Forex News

Currency Trends & Insights

General

Australia, EU, UK Keep Rates Unchanged; Aussie, Kiwi Job Data Diverged

The Reserve Bank of Australia, European Central Bank, and Bank of England all decided to leave their respective interest rates unchanged this week. RBA left its Cash Rate at 2.50 percent, while the ECB and BOE left their rates at 0.25 percent and 0.50 percent, respectively. ECB’s Draghi expressed no willingness to further the central bank’s stimulus measures, but at the same time talked about a possible June action in light of low inflation and a strong forex rate.

In other news, Australia’s Building Approvals dipped 3.5 percent in March, giving this data its 5th decline in the last 6 months. Trade Balance slipped below the 1 billion mark for the first time in 3 months in March at AUD0.73 billion. Employment Change came in almost double of forecast in April while Jobless Rate was unchanged at 5.8 percent.

In contrast, New Zealand Jobless Rate stood at 6 percent for the second month, while Employment Change increased slightly to 0.9 percent.

Spanish Unemployment Change came in more than double its forecast at -111,565.

Commodities

Gold bolted the $1,300 level on Monday and reached a high of $1,315. This turned out to be the high of the week as price pretty much declined from then on. This price action indicates Gold is not yet prepared to move higher and it still prefers range trading. Keep an eye on $1,250-80.

Oil saw mild trading action this week, closing virtually unchanged compared to last week’s close. Price topped out just above 101 on the third daily attempt on Friday after 2 consecutive days of misses. 102-104 likely has more lurking sellers.

Currency Pairs

EURUSD has been slammed lower this week, particularly on Thursday and Friday after the pair failed to thrust through the key 1.40 level. Price dropped 250 pips on those 2 days, and closed the week near the week’s low at 1.3757. If momentum carries forward, we’ll likely see an attack on 1.3600.

GBPUSD reached another new high this week, but the pair ended close to its weekly low just like EURUSD. The first attempt at 1.70 failed and it was followed by heavy selling that reached the mid-1.6800s. Bulls must contain this selling by fortifying 1.6700-1.6850.

USDJPY bulls remain vulnerable as they fail to break through 103. If we look back, this pair has been in consolidation since February, but in the last several weeks, we have seen dominance of bears thanks to their strong defense of the 103 level. If their dominance continues, we could see a move toward 100 in the next week or so.

The Week Ahead

This week, Monday will be a very brief news day with Japan’s Current Account; Australia’s NAB Business Confidence; Switzerland’s Retail Sales; and US Federal Budget Balance.

Tuesday will get started quite early with UK’s BRC Retail Sales Monitor; Australia’s Annual Budget Release, HPI and Home Loans; China’s Industrial Production and New Loans; Germany’s ZEW Economic Sentiment; US Retail Sales and Import Prices.

Wednesday will get busy very early with New Zealand’s RBNZ Financial Stability Report and Retail Sales; UK BOE Inflation Report, Claimant Count Change and Jobless Rate; Switzerland’s ZEW Economic Expectations; and US PPI.

Thursday’s action will start very early as well with New Zealand’s Business NZ Manufacturing Index and Annual Budget Release; Japan’s Prelim GDP and BOJ Kuroda’s speech; Australia’s New Motor Vehicle Sales; France and Germany Prelim GDP; Euro-area CPI and Flash GDP; Canada’s Manufacturing Sales; US CPI, Jobless Claims, Empire State Manufacturing Index, Industrial Production, and Philly fed Manufacturing Index.

On Friday, news activity will significantly decrease with Japan’s Revised Industrial Production; France Prelim Non-farm Payrolls; Canada’s Foreign Securities Purchases; and US Building Permits, Housing Starts, and Prelim UoM Consumer Sentiment.

New Zealand Cash Rate Raised, UK Official Bank Rate Unchanged

The Reserve Bank of New Zealand on Thursday raised its Official Cash Rate by another 25 basis points to 3 percent, citing possible continuation of its country’s economic expansion as the global financial condition remains accommodating. Future rate hikes were also alluded to by the central bank.

In the UK, the Monetary Policy Committee or MPC voted to keep the Asset Purchase Facility and Official Bank Rate unchanged. In the news front, Public Sector Net Borrowing came in at GBP4.9 billion, much better than the GBP8.9 billion expected by analysts. The previous reading was also revised better. CBI Realized Sales also came much higher than expected (30 versus 18 forecast); Retail Sales was slightly better; while CBI Industrial Order Expectations declined for the first time in three months.

In the United States, Durable Goods Orders, particularly the Core data, came in much higher than expected. Existing Home Sales slightly better but this was negated by much-weaker New Home Sales. Jobless Claims for the prior week jumped to 329,000, higher by 20,000 compared to its median estimate.

Commodities

Gold declined to new monthly lows this week but somehow buyers managed to resuscitate this on Thursday when it jumped back close to the weekly open. The slight advance on Friday enabled Gold to close the week, surprisingly, higher and back above the $1,300 level. Bulls have the chance of defending $1,300 again, so they can attempt for higher highs.

Oil shied away from reaching new 8-month highs last week after bulls struggled to break the 105 barrier. The lack of upside momentum opened the downside, and sellers quickly pounced on the opportunity and continue to hold control. With $103 down to $101 quickly eradicated, bears are setting their sights on the 96-98 area.

Currency Pairs

EURUSD struggled to find direction again this week as evidenced by the 51-pip weekly trading range. The pair reached a marginal new weekly low but eventually closed the week in the green. Bulls need to have more participation this week so they can revisit the 1.39s.

Although it had a wider weekly trading range, GBPUSD did not fare much better than its rival EURUSD. The former faced headwinds in its quest for new multi-year highs. Bulls should just keep trying to prevent any attempts to revisit or break 1.6700.

USDJPY failed to make a follow-through move again this week, managing just 76 pips of weekly movement, and this was mostly to the downside. 101 and 102 are back on the radar. It seems like buyers will be having a hard time defending the lows and reaching the 104s in the remaining part of April.

The Week Ahead

For Monday, April 28, there will only be a few economic releases such as Japan’s Retail Sales, Germany’s Bundesbank Monthly Report, and US Pending Home Sales.

On Tuesday, news activity will start early with New Zealand’s Trade Balance; Gfk German Consumer Climate and German Preliminary CPI; Eurozone M3 Money Supply; UK Prelim GDP; US CB Consumer Confidence; and Bank of Canada Governor Poloz’s speech. Japan will observe Showa Day today.

Wednesday will have the most activity this week with New Zealand’s Building Consents and ANZ Business Confidence; Japan’s Preliminary Industrial Production, Average Cash Earnings, and Monetary Policy Statement, and BOJ Outlook Report; Germany’s Retail Sales and Unemployment Change; France’s Consumer Spending; Spain’s Flash GDP; US ADP Non-Farm Employment Change, Advance GDP, Chicago PMI, Employment Cost Index, FOMC Statement, and Federal Funds Rate announcement; Canada’s GDP, RMPI, and IPPI.

Thursday will have China’s Manufacturing PMI; Australia’s Import Prices; UK Nationwide HPI, Manufacturing PMI and Net Lending to Individuals; EU Economic Forecasts; US Fed Chair Yellen’s speech, Unemployment Claims, Personal Spending, and ISM Manufacturing PMI.

Friday’s news highlights will include Japan’s Household Spending; Australia’s HIA New Home Sales and PPI; Spain’s and Italy’s Manufacturing PMI; UK Construction PMI; Eurozone Jobless Rate; US Non-Farm Employment Change, Jobless Rate, and Factory Orders.

Bank of England Put Rates on Hold; Favorable US, UK Data Seen

The United States and United Kingdom shone as both countries saw a slew of favorable economic news releases this week.

The latest US JOLTS Job Openings data showed a 4.17 million increase following January’s revised 3.87 million gain. Jobless Claims for the prior week was lower at 300,000 (versus 314,000 forecast) while the Federal Budget Balance came out to be just -$36.9 billion when analysts expected -$76.5 billon. Meanwhile, PPI stood at 0.5 percent and the preliminary University of Michigan Consumer Sentiment came in at 82.6.

In the United Kingdom, the latest Manufacturing & Industrial Production came out much better than forecast at 1 percent and 0.9 percent, respectively. UK Trade Balance also came lower than expected at -9.1 billion. Meanwhile, the latest data from the Bank of England showed the Asset Purchase Facility was maintained at GBP375 billion and the Official Bank Rate stayed at 0.50 percent.

Commodities

Gold had a good run as price climbed on the final four days of the week. Now that bulls regained control of the $1,300 level, they must try to aim for a move through $1,350. This area could present itself as the first tough resistance ahead.

Oil had roughly the same action as Gold this week, climbing nearly 4 of the 5 days and creating 5 consecutive higher highs. Price closed in on March 3’s $105.20 high in the process ($104.40 high on Friday), but sellers quickly stepped in and hold down price to close the week close to $103. Bulls should expect more selling toward $102-$103.

Currency Pairs

EURUSD had a decent run-up following what seemed like an imminent drop due to Friday’s bearish price action. The pair’s action started off on Monday in the upper-1.3600s and closed the week just off the 1.3900 level. Bulls may try to challenge the 1.4000 level again soon.

GBPUSD nearly mimicked EURUSD’s price action this week, except the former retraced about 30 percent of the week’s uphill climb during the last two days. To keep the ball firmly in bulls’ hold, 1.6700 should hold in the coming week.

A follow-through decline was seen in USDJPY, coming off a 90-pip drop seen on Friday. The pair cut through 103 and 102 easily and proceeded to challenge the low-101s. A break of 101 could open up 97-99.

The Week Ahead

Monday will have a dearth of news releases, namely China’s New Loans and M2 Money Supply; Euro-area Industrial Production; and US Retail Sales and Business Inventories.

Tuesday will get a lot more active with UK’s BRC Retail Sales Monitor; RBA’s Monetary Policy Meeting Minutes; UK CPI, PPI Input, RPI, and HPI; Germany and Eurozone ZEW Economic Sentiment; Canada’s Manufacturing Sales; US CPI, Empire State Manufacturing Index; NAHB Housing Market Index, and Federal Reserve Chair’s Yellen’s speech.

Wednesday will be very busy and start quite early with New Zealand’s CPI, followed by China’s Industrial Production, GDP and Fixed Asset Investment; BOJ Kuroda’s speech; UK Claimant Count Change and Jobless Rate; Euro-area CPI; Canada’s Foreign Securities Purchases, BOC Monetary Policy Report and Rate Statement and Announcement; US Building Permits and Housing Starts.

Thursday will have lower news activity, with news releases such as BOJ Kuroda’s speech; Australia’s NAB Quarterly Business Confidence index; and New Motor Vehicle Sales; Euro-area Current Account; Germany’s PPI; US Jobless Claims and Philly Fed Manufacturing Index.

Friday will only have Japan’s Tertiary Industry Activity as sole news release. New Zealand, Australia, Switzerland, Germany, the UK, and Canada will be on holiday (Good Friday).

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

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

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

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

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

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

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

Commodities

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

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

Currency Pairs

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

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

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

 The Week Ahead

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

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

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

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

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

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

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

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

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

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

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

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

Commodities

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

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

Currency Pairs

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

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

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

The Week Ahead

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

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

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

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

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

Interest Rates Unchanged in EU, UK, Canada & Australia; Strong Aussie Data Surprise

The month of March kicked off with a very busy week, particularly with the release of central bank rate decisions, strong Aussie data, and mixed data from the US.

All four central banks – the European Central Bank, Bank of England, Bank of Canada, and Reserve Bank of Australia – decided to leave their respective rates unchanged (0.25 percent, 0.50 percent, 1 percent, and 2.50 percent, respectively).

In other news, several data surprises came out from Australia. Building Approvals surged in January, rising 6.8 percent following a 1.3 percent decline in the previous month. Analysts expected a measly 0.7 percent advance for January. GDP was slightly better at 0.8 percent, Retail Sales rose 1.2 percent, while Trade Balance surprised with AUD1.43 billion. Current Account came in as expected at –AUD10.1 billion.

In Canada, Building Permits surged to 8.5 percent in January, following significant back-to-back monthly declines. The Ivey PMI continued to rise in February, 57.2. On the other hand, Employment Change saw a dip of 7,000 while Unemployment Rate stayed at 7 percent.

In the United States, Non-Farm Employment Change rose more than forecast to 175,000. Jobless Rate, however, dipped to 6.7 percent. The Jobless Claims rose less than expected last week at 323,000.

Commodities

Gold pushed higher again this week despite headwinds faced along the way. Sellers kept buyers on their toes again as the latter tried to cross the $1,350s. It’s the third week wherein the price range has been very tight, and this possibly indicates that we will see a considerable pullback in the coming week or so.

Oil saw intense volatility throughout the entire week as price moved within a $5 trading range. Price explored both sides of the previous week’s range, and we saw oil trade from $105 down to the $100s in the first four days. We could expect a similar action in the coming weeks, so traders should be very careful.

Currency Pairs

EURUSD gave another strong weekly finish, rising for the fifth straight week and touching the 1.3900 level for the first time since October 2011. The preferred move for the coming week is solidifying supports around 1.3700/1.3800 before price trampolines toward the 1.4000s.

GBPUSD displayed a much subdued price action this week, unlike EURUSD. Price has been magnetized to the 1.6700 level since mid-February, and bulls must control the situation soon and prevent a strong regrouping of sellers. A strong break of 1.6700 would risk a move toward 1.6200-50.

USDJPY started the week with a downside gap which saw no follow-through move. Price reversed quickly on Tuesday, instead, and the move snowballed to a break of the recent range top and the 103 level. The pair reached as high as 103.74 before it closed the week at 103.24. This strong weekly finish gives buyers a ticket to regain the 105 in the coming weeks, assuming 103 holds.

The Week Ahead

Starting March 9, Canada and the United States will implement the Daylight Savings time shift and clocks will move ahead by 1 hour.

This time around, Monday will have a sparse amount of critical news releases, such as Japan’s Current Account and Final GDP; France and Italy’s Industrial Production; Switzerland’s Retail Sales; and Eurogroup Meetings.

Tuesday will have Australia’s NAB Business Confidence; BOJ Press Conference and Monetary Policy Statement; Germany’s Trade Balance; China’s New Loans; UK and Manufacturing Production and Inflation Report Hearings; US JOLTS Job Openings; and ECOFIN meetings.

Wednesday is relatively concise this week but nonetheless teeming with key news like Australia’s Westpac Consumer Sentiment and Home Loans; Japan’s BSI Manufacturing Index; UK Trade Balance; Euro-area’s Industrial Production; and US Federal Budget Balance.

Thursday’s action will start very early with New Zealand’s Interest Rate Announcement, Statement, and Press Conference. This will be followed by Australia’s jobs data; China’s Industrial Production and Fixed Asset Investment; ECB Monthly Bulletin; Canada’s NHPI; US Retail Sales and Jobless Claims.

Finally on Friday, we will witness the release of New Zealand’s Business NZ Manufacturing Index; BOJ Monetary Policy Meeting Minutes; Switzerland’s PPI; US PPI and Preliminary University of Michigan Consumer Sentiment.

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.

US Federal Reserve Left Rates Unchanged, Fed Taper Continues

The Reserve Bank of New Zealand and US Federal Reserve decided to leave rates unchanged according to their latest statements release this week. For the Fed’s part, it decided to continue cutting the monthly bond purchases by $10 billion to $65 billion , citing pickup in growth in past quarters as well as improvement “on balance” in the labor market. The Fed noted that the jobless rate has “declined but remains elevated” and the housing sector’s recovery “slowed somewhat.”

In the US, there were more weakness seen in economic indicators in the US. New Home Sales for December came in weaker than expected at 414,000 versus 457,000 expected. Pending Home Sales declined sharply, -8.7 percent, its worse since April 2011.

On Tuesday, reports showed US Durable Goods Orders including its Core part declined in December, posting -4.3 percent and -1.6 percent respectively. The decline of the headline figure is its worst decline in 5 months. Meanwhile, US CB Consumer Confidence returned above the 80 level, (80.7) this January.

In other news, Destatis reported that German Unemployment Change surprised to the upside with a 28,000 decline, much better than the -5,000 forecast.

Commodities

Gold filed a new high this week (fifth consecutive weekly high, in fact), but price immediately reversed and went on to close the week lower, erasing most of the prior week’s gains. The $1,200 level continues to attract both sides and we could expect price to remain close to where it is now for some time.

Following Gold, Oil also posted another consecutive weekly high this week. But unlike Gold, Oil was able to keep its gains. The pullback from the $98s was expected, but we should see another challenge of this level in the coming week.

Currency Pairs

EURUSD had a very tough week as sellers pounded on their competitors for five straight days, leading to the pairs breakdown to new weekly lows. Bulls were unable to protect the 1.3500 level and this puts price at risk of spiraling down toward 1.3000-1.3300 in the coming week or so.

The decline in GBPUSD was much milder compared to what has transpired in EURUSD. This pair formed an inside bar for the weekly. We expect a potential test of the 1.6250-1.6300 area in the coming week.

USDJPY fell in unison with GBPUSD and EURUSD this week as USDJPY found it hard to get past sellers around 103. The weekly close below 102 could give sellers more confidence to attack 96-100 again.

The Week Ahead

This week will definitely be news-packed as the month of February gets under way.

Monday will kick off with Australia’s Building Approvals and ANZ Job Ads; China’s Non-Manufacturing PMI; Switzerland SVME PMI; Euro-area, Spain, Italy, UK Manufacturing PMI; Canada’s IPPI and RMPI; US Final and ISM Manufacturing PMI.

On Tuesday, Australia’s RBA Rate Announcement and Statement will be anticipated, as well as Spain’s Unemployment Change; UK Halifax HPI and Construction PMI; and US Factory Orders.

Wednesday will start very early with New Zealand’s Unemployment Rate and Employment Change ; Japan’s Average Cash Earnings; Services PMI data from Spain, Italy, and the UK; Eurozone Retail Sales; US ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI; and Canada Building Permits.

On Thursday, we will have Australia’s Retail Sales and Trade Balance; Germany’s Factory Orders; BOE and ECB Rate Announcement and Statement; US Trade Balance and Jobless Claims; and Canada’s Ivey PMI.

Finally, on Friday, RBA will release its Monetary Policy Statement. This will be followed in the afternoon by the release of Germany’s Trade Balance; Switzerland’s Foreign Currency Reserves and Retail Sales; UK Manufacturing Production and Trade Balance; and Canada and US Jobs Data.

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.