General

China’s central bank rocked global markets this week as it initiated devaluation of the Yuan, saying it would begin setting the daily rate based in part on the prior day’s trading. In a press conference on Thursday, PBOC discussed its recent policy moves and Deputy Governor Yi Gang said “adjustment is almost complete”. He further said the possibility of a 10 percent devaluation was “nonsense”, amidst rumors of some government figures pushing for a bigger depreciation. The PBOC started Yuan devaluation on Tuesday by 1.9 percent, 1.6 percent on Wednesday, and finally 1.1 percent on Thursday. Despite the devaluation, PBOC also intervened to manage currency volatility, keeping the market in check.

China’s New Loans surged to CNY1.480 billion in July. This is more than double the median estimate and the third straight monthly increase. M2 Money Supply grew 13.3 percent. Industrial Production and Retail Sales came in at 6 percent and 10.5 percent, respectively.

Japan’s Core Machinery Orders fell 7.9 percent in June, its lowest reading since May 2014.

German ZEW Economic Sentiment slipped to 25.0 from July’s 29.7. This is its fifth consecutive monthly decline. In contrast, the Eurozone German ZEW Economic Sentiment improved to 47.6.

In Greece, the parliament on Friday voted in favor of implementing the measures for the third bailout program. 222 Greek MPs voted Yes and 64 voted No, with a growing number of SYRIZA lawmakers opposing the deal, the third bailout in the last five years. Euro finance ministers will approve lending 85.5 billion Euros in the next three years to Greece for stability support.

 Commodities

Gold recovered this week as it traded within a $37 trading range and pushed through $1,100. An initial bounce toward $1,150 remains possible amidst a bearish backdrop while price is below $1,250.

Oil completed its ninth straight weekly bearish close this week as more sellers joined. The $40 level is now on target, and a move toward the $30-$35 zone is now an increased possibility. Traders should avoid buying any dip.

Currency Pairs

EURUSD recovered this week further after price failed to make a new weekly low. The pair was able to move past 1.1200 but topside selling made it close the week much lower. The goal of buyers for the next few weeks is to sustain momentum and target 1.1400 again.

GBPUSD came close to taking out previous week’s low, but in the end it just formed a bullish weekly inside bar. This was a positive result, which could pave the way for a breakout toward 1.5900 in the coming week or so. This is a big possibility unless support around 1.5400 will be cleared.

The 125 level in USDJPY has been reached but the last three weekly closes has been far from ideal. Most moves towards that level has been thwarted by sellers easily, and this could become a bigger concern for bulls starting this coming week. Sellers could aim for a break of 124 this week.

The Week Ahead

This week will be less active, overall, compared to previous weeks. However, activity would be more evenly distributed.

Monday will offer Japan’s Prelim GDP; Switzerland’s Retail Sales; Canada’s Foreign Securities Purchases; US Empire State Manufacturing Index;

Tuesday will have RBA’s Monetary Policy Meeting Minutes; UK CPI, RPI, PPI Output and HPI; US Building Permits and Housing Starts.

Wednesday will be unusually compact with New Zealand’s PPI Input and PPI Output; Japan’s Trade Balance; US CPI and FOMC Meeting Minutes.

Thursday will have Bank of Japan’s Monetary Policy Statement and press conference; Switzerland’s Trade Balance; UK Retail Sales; Canada’s Wholesale Sales; US Jobless Claims, Existing Home Sales, and Philly Fed Manufacturing Index.

Friday will remain active with China’s Caixin Flash Manufacturing PMI; Flash Manufacturing PMI and Flash Services PMI from France, Germany, and the Eurozone; UK Public Sector Net Borrowing; Canada’s CPI and Retail Sales; and US Flash Manufacturing PMI.

On Tuesday, the Reserve Bank of Australia left the Cash Rate unchanged at 2 percent. Meanwhile, the Bank of England kept its Official Bank Rate at 0.50 percent. The latest Official Bank Rate votes surprisingly showed only one policymaker out of nine, Ian McCafferty, saw the need to raise rates. Analysts expected two BOE MPC members would want to hike rates. The Asset Purchase Facility (APF) and APF votes came in line with expectations (GBP375 billion and 0-0-9, respectively). BOE Governor Carney hinted that the first rate hike could happen next year but would be “data dependent”.

On the global employment front, New Zealand’s Employment Change fared lower than forecast at 0.3 percent, while the Unemployment Rate came in at 5.9 percent, as expected. On the other hand, Australia’s Employment Change was much stronger as employers added 38,500 jobs in July, but the Jobless Rate slipped to 6.3 percent from 6.1 percent. In the United States, Non-Farm Employment Change was 7,000 below the 222,000 forecast, while the previous reading has been revised higher to 231,000. US Jobless Rate remained fixed at 5.3 percent for the second month in July, according to the latest Bureau of Labor Statistics data. Canada’s Jobless Rate stayed at 6.8 percent for the sixth straight month.

In other news, Australia’s Retail Sales and Trade Balance came in better than forecast. Home Loans were lower at 4.4 percent, while previous reading was revised lower to -7.3 percent.

In the United States, ISM Manufacturing PMI and ISM Manufacturing Prices slipped to 52.7 and 44.0, respectively. However, ISM Non-Manufacturing PMI jumped to 60.3, its best reading since 2005.

Commodities

Gold posted its second weekly inside bar after price hovered just below the $1,100 area. We could then see a bounce toward $1,150-$1,200 initially. However, downtrend remains firm as long as price stays below $1,250.

Oil tracked lower again this week, printing its eighth straight weekly bearish close. The triple bottom is now fully in play, and we could see fireworks in the coming days or weeks. Price is looking for new lows – new multi-year lows, in fact. It is now staring at a possibility of price heading for the $30-$35 zone.

Currency Pairs

EURUSD has been sticking close to the 1.100 level for several weeks now. With the pair’s failure to create a new weekly low, we can see bulls attempt for a move toward 1.1400 again. This area is possibly rich in armies of sellers.

GBPUSD traders are battling within a tight range for the fifth week now. If this pair wants to track higher, it should take out the 1.5700 this week so it can head to 1.5900. Otherwise, GBPUSD would stay in a range, which could trade as low as 1.5400.

Slowly but surely, USDJPY has been moving higher toward 125 for the past couple of weeks. The pair remains content, for now, in staying below 125 (although this figure has been touched twice this week). If it continues to march higher, the June 5 high below 126 is the next target.

The Week Ahead

Monday will offer Japan’s Current Account, Consumer Confidence, and BOJ Monthly Report; and speeches from US FOMC Member Lockhart and Fischer.

Tuesday will start quite early with UK’s BRC Retail Sales Monitor. This will be followed by Australia’s NAB Business Confidence and HPI; China’s New Loans; Germany and Eurozone ZEW Economic Sentiment; Canada’s Housing Starts; and US Prelim Unit Labor Costs and Prelim Nonfarm Productivity.

Wednesday will get busy with Japan’s BOJ Monetary Policy Meeting Minute; Australia’s Wage Price Index and Westpac Consumer Sentiment; China’s Industrial Production, Retail Sales, and Fixed Asset Investment; UK Average Earnings Index, Jobless Rate, and Claimant Count Change; and JOLTS Job Openings

Thursday will be critical again for Greece as its set for another Debt Crisis Vote. Other important news to watch out for include New Zealand’s Business NZ Manufacturing Index and FPI; Japan’s Core Machinery Orders; Australia’s MI Inflation Expectations; France’s CPI; ECB Monetary Policy Meeting Accounts; US Jobless Claims, Retail Sales, Business Inventories and Import Prices.

Friday will have moderate news activity with New Zealand’s Retail Sales; Germany’s Prelim GDP; Eurozone Flash GDP; Eurogroup Meetings; Canada’s Manufacturing Sales; US PPI, TIC Long-Term Purchases, Empire State Manufacturing Index, Industrial Production, Capacity Utilization Rate, and Prelim UoM Consumer Sentiment.

The Greek government approved on Thursday some reform-related demands of creditors in order to stay in the Eurozone. The televised voting showed 151 lawmakers supported Prime Minister Alexis Tsipras in passing the second tranche of policy measures. Meanwhile, in his speech in Frankfurt on the same day as the Greek vote, Bundesbank President Weidmann commented that the ESM is only able to provide credit to solvent states.

In the United Kingdom, the MPC voted as expected (no change) in relation to the Official Bank Rate and Asset Purchase Facility. On the other hand, the RBNZ reduced its Official Cash Rate to 3 percent from 3.25 percent as expected on Thursday. The central bank chief expects the New Zealand Dollar to depreciate further amidst weakness in commodity prices. Governor Wheeler further noted that further easing in rates is “likely”.

In other news, Canada’s Wholesale Sales dipped 1 percent in May, while previous reading revised down to 1.7 percent. Retail Sales, both the main and core readings, were higher than anticipated.

New Zealand Trade Balance posted a NZD60 million deficit in June, in contrast to a NZD100 million surplus expected. The previous reading was revised higher to NZD370 million.

US Existing Home Sales came in slightly higher than forecast at 5.49 million in June, but May‘s reading was revised down to 5.32 million from 5.35 million. New Home Sales only gained 482,000 in June compared to 543,000 expected. May’s reading was similar with April’s at 517,000.

Jobless Claims for the previous week came in at 255,000 compared to the 279,000 forecast.

Commodities

Gold created a $57 range this week as it posted its fifth straight weekly downside track and reaching its lowest price in over five years. The next critical support now comes at $1000.

Oil went on post its sixth weekly decline and it broke the $50 level with confidence. The chance for a move to create a triple bottom has therefore increased and we could expect that this coming week. Sellers will now target the $40 to $44 area.

Currency Pairs

EURUSD managed to post some gains this week after pulling close to the 1.0800 level again. Buyers still need to prove their might by forcing through the 1.1450 resistance area. That area is critical if bulls want to revisit the 1.2000s again.

GBPUSD posted an inside bar this week as the 1.5500 level continues to attract buyers and sellers on both sides. Buyers have a slight upper hand here as long as they can maintain a good support around 1.5500. Next target area is 1.5900.

USDJPY posted below-average weekly activity this week after making a strong showing in the past two weeks. Sellers entered the fray around the 124 level, keeping a lid on growing confidence of the buyers. The June 5 high below 126 is the next target.

 The Week Ahead

The overall news activity for this week would be lower than average as July draws to a close.

Monday will showcase Germany’s Ifo Business Climate; Eurozone M3 Money Supply; and US Durable Goods Orders.

Tuesday will remain quiet with UK’s Prelim GDP; Canada’s RMPI and IPPI; and US Consumer Confidence and Richmond Manufacturing Index.

Wednesday will have Japan’s Retail Sales; Germany’s GfK Consumer Climate; UK Net Lending to Individuals and Mortgage Approvals; US Pending Home Sales, and Fed Rate Announcement and Statement.

Thursday will offer more activity with Australia’s Building Approvals and Import Prices; Germany’s Prelim CPI and Unemployment Change; Spain’s Flash CPI and Flash GDP; US Unemployment Claims, Goods Trade Balance, Advance GDP, and Advance GDP Price Index.

Friday will end the week with Japan’s Household Spending, Tokyo Core CPI, and Jobless Rate; New Zealand’s ANZ Business Confidence; Australia’s PPI; Germany’s Retail Sales; France’s Consumer Spending; Eurozone CPI Flash Estimate and Jobless Rate; Canada’s GDP; US Employment Cost Index, Revised UoM Consumer Sentiment, and Chicago PMI.