Press review - page 416

[Sergey Golubev]

Fundamental Weekly Forecasts for Dollar Index, GBP/USD, USD/JPY, AUD/USD, USD/CAD, USD/CNH and GOLD (based on the article)

Dollar Index - "If there is any imbalance in one of these major regions of the world, it is unlikely that emergent pressures on the traditional dual mandate will lead the Fed to potentially-risky rate hikes. On the other hand, if any of these critical areas implode; the implications for global risk trends could prove a boon for the Greenback. The Dollar has seen its position as a safe haven intensify significantly recently with the options for reserve alternatives diminishing post Brexit (brining the second and third most liquid reserve currencies – Euro and Pound – down with it). In the event of a sentiment slide that pulls down equity markets like the S&P 500, the need for safe harbor would revive a dormant appetite for the benchmark."

GBP/USD - "In August, the Bank of England will deliver forecasts and projections along with their rate decision and this could be a likely time to get a pulse from the bank for monetary policy moving forward. If the BOE doesn’t cut next week, we will likely see a cut at this meeting in August. And even if we do get a rate cut next week, should weakness persist, we may see a second rate cut to zero at this August meeting. There has even been increasing odds of negative rates showing up at the BOE’s rate decision in December. And while this may be a far distance from where we’re at today, the one thing that should be clear is that the BOE isn’t taking this lightly. In the near-term, this is a negative for the British Pound as it means that we likely haven’t seen the end of that ‘sharp re-pricing’ that Mr. Carney had warned us about two months ago, and the bank likely isn’t done making moves in an attempt to proactively off-set the risks emanating from Brexit."

USD/JPY - "The Bank of Japan (BoJ) may also stick to the sidelines and retain its current stance at the next rate decision on July 29 as the central bank continues to assess the impact of the negative-interest rate policy (NIRP). Even though the BoJ largely preserves a dovish outlook for monetary policy, Governor Haruhiko Kuroda and Co. may attempt to buy more time especially as Prime Minister Shinzo Abe delays the sales-tax hike and pledges to take ‘bold’ steps to foster a stronger recovery."

AUD/USD - "Domestic news-flow could limit sentiment-inspired weakness. June’s Employment report is expected to show job creation slowed a bit compared with the prior month but Australian data’s tendency to outperform over the past two months opens the door for an upside surprise. That may weigh against RBA easing expectations, although traders still lean in favor of a cut at the next meeting despite supportive data news-flow."

USD/CAD - "We have heard the Bank of Canada voiced concern over slack in the job market while being encouraged by his services and non-energy export-led recovery. Last week’s trade balance and employment report may change their tone to either a more accommodative stance or at least a lower rates for longer positioning to help the economy find its footing." 

USD/CNH - "The PBOC may continue to guide the Yuan lower against the US Dollar in the effort of maintaining the Chinese currency’s relative stability to the currency basket. The probability of the Bank of England cutting rates by 25bp is 18.2% according to Credit Suisse. If the British Pound continues to drop, such as it would if being driven by a rate cut, the PBOC has to devalue the Yuan against the US Dollar in the effort to evening-out changes in the Yuan basket. Or else, the PBOC needs to revise its exchange rate target, such as temporarily re-pegging the Yuan against the US Dollar and loosening reference to the currency basket. Either move could bring a huge impact to the Dollar/Yuan rate."

GOLD (XAU/USD) - "Aside from the economic docket, traders will be lending a keen ear to a fresh batch of central bank rhetoric with Kansas City Fed President Esther George, Cleveland Fed President Loretta Mester, Fed Governor Daniel Tarullo, St. Louis Fed President James Bullard, Minneapolis Fed President Neel Kashkari, Dallas Fed President Robert Kaplan, Philadelphia Fed President Patrick Harker and Atlanta Fed President Dennis Lockhart slated for speeches next week. The release of the Federal Reserve’s Beige book on Wednesday will also be of interest as we get the updated assessment on the Fed’s twelve districts. Although the fundamental story for hasn’t, the technicals point to a massive resistance confluence which could cap further advances near-term."

[Sergey Golubev]

Technical Targets for EUR/USD by United Overseas Bank (based on the article)

H4 price is located below Ichimoku in the primary bearish area of the chart: price is on ranging within the following narrow support/resistance levels:

• 1.1120 resistance level located on the border between the ranging bearish and the primary bullish trend on the daily chart, and
• 1.1001 support level located far below Ichimoku cloud in the bearish area of the chart.

Absolute Strength indicator together with Chinkou Span line are estimating the ranging bearish condition to be continuing.

Daily price. United Overseas Bank is considering for EUR/USD with the contuning the primary bearish market condition to be lower than 1.0820:

"While EUR dropped to 1.0995/00 last Friday (lowest level seen this month), downward momentum is far from impulsive and it is doubtful that this pair would accelerate lower from here. However, looking further ahead, a move to 1.0820 cannot be ruled out just yet as long as 1.1185 is intact. In the meanwhile, further short-term sideway trading above the recent 1.0909 low seems likely and only a clear break below this level would indicate that the next bearish leg lower has started."

• If daily price breaks 1.1185 resistance level on close bar so the local uptrend as a bear market rally will be started.
  
• If daily price breaks 1.1001 support level on close bar so the primary bearish trend will be continuing up to 1.0911 bearish target to re-enter.
• If not so the price will be ranging within the levels.

[Sergey Golubev]

AUD/USD Intra-Day Fundamentals: National Australia Bank Business Confidence and 44 pips price movement

2016-07-12 01:30 GMT | [AUD - NAB Business Confidence]

• past data is 3
  
• forecast data is n/a
  
• actual data is 6 according to the latest press release

if actual > forecast (or previous one) = good for currency (for AUD in our case)

[AUD - NAB Business Confidence] = Level of a diffusion index based on surveyed businesses, excluding the farming industry.

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Business confidence rises despite Brexit, election campaign :

• "NAB's widely watched monthly business survey was undertaken in June amidst the uncertainty generated by the Brexit vote and Australia's federal election campaign.
• "It shows business confidence bouncing back to +6, a level last seen in April, and conditions surging from +10 to +12 in June.
• "NAB said that level of business conditions is consistent with post-GFC highs.
• "We are very much seeing a continuation of the positive trends evident in the survey for some time now."
• "Strong activity seems to be having a positive effect on labour demand in the survey, despite recent 'questionable' official labour market statistics suggesting otherwise."
• "The mining sector was the only one with negative conditions, although it recorded an improvement. However, retail did record a fairly steep fall in conditions."
• "The deterioration in retail coincides with big declines in retail price growth, highlighting the competitive and cost pressures facing the industry."

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AUD/USD M5: 44 pips price movement by National Australia Bank Business Confidence news event :

[Sergey Golubev]

S&P 500 Sets New Record (adapted from the article)

Analysts at Goldman Sachs estimated that S&P 500 is expected to fall by 3% year over year, but anyway - the daily price is making new high now at 2,137 by bullish breakout for example:

• "U.S. stocks delivered another strong performance Monday, with the S&P 500 climbing to a fresh record high."
• "The benchmark S&P index closed at 2,137.16, up 0.3% for the day, and above its previous record finish, 2,130.82 on May 21, 2015. At the day’s best levels, the S&P hit a new all-time high of 2,143.16."

[Sergey Golubev]

Foreign Exchange post-Brexit Vote - China's Economy: Between a Rock and a Hard Place (based on the article)

• "The Chinese economy appears to be stuck in an uncomfortable and unsustainable quasi-equilibrium in which growth is just about stopped from falling further through continued central-bank and financial regulator-promoted credit growth and selective fiscal stimulus, funded by local governments borrowing and debt issuance by SOEs and other large corporates.  This interruption of the decline in China’s growth rate is achieved through means that increase the likelihood of an eventual larger decline in growth, commonly referred to a “hard landing”.  Adding debt to the already over-leveraged balance sheets of local governments and non-financial corporates and adding productive capacity in sectors already plagued by excess capacity are the wrong kind of counter cyclical demand stimulus."
• "The RMB has depreciated ~8% from ~6.2 to ~6.7 RMB/USD in one year, weakest since Oct 2010.  The risk of a resumption of capital outflows driven by expectations of near-term RMB weakening is therefore rising.  The official FX reserve figures of over $3.1 trillion overstate the amount of ammunition available to defend the RMB, as $1 trillion or more of these reserves may be encumbered through forward and futures interventions. (When selling FX forward to stop the RMB weakening, one will have to deliver the FX at a future date.  So we need to subtract that the future FX delivery from the current stock of reserves.)"
• "The strengthening of the US dollar in response to the Brexit vote on June 23rdputs further pressure on the RMB.  The key advanced industrial regions of the world (North America, the EU and Japan) are unlikely to match last year’s growth this year as a result of rising policy uncertainty including the political tensions and banking sector weakness in Europe and the forthcoming US elections."

[Sergey Golubev]

GBP/USD Intra-Day Fundamentals: BoE Financial Stability Report speech and 40 pips price movement

2016-07-12 09:00 GMT | [GBP - BoE Gov Carney Speaks]

• past data is n/a
  
• forecast data is n/a
  
• actual data is n/a according to the latest press release

[GBP - BoE Gov Carney Speaks] = The speech about the Bank of England Financial Stability Report before the Treasury Select Committee, in London.

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GBP/USD M5: 40 pips price movement by BoE Financial Stability Report speech news event :

[Sergey Golubev]

How low can sterling go? (review of the article)

There are some forecastings made by some int'l financial institutions related to the GBP/USD pair movement in the long-term situation:

• Goldman Sachs: "sterling hit $1.20 within three months."
• Deutsche Bank, Société Générale, UBS, JPMorgan, and HSBC: "price targets ranging from $1.15 to $1.20."
• Allianz: "sterling could even “head to parity” with the dollar."

If we look at the weekly chart so we can see that the price is located too far from 100 SMA/200 SMA area for any possible bullish reversal in this year for example. And if the price breaks 1.2794 to below so  the bearish trend will be continuing without ranging up to the new bottom to be formed. So, seems, the key level which should be broken by the price is 1.2794.

And it is too early to speak about 1.20 or 1.15 levels for now if the key level at 1.2794 is not yet broken to below.

[Sergey Golubev]

S&P 500 Short-Term Technical Analysis: watch for key support to be broken for possible sell trade (adapted from the article)

The one hour price is located above 100 period SMA (100 SMA) and 200 period SMA on the bullish area of the chart. The price is breaking 2147.25 resistance level to above for the bullish trend to be continuing.

• "Let’s take a look at the hourly chart: At this time, with the market trading in record territory there is no actual horizontal price levels which act as resistance, obviously. There is a top-side trend-line at this immediate moment extending back to the 7/4 peak which could help contain further momentum today. Just below, is the parallel of the top-side trend-line which crosses under lows made yesterday and today. This small channel will be used as a short-term guide. Stay within or above, then market will remain firm to higher."
• "A break below the channel will put the ‘Brexit’ high at 2127 into focus and not too far below there, the rising trend-line off the 6/27 low. The two angles of influence could very well collide with another, strengthening the 2127 level. A decline below both technical markers would open the door up for a move to the 7/4 high at 2112 (highly unlikely we see this level today without a major catalyst)."

Alternative, breaking 2119.25 level to below will lead to the secondary correction, and if the price breaks support level at 2065.50 so the bearish reversal will be started.

The 4 hour price is breaking 2147.25 resistance together with ascending triangle pattern to above for the bullish trend to be continuing.

• If H4 price breaks 2147.25 resistance level so the bullish trend will be continuing reversal will be started.
  
• If H4 price breaks 2119.25 support so the local downtrend as the secondary correction within the primary bullish market condition will be started.
• If H4 price breaks 2065.50 support so we may see the reversal of the price movement from the bullish to the primary bearish condition.
• If not so the price will be ranging within the levels.

Resistance	Support
2147.25	2119.25
N/A	2065.50

[Sergey Golubev]

AUD/USD Intra-Day Fundamentals: Westpac-Melbourne Institute Consumer Sentiment and 17 pips price movement

2016-07-13 00:30 GMT | [AUD - Westpac Consumer Sentiment]

• past data is -1.0%
• forecast data is n/a
  
• actual data is -3.0% according to the latest press release

if actual > forecast (or previous one) = good for currency (for AUD in our case)

[AUD - Westpac Consumer Sentiment] = Change in the level of a diffusion index based on surveyed consumers.

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• "With the major events of ‘Brexit’ and prolonged election uncertainty it is not surprising to see a fall in the Index. In fact, given these developments, this fall appears to be surprisingly modest."
  
• "The survey was conducted over the period July 4 to July 7. By the time of the survey market volatility associated with ‘Brexit’ had largely settled down and media commentary was, correctly in my view, concentrating on the implications for the UK economy rather than the initial reaction which speculated on some disastrous contagion for the whole of Europe. However concerns would have lingered for many respondents given the blanket publicity which the ‘Brexit’ development received."
  

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AUD/USD M5: 17 pips price movement by Westpac-Melbourne Institute Consumer Sentiment news event :

[Sergey Golubev]

USD./JPY Intra-Day Fundamentals: Japan Indices of Industrial Production and 29 pips price movement

2016-07-13 04:30 GMT | [JPY - Industrial Production]

• past data is -2.3%
• forecast data is -2.2%
• actual data is -2.6% according to the latest press release

if actual > forecast (or previous one) = good for currency (for JPY in our case)

[JPY - Industrial Production] = Change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.

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USD./JPY M5: 29 pips price movement by Japan Indices of Industrial Production news event :