Fundamental Weekly Forecasts for US Dollar, GBPUSD, AUDUSD, and GOLD: Greece News, US Jobs Data for Direction

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Sergey Golubev, 2015.06.29 20:45

Danske Bank 'Buy SEK, NOK, CHF And Sell NZD, USD, CAD for this week' (based on efxnews article)

• This week the scorecard recommends buying SEK, NOK and CHF, and selling NZD, USD and CAD (see suggested weights in portfolio in table below). 
• The recommendation to  buy the Scandies and the Swissie derives largely from last week’s dire performance (i.e. a mean reversion argument) and fits neatly with the likelihood that risk-off sentiment will dominate markets at the start of what looks set to be a chaotic week for Greece. NOK is also favoured due to positioning and the risk premium component.
• While the  scorecard suggests selling USD  this week  due to  technicals, last week’s price action and still stretched positioning, we note in relation to the latter component that IMM data actually suggests that there should be room to add  to longs in USD as we are still some way off the highs for the year, see  IMM Positioning: Still decent room for USD longs to be added.
• Last week’s signals resulted in a  close to 2%  gain.  The short EUR position  in particular performed well due to the sell-off in EUR crosses this morning as Grexit risk has intensified.

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GBPUSD, M5, 2015.06.30

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GBPUSD M5: 28 pips price movement by GBP - GDP news event

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Sergey Golubev, 2015.06.30 12:44

Euro area annual inflation down to 0.2% (based on official report)

Euro area annual inflation is expected to be 0.2% in June 2015, down from 0.3% in May 2015, according to a flash estimate from Eurostat, the statistical office of the European Union.

EURUSD M5: 35 pips price movement by EUR - CPI Flash Estimate news event:

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Press review

Sergey Golubev, 2015.06.30 19:30

Bank of America Merrill Lynch about Non-Farm Payrolls on Thursday (based on efxnews article)

• "The employment report is likely to show another solid month of job creation in June. We look for job growth of 220,000, a slowdown from the 280,000 pace in May but consistent with the recent trend.
  As a result, the unemployment rate will likely lower to 5.4% from 5.5%. With the continued tightening in the labor market, we think average hourly earnings (AHE) will increase a “strong” 0.2%, allowing the yoy rate to hold at 2.3%."
• "Within the components of the establishment survey, we expect private payrolls of 215,000 with the government only adding 5,000. Similar to last month, we expect the goods side of the economy to reveal weaker job creation, consistent with the softer trajectory of industrial production and capital expenditures. Moreover, we have yet to see the end of job cuts in the energy-related sectors. That said, there should be some support from greater construction hiring given the improvement in homebuilding. On the services side, we look for broad-based expansion in jobs with particular gains in leisure and hospitality and overall business services."
• "The household survey, which provides the data on the unemployment rate, should also show solid job growth. The three-month average has been a bit softer than nonfarm payrolls, with growth of only 166,000, but the six-month average has been consistent at 244,000. A wildcard is the change in labor force participation. After a sharp gain of 0.11% in May, we look for little change in June, given the volatile nature of the series. Smoothing through, the labor force participation rate has been essentially moving sideways since last fall, suggesting that a cyclical gain has managed to offset the secular downward pull."