Forex News

Currency Trends & Insights

General

England & EU maintain their Rates, Yellen Confirmed as US Fed Chief

The 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 US, the Senate passed on Monday the nomination of Janet Yellen as the Federal Reserve Chairperson. Yellen will serve her post for four years, from February 2014 to January 2018.

The US Bureau of Labor Statistics reported on Friday that the labor market added 74,000 jobs in December, much weaker than the median estimate of economists surveyed (196,000). November’s reading was revised higher, from 203,000 to 241,000. Meanwhile, the unemployment rate came in at 6.7 percent.

In other news, Canada’s Employment Change surprisingly came in at -45,900, more than triple and opposite its forecast of 14,400. The Unemployment Rate rose to 7.2 percent.

Commodities

Gold caught some wind and moved higher this week. The advance was marginal, however, as price only peaked at $1,248 and closed the week nearby. There is still potential resistance ahead of the $1,300 level. There are lots of wood to chop further up.

Oil declined further this week after it dropped nearly $7 the other week. The current decline peeked through the multi-month support (set on late-November at $91.75) before bouncing to close the week just below $93. Expect another attack on the $90-$92 area.

Currency Pairs

EURUSD was pretty much under water for most of the week until it made a mad dash higher late-Friday. This run-up was enough to give the pair a bullish weekly close above the 1.3600 level. Buyers need to be careful with resistance around 1.3800.

Price-action wise, GBPUSD was slightly ahead of EURUSD and the former also managed to eke out gains this week. Bulls should continue the pressure higher so they can take out the 1.6602 high.

USDJPY was all pretty quiet before US NFP Friday, when it created the week’s 150-pip trading range as it moved to the downside. Bulls have been having problems with the 105 level, so sellers pounced to take the cake this time. Further decline is possible but not without potential detractors along the way.

The Week Ahead

Monday will be quiet for the most part. We will witness the release of Australia’s ANZ Job Ads; China’s Money Supply and New Loans; Bank of Canada’s Business Outlook Survey; and US Federal Budget Balance. There will be a bank holiday in Japan due to ‘Coming of Age Day.’

Tuesday will start early with New Zealand’s NZIER Business Confidence; Japan’s Current Account; UK CPI, RPI, and PPI; Eurozone Industrial Production; US Retail Sales, Import Prices, and Business Inventories.

Wednesday will be a very brief news day with Australia’s new Motor Vehicle Sales; Switzerland’s Retail Sales; US PPI, Empire State Manufacturing Index, and Beige Book.

Thursday will be busy with Japan’s Core Machinery Orders and Tertiary Industry Activity; Australia’s Unemployment Rate and Employment Change; ECB Monthly Bulletin; Eurozone CPI; Canada Foreign Securities Purchases; US CPI, TIC Long-term Purchases, Philly Fed Manufacturing Index. Fed Chairman Bernanke is also slated to give a speech.

Finally, Friday will cap the week with Switzerland’s PPI; UK Retail Sales; US Building Permits, Capacity Utilization Rate, Housing Starts, Industrial Production, and Preliminary UoM Consumer Sentiment.

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.

Bank of England Leaves Interest Rate at 0.5%

The Bank of England’s Monetary Policy Committee, through its meeting minutes, declared on Wednesday that all of the nine Committee members decided to keep the Official Bank Rate and Asset Purchase Facility at the same rate, 0.50 percent and GBP375 billion, respectively. The Committee noted that the economy is in the path of sustained recovery and is at no significant risk of inflation hence the bank does not foresee any urgency in terms of raising interest rates.

In the same light, the US Federal Open Market Committee decided to keep the same pace of its asset purchase program ($85 billion per month, $45 billion per month of which is for purchases of Treasuries). QE tapering could be seen “in the coming months,” but the FOMC noted that the pace of asset purchases would continue to be appropriate for as long as the inflation and unemployment thresholds are not breached.

The us Department of Labor reported on Thursday that the prior week’s Unemployment Claims declined to 323,000, its lowest in seven weeks. Flash Manufacturing PMI rose to 54.3 after posting 51.8 on October. However, Philly Fed Manufacturing Index sunk to 6.5, the lowest reading in the last six months.

Commodities

Gold resumed its downhill move after making a brief pause just below the $1,300 level in the prior week. It was pretty much all about the bears this week starting Monday as bulls failed to even make a short revisit to $1,300. Price has now reached a near-five month low, and we expect the same thing next week if Gold cannot recover back above $1,300.

Oil continued to struggle around $95 this week. Price has been plowing through the same tight range ($92.50-$95.50) for 14 straight trading days, but we suspect that we will see some developments in the very near future. Tough support is seen below $95, so we could see a move toward $100 next week.

Currency Pairs

Though the trading range has been somewhat average, EURUSD traders had a volatile week particularly in the last three days after price whipsawed on either side of 1.3400. Large selling in the upper-1.3500s took price down briefly through 1.3400 on Wednesday, but buyers were quick to scoop up and absorb selling. If what we saw was serious buying, we could see the pair trading back in the 1.3600s again.

Price action-wise, GBPUSD performed better than EURUSD this week as the former was able to close in on its own October resistance area in the 1.6250s. If EURGBP breaks down further next week, we could see GBPUSD punch through 1.6250 easily.

USDJPY went on to create its fourth consecutive bullish weekly close after bulls triumphed in conquering 100 and 101, confidently closing above the latter on Friday. The only thing that blocks the way toward May 22’s 103.70 high is the early July high of 101.52.

The Week Ahead

Asia will be quiet for a second consecutive Monday. The European session will start off with

Switzerland’s Employment Level data, followed shortly by the UK’s BBA Mortgage Approvals, and later on by the US Pending Home Sales.

On Tuesday, the Bank of Japan will release its latest Monetary Policy Meeting Minutes. Then the UK will provide the Inflation Report Hearings, succeeded by a raft of US data which includes Housing Starts, Building Permits, S&P/CS Composite-20 HPI, and CB Consumer Confidence.

Wednesday will start very early with New Zealand’s Trade Balance data. Australia will follow a few hours later with Construction Work Done; Germany’s Gfk Consumer Climate; UK’s Second Estimate GDP, Preliminary Business Investment, and CBI Realized Sales; US Durable Goods Orders, Jobless Claims, Chicago PMI, and Revised UoM Consumer Sentiment.

On Thursday, activity will be relatively even throughout the day with Japan’s Retail Sales; ANZ Business Confidence; Australia’s Private Capital Expenditure and HIA New Home Sales; Switzerland’s GDP; Germany’s Preliminary CPI and Unemployment Change; BOE Carney’s speech and BOE Financial Stability Report; Canada’s Current Account, IPPI, and RMPI. The United States, meanwhile, will celebrate Thanksgiving Day.

Finally, Friday will end the week with New Zealand’s Building Consents; Japan’s Household Spending, Tokyo Core CPI, and Preliminary Industrial Production; Australia’s Private Sector Credit; Germany’s Retail Sales; Switzerland’s KOF Economic Barometer; UK’s Net Lending to Individuals; Eurozone CPI Flash Estimate and Jobless Rate; and Canada’s GDP.

Yellen to Head the US Fed, US economic Data Disappoints

On balance, there was a raft of negative economic news this week, particularly from the United States.

On Monday, the Australian Bureau of Statistics said Home Loans surprised to the upside with a 4.4 percent growth in September, beating its median expectation of 3.6 percent. Westpac Banking Corporation reported on Wednesday that the Westpac Consumer index crawled back into positive territory this November, up by 1.9 percent after sliding 2.1 percent in October.

In the UK, Claimant Count Change surprised again last October with a -41,700 reading, its 12th straight monthly decline. The Unemployment Rate declined slightly to 7.6 percent in October. Meanwhile, October Retail Sales slipped 0.7 percent, the Office for National Statistics said on Thursday.

The United States reported plenty of negative news this week. US Jobless Claims increased to 339,000 in the prior week, and the previous week’s reading was revised higher to 341,000 from 336,000. The Empire State manufacturing Index shocked the market with a -2.2 reading for November, when analysts were expecting a growth of 5.2. Import prices slipped more than anticipated, -0.7 percent. Industrial Production for October was also weaker than expected, -0.1 percent.

Meanwhile, Janet Yellen swiftly went through her nomination as the next head of the US Federal Reserve in the Senate Banking Committee’s hearing last Thursday.

Commodities

Gold buyers’ mid-week upside attempt was good enough that they were able to push price back to the weekly open – and this is where it ended the week. The brief plunge toward the $1,260s could be just that – fleeting. Or, we could see another downside test next week.

It was yet another tough week for Oil as sellers continue to put pressure on price. Bulls made an effort early Monday to bring price close to $96; however, sellers were apparently lurking just above $95, and they dominated after pulling price down on Tuesday. Buyers had a very tough time preserving their position above $94 for the rest of the week. Bulls must recapture the $95-$98 area next week.

Currency Pairs

EURUSD closed the week with an inside trading range that spanned a mere 160 pips. Although the 1.3500 level has been breached in late-Friday, price closed the week at 1.3495. We need to see a strong move above 1.3500 this coming week, so that bulls can tackle 1.3600-50.

GBPUSD displayed a much better performance than EURUSD this week, as the former easily cut through and subsequently close above last week’s high. Bulls are undeniably aiming for another fight around 1.6250.

The question in all USDJPY traders’ mind was whether 100 can be hit again, and this was answered with a confident “Yes!” this Friday. The pair reached and broke the 100 level for the first time since September 11, and USDJPY bulls are surely ecstatic about it! Before they celebrate, they need to make sure 100 holds in the coming weeks.

The Week Ahead

Asia will be quiet this Monday. The European session will start off with the Eurozone’s Current Account data, followed by Canada’s Foreign Securities Purchases, US TIC Long-term Purchases, and US NAHB Housing Market Index.

Australia will welcome Tuesday with its CB Leading Index and RBA’s Monetary Policy Meeting Minutes. Next up are ZEW Economic Sentiment for Germany and the Eurozone, and the US Employment Cost Index.  US Treasury Secretary Lew and FOMC members Dudley and Evans will give their respective speeches.

Wednesday will start very early with New Zealand’s PPI Output and PPI Input. Then there will be Japan’s Trade Balance; Germany’s PPI; UK’s MPC Asset Purchase Facility and Official Bank Rate Votes; Switzerland’s Economic Expectations; Canada’s Wholesale Sales; US Retail Sales, Existing Home Sales, CPI, and FOMC Meeting Minutes.

On Thursday, we’ll have China’s HSBC Flash Manufacturing PMI; BOJ Monetary Policy Statement and Press conference; Flash Manufacturing PMI and Flash Services PMI for Germany, France, and the Eurozone; UK CBI Industrial Order Expectations and Public Sector Net Borrowing; US PPI, Flash Manufacturing PMI, Jobless Claims, and Philly Fed Manufacturing Index.

Finally, Friday will end the week with the release of Germany’s Ifo Business Climate, Canada’s CPI and Retail Sales, and US JOLTS Job Openings.

EURUSD Dives in Response to the European Central Bank Interest Rate Reduction

The Reserve Bank of Australia, European Central Bank, and the Bank of England made their respective interest rate announcements this week. The RBA left its Cash Rate unchanged at 2.50 percent on Tuesday. On the other hand, the BOE and ECB made back-to-back announcements on Thursday. BOE decided to maintain the Official Bank Rate at 0.50 percent, while the ECB surprised the market with its 25 basis points cut in its Minimum Bid Rate to 0.25 percent.

In other relevant news, UK’s Construction PMI and Services PMI both surprised to the upside. Construction PMI increased to 59.4 (58.9 expected), while the October Services PMI went straight to 62.5 after posting 60.3 in September.

Jobs data out of New Zealand showed Employment Change rose 1.2 percent in the recent quarter, and the September quarter’s Unemployment Rate eased slightly to 6.2 percent from the previous quarter’s 6.4 percent reading.

Canada’s Building Permits advanced only 1.7 percent in September, following a revised reading of -20 percent last August. On the other hand, the October Ivey PMI jumped to 62.8, its strongest reading in five months.

In the United States, Non-Farm Employment Change surged to 204,000 in October after registering a 163,000 increase in September. The Unemployment Rate came in at 7.3 percent (as expected), while the ISM Non-Manufacturing PMI increased to 55.4 in October.

Commodities

Gold posted a second consecutive weekly decline after price topped out at $1,361 last week. The $1,300 level hold during the first three days but eventually succumbed to intense bear pressure on Thursday. The current price movement brings the $1,251 low seen in mid-October back in the crosshairs.

After two intensely bearish weeks, Oil took a break this week but it almost broke through the $93 level. As mentioned, the acid test would be whether bears can take out the $90 level this November. Expect to see some more action between $93 and $99 in the coming sessions.

Currency Pairs

Another explosive week saw EURUSD dive more than 250 pips as the ECB delivered a shocking announcement (interest rate cut) last Thursday. This declaration saw price slice through the 1.3400 level, but somehow bulls manage to reduce the damage and price closed the week at 1.3366, an important support area. We could expect more action this coming week!

GBPUSD was quite oblivious of the action in EURUSD, and the former tried to move away from the weekly consolidation low seen around 1.5900. Bulls were able to recapture 1.6100 but Dollar strength pressed the pair back into the 1.6000s. We could see more of the same action next week.

USDJPY showed remarkable volatility to close this week, something unseen since mid-September. In the end, bulls emerged victorious as they were able to bring price to close right above the 99.00 level. This gives them the ticket to attack the coveted 100.00 level.

The Week Ahead

This Monday, Japan will release its Current Account and Bank Lending data. Meanwhile, the Australian Bureau of Statistics will issue the latest report on Home Loans. Then, things will quiet down quickly for the rest of the day thanks to the observance of several holidays (Armistice Day for France, Remembrance Day for Canada, and Veterans Day for the United States).

On Tuesday, there will be news releases such as Japan’s Tertiary Industry Activity; Australia’s NAB Business Confidence; China’s New Loans; and the UK’s PPI, RPI, and CPI.

Wednesday will start off very early with New Zealand’s RBNZ Financial Stability Report. A few hours later, we will hear about Australia’s Westpac Consumer Sentiment and Wage Price index; Japan’s Core Machinery Orders; UK jobs data, BOE Carney’s speech, and BOE Inflation Report; Eurozone Industrial Production; and US Federal Budget Balance.

Thursday will be a very busy day with New Zealand’s Business NZ Manufacturing Index and Retail Sales; Australia’s MI Inflation Expectations; France’s, Italy’s, and Germany’s Preliminary Gross Domestic Product; Switzerland’s PPI; ECB Monthly Bulletin; UK Retail Sales; Canada’s Trade Balance and NHPI; US Jobless Claims, Trade Balance, and Fed Chairperson Designate Yellen’s speech.

Finally, Friday will cap the week with the announcement of Eurozone CPI; Canada’s Manufacturing Sales; US Empire State Manufacturing Index, Import Prices, Industrial Production, and Capacity Utilization Rate.

The US Federal Reserve Maintains its Interest Rate

The Federal Reserve ended its two-day policy meeting last Wednesday, where consensus dictated to keep a wait-and-see stance in terms of the economy and monetary policy. The Fed decided to hold its Federal Funds Rate at less than 0.25 percent and monthly bond purchases worth $85 billion, as it awaits additional signs that the economy is improving.

Likewise, the Reserve Bank of New Zealand opted to keep its Official Cash Rate at 2.50 percent last Thursday. In his statement, RBNZ Governor Wheeler said: “The recovery in the United States and other major advanced economies remains patchy. Nevertheless, world prices for New Zealand’s export commodities are very high… Global long-term interest rates are still very low, but have been volatile recently. This volatility has largely been due to uncertainty as to when the Federal Reserve will exit from quantitative easing.”

In other relevant news, Australia’s PPI grew 1.3 percent in the third quarter of this year. Building Approvals jumped 14.4 percent last September, with the prior reading revised higher to -1.6 percent from -4.7 percent. Import Prices rose 6.1 percent compared to the 3.5 percent forecast.

In the United States, September figures showed Pending Home Sales disappointment for a fourth straight month with a 5.6 percent drop, while PPI and Retail Sales both declined 0.1 percent. October ADP Non-Farm Employment Change grew 130,000, weaker than expected. On the other hand, Chicago PMI roared upward with a 65.9 reading, the strongest level seen since April 2011.

Commodities

With nearly five straight declines, it was all about pullbacks this week in Gold. Soon after reaching a $1,361 on Monday, bears took control and dominated the entire week, missing the $1,300 level by just five dollars. If they can keep the pace, bears will have to push through stops below $1,300 and aim for a break of $1,250.

Oil ended October with a strong bearish close, giving it two consecutive months of pure bear dominance. This November will be an acid test whether they really have the strength to muscle their way through $90 and attack the $84-$87 area.

Currency Pairs

Most of the bullish efforts planted in early October disintegrated last week when EURUSD dropped nearly 350 pips. The huge drop erased two weeks’ worth of advances in just four days! The pair is now trading back below the 1.3500 level buts the carnage may not be over.

In GBPUSD’s case, weakness has been evident through October as the pair failed to break through 1.6250 since late-September. The pair is back below 1.6000 and trading near the weekly consolidation low in the low-1.5900s. We could see 1.5500-1.5700 if the consolidation low breaks.

USDJPY continues with its multi-month consolidation theme as bulls emerged victorious in this week’s trading. The 98-100.50 area remains as a serious threat to any bullish advance.

The Week Ahead

This Monday, Japan will celebrate Culture Day. Australia will jumpstart Monday with the announcement of MI Inflation Gauge, Retail Sales, HPI, and ANZ Job Advertisements. These will be followed by Italian and Spanish Manufacturing PMI; Eurozone Manufacturing PMI; UK Construction PMI; and US Factory Orders.

On Tuesday, the host of economic data releases will start with UK’s BRC Retail Sales Monitor; RBA’s Interest Rate Announcement and Statement; UK Halifax HPI; and Services PMI; Switzerland’s CPI; and US ISM Non-Manufacturing PMI.

Wednesday will start off with New Zealand’s jobs data. This will be followed by BOJ’s Monetary Policy Meeting Minutes; Australia’s Trade Balance; Italian and Spanish Services PMI; UK Industrial Production and Manufacturing Production; Eurozone Retail Sales; Germany’s Factory Orders; UK NIESR GDP Estimate; and Canada’s Ivey PMI and Building Permits.

On Thursday, it will be Australia’s turn to disclose its employment data. This will be succeeded by Switzerland’s Foreign Currency Reserves; Germany’s Industrial Production;  BOE and ECB Rate Announcement and Statement; US Advance GDP and Jobless Claims.

Finally, Friday will cap the week with the disclosure of RBA’s Monetary Policy Statement; China’ Trade Balance data; France’s Industrial Production; Switzerland’s Retail Sales; UK Trade Balance; US and Canada jobs data; US Core PCE Price Index, Personal Income, Personal Spending, and preliminary UoM Consumer Sentiment.

Majors Mixed Versus Dollar in the Light of the US Jobs Reports

Bank of Canada on Wednesday decided to maintain its overnight rate target at 1 percent. In the BOC Rate Statement, Governor Stephen Poloz dropped the central bank’s bias for future interest rate hikes.

In other news, the much-awaited jobs reports from the United States have finally been released on Tuesday. Non-Farm Employment Change disappointed with an increase of only 148,000, while analysts expected a gain of 182,000. Bureau of Labor Statistics reported that the Unemployment rate eased slightly to 7.2 percent. Meanwhile, JOLTS Job Openings increased to 3.88 million in August, from 3.81 million during the prior month. On the other hand, Jobless Claims increased to 350,000 in the prior week, versus 343,000 expectations.

In the United Kingdom, Public Sector Net Borrowing improved to GBP9.4 billion. The August reading was revised better to GBP10.8 billion from GBP11.5 billion.

On Thursday, Statistics New Zealand said the Trade Balance data improved to –NZD199 million in the September quarter, a huge drop in deficit compared to the previous quarters –NZD1.234 billion trade deficit.

Commodities

Gold continued to advance this week, coming off a successful reversal from the $1,251 low in the prior week. Price closed right at $1,350, a critical area that gave problem to the bulls for many weeks prior. The next objective for bulls is to break through $1,400-$1,450.

Oil sank the most this week compared to the five weekly declines that past. We could attribute this to the overwhelming pressure which led to the successful break of the bullish defenses around $100-$101. The question now is whether the $95-98 area would cause a temporary halt in the relatively steady decline seen since early September.

Currency Pairs

EURUSD have successfully kept the pair afloat this week, easily averting a lone takedown attempt around 1.3650 in the early part of the week. We’ve now seen back-to-back weekly advances, and we expect this to continue as long as 1.3600-1.3800 holds. Next upside target is 1.4000-1.4250.

GBPUSD had a very tough week lagging behind its lifelong rival, EURUSD. GBPUSD failed to take advantage of the prior week’s 330-pip advance. Instead, the pair languished in consolidation throughout the entire week. Price needs a serious punch-through of 1.6250; otherwise, sellers might get ambitious and target 1.5800-1.6000.

USDJPY declined for a second consecutive week as the 98-99 area continued to pose problems for all bulls. This puts price closer to breaking the 10-week low at 96.56. If a successful break occurs, the next downside target would come in around 93.80.

The Week Ahead

This Monday, New Zealand will celebrate Labor Day. Economic data release start in the European session with UK’s CBI Realized Sales; US Industrial Production and Capacity Utilization Rate, and Pending Home Sales.

On Tuesday, Reserve Bank of Australia Governor Stevens will give a speech in the early part of the Asian session. Then there will be Japan’s Household Spending and Retail Sales; Germany’s Gfk Consumer Climate; UK net Lending to Individuals; Canada’s IPPI and RMPI; US PPI, Retail Sales, Consumer Confidence, and S&P/CS Composite-20 HPI.

Wednesday will start off with Japan’s Preliminary Industrial Production. This will be followed by Germany’s Preliminary CPI and Unemployment Change; Switzerland’s KOF Economic Barometer; Spain’s Flash GDP; US ADP Non-Farm Employment Change, CPI, FOMC Statement, and Federal Funds Rate.

Economic data release for a very busy Thursday will start very early with New Zealand’s RBNZ Interest Rate Announcement and Statement, Building Consents, ANZ Business Confidence. This will be followed by Australia’s Private Sector Credit; Japan’s BOJ Monetary Policy Statement, BOJ Outlook Report, and Press Conference; Germany’s Retail Sales; France’s Consumer Spending; Eurozone Unemployment Rate and CPI Flash Estimate; Canada’s GDP; US Jobless Claims and Chicago PMI.

Finally, Friday will have Australia’s PPI; China’s HSBC Final Manufacturing PMI and Manufacturing PMI; Switzerland’s SVME PMI; UK Manufacturing PMI; and US ISM Manufacturing PMI.