ZEW Economic Sentiment posted an overwhelming surprise as it plunged to negative territory for the very first time in almost 2 years. The October reading of the index dropped to -3.6 after a better-than-expect 6.9 reading back in September. The Eurozone ZEW Economic Sentiment came in weaker too at 4.1 (versus 7.1 forecast). The Eurozone Industrial Production dropped slightly more than expected at -1.8 percent.

Commodities

Gold bulls kept the pace for the second week as they search for higher ground beyond the $1,200 level. The sky would continue to open up if price can reach the $1,300 level. The $1,180 area remains a triple bottom at risk of breaking.

Another week, another decline. Oil saw its third consecutive volatile week as it sought out any brave buyers until $80. Price breached this level shortly on Thursday until buyers decided to step in. The weekly close above $80 is just the first step in dealing with the serious decline in black gold. Tons of sellers are expected to camp out around the $90s.

Currency Pairs

EURUSD has closed bullish for the second week amidst weakness in the Dollar. The pair is poised for a retest of the 1.2900 level if bulls can maintain support around 1.2800 this week. Support lies at 1.2500-1.2600.

GBPUSD posted a fleeting move through 1.5800 but the week ended with a huge reversal candle that closed the week just below 1.6100. Bulls should snatch the opportunity and keep the momentum on their side. Plenty of resistance until 1.6500-50.

USDJPY saw a tug of war between USD and JPY supporters but ultimately the JPY supporters won the week, albeit with a strong battle. USD bulls fought back mid-week and this prevent a freefall through $105. The pair remains well above the 200-SMA which is located at 103.23, however we could still see volatility in the coming weeks in favor of JPY.

The Week Ahead

Monday is going to be quite again, with only German Bundesbank’s Monthly Report and Canada’s Wholesale Sales giving a jolt in activity. US FOMC member Powell is also expected to give a speech.

Tuesday will begin with Australia’s Monetary Policy Meeting Minutes. This will be followed shortly by China’s Industrial Production, Gross Domestic Product, Retail Sales, Fixed Asset Investment, and NBS press conference; Switzerland’s Trade Balance; UK Public Sector Net Borrowing; and US Existing Home Sales.

Wednesday will get very busy with Japan’s Trade Balance; Australia’s CPI and Trimmed Mean CPI; UK MPC Asset Purchase Facility and Official Bank Rate Votes; Canada’s Retail Sales, CPI, Overnight Rate Announcement, BOC Rate Statement, BOC Monetary Policy Report and BOC press conference.

Early Thursday, RBA Governor Stevens will provide a speech, followed shortly by New Zealand’s CPI; Australia’s NAB Quarterly Business Confidence; China’s HSBC Flash Manufacturing PMI; France, Germany, Eurozone Flash Manufacturing PMI and Services PMI; Spain’s Jobless Rate; UK Retail Sales and BBA Mortgage Approvals; EU Economic Summit; US Flash Manufacturing PMI.

Friday will be brief with New Zealand’s Balance; GfK Germany Consumer Climate; UK Prelim GDP; EU Economic Summit (day 2); and US New Home Sales.

England and Australia Hold Rates; Canadian Data Net-Positive

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.