Technical Analysis - GBPUSD bearish breakdown with 1.4634 weekly support level

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newdigital, 2015.04.10 19:22

Forex Weekly Outlook Apr. 13-17 (based on forexcrunch article)

The US dollar managed to stage a recovery after the previous blows, especially against the majors. A busy week awaits traders with US inflation and consumer data as well as rate decisions in Canada and the euro-zone among other events. Here is an outlook on the highlights of this week.

US data began recovering and the dollar followed. The ISM Non-Manufacturing PMI was OK and JOLTs beat expectations. But it was the meeting minutes that provided the greenback with the biggest push: they revealed that in March, some members talked about hiking in June. Despite the known fact about the existence of hawks and the timing of the meeting before the weak NFP, the greenback soared. It probably remains the cleanest shirt in the dirty pile. Elsewhere, Greek worries weighed on the euro, elections worries hurt the pound and the yen also slid. The Aussie stood out, enjoying yet another “no change” decision by the RBA.

1. UK CPI: Tuesday, 8:30. Inflation in the UK reached a flat 0% in February, a figure that alarmed many. Will Britain enter deflation? This could push back any potential rate hike for even longer and also cast its shadow on the euro-zone. Official expectations stand on another 0% read y/y.
2. US Retail Sales: Tuesday, 12:30. For a third consecutive time, retail sales squeezed and disappointed. The fall of 0.6% in February will likely be followed by a bounce in March of 1.1%. Also core sales have followed the same pattern with a drop of 0.1% in February. Also here, a bounce is on the cards: +0.7%.
3. US PPI: Tuesday, 12:30. Producer prices serve as a warm up to consumer prices. After a drop of 0.5% in both headline and core figures in February, rises are expected in both, 0.2% and 0.1% respectively, especially as oil prices have stabilized.
4. Chinese GDP: Wednesday, 2:00. The world’s No. 2 economy has grown at a pace of 7.3% in Q4 2014 and is expected to experience slower growth in Q1. Some say it is inevitable and others say it is wisely engineered by the leadership. Growth in China closely impacts Australia but certainly has implications for the entire world. A slide to 7% y/y is on the cards and as authorities wish to see.
5. Euro-zone rate decision: Wednesday, decision at 11:45, press conference at 12:30. In the last meeting by the ECB in early March, Draghi showed determination in implementing the QE program announced in January. Implementation has begun and it is going well. The Bank made it clear that success of the euro-zone in general and particularly regarding inflation depends on full implementation. Will he continue the same determination? If so, the euro would feel the weight. If optimism rises due to the recent signs of growth, we could see the common currency rise. The interest rate is expected to remain unchanged at 0.05% with a negative deposit rate of 0.20%. The latter serves as the lower bar for buying bonds in the QE program
6. Canadian rate decision: Wednesday, 14:00. The Bank of Canada left the interest rate unchanged at 0.75% and is expected to do so once again. After the surprise cut in January, Poloz and his team seemed more optimistic about the economy and hinted that this was not the beginning of a new loosening cycle. How will they sound now? Worries about Q1 growth could be echoed in the statement. Note that the release is followed by a press conference at 15:15.
7. Australian employment data: Thursday, 2:30. Australia enjoyed job growth in February: 15.6K jobs were added. Also the unemployment rate went in the right direction and dropped to 6.3%. In the bigger scheme of things, unemployment is still on the rise and is likely to rise later on in the year. Very similar number are expected now: a gain of 15.1K jobs and an unemployment rate of 6.3%.
8. US housing data: Thursday, 12:30. These figures went in different directions: building permits rose to a promising 1.09 million (annualized) in February, while housing starts stood on 0.90 million. The latter can be blamed on the cold winter weather, while the former is more forward looking. Building permits are expected to stand at 1.08 million (annualized) and housing starts to bounce back to 1.04 million. Note that revisions are quite common here.
9. US unemployment claims: Thursday, 12:30. The weekly gauge of jobs did bounce back from the lows but beat expectations by hitting 281K. Perhaps more importantly the moving average fell to levels last seen many years ago at 282K. It was above 300K not too long ago. A small rise to 284K is on the cards.
10. US Philly Fed Manufacturing Index: Thursday, 14:00. The regional figure is for the month of April, providing a fresh insight on the manufacturing situation. 4 consecutive misses on expectations set the number on 5 points last time. A small rise is likely: 5.5 points.
11. UK employment data: Friday, 8:30. This is the last jobs report before the May elections and carries more political weight. The claimant count change, aka jobless claims, continued dropping quickly in February: 31K. A similar number is probable now – a slide of 28.5K. The unemployment rate is also going in the right direction, and stood on 5.7% in January. A drop to 5.6% is expected. This is what the current conservative coalition government is championing. However, the average earnings index has risen by only 1.8% y/y in January, and this provides fuel for the opposition Labour. A tick down to 1.7% is expected now.
12. US CPI: Friday, 12:30. When looking at the headline number, the US is experiencing deflation, but this is clearly oil-related. Year over year core inflation is actually on the rise, reaching 1.7% in February. Both monthly indicators rose 0.2% last time and could follow suit this time, with +0.3% in the headline number and +0.2% in the core figure.
13. US Consumer Confidence: Friday, 14:00. The Reuters / University of Michigan consumer confidence survey edged up to 93 points in the final read for March. We now get the preliminary figure for April and a higher score is expected: 93.8 points.

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newdigital, 2015.04.11 10:34

GBPJPY Crushed As Yen Gains (based on countingpips article)

The British pound was seen trading lower against the Japanese yen, as the latter one was bid across the board. Plus, the British also weakened in the short term igniting downside reaction in GBPUSD, GBPJPY. There are a few major releases lined up in the UK, including the industrial production data and the manufacturing report. The UK Industrial Production measuring outputs of the UK factories and mine will be released by the National Statistics. The forecast is lined up for an increase of 0.3% in February 2015, compared to the previous decline of 0.1%. Let us see how the outcome shapes and affects the British Pound moving ahead.

There was a minor bullish trend line formed on the hourly chart of the GBPJPY pair, which was broken recently by sellers. There was a sharp downside reaction after the break and the pair was seen testing the 177.00 area. The British pound buyers managed to protect losses around the mentioned area and it is currently correcting higher. However, it faces the same trend line as resistance, which is also coinciding with the 23.6% fib retracement level of the last drop from the 178.05 high to 177.00 low. The hourly RSI is well below the 50 level signalling more losses in the near term. Moreover, the 100 and 200 simple moving averages on the way up are also barriers for the pair.

If the GBPJPY continues to move lower from the current levels, then a break below the recent low could take it towards 176.46

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newdigital, 2015.04.14 11:51

The Next Big Levels In EUR/USD, GBP/USD, USD/CAD - Goldman Sachs (based on efxnews article)

Starting with EUR/USD, GS notes that it peaked least week right underneath an important resistance area at 1.1052-1.1099, a  region included the interim high (bearish key day reversal) from Mar. 26th , the interim low from Jan. 26th and the 55-dma.

"It’s since broken lower from a triangle type pattern (ABCDE). Triangles tend to be characteristic of wave 4s which in this case suits the underlying wave count and implies that there is further downside potential.  The next near-term support stands down at 1.0487- 1.0458 (1.618 extension from Mar. 26th and the low from Mar. 15th)," GS projects.

Bigger picture, GS targets f EURUSD at 1.0286-1.0103 pivot which includes 76.4% retrace of the entire ‘00/’08 rise as well as an equality target taken from the Jul. ’08 peak.

Moving to GBP/USD, GS notes that it has broken trendline support and this should in theory be a strong signal opening up potential to accelerate lower.

"The next big level lower is 1.4372-1.420. This includes two long-term Fibonacci retracements and the low from May ’10...Put simply, it appears that GBPUSD is gradually making its way down to the bottom of its multi-decade range," GS projects.

Finally in USD/CAD, GS thinks that the focus should be back on the range highs; 1.2799-1.2835.

"Would however need a clean break above 1.2799-1.2835 to cancel out the risk of a double top and to diminish the bearish implications of the bearish key day reversal which formed on Mar. 18th . Ideally want to play the range until a break in either direction is finally attain," GS advises.

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newdigital, 2015.02.03 18:48