Forex News

Currency Trends & Insights

General

US Debt Deal Struck at the 11th Hour; US Government Reopens

The world watched with bated breath as the US political crisis surrounding its debt came close to the October 17 (Thursday) deadline. After the debt deal passed the US Senate on Wednesday, the US House of Representatives voted 285-144 in favor of the debt deal, which included issues about the budget, debt ceiling, and government shutdown, as well as sequestration and Obama’s health care plan. The deal reopened the US federal government from its partial shutdown and narrowly averted a debt default which could have unprecedented global economic repercussions.

The government shutdown affected an estimated 900,000 federal workers, and is expected to hike the unemployment rate by a few percentage points. US lawmakers will get back to the negotiating table as the recent debt deal only funds the government until January 15, with the US Treasury allowed to borrow until February 7.

In other news, US Empire State Manufacturing Index declined to 1.5 in October, following four months of index readings above the 5 level. On the other hand, Philly Fed Manufacturing Index surprised with a reading of 19.8 in October, a good follow-up to September’s 22.3 figure.

In the United Kingdom, Consumer Price Index remained at 2.7 percent in September, but Producer Price Index Input declined for the second straight month (-1.2 percent). Meanwhile, the Office for National Statistics said Claimant Count Change registered a decline of 41,700, the greatest decline in over 16 years. The Unemployment Rate remained at 7.7 percent for the second month.

Commodities

A decisive $50 upmove in Gold on Thursday salvaged the bulls from seeing the $1,200 level and the three-year low set this June at $1,180. After the strong weekly close above $1,300, the next step for buyers is to bring price back towards $1,400.

Oil has now declined in five out of the last six weeks but the $100 level has not cracked on its first test. Topside resistance has been increasing and this will prove problematic for bulls in the coming week. A strong break of $104 is necessary to annihilate the very bearish mood that is developing.

Currency Pairs

EURUSD created the highest weekly close in nearly two years this week, climbing 230 pips to a 1.3703 high. It is important for buyers to keep the price afloat next week, avoiding takedowns through 1.3600-50 as much as possible. Next upside target is 1.4000-1.4250.

GBPUSD started the week very quiet but this changed towards the end of the week with a spike in volatility, resulting in a trading range of 330 pips. The pair exploded to the upside but was unable to take out the 1.6259 September high. Unlike EURUSD, GBPUSD will have to contend with multi-month resistance to as high as 1.6338 before it can trade in fresh territory.

USDJPY bulls continued to face headwinds as price gently moved up. They confronted mainstay sellers around 99.00 and bulls balked again, sending the pair lower to close the week at 97.74. Because of this, the 96.56 low set this October is back at risk.

The Week Ahead

This Monday, Asia will be pretty much quiet except for the release of Japan’s Trade Balance data. This will be followed by Germany’s PPI; Bundesbank Monthly Report; Canada’s Wholesale Sales; and US Existing Home Sales.

Tuesday will start quite late. There will be UK Public Sector Net Borrowing; Canada’s Retail Sales; and the delayed US jobs data (due to the recent US government shutdown), specifically Non-Farm Employment Change, Unemployment Rate, and Average Hourly Earnings.

Australia will kick off Wednesday with the announcement of CB Leading Index, Trimmed Mean CPI, and CPI. These will be succeeded by UK BBA Mortgage Approvals, MPC Asset Purchase Facility Votes and MPC Official Bank Rate Votes; US Import Prices; Belgian NBB Business Climate; Bank of Canada’s Rate Announcement and Statement, Monetary Policy Report, and press conference.

Economic data release on Thursday will start very early with New Zealand’s Trade Balance, followed by China’s HSBC Flash Manufacturing PMI; Germany, France, and Eurozone Flash Manufacturing PMI and Flash Services PMI; UK CBI Industrial Order Expectations; US Jobless Claims, New Home Sales, and Flash Manufacturing PMI.

Finally, Friday will have Japan’s Tokyo Core CPI; Germany’s Ifo Business Climate; Eurozone M3 Money Supply; UK Preliminary GDP; US Durable Goods Orders and revised UoM Consumer Sentiment.

US Shutdown Continues, Yellen New Federal Reserve Chairman

US shutdown enters its third week and it seems that there is no solution in sight. The US senate will now have to expedite the efforts to find a solution to the crisis before the US government reaches its debt ceiling.

In other US news, President Obama chose Janet Yellen to succeed Ben Bernanke as Federal Reserve Chairman. She is expected to maintain the current expansionary policies implemented by the Fed.

US Jobless Claims came in worse than expected, based on the prior week’s data from the Department of Labor. Jobless Claims ballooned by 66,000 to 374,000 and was attributed to the current US government shutdown and a computer system-related backlog in California.

The preliminary University of Michigan Consumer Sentiment dropped to 75.2 in October, the lowest reading since January’s 71.3 reading.

Bank of England decided on Thursday to leave its Official Bank Rate unchanged at 0.50 percent, and its Asset Purchase Facility at GBP375 billion.

UK Manufacturing Production surprisingly contracted 1.2 percent, the most in nearly a year according to the Office for National Statistics on Wednesday. Meanwhile, trade deficit came in more than expected, GBP9.6 billion.

In Canada, a very weak Building Permits figure was reported by Statistics Canada last Monday. Permits sank 21.2 percent on August, falling from the record 21.4 percent gain registered in July. Trade deficit increased slightly to CAD1.3 billion. Meanwhile, Employment Change climbed less than expected, 11,900 (versus 15,300 forecast). On the other hand, Unemployment Rate improved to the lowest in nearly five years, 6.9 percent from the August reading of 7.1 percent.

Commodities

Gold displayed signs of bullish fatigue early this week. Bears took notice and tore down all buying above the $1,300, and bulls quickly retreated. This resulted in four straight days of selling until Friday, pulling price down to its lowest in four months. The risk now is for a move towards the 2013 low (also the three-year low) at $1,180.

Oil has now declined in four out of five weeks and this is bad news for bulls who’ve been trying to aim for a move back toward $110. Just like Gold bulls, Oil bulls struggled on the topside and this paved the way for bears to aim for lower prices, which they succeeded in doing. A sustained break of the $100 level could prove more disastrous.

Currency Pairs

Looking at the weekly chart, EURUSD has been trading close to the 1.3500 level for three weeks now. Bulls must be able to print a strong weekly close at/or above 1.3600-1.3700 to maintain the momentum on their side.

In a matter of a few weeks, GBPUSD has gone from a leader to one of the laggards of the major pairs. Bulls failed close strongly above the 1.6200 level during the prior week, and this opened up the possibility for downside attacks this week. Coupled by a spate of weak UK data, the pair closed the week below 1.6000, a serious indication that bears are increasing their control. If 1.6000 will not be recovered quickly, we could see 1.5600-1.5800 soon.

Thanks to the latest recovery in the Dollar, USDJPY gained considerably this week after playing with fire with the ascending trendline discussed in the previous week. It won’t be smooth-sailing for bulls as they have to contend with sellers around 99.00-100.00.

The Week Ahead

This Monday, we will witness the release of Australia’s Home Loans; China’s New Loans, PPI, and CPI; Switzerland’s PPI; and Eurozone’s Industrial Production. The United States will observe Columbus Day, while Canada will celebrate Thanksgiving Day.

The Reserve Bank of Australia will kick off Tuesday with the disclosure of the latest Monetary Policy Meeting Minutes. This will be followed by UK’s PPI, RPI, and CPI; Eurozone’s and Germany’s ZEW Economic Sentiment; and US Empire State Manufacturing Index.

Economic data release on Wednesday will start very early with New Zealand’s Consumer Price Index. Then, this will be succeeded by UK’s Unemployment Rate, Average Earnings Index, and Claimant Count Change; Eurozone CPI; Canada’s Manufacturing Sales; and US Beige Book.

Thursday would be a rather short news day this week with Australia’s NAB Quarterly Business Confidence; Eurozone Current Account; UK Retail Sales; Canada’s Foreign Securities Purchases; and US Jobless Claims and Philly Fed Manufacturing Index.

Friday will also be a short one with RBA Governor Stevens’ speech; China’s Industrial Production, Gross Domestic Product, and Fixed Asset Investment; BOJ Governor Kuroda’s speech; and Canada’s CPI.

Interest Rates Unchanged, US Government Shutdown

The main news item in the previous week was undoubtedly the US government shutdown. It is impacting the US economy and the global economy alike.

Two central banks announced their latest interest rates this week. The European Central Bank and Reserve Bank of Australia both held their respective benchmark interest rates unchanged at 0.50 percent and 2.50 percent, respectively.

In Japan, Household Spending surprisingly declined 1.6 percent. Meanwhile, the third quarter Tankan Manufacturing Index rose sharply to 12, beating its forecast for an advance to 7.

In Australia, Building Approvals declined more than expected in August, contracting 4.7 percent versus an expectation for a 0.7 percent decline. Trade Balance for August showed a –AUD0.82 billion deficit.

In the United States, a mixed slew of economic data were reported this week. US Unemployment Claims increased 308,000 (less than expected); Chicago PMI rose to 55.7 in September (versus August’s 53.0); ISM Manufacturing PMI climbed to 56.2, while ISM Non-Manufacturing PMI declined in September to 54.4 from 58.6 the previous month; and US ADP Non-Farm Employment Change increased less than expected (166,000). The Non-Farm payroll report was absent this Friday due to the US government shutdown.

Commodities

Now that the week is over, we could see that the prior week was just a pause from the prevailing downtrend in Gold. Buyers attempted on Monday to rally price through the $1,350s but easily failed. This gave sellers the chance to control the market the entire week. The move toward $1,277 could be a prelude to what will come next week.

It was a completely different story for Oil. After three consecutive weekly declines, Oil made its first weekly advance after nearly breaking $101 on Monday and Tuesday. Buyers need to go through a thick forest of resistance around $105-$108.

Currency Pairs

EURUSD broke new ground this week after hesitating in the mid-13500s for two weeks. The pair is moving closer to breaking its 2013 highs at 1.3710 which was posted in late-January. If the pair can push higher further next week, and then we could see new highs sometime before the current year closes.

A huge reversal ended the week for GBPUSD, after reaching a new 2013 high of 1.6259 last Tuesday. 1.6000 is back in the hot seat and we could see a good battle happen in this area next week.

USDJPY bearishness remains prevalent despite attempts break higher through the 98.00s. The up-trendline extending all the way from February remains at risk of breaking. A big move could arise if this trendline gives way.

The Week Ahead

The most significant issue this week will be the US government shutdown. This issue has a huge impact on the American and global economies and the markets are deeply affected by it.

This Monday, a significant number of Australian banks will observe Labor Day. However, the Australian Industry Group will release its Construction Index. Japan will have BOJ Monthly Report and Leading Indicators, while Switzerland will release Foreign Currency Reserves. Meanwhile, Canada will issue the latest Building Permits report.

New Zealand will open up Tuesday with NZIER Business Confidence, followed by UK BRC Retail Sales Monitor; Japan’s Current Account; Australia’s NAB Business Confidence and ANZ job Advertisements; Germany’s Factory Trade Balance; Switzerland’s Retail Sales and CPI; and Canada’s Trade Balance.

On Wednesday, there will be Australia’s Westpac Consumer Sentiment; Japan’s BOJ Monetary Policy Meeting Minutes; UK Trade Balance, NIESR GDP Estimate, and Manufacturing Production; and US FOMC Meeting Minutes.

On Thursday, there will be Business NZ Manufacturing Index; Japan’s Tertiary Industry Activity and Core Machinery Orders; Australia’s MI Inflation Expectations, Unemployment Rate, and Employment Change; China’s New Loans; ECB Monthly Bulletin; UK Interest Rate Announcement and Statement; Canada’s NHPI; and US Jobless Claims.

On Friday, the market will only have a few key economic data to look at, mainly jobs reports from the United States and Canada.

Bank of England Confident in The Country’s Economic Recovery

After the release of the Bank of England’s Monetary Policy Committee Meeting Minutes in the prior week, news wires broadcasted on early Thursday that BOE Chief Carney does not find a reason to provide more QE, given that the economic recovery has “strengthened and broadened.”

In other news, New Zealand’s statistics agency revealed last Wednesday that the Trade Balance weakened further and more than expected in August. The trade deficit ballooned to NZD1.191 billion. This is the worst trade deficit since late-2008.

In the UK, CBI Realized Sales soared to 34 in September. Analysts were upbeat but were only expecting 24. Meanwhile, Current Account was weaker than expected at –GBP13 billion.

In the United States, Unemployment Claims continued to beat its forecast for the fourth consecutive week (305,000 versus 319,000 forecast).

US Pending Home Sales declined more than expected in August, according to the National Association of Realtor’s latest report. Sales declined 1.6 percent (analysts expected a 0.9 percent decline).

The Revised University of Michigan Consumer Sentiment posted its second straight reading below the 80-level, 77.5.

Commodities

Not much happened in Gold this week and there are signs of a possible move back into the $1,400s. Gold bulls successfully defended the $1,300 for five straight days, and this means they got a tiny headstart for next week’s trading. Before they get too complacent, they must strike down potential sellers at and ahead of the $1,400 level. A break of $1,430 is the upside target.

Oil was a different story as price was down for the third straight week. The weekly close below $103 was a strong statement against bears, and they should gear up for next week. There is still time for them to shore up price back into the $105s. That’s their goal for this coming week.

Currency Pairs

EURUSD has been very quiet this week. In fact, its 101-pip weekly trading range is one of the lowest in many weeks. This pair lags behind GBPUSD but is still poised to move higher if it can make a good close above 1.3600.

GBPUSD went on to complete its fourth straight bullish week, closing comfortably above the 1.6100 level for the first time since early January. Bulls are looking for a break through 1.6400 in the coming weeks.

USDJPY’s 127-pip weekly range was not enough to break out of the prior week’s range. The pair continues to find problems moving away from 98 and reaching the 100.00 level. Price action-wise, the chart looks ugly and we could see 95-96 soon.

The Week Ahead

The brand new week ushers in the month of October starting on Tuesday.

On Monday, the market will have relatively fewer economic releases to look at compared to previous end-of-month days. New Zealand will have Building Consents. This will be followed by Japan’s Retail Sales and Preliminary Industrial Production; ANZ Business Confidence; Australia’s Private Sector Credit; China’s HSBC Final Manufacturing PMI; Germany’s Retail Sales; UK Net Lending to Individuals; Eurozone CPI Flash Estimate; Canada’s GDP; and US Chicago PMI.

Japan will open up Tuesday with Household Spending and Tankan Indices. China will observe National Day but Manufacturing PMI will be out. Other news include Australia’s Retail Sales, Interest Rate Announcement and Statement; Spain’s Manufacturing PMI; Germany’s Unemployment Change; and US ISM Manufacturing PMI.

On Wednesday, there will be Australia’s Trade Balance and Building Approvals; UK Construction PMI and Halifax HPI; ECB’s Interest Rate Announcement and press conference; and US ADP Non-Farm Employment Change.

On Thursday, worthy news to watch out for come in the form of China’s Non-Manufacturing PMI; Italy, UK, and Spain Services PMI; Eurozone Retail Sales; US Jobless Claims, Factory Orders, and ISM Non- Manufacturing PMI.

On Friday, the market will only have a couple of key economic data to look at, particularly BOJ’s Monetary Policy Statement and press conference; Germany’s PPI; and US Non-Farm Employment Change, Jobless Rate; and Canada’s Ivey PMI.

US Federal Reserve Puts off QE Tapering

According to the latest Minutes from the US Federal Reserve’s Federal Open Market Committee policymakers opted to wait for further evidence before they put the tapering option on the table. There was no change in the forward guidance as well as on the Federal Funds Rate (less than 0.25 percent rate).

The Federal Reserve Bank of Philadelphia announced that its Manufacturing Index surged to 22.3 in September, the strongest expansion since March 2011.

Meanwhile, US TIC Long-term Purchases surprised to the upside as purchases went up $31.1 billion. This is the first advance since January.

In other news, the Swiss National Bank held its LIBOR rate unchanged at less than 0.25 percent. SNB affirmed its protection of the minimum EURCHF rate at 1.20.

Minutes from the Bank of England’s Monetary Policy Committee showed a consensus among the officials to retain the status quo in terms of policy. MPC policymakers voted 0-0-9 to keep the asset purchase facility and Official Bank Rate unchanged.

 Commodities

Gold had a very volatile week with the US FOMC’s “no taper” announcement mid-week. Price had traded below $1,300 several hours prior the FOMC announcement and found support at $1,291. And then the FOMC announcement drove price higher toward $1,367 just ahead of the New York close one hour later. With the absence of follow-through momentum, price slid back down and ended the week at $1,325, the same closing price printed during the prior week. If the latest price action is an indication of inherent weakness, we could see price drift further down toward $1,250-70.

Oil bulls are in bad shape as price printed its second consecutive weekly close last week – and below $105 to boot. It is the first weekly close below $105 since mid-August and we could see further declines next week. $102-$103 could be seen next week.

Currency Pairs

Majors had an amazing run-up this week and EURUSD was no exception as it flew high past 1.3500 for the first time since early February. The pair started the week with a gap up and launched higher by 200 pips on Wednesday. The strong weekly close above 1.3500 could indicate a possible move toward 1.3600-50 quickly.

Like EURUSD, GBPUSD flew high on Wednesday but more than 50 percent evaporated by Friday after sellers dominated after the FOMC announcement. The only consolation for bulls was that the pair held firm just above the 1.6000 psychological levels. The near-term topside goals come at 1.6250-1.6300, while sellers want to bring price back towards 1.5700.

USDJPY enjoyed a nice bullish weekly close despite the gap-down seen on Monday. The FOMC announcement on Wednesday pulled the pair from 99.32 to a low of 97.75, but price reversed strongly on Thursday.  Not much price movement was seen on Friday and the week closed near the high at 99.35. Bulls should aim to gate crash through 100.00 in the coming week.

The Week Ahead

On Monday, a host of Flash Manufacturing PMI and Flash Services PMI data will be released and they will come from China, France, Germany, Euro-zone, and US (Flash Manufacturing PMI only). A host of speeches will also come from top officials such as ECB President Mario Draghi, SNB Chairman Thomas Jordan, MPC Member Ben Broadbent, and US FOMC Member William Dudley.

 

On Tuesday, the market will only have a couple of key economic data to look at, particularly Germany’s Ifo Business Climate, UK BBA Mortgage Approvals, Canada’s Retail Sales, US S&P/CS Composite-20 HPI, and US CB Consumer Confidence.

 

Wednesday starts early with New Zealand’s Trade Balance, RBA’s Financial Stability Review, Germany’s Gfk Consumer Climate, UK CBI Realized Sales, US Durable Goods Orders, and US New Home Sales.

 

Thursday news release will start somewhat late as the Asian session will be devoid of important economic data. ECB will release M3 Money Supply, then this will be followed by UK’s Current Account and Final GDP; US Jobless Claims, Final GDP, and Pending Home Sales.

 

Friday will be the most jam-packed news day in the coming week, starting with Japan’s Tokyo CPI; New Zealand’s ANZ Business Confidence; Germany’s Prelim. CPI; France Consumer Spending; Switzerland’s KOF Economic Barometer; ECB Draghi’s speech; US Core PCE Price Index, Personal Income, Personal Spending, and Revised UoM Consumer Sentiment. FOMC Members Rosengren, Evans, and Dudley will also give their respective speeches.

US, UK Jobless Claims Shine; US UoM, AUS Jobs Slide

The United States had a slew of mixed data this week, highlighted by the release of the US Unemployment Claims and the Preliminary University of Michigan Consumer Sentiment. Jobless Claims breached the 300,000 mark and registered only 292,000 claims in the prior week compared to a 332,000 forecast. On the other hand, the preliminary reading of University of Michigan Consumer Sentiment hit 76.8, the first below-80 reading and the lowest since April. The US Census Bureau reported that Retail Sales increased by 0.2 percent, while the Department of Labor said Producer Price Index rose 0.3 percent.

In other news, UK’s Claimant Count Change improved to -32,600 in August, better than the expected -21,200 reading. This followed a -36,300 reading back in July. The Unemployment Rate saw a minor improvement to 7.7 percent.

In Australia, the Bureau of Statistics announced a surprise second monthly decline in August, sliding 10,800 when analysts were expecting an increase of 10,200. The Unemployment Rate came in as-expected at 5.8 percent.

Statistics Canada publicized that Building Permits surged in July, following a sharp decline in  June. Newly-issued Building Permits amounted to CAD8 billion or 20.7 percent, putting it in a consistent upward trend with six advances out of the last seven months.

Finally, the Reserve Bank of New Zealand decided on Thursday to leave the Official Cash Rate unchanged at 2.50 percent. In his statement, RBNZ Governor Wheeler said the local economic recovery is getting more “broad-based” and the board sees a possible rate hike sometime next year.

Commodities

Gold had a very tough week as buyers failed to recapture a solid foothold above $1,400. Price did not even touch the $1,400 level despite trading just $6 away from it on Monday. Price went pretty much all downhill since then, and it nearly crossed the $1,300 border as bulls struggled to create an efficient barricade on $1,350 and $1,320. The weak bounce to and close around $1,325 puts bulls in serious danger next week. More supporters are required to buoy price early next week.

Oil performed slightly better than Gold this week as the $108 area continued to magnetize both buyers and sellers. Bulls are in a better position here, so they must promptly lay the foundation next week and aim for higher prices. Topside resistance remains at the $110-$112.50 area.

Currency Pairs

EURUSD traded well bid this week after reaching a 1.3103 low in the prior week. If bullish momentum has indeed been boosted, we could see price propel higher even before mid-week. But raging bulls should proceed with caution when the 1.3400-1.3500 is reached.

GBPUSD led the majors this week and flew high with more than 270 pips. The pair inched closer to the 1.5900 level and closed the week with a very strong finish at 1.5875. Bulls should anticipate potential price caps as sellers try to limit further upside moves. The coming week will be an interesting test on the current bullish momentum’s strength.

USDJPY traded barbs this week as the pair just bobbed up and down in a 160-pip range above 99.00. Although the week closed in the bears’ favor, the pair stayed comfortably above the 99.00 level. Furthermore, potential support could limit further declines in prices. Potential corral is found at 98.50-99.00 to 100.50-110.00.

The Week Ahead

On Monday, New Zealand kicks off the brand new week with the release of Westpac Consumer Sentiment; UK Rightmove HPI; China’s Foreign Direct Investment; Eurozone Consumer Price Index; Italy’s Trade Balance; Canada’s Foreign Securities Purchases; US Capacity Utilization Rate, Empire State Manufacturing Index, and Industrial Production.

On Tuesday, traders will keep an eye on Australia’s Monetary Policy Meeting Minutes; China’s CB Leading Index; Eurozone’s Current Account; UK’s RPI, PPI Input, CPI, and HPI; Eurozone ZEW Economic Sentiment; Canada’s Manufacturing Sales; US CPI and TIC Long-Term Purchases.

On Wednesday, there will be New Zealand’s Current Account; Australia’s MI Leading Index; UK MPC Asset Purchase Facility and Official Bank Rate Votes; and US Housing Starts, Building Permits, FOMC Statement, Federal Funds Rate, and Economic Projections.

Thursday gets to become the busiest again this week with a flurry of economic data releases such as New Zealand Gross Domestic Product; Japan’s Trade Balance; Reserve Bank of Australia’s Bulletin and Annual Report; Switzerland’s Trade Balance, Libor Rate, and SNB Monetary Policy Assessment; UK Retail Sales and CBI Industrial Order Expectations; Canada’s Wholesale Sales; US Jobless Claims, Current Account, Philly Fed Manufacturing Index, and Existing Home Sales.

Friday ends the week with UK Public Sector Net Borrowing, Canada’s Consumer Price Index; and Eurozone Consumer Confidence.

Central Banks Held Rates Steady, US Jobs Data Mixed

It was a very busy week as four central banks made interest rate announcements. The Reserve Bank of Australia, Bank of Canada, Bank of England, and the European Central Bank all maintained their respective rates. RBA’s Cash Rate was held at 2.50 percent, BOC held its Overnight Rate at 1 percent, while both ECB and BOE held rates at 0.50 percent. BOE’s Asset Purchase Facility was also maintained at GBP375 billion.

The UK had quite a stellar week as Manufacturing PMI, Construction PMI, and Services PMI topped their respective estimates (57.2, 59.1, and 60.5, respectively).

US Non-Farm Employment Change missed expectations for its August reading, increasing 169,000 compared to its 178,000 estimate. August Unemployment Rate improved slightly to 7.3 percent, according to the Bureau of Labor Statistics.

Meanwhile, Canada’s Employment Change increased 59,200 in August, while the Unemployment Rate also improved, from 7.2 percent to 7.1 percent. Ivey PMI jumped to 51.0 from 48.4 in the previous month.

Commodities

Gold’s $1,400 level has been pivotal in this week’s trading, but in the end bears were able to close the week slightly on their side. Next week, focus will remain on whether the level can put a lid on price. Near-term areas to watch are $1,350 and $1,430-50.

Oil had another volatile week, and like last week bulls had the upper hand. Unlike the other week, though, bulls completely dominated in this week’s trading, making deep discount buys since early Monday and pushing price upward through $110. In the process, weekly price closed at the highest level since May 2011. It would be fascinating to see whether bulls can continue the momentum next week.

Currencies

EURUSD weakness persisted this week but bears had trouble getting through the 1.3100 level. The pair bounced on Friday but it was not enough to reverse the weekly decline. Key areas to watch next week are 1.3000-1.31000 and 1.3300.

The downside trendline capping USDJPY since May has been duly broken this week. But after the brief excursion above 100.00, the pair has been slammed down very hard on Friday. Price reached a 98.53 low before it was able to close the week just above 99.00. Bulls should make another attempt at closing above 100.00 next week.

GBPUSD had a pretty smooth ride upward, thanks to several favorable data released this week. The steady climbed started near 1.5500 and the pair rose all the way up through 1.5650, topping just ahead of 1.5700. The August top at 1.5716 is looming and bulls should try to blast through it this coming week.

The Week Ahead

The second week of September will turn out to be evenly busy.

On Monday, watch out for Japan’s Current Account and Final GDP; Australia’s Job Advertisements and Home Loans; China’s PPI, CPI and New Loans; Switzerland’s Retail Sales; and Canada’s Building Permits.

On Tuesday, traders will keep an eye on Japan’s Monetary Policy Meeting Minutes and Tertiary Industry Activity; Australia’s NAB Business Confidence and MI Inflation Expectations; China’s Industrial Production and Fixed Asset Investment; BOE Credit Conditions Survey; US JOLTS Job Openings.

On Wednesday, there will be Japan’s BSI Manufacturing Index; Australia’s Westpac Consumer Sentiment; UK Claimant Count Change and Unemployment Rate.

On Thursday, RBNZ will have its Rate Announcement and Monetary Policy Statement. Other noteworthy releases include Japan’s Core Machinery Orders; Australia’s Jobs data; ECB Monthly Bulletin; UK’s Inflation Report Hearings; US Unemployment Claims and Import Prices.

Friday ends the week with New Zealand’s Business NZ Manufacturing Index; Switzerland’s PPI; ECOFIN Meetings and Eurogroup Meetings; US Retail Sales, PPI, and Preliminary UoM Consumer Sentiment.

Raft of Economic Data Ends the Month of August

The final week of August started out very quietly but this all changed as the week wore on.

Orders for US Durable Goods tumbled greater than estimated after three continued monthly advances. Purchase orders for durable goods fell 7.3 percent in July led by capital goods and aircraft, according to the Census Bureau. Core Durable Goods Orders eased for the second month at minus 0.6 percent.

US CB Consumer Confidence climbed to 81.5 in August from last month’s 81.0 reading. This is the third index reading above the 80 level.

US Pending Home Sales contracted, according to the latest report from the National Association of Realtors. Pending sales of existing homes declined 1.3 percent in July, a greater decline than forecast. The rise in mortgage rates is causing concern, putting pressure on Pending Home Sales which has now declined for the second month.

The US economy grew more than expected in the second quarter of this year, the Bureau of Economic Analysis said on Thursday. Preliminary Gross Domestic Product advanced 2.5 percent, compared to the median estimate of 2.2 percent.

US Core PCE Price Index, Personal Spending, and Personal Income all came in at 0.1 percent in July. All were also below their respective forecasts.

In other news, Private Capital Expenditure in Australia surged 4.0 percent (seasonally adjusted) in the June quarter 2013. This puts it back in the black after capital expenditure of private business slumped 4.1 percent in the first quarter of this year.

Meanwhile, in the United Kingdom, the Confederation of British Industry reported Wednesday that CBI Realized Sales jumped to 27 in August, following July’s equally-impressive advance to 17.

Commodities

Bullish momentum in Gold fizzled out as the week progressed. Gold advanced for five days since August 22, but the fifth day saw a marked about-face after price met sellers around the $,1420-50 area. From there, it was all downhill until the Friday close, when bulls had still attempted to print a weekly close above $1,400—but failed. Next week, bulls should strive for a move back up; otherwise, expect $1,350-80 or even lower.

Oil became active and perky this week as news and speculation about a potential attack on Syria has been doing the rounds throughout the internet. From $105.80s on Tuesday, price shot up past $112 before closing the day in the mid-$109s. Expect further volatility in the coming days or weeks.

Currencies

EURUSD failed to capitalize on the recent consolidation this week and slipped through 1.3300 and even 1.3200 before New York closed on Friday. If bearish momentum continues next week, the pair will target the 1.3100 level, ahead of which is where the 200-day MA lies.

USDJPY remained range-bound below the 99.00 level for a fourth straight week. Risk aversion in relation to the potential attack on Syria could provide a lift to JPY in the following weeks. Trading range has tightened up further; hence expect a burst of volatility soon.

Despite a bullish close on Monday, it was all downhill for GBPUSD throughout this week after bulls failed to make price close above 1.5600 since Thursday. Next week, bulls need to move it back above 1.5600 so they can attack stops toward a break of 1.5700.

The Week Ahead

The start of the new month sees a barrage of economic data this week.

On Monday, there will be New Zealand Overseas Trade Index; Japan’s Capital Spending; Australia’s Building Approvals and Company Operating Profits; China’s HSBC Final Manufacturing PMI; Spain’s, UK’s, and Italy’s Manufacturing PMI; Switzerland’s SVME PMI. Canada and the US are on holiday to celebrate Labor Day.

On Tuesday, traders will focus on China’s Non-Manufacturing PMI; Australia’s Current Account, Retail Sales, Interest Rate Announcement, and RBA Rate Statement; Spain’s Unemployment Change; UK Construction PMI; and US ISM Manufacturing PMI.

Australia kicks off Wednesday with the GDP data, followed by UK Halifax HPI; Spain Italy, and UK Services PMI; Eurozone Retail Sales; US and Canada Trade Balance; US Beige Book; BOC Rate Announcement and Statement.

On Thursday, there will be Australia’s Trade Balance; BOJ’s Press Conference and Monetary Policy Statement; BOE’s and ECB’s Rate Announcement and Statement; US Unemployment Claims, ISM Non-Manufacturing, and Factory Orders.

Finally on Friday, the week closes with Germany’s Trade Balance and Industrial Production; Switzerland’s CPI; UK Trade Balance and Manufacturing Production; US Non-Farm Employment Change and Unemployment Rate; Canada’s Ivey PMI, Employment Change and Unemployment Rate.

Federal Reserve Open Market Committee: QE Could Be Tapered Later This Year

According to the latest Federal Reserve Federal Open Market Committee Meeting Minutes, majority of the FOMC participants were “broadly comfortable” with the tapering of the asset purchases “later this year.” The minutes also noted that domestic economic activity has progressed at a moderate pace during the first half of 2013, labor conditions improved, while jobless rate continues at an elevated pace.

US Unemployment Claims grew more than expected in the prior week at 336,000. Meanwhile, the National Association of Realtors said Existing Home Sales advanced 5.39 million in July, its quickest pace since November 2009. On the other hand, the Census Bureau reported New Home Sales plunged to just 394,000 in July and the June reading was revised down to 455,000 from its initial reading of 497,000.

In other news, Flash Manufacturing PMI and Flash Services PMI data were released across Europe. France had them at 49.7 and 47.7, Germany at 51.3 and 51.0, and Eurozone at 52.0 and 52.4, respectively.

UK’s Second Estimate Gross Domestic Product went up 0.7 percent during the second quarter of the year, thanks to advances in manufacturing, construction, and trade. Preliminary Business Investment also increased, 0.9 percent, during the same period.

 Commodities

Gold marched higher for a third straight week and bulls just missed the $1,400 level a few hours before the week ended. It would be interesting to see if there are remaining bears lurking around and above the $1,400 level. We expect layers of resistance ahead of $1,500. Higher targets include $1,550-$1,630.

Tug-of-war rages on in Oil for a seventh straight week. Infighting between bulls and bears focus mainly between $103 and $108 within the broader $102-$109 range. Overall, the risk is slightly to the downside if the weekly declining peaks are a good indication. Expect the consolidation to persist until we get a decent break out of this range.

Currencies

EURUSD managed to complete its third bullish weekly close despite whipsaw moves during several trading sessions. The pair made a fleeting excursion above 1.3400, but overall the level capped throughout the week. We could see bullish attempts to break beyond this level next week.

Thanks to Dollar recovery, USDJPY has emerged successful in this trading week following last week’s achievement in defending the 96.00 level. To keep the momentum going, bulls need to launch a stronger attack to 100-101.50 starting this coming week.

GBPUSD went from a leader to a laggard after the pair failed to hold on to its gains above the 1.5700 level. This move broke the string of weekly advances which started in the low-1.5200s. Despite this, bulls are still ahead but they need to maintain support at 1.5500 if any attacks surface next week.

The Week Ahead

On Monday, there will only be New Zealand’s Trade Balance and US Durable Goods Orders. UK banks will observe the Summer Bank Holiday.

On Tuesday, traders will only have to look at Germany’s Ifo Business Climate and US CB Consumer Confidence.

Economic releases pick up the pace on Wednesday with Australia’s Construction Work Done; Gfk German Consumer Climate; Eurozone M3 Money Supply; UK CBI Realized Sales and BOE’s Carney speech; and US Pending Home Sales.

On Thursday, there will be Japan Retail Sales; New Zealand’s ANZ Business Confidence; Australia’s Private Capital Expenditures; Germany’s Preliminary CPI; Switzerland’s Employment Level; Canada’s Current Account and RMPI; and US Preliminary GDP and Unemployment Claims.

Finally August ends on Friday with Japan’s Household Spending, Preliminary Industrial Production, and Tokyo Core CPI; Australia’s Private Sector Credit; Germany’s Retail Sales; UK Nationwide HPI and Net Lending to Individuals; and US Chicago PMI and Revised UoM Consumer Sentiment.

Bank of England Votes in Favor of QE and Bank Rate Status Quo

The Bank of England’s Monetary Policy Committee remained in consensus in terms of Asset Purchase Facility and Official Bank Rate votes, but not in terms of forward guidance. The committee voted unanimously in favor of retaining the QE and the bank rate. However, Martin Weale dissented, in favor of a stricter stance with regards above-average inflation.

UK Claimant Count Change has declined for the ninth straight month, decreasing a little over 29,000 in July. Unemployment Rate stood at 7.8 percent for the fourth straight month. Retail Sales increased 1.1 percent, following the prior month’s mild 0.2 percent gain.

In other news, New Zealand posted a surprise increase in the June quarter Retail Trade Survey. According to Statistics New Zealand, Retail Sales rose 1.7 percent, the second strongest reading in the last six quarters. Core Retail Sales was nearly double than expected, 2.3 percent.

The US Empire State and Philly Fed Manufacturing Index both disappointed with readings of 8.2 and 9.3. Analysts were expecting above 10-level readings. The same happened with the Preliminary reading of the University of Michigan Consumer Sentiment, which stood at 80.0 compared to 85.6 expectations by analysts surveyed.

Commodities

Gold launched the week with a good start and ended in the same fashion, maintaining its stance above the $1,300 level all the way through. With fresh momentum on the side of the bulls, they are ready to tackle remaining bear defense lurking around $1,400. Layer of resistances are scattered through $1,500.

Oil completed the week with five straight days of advances, bringing price closer to fulfilling the expected triple top. There is a potential thick layer of defense around $108-$109, so buyers need to be extra vigilant.

Currencies

EURUSD managed a V-shaped recovery after blasting higher by more than 150 pips on Thursday, effectively erasing the losses built on the early part of the week. Bulls will surely aim for a trek above the 1.3400 level this coming week.

USDJPY started the week well bid but a significant turnaround happened on Thursday which thwarted a great bullish advance. Based on this price action, it appears bears remain in control; hence bulls need to act with conviction next week in order to significantly reverse the bearish momentum.

GBPUSD led the majors this week as the pair rocketed above the 1.5600 level after breaking away from the sticky 200-day MA which influenced price for a week. Bullish target this week could go as high as 1.5800-1.5900. Before that, June’s 1.5750 high needs to be taken out of the way.

The Week Ahead

The coming week is rather quiet relative to its normal state.

On Monday, there will only be New Zealand’s PPI Input; Japan’s Trade Balance; Australia’s New Motor Vehicle Sales.

On Tuesday, traders will focus on Australia’s Monetary Policy Meeting Minutes; New Zealand’s Inflation Expectations; Germany’s Producer Price Index; Canada’s Wholesale Sales.

Wednesday is unusually quiet, with just a few key releases such as UK Public Sector Net Borrowing and CBI Industrial Order Expectations; US Existing Home Sales and FOMC Meeting Minutes.

Thursday tops the week with the most releases, particularly Australia’s CB Leading Index; China’s HSBC Flash Manufacturing PMI; Eurozone, France, and Germany Flash Manufacturing PMI and Flash Services PMI; US Unemployment Claims and Flash Manufacturing PMI; Canada’s Retail Sales

Finally on Friday, the week winds down with the release of Germany’s Final GDP; UK Second Estimate GDP, Prelim. Business Investment, and BBA Mortgage Approvals; Canada CPI; and US New Home Sales. The Jackson Hole Symposium, to be held in Wyoming, will also start today and is expected to end on Sunday.