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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.

NZ Trade Balance, UK Retail Sales Soared; US Data Mixed

The last full week of March turned out to be very busy as a flurry of economic data dotted the entire week, highlighted by a jump in New Zealand Trade Balance and a surprise recovery in UK Retail Sales.

New Zealand’s Trade Balance jumped to NZD818 million, beating analysts’ median forecast of NZD595 million by a hefty margin. This follows a revised NZD286 million from the previous month.

In the United Kingdom, Current Account matched prior data with –GBP22.4 billion. Final GDP stood at 0.7 percent. PPI Input and HPI surprised with a 0.4 percent decline and jump to 6.8 percent, respectively.

In Japan, Household Spending sank 2.5 percent according to the latest data. Tokyo Core CPI inched up to 1 percent. Unemployment Rate improved slightly to 3.6 percent.

US data was generally mixed. Flash Manufacturing PMI, Pending Home Sales, and New Home Sales came in lower than expected, but actual data for Durable Goods Orders and Flash Services PMI were better than expected. Richmond Manufacturing Index dropped further to -7 (versus -1 forecast) while CB Consumer Confidence surprised with an improvement past the 80 level to 82.3. Jobless Claims for the prior week was 311,000. Meanwhile, the revised University of Michigan Consumer Sentiment was flat at 80.0.

Commodities

Gold sank further this week, initiated by the early $27 drop on Monday. Sellers seem to have full control of yellow metal and we could see additional selling next week and move toward $1,100-$1,200.

Oil bucked the trend set by Gold and has continued on to erase the early-March drop through the $100 level. Price has recovered back to the low-$102s and closed the week in the mid-$101s. This puts a possibility of a challenge of the $103 level next week.

Currency Pairs

EURUSD followed the footsteps of Gold and declined for a second week. This time, the pair broke through the 1.3800 level with relative ease as sellers outnumbered buyers. Next potential support comes around 1.3650-1.3700.

Unlike EURUSD, GBPUSD posted a turnaround and erased most of the prior week’s losses. Price rose for five straight days and closed the week off the highs. Stiff resistance remains at 1.6700.

USDJPY followed up with another bullish advance this week. The near-100 pip move in the 11th hour pushed the pair through buy stops close to the 103 level. Buyers must exert considerable effort to conquer the resistance at 104. This coming week could be pivotal for this pair.

The Week Ahead

Daylight Saving Time shift will happen in Switzerland, the UK, and several Eurozone countries. Meanwhile, New Zealand and Australia will exit DST on April 5 (Saturday) and April 6 (Sunday), respectively.

On Monday, New Zealand’s Building Consents and ANZ Business Confidence; Japan’s Preliminary Industrial Production; Australia’s HIA New Home Sales and Private Sector Credit; Germany’s Retail Sales; Switzerland’s KOF Economic Barometer; UK Net Lending to Individuals; Eurozone CPI Flash Estimate; and US Chicago PMI. US Fed Chair Janet Yellen and BOE Governor Carney will also give a speech.

On April 1, Tuesday, we will see the release of Japan’s Tankan Manufacturing and Non-Manufacturing Index; China Manufacturing PMI and HSBC Final Manufacturing PMI; RBA Rate Announcement and Statement; UK Manufacturing PMI; ECOFIN Meetings; and US Final Manufacturing PMI; US Construction Spending, and US ISM Manufacturing PMI.

Wednesday will start off with Australia’s Building Approvals; UK Nationwide HPI and Construction PMI; ECOFIN Meetings; and US ADP Non-Farm Employment Change and Factory Orders.

Thursday will get much busier with Australia’s Retail Sales and Trade Balance; China Non-Manufacturing PMI; UK Services PMI; Eurozone Final Services PMI; ECB Rate Announcement and Press Conference; US and Canada Trade Balance; US Unemployment Claims and ISM Manufacturing PMI.

Friday’s news activity will be very compact with Germany’s Factory Orders; US and Canada Employment data; and Canada’s Ivey PMI.

Fed’s Yellen Testifies; Australia Jobless Rate Jumps to 10-Year High

Federal Reserve Chair Janet Yellen made her testimony in the Semiannual Monetary Policy Report before the House Financial Services Committee in Washington last Tuesday. In her debut as the Fed Chair, Yellen said the Fed is committed to stay the course and continue trimming the monthly bond purchases. She emphasized that she does not plan to make any sudden changes to the monetary policy as the recovery from the labor market is still incomplete.

In other news, Japan’s Core Machinery Orders declined 15.7 percent, nearly four times as expected in December, reversing from the 9.3 percent gain in the previous month. Tertiary Industry Activity eased 0.4 percent.

China’s Trade Balance surpassed expectations as it registered CNY31.9 billion versus CNY24.2 billion expected. This is the second best reading in the last 15 months. CPI remained at 2.5 percent for the second month.

In Australia, the Bureau of Statistics reported that Employment Change for January decreased 3,700, while analysts expected a 15,300 advance. In contrast, Employment Change declined 23,000 last December. The Unemployment Rate rose to 6 percent, the worst in over 10 years.

In the United States, Unemployment Claims rose 339,000 compared to the 331,000 forecast. Meanwhile, Preliminary University of Michigan Consumer Sentiment.

Commodities

Gold outpaced Oil this week as the former broke the $1,300 level successfully. Buyers would need to contend with potential sellers around $1,350-$1,400 next.

Oil took a huge breather this week around the $100 level, following four straight weeks of gains. Bears are likely very jittery at this point as bullish momentum could drive price toward $104-$106 very soon. Sellers should prevent the floodgates of $100 from opening to the upside.

Currency Pairs

We have just seen two consecutive weekly gains for EURUSD but the pair still needs to contend with the sellers around 1.3700. This pair needs to play catch-up with GBPUSD as there are still topside barriers in the form of previously monthly highs.

GBPUSD showed remarkable gains this week, giving the pair a total of 7 straight daily gains since the 1.6250 level held in the prior week. Expect a few tests of the 1.6700 level to happen in the coming days or weeks.

USDJPY saw a pretty much uneventful week as the pair failed to capitalize on last week’s bullish reversal. Sellers around 102.50 took charge and pulled this pair down. If price will continue to find problems advancing through 103, we could see attempts to break the 100 level.

The Week Ahead

The week will start out with only a few news highlights for Monday, particularly Australia’s New Motor Vehicle Sales for January; Japan Prelim GDP; and Eurogroup meetings. US banks are closed to commemorate President’s Day (Washington’s birthday).

Tuesday will provide more action in the form of Monetary Policy Meeting Minutes from the  RBA and Monetary Policy Statement from BOJ; Euro-area Current Account; UK CPI, RPI, and PPI Input; Germany and Euro-area ZEW Economic Sentiment; Canada’s Foreign Securities Purchases; US TIC Long-term Purchases, Empire State Manufacturing Index, and NAHB Housing Market Index.

On Wednesday, there are Australia’s CB Leading Index and Wage Price Index; UK Claimant Count Change, Unemployment Rate, MPC Asset Purchase Facility and Official Bank Rate votes; Switzerland’s ZEW Economic Expectations Survey; Canada Wholesale Sales; US PPI, Building Permits, Housing Starts, Fed’s Meeting Minutes.

Thursday’s action begins with New Zealand’s PPI Input and Output; Japan’s Trade Balance; China’s HSBC Flash Manufacturing PMI; Germany’s PPI; Flash Manufacturing PMI and Flash Services PMI for Euro-area, France, and Germany; UK CB Industrial Order Expectations; US Unemployment Claims, CPI, Philly Fed Manufacturing Index, and speech from Fed Chair Yellen.

Friday will remain active with BOJ’s Monetary Policy Meeting; UK Retail Sales and Public Sector Net Borrowing; G20 Meetings; EU Economic Forecasts; Canada’s CPI and Retail Sales; and US Existing Homes Sales.

Interest Rate Unchanged in the EU, UK & Australia, US Data Mixed

Similar to the actions of RBNZ and US Federal Reserve last week, the Reserve Bank of Australia, European Central Bank, and the Bank of England all decided to leave rates unchanged this week. Rates for these three central banks will remain at 2.50 percent, 0.25 percent, and 0.50 percent, respectively.

In the United States, the raft of news releases has been a mixed bag. ISM Non-Manufacturing PMI came in better than forecast and the Unemployment Rate improved to 6.6 percent from 6.7 percent. However, Trade Balance, ISM Manufacturing PMI, and Non-Farm Payrolls have been weak. Non-Farm Payrolls for January rose 113,000 compared with expectations for a 185,000 rise.

In the UK, Construction PMI came in much better than anticipated, while both Manufacturing PMI and Services PMI were slightly weaker than forecast.

In other news, unexpected declines were seen in Australia’s Building Approvals (-2.9% vs. -0.3% expected), Spain’s Unemployment Change (113,100 vs. -21,300 expected), and Canada’s Building Permits (-4.1% vs. 2.3% expected). On the other hand, Canada’s Employment Change and Unemployment Rate for January improved (29,400 and 7 percent, respectively).

Commodities

As expected, not much has changed in Gold in the past week. This week’s price action is virtually a mirror image of last week’s, with the mid- to upper-$1,200s continuing to pose as resistance. Bulls might try to switch up the pace next week. And if they are successful, we could see a move toward $1,300.

Oil left Gold in the dust this week, as the former jolted higher on Friday, closing just above the $100 level. Oil could be setting up for a break to new highs if buyers can maintain support around 98-99 in the coming weeks.

Currency Pairs

The strong advance in EURUSD seen on Thursday and Friday allowed this pair to recuperate from the prior week’s decline. More than half of that week’s 237 pip decline has been erased in the process, and this gives buyers a chance to bring price back above 1.3700 and challenge the 1.3800 highs again.

A well-established support around 1.6250 has helped GBPUSD bulls mitigate a further decline after the hefty 1-day fall seen on Monday. Aided by the considerable rebound on Friday, this pair is effectively unchanged this week. A follow-through move from the bulls could drive price higher.

Like EURUSD and GBPUSD, USDJPY has experienced a reversal of fortune this week as the pair managed to recover from the decline below 101. Given that there are a lot of wood to chop ahead, price could find trouble advancing through 103.

The Week Ahead

Monday will start the week slowly with the release of Japan’s Current Account; France and Italy Industrial Production; Canada’s Housing Starts; and US Mortgage Delinquencies.

On Tuesday, Japanese banks will be closed to celebrate National Foundation Day. UK will kick things off with BRC Retail Sales Monitor; Australia’s NAB Business Confidence, Home Loans, and HPI; China’s Trade Balance and New Loans; Canada’s Annual Budget Release; US JOLTS Job Openings and testimony of Federal Reserve Chair Janet Yellen.

Wednesday will be slightly busier with Australia’s Westpac Consumer Sentiment; Japan’s Core Machinery Orders and Tertiary Industry Activity; Switzerland’s CPI; Eurozone Industrial Production; BOE Inflation Report and BOE Governor Carney’s Speech; and US Federal Budget Balance.

On Thursday, there will be a raft of news such as Business NZ Manufacturing Index; Australia’s MI Inflation Expectations and jobs data; Switzerland’s PPI; ECB Monthly Bulletin; Canada’s NHPI; US Retail Sales, Jobless Claims, and Business Inventories.

Finally, on Friday, there will still be news to watch out for such as Chinas CPI and PPI; France, Italy, and Germany’s Preliminary GDP; Eurozone Flash GDP; Canada’s Manufacturing Sales; US Import Prices, Capacity Utilization Rate, Industrial Production, and Preliminary UoM Consumer Sentiment.

Davos World Economic Forum Concludes, Central Banks Maintain Status Quo

Over 2,500 key government officials as well as entrepreneurs, various organization representatives, and business leaders convened in Davos, Switzerland this week for the annual meeting of the World Economic Forum. This year, the WEF was spread across only four days and it concluded yesterday, January 25.

Though recovery has been seen, particularly in certain advanced economies, the WEF attendees agree that more needs to be done. During the WEF’s opening day, IMF Managing Director Christine Lagarde said “while the worst fears have faded, the emerging economies face new policy challenges.” IMF expects the global economy to grow at 3.6 percent this year, below its potential growth which is 4%. With uncertainty as well as recovery expected ahead, key officials of the world want to reshape the world with collaborative action, in line with this year’s WEF theme, “The Reshaping of the World: Consequences for Society, Politics and Business.”

In other news, status quo reigned in Bank of Japan, Bank of England, and the Bank of Canada as shown by these central banks’ respective data releases and policy statements last Tuesday.

Flash Manufacturing PMI and Flash Services PMI in Europe were broadly better than expected. On the other hand, China’s HSBC Flash Manufacturing PMI came in weaker than forecast and slid below the 50 level for the first time since July.

In Canada, Manufacturing Sales for November came out with its best reading in four months. Retail Sales also came out better than expected, 0.6 percent, following a 0.1 percent decline in October.

In the United States, Jobless Claims for the prior week came in lower than forecast (326,000 versus 331,000). On the other hand, December Existing Home Sales was weaker (4.87 million actual versus 4.94 forecast), with November’s reading revised down to just 4.82 million.

Commodities

Gold had it tough during the first three days but price roared higher on Thursday and a follow-through move was seen on Friday, giving the yellow metal its best close since November 20. Buyers can’t celebrate yet, as there are still more wood to chop until at least $1,350.

Oil had a better week, rising over $4 and closing in on the $98 level before ending the week in mid-$96s. Buyers still need to take out the resistance built around the $98-$101 area.

Currency Pairs

EURUSD clinched a new low on Monday but the pair ended the week on a good note. EURUSD flew through the 1.3700 on mid-Friday before easing to close the week around 1.3676. We should see support pile up around 1.3600 to keep the momentum on the upside.

Most of GBPUSD’s 270-pip advance this week evaporated in front of traders’ eyes as the pair erased about 190 pips in the latter part of Friday. Recent price action suggests this pair could revisit 1.6250-1.6400 next week.

After a quiet start to the week, risk sentiment went stale on the last two days and this dragged the pair to a new 7-week low, putting a serious challenge to the multi-month advance. The 98-100 area would take a lot of heat if 102 breaks.

 The Week Ahead

Monday will have little news scattered throughout the day. There will be Japan’s Trade Balance and BOK Monetary Policy Meeting Minutes; Germany’s Ifo Business Climate and Bundesbank Monthly Report; Eurogroup meetings; and US New Home Sales. Australia will celebrate Australia Day.

Tuesday will be much more packed with Australia’s CB Leading Index and NAB Business Confidence; UK Preliminary GDP; ECOFIN meetings; US Durable Goods Orders, S&P/Case-Shiller Composite-20 House Price Index and US Consumer Confidence.

Wednesday will be unusually brief yet still busy with GfK German Consumer Climate; UK Nationwide HPI; Eurozone M3 Money Supply; BOE Governor Carney’s speech; US Federal Reserve interest rate announcement and FOMC Statement.

On Thursday, New Zealand will be out early with its announcement of its Official Cash Rate and Rate Statement. Other news releases include Japan’s Retail Sales; UK’s Net Lending to Individuals; Australia’s HIA New Home Sales and Import Prices; Germany’s Unemployment Change and preliminary CPI; Spain’s Flash GDP; and US Unemployment Claims, Advance GDP, Pending Home Sales.

Friday will have a good mix of economic releases, to wit: New Zealand’s Trade Balance; RBNZ Governor Wheeler’s speech; Japan’s Household Spending, Preliminary Industrial Production, and Tokyo Core CPI; Australia PPI and Private Sector Credit; Germany’s Retail Sales; Eurozone Unemployment Rate; Canada’s GDP; US Core PCE Price Index, Employment Cost Index, Chicago PMI, Personal Spending, Personal Income, and Revised University of Michigan Consumer Sentiment.

EURUSD Slides While USDJPY is on the Rise

Retail Sales in the UK has beaten expectations and soared to its strongest pace in over nine years. The Office for National Statistics reported that retail sales have jumped 2.6 percent in December, amounting to a year-on-year estimate of 5.3 percent, aided by improved sales in smaller stores. This was compared to analysts’ forecast of just 0.4 percent.

In the United States, the Philly Fed Manufacturing Index and Empire State Manufacturing Index surpassed their respective expectations. The former came in at 9.4, while the latter jumped to 12.5 which was nearly 4 times higher than expectations. Meanwhile, the Preliminary University of Michigan Consumer Sentiment slid to 80.4 from 82.5.

In other news, Australia’s Employment Change surprised with a reading of minus 22,600, compared to the forecast for a 10,300 gain. The Unemployment Rate stood at 5.8 percent.

In Japan, Core Machinery Orders jumped 9.3 percent in November, its best reading in the last 6 months.

Commodities

Gold is chugging along well and has now clinched its third consecutive bullish week. Price closed the week just above $1,250 but there are evidently more wood to chop until at least $1,350. $1,200-30 should provide support to keep the upside momentum going.

Oil made a strong rebound this week and price was able to close the week just above the critical $94 level. The next step is to take out the resistance surrounding the $98-$101 area.

 Currency Pairs

The upmove last week in EURUSD now appears to be a break from the ongoing slide in this pair. The weakness in EUR crosses helped drag this pair even lower, and EURUSD closed the week at 1.3540. This is a serious situation, and technically, the pair should make a strong rebound next week, otherwise bear will look for 1.3000-1.3300.

GBPUSD soared almost 150 pips on Friday but apparently this was not enough to change the course of this pair this week. Price closed the week just above the middle of the weekly range at 1.6422. There are tons of resistances from 1.6500 and higher. Bulls can take these out if Retail Sales-led momentum flows through the coming weeks.

USDJPY had a rough start to the week, but eventually JPY weakness prevailed and the pair closed the week at 104.30. Now, price is back at challenging the 105 highs which have been a headache to buyers since late-December. We can expect another test of either side of price in the coming week.

The Week Ahead

Monday will have very few economic releases to watch out for, such as China’s GDP, Industrial Production, Fixed Asset Investment, and Retail Sales; Germany’s PPI, Bundesbank Monthly Report.

On Tuesday, there will be New Zealand’s CPI; German ZEW Economic Sentiment; Spain’s HPI; UK CBI Industrial Order Expectations; Canada’s Manufacturing Sales and Wholesale Sales.

Wednesday will be busy as usual with news namely, Australia’s CPI;  BOJ’s Monetary Policy Statement and Press Conference; UK Claimant Count Change, Unemployment Rate, MPC Asset Purchase Facility and Official Bank Rate Votes; Bank of Canada Overnight Rate Announcement, Rate Statement, Press Conference, and Monetary Policy Report. Today is also day 1 of the 4-day World Economic Forum annual meetings.

Thursday is just as busy with Business NZ Manufacturing Index; Australia’s MI inflation Expectations; China’s HSBC Flash Manufacturing PMI; Euro-area, France, and Germany Flash Manufacturing PMI and Services PMI; Spain’s Unemployment Rate; Eurozone Current Account; Canada’s Retail Sales; US Jobless Claims, Flash Manufacturing PMI, Existing Home Sales.

Friday’s Asian session is pretty much quiet. Focus will be on UK BBA Mortgage Approvals; Canada’s CPI.

US Fed Tapers Bond Buying by $10B

After a fairly long wait, the US Federal Reserve finally decided to start tapering, according to the latest FOMC statement released on Wednesday. The Fed decided to taper QE by $10 billion – $5 billion from mortgage-backed securities and another $5 billion from Treasuries. The interest rate was also held at 0-0.25 percent. Fed Chairman Bernanke said that the end of QE “certainly” would not happen at mid-2014. He also sees improved labor market conditions next year. Meanwhile, Fed officials also see better growth next year – they raised their growth forecast for 2014 from 2.8 percent-3.1 percent to 2.9 percent-3.2 percent and also cut the unemployment rate forecast to 6.3 percent from 6.6 percent.

In other news, US Existing Home Sales surprisingly decreased this November. Sales reached 4.90 million after posting 5.12 million sales last October. The Philly Fed Manufacturing Index also surprised with a weaker-than-expected 7.0 December reading.

In the UK, MPC Asset Purchase Facility and Official Bank Rate votes remained unchanged (0-0-9 votes, with 9 votes in favor of holding or status quo). Meanwhile, the Unemployment Rate has improved to 7.4 percent from 7.6 percent.

In Europe, the ZEW Economic Sentiment for Germany and the Euro-area jumped to 62.0 and 68.3, much better than expected (Germany’s latest ZEW figure is a seven-year high).

Commodities

Gold reached fresh 24-week lows after breaking the key $1,200 level. Despite this, the yellow metal managed to close the week just above this level. The more than 3-year low set last June 23 at $1,180 is in serious risk of getting run over soon. Bulls must protect $1,200.

After a weekly pause, Oil made a comeback this week and even created a new 8-week high last Thursday. Buyers must contend with potential sellers around $100-$102 before price can advance toward $104-$105.

Currency Pairs

EURUSD has been dragged 185 pips lower this week after encountering issues pushing through 1.3800 the prior week. Nevertheless, this pair is set to close the year with a bullish tone. Next major resistance into the brand new year would be the 1.4000 level.

GBPUSD refuses to make progress as it has now made its third weekly rejection at the 1.6400 level. With the plunge close to the 1.4800 level, GBPUSD is virtually unchanged this year. If the bullish momentum continues, this pair is on track to move toward 1.6500-1.700 next year.

With 8 straight weeks of pure upside culminating in a new yearly high and 61-month high, USDJPY is poised to keep chugging along and attempt for a move toward 110-120 next year.

The Week Ahead

As Christmas and the New Year are coming soon, this will be the lightest week in December in terms of data release.

Monday is light with a few economic releases such as Canada’s Gross Domestic Product; US PCE Price Index, Personal Income, Personal Spending, and Revised University of Michigan Consumer Sentiment. Japanese banks are closed to celebrate the Emperor’s birthday.

On Tuesday, there will be Bank of Japan’s Monthly Report; France’s Consumer Spending; UK BBA Mortgage Approvals; US Durable Goods Orders and New Home Sales.

The market will be virtually closed on Wednesday (Christmas Day) and Thursday, except for BOJ’s Monetary Policy Meeting minutes and US Jobless Claims which are to be released on Thursday.

On Friday, Japan will dominate with the release of Household Spending, Tokyo Core CPI, Jobless Rate, Preliminary Industrial Production, Retail Sales, and Average Cash Earnings.

New Zealand & Switzerland Interest Rates Unchanged

Following four central bank announcements last week, the Reserve Bank of New Zealand and Swiss National Bank followed up this week and they also maintained their rates. RBNZ kept its Official Cash Rate at 2.50 percent, while the SNB left its Libor Rate at less than 0.25 percent.

Meanwhile, Reserve Bank of Australia Governor Stevens seems to be in favor of seeing the local dollar somewhere in the $80 cent level. In his interview with the Australian Financial Review, he said “…I just think that if things over the medium term evolve as we’re presently assuming – and I think it’s reasonable to make these assumptions – it’s going to be surprising if a nine at the front is the right number.”

In other news, China released some robust numbers last Tuesday. Fixed Asset Investment remained high at 19.9 percent, while Retail Sales edged up 13.7 percent year-on-year in November. Industrial Production for November rose 10 percent, the National Bureau of Statistics reported.

Employment Change in Australia surprisingly jumped 21,000 in November, with participation rate stable at 64.8 percent, according to the Australian Bureau of Statistics.

In the United States, the latest report from the Department of Labor showed the Jobless Claims rose to 368,000, its weakest level since early October.

Commodities

Despite the downside bias, Gold went on to chop around just above the $1,200 level for the third straight week. Price showed signs of bearish defiance as it tried to jump through the $1,260s, but sellers quelled the move easily. Nonetheless, the move was enough to create a bullish close for the week, and this could indicate that price could attempt another upside attack in the coming weeks.

Oil had a limited range of action this week, managing a brief foray into the $98s before sliding to a weekly low and close in the mid-$96s. Bulls are expected to remain supportive of any declines to the $92-$95 area.

Currency Pairs

EURUSD saw a move higher for its fifth bullish weekly close, but it failed to take out the October high at 1.3831 in the process. The pair struggled to support the move through 1.3800 despite constant attempts on Wednesday and Thursday. Anyway, as long as 1.3700 holds, we expect another shot or two at 1.3800 in the coming week.

GBPUSD kicked off its week with an early scurry, reaching a new high (1.6464) before easing off for the rest of the week, giving it its second consecutive bearish weekly close. This is a worrying sign that could mean a potential move through the 1.6200 is in the offing.

USDJPY sported another action-packed week which pretty much replicated the price action in the prior week. A second week of volatility-spiced activity saw the pair challenge the downside in the beginning of the week, followed by a squeeze toward new highs. 104.00 has not been reached but nevertheless we could see at least a brief visit to that area in the days to come.

The Week Ahead

As the year draws to a close, this will be the final busy week for December.

Monday begins very early with New Zealand’s Westpac Consumer Sentiment, followed a few hours later by Japan’s Tankan indices; China’s HSBC Flash Manufacturing PMI; Flash Manufacturing PMI and Flash Services PMI for France, Germany, and the Eurozone; Bundesbank Monthly Report; Canada’s Foreign Securities Purchases; US Empire State Manufacturing Index, Flash Manufacturing PMI, TIC Long-Term Purchases, and Industrial Production.

On Tuesday, there will be Australia’s CB Leading Index, Monetary Policy Meeting Minutes, and New Motor Vehicle Sales; UK PPI input, RPI, and CPI; Germany’s ZEW Economic Sentiment; Eurozone CPI and ZEW Economic Sentiment; US Current Account, CPI, and NAHB Housing Market Index.

Wednesday will start early again with New Zealand’s Current Account. Japan’s Trade Balance will follow, then ANZ Business Confidence; Germany’s Ifo Business Climate; UK Claimant Count Change, Jobless Rate, and MPC Asset Purchase Facility and Official Bank Rate Votes; Switzerland’s ZEW Economic Expectations; UK CBI Realized Sales; US Housing Starts, Building Permits, FOMC Economic Projections, FOMC Statement, and US Federal Funds Rate.

Thursday kicks off with New Zealand’s GDP; Eurozone Current Account; UK Retail Sales; US Jobless Claims, Existing Home Sales, and Philly Fed Manufacturing Index.

Friday will end the week with a flurry of news release such as BOJ’s Monetary Policy Statement; Germany’s PPI and Gfk Consumer Climate; UK Final GDP, Current Account, and Public Sector Net Borrowing; Canada CPI and Retail Sales; US Final GDP.

Four Central Banks Maintain Rates; US Jobless Rate Improve

Central bank announcements dotted most of the week and all these central banks decided to maintain their respective rates. To wit, 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 0.25 percent.

In the United States, Non-Farm Employment Change and Unemployment Rate manifested positive surprises: the former increased 203,000 and the latter improved to 7 percent. Jobless Claims came in below 300,000 for the first time in 12 months, posting 298,000 last week. ISM Manufacturing PMI rose to 58.4 but ISM Non-Manufacturing PMI eased to 53.9. Preliminary University of Michigan Consumer Sentiment soared to 82.5 after posting a revised 75.1 reading last October. Meanwhile, New Home Sales increased 25.4 percent to an annualized pace of 444,000 in October.

In other news, Canada’s Building Permits jumped 7.4 percent in October (CAD7.2 billion), according to the latest data from Statistics Canada. Employment Change came in almost double of its November forecast, 21,600. The Unemployment Rate stayed at 6.9 percent for a third straight month.

Commodities

Gold resumed its downside course this week, but bulls continued to resist declines throughout the week. The back-and-forth price movements were confined in the $1210-$1250 area for most of the week. We do not expect any changes in the price movement next week, but bears could still impose their strength, so bulls should keep that in mind.

Oil had a much better week in terms of price action as “black gold” sprung up nearly $6 after a lackluster November. Price could challenge the $99-$100 area if we do not see substantial retreat in price in the coming days.

Currency Pairs

EURUSD had another good run this week, posting its fourth straight bullish weekly close not to mention gaining a foothold of 1.3700 by the end of the week. This recent activity threatens more bears as the 1.3831 October high draws near. We expect a pullback towards the 1.3600s as a healthy retreat.

GBPUSD painted a different picture as the pair broke its streak of weekly gains this time. The pair rose through the 1.6400 level but it did not manage to hold above it. 1.6300 must continue to gain support in the coming weeks, otherwise GBPUSD would lag behind the other major currencies.

USDJPY slid for most of the week, but an impressive run-up last Friday managed to give this pair a bullish weekly close and sixth straight bullish week. The 103.72 May 2013 high, which is also the 4-year high, is now close by and is in danger of getting run over soon. If the JPY weakness continues.

The Week Ahead

Monday will be back with a busy Asian session. We will witness the release of Japan’s Current Account and Final GDP; Australia’s ANZ Job Ads; China’s CPI and PPI; Germany’s Trade Balance, succeeded by Switzerland’s Retail Sales; Eurogroup Meetings; Germany’s Industrial Production; BOE Governor Carney’s speech; US FOMC Bullard’s speech.

Tuesday will start early with Japan’s BSI Manufacturing Index and Tertiary Industry Activity; Australia’s NAB Business Confidence and Home Loans; China’s New Loans, Fixed Asset Investment and Industrial Production; UK, Italy, and France Industrial Production; UK Manufacturing Production and NIESR GDP Estimate; and US JOLTS Job Openings.

Wednesday will be a very brief news day with Australia’s Westpac Consumer Sentiment; Japan’s Core Machinery Orders; and US Federal Budget Balance. UK MPC Member Weale and US Treasury Secretary Lew will also give their respective speeches.

Thursday is a big day as New Zealand and Switzerland will announce their respective interest rates announcements and monetary policy statements. Australia will be out with MI Inflation Expectations and jobs data, while the United States will release Retail Sales, Jobless Claims, and Import Prices.

Finally, Friday will cap the week with New Zealand’s Business NZ Manufacturing Index; Switzerland’s PPI; US PPI; and UK MPC Member Dale’s speech.

US Jobless Claims Improve, Other US Economic Parameters Disappoint

The US dominated the economic news arena this week and it was a mixed bag.

US Pending Home Sales kicked off the week and it surprised to the downside, declining 0.6 percent in October. Based on the data given by National Association of Realtors, this is the fifth straight monthly decline.

US Building Permits were slightly higher at 0.97 million (versus 0.94 million expectations) for September, and breached the 1 million-mark in October (1.03 million versus 0.94 million expectation). The October reading is the highest in more than five years. S&P/CS Composite-20 HPI continued to increase for the third straight month with a 13.3 percent gain. Meanwhile, CB Consumer Confidence declined to a seven-month low in November (70.4 versus 72.2 forecast).

According to the US Census Bureau, Durable Goods Orders along with its core reading contracted on October. Purchase orders for durable goods declined 2 percent while purchase orders for core durable goods eased 0.1 percent during the same period.

On the other hand, US Jobless Claims improved for the second consecutive week. Only 316,00 Americans filed for unemployment benefits last week (analysts expected 331,000). Chicago PMI stayed above the 60 level for the second month in November at 63.0. Revised University of Michigan Consumer Sentiment rose to 75.1 in November.

In other news, New Zealand posted a Trade Balance of –NZD168 million, its lowest October trade deficit since the mid-1990s. This is the fourth straight trade deficit posted, but it has significantly declined since August.

Australian Bureau of Statistics reported that, after three consecutive quarterly declines, Construction Work Done surged a seasonally adjusted 2.7 percent in the September quarter. Meanwhile, Private Capital Expenditures also remained robust in the September quarter, surprising analysts with a 3.6 percent advance.

Commodities

After the strong bearish performance during the previous week, Gold took a breather this week and struggled to close in on the $1,200 level. Price pretty much stayed close to $1,250 throughout the week, and some eager bulls seem to have intervened as if they are seeing bargains. They will need to tackle potential seller ahead of $1,300 and perhaps above this level.

Oil went on to close down for the third straight week. Despite the last-ditch rally on Friday, price closed the week below $93 signifying sellers still have consistent control. Buyers must certainly exert more effort as there are a lot of wood to chop until $95.

Currency Pairs

The activity in EURUSD was subdued last week as bulls found it hard to take out the 1.3600 level for three consecutive days. If this indicates limited upside potential, we may see the pair drift down towards 1.3400-1.3500.

GBPUSD continued to outpace EURUSD for a third straight week as the former surged past its own tough resistance (1.6250-1.6300) with ease. The strong weekly close at 1.6367 gives the pair the extra jolt it needs to take on higher prices.

Meanwhile, USDJPY made another impressive run higher, giving the pair its fifth straight weekly advance. Now that 102 has completely been taken out, we could see an attack on the 103 level. The 60-month high comes in at 103.72.

The Week Ahead

Unlike the past few weeks, Monday will be relatively packed with news. It will begin with New Zealand’s Overseas Trade Index, succeeded by Australia’s Building Approvals and Company Operating Profits; China’s HSBC Final Manufacturing PMI; Japan’s Capital Spending and BOJ Kuroda speech; Manufacturing PMI for Spain, Switzerland (SVME), Italy, UK, and the US. Fed Chairman Bernanke will also give a speech not long after the start of the US session.

UK’s BRC Retail Sales Monitory will kick off Tuesday, followed by Australia’s Retail Sales, Current Account, and RBA Rate Announcement and Statement; China’s Non-Manufacturing PMI; Japan’s Average Cash Earnings; Spain’s Unemployment Change; UK’s Halifax HPI and Construction PMI.

Wednesday will have Australia’s GDP; Spain, Italy, and UK Services PMI; Eurozone Retail Sales; Canada Trade Balance, BOC Rate Announcement and Statement; US ADP Non-Farm Employment Change, Trade Balance, New Home Sales, ISM Non-Manufacturing PMI, and Beige Book.

On busy Thursday, there will be Australia’s Trade Balance; UK Autumn Forecast Statement, Asset Purchase Facility, Official Bank Rate and MPC Rate Statement; ECB Rate Announcement and press conference; Canada’s Building Permits and Ivey PMI; US Preliminary GDP, Jobless Claims, and Factory Orders.

Finally, Friday will remain active with the release of Switzerland’s Foreign Currency Reserves and CPI; UK Consumer Inflation Expectations; Germany’s Factory Orders; Canada and US jobs data; US Core PCE Price Index, Personal Spending, Personal Income, and Prelim UoM Consumer Sentiment.