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The US dollar was on the back foot in a week that saw quite a few breakouts. As the new quarter begins, top tier events are due in the busy calendar. The peak is the early Non-Farm Payrolls release, which happens at the same time that Draghi begins talking. Here is an outlook on the highlights of this week.
The divergence between past and present data became extreme: Q1 contraction was revised to a terrible 2.9% and it certainly hurt the dollar. How will the US reach 2.2% growth in 2014 this way? Well, Q2 continues to look good, with excellent home sales and rising consumer confidence. In the euro-zone, data remains weak, while in the UK, the BOE watered down its comments and sent GBPUSD down. NZD/USD stood out with a challenge of the yearly highs and the loonie continued recovering.
AUDUSD Fundamentals (based on dailyfx article)
Fundamental Forecast for Australian Dollar: BearishDomestic policy returns to focus for the Australian Dollar in the week ahead as all eyes turn to the RBA interest rate decision. Economists’ expectations suggest Governor Glenn Stevens and company will leave the baseline lending rate unchanged yet again. The markets seem to agree, with a Credit Suisse gauge tracking the priced-in policy outlook putting the probability of an adjustment at a mere 1 percent. That puts the spotlight on the statement accompanying the announcement, with traders combing through the document’s verbiage to tease out the central bank’s thinking on where it intends to go in the months ahead.
For the past two months, the combination of the post-meeting RBA statement and the subsequent release of minutes from the sit-down have left investors with a dovish lean in their forward outlook. The statements themselves have struck a fairly neutral tone, steadfastly arguing for a period of stability in benchmark borrowing costs. The minutes have added some dovish color, reflecting a central bank uneasy about a return to tightening. That is not surprising: Australian economic news-flow has dramatically deteriorated relative to consensus forecasts since mid-April, warning against taking any steps that might make matters worse.
July’s meeting seems likely to offer more of the same. While the economy continues to look fragile, it does not seem to have become substantially more so since policymakers convened in June. That opens the door for the status quo to remain in place. Interestingly, the absence of a change in the RBA’s posture may still carry important directional implications for the Aussie. Having previously moved tracked closely with Australia’s 2-year bond yield, the currency has increasingly diverged in recent weeks. While the Australia-US front-end yield spread has moved sharply lower, AUD/USD has continued to oscillate in a range loosely defined between the 0.92 and 0.95 figures.
On balance, this seems to leave the door open for a correction. Moving past the RBA announcement without material changes to the landscape may put a spotlight on the increasingly disconnect between the exchange rate and relative policy bets, forcing the Aussie to correct downward. The move may be amplified by a set of high-profile US data releases. Manufacturing- and service-sector ISM figures as well as the closely-monitored Nonfarm Payrolls reading are in the spotlight. Expectations call for only nominal changes on both fronts, keeping the present setting of investors’ Fed policy bets broadly intact. Cumulatively, the emerging narrative tells of a US central bank that is cautiously reducing stimulus and an Australian one that isn’t, prodding investors to take heed of the shifting landscape and respond accordingly.
The EUR/USD pair broke higher during the course of the week, but still remains stuck in the consolidation area we have been in for several weeks now. It is not until we get above the 1.37 level of that we feel comfortable buying this market on more of a longer-term move. A break down below the 1.35 level since this market much lower, probably looking for the 1.33 handle, or perhaps even as low as the 1.31 level. In the meantime, we think this market going to be a little bit tight for longer-term traders to be involved in.
EUR/USD Forecast Jun 30-Jul 4
EUR/USD did not go too far in the last full week of the quarter, and remained in range. It might be just the time now for the pair to pick a direction: the ECB meeting is undoubtedly the highlight of the week, yet also inflation numbers will eb closely watched. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD.
Forward looking PMIs in the euro-zone fell short of expectations, especially in France. Germany is not doing too well either, with a drop in the IFO Business Climate. However, German inflation is finally moving up and this could calm the ECB. In the US, there seems to be an even clearer separation between the horrible first quarter (as reflected in a 2.9% annualized contraction of GDP) and the more upbeat economic activity in Q2, as seen in strong home sales and consumer confidence.
The Australian dollar edged higher against its U.S. counterpart on Friday, amid speculation the Federal Reserve will keep interest rates at record-low levels for a considerable time.
AUD/USD hit 0.9444 on Wednesday, the pair’s highest since April 10, before subsequently consolidating at 0.9423 by close of trade on Friday, up 0.09% for the day and 0.35% higher for the week.
The pair is likely to find support at 0.9353, the low from June 25 and resistance at 0.9444, the high from June 23.
Upbeat U.S. consumer sentiment data released Friday failed to dispel concerns over the outlook for the wider economic recovery.
The final reading of the University of Michigan's consumer sentiment index rose to 82.5 this month from 81.9 in May, compared to expectations of 82.2.
The report did little to alter expectations that the Federal Reserve will keep rates on hold for an extended period after data earlier in the week showed that U.S. first quarter growth was revised sharply lower.
The dollar weakened broadly after the Commerce Department said Wednesday that the U.S. economy contracted at an annual rate of 2.9% in the first three months of the year, compared to the consensus forecast for a decline of 1.7%.
U.S. first quarter GDP was initially reported to have increased by 0.1%, but was subsequently revised to show a contraction of 1.0%.
The dollar came under additional pressure after data on Thursday showed that U.S. consumer spending rose by just 0.2% in May, below forecasts for 0.4%.
In the week ahead, investors will be looking to the U.S. nonfarm payrolls report on Thursday for further indications on the strength of the labor market, while the Reserve Bank of Australia’s policy meeting on Tuesday will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, June 30
- The U.S. is to produce data on manufacturing activity in the Chicago region and a report on pending home sales.
Tuesday, July 1- The Reserve Bank of Australia is to announce its
benchmark interest rate and publish its rate statement, which outlines
economic conditions and the factors affecting the monetary policy
decision.
- Later Tuesday, the Institute of Supply Management is to publish a report on U.S. manufacturing activity.
Wednesday, July 2- Australia is to release data on the trade balance, the difference in value between imports and exports.
- The
U.S. is to release the ADP report on private sector job creation, which
leads the government’s nonfarm payrolls report by two days. The U.S. is
also to release data on factory orders.
- Later Wednesday, Fed Chair Janet Yellen is to speak at an event in Washington; her comments will be closely watched.
Thursday, July 3- Australia is to publish data on building approvals and
retail sales. RBA Governor Glen Stevens is to speak at an event in
Hobart.
- The U.S. is to release data on the trade
balance, as well as the weekly report on initial jobless claims. The
U.S. is also to publish what will be closely watched government data on
nonfarm payrolls and the unemployment rate, one day ahead of schedule
due to the fourth of July holiday.
- Later Thursday, the ISM is to publish a report service sector activity.
Friday, July 4The euro moved higher against the broadly weaker dollar on Friday as concerns over the outlook for U.S. economic growth continued to weigh, despite a report showing that U.S. consumer sentiment improved this month.
EUR/USD ended Friday’s session at 1.3649, up 0.28%. For the week, the pair added 0.43%.
The pair is likely to find support at 1.3600 and resistance at 1.3670.
The dollar remained lower after data on Friday showed that the final reading of the University of Michigan's consumer sentiment index rose to 82.5 this month from 81.9 in May, compared to expectations of 82.2.
The report did little to alter expectations that the Federal Reserve will keep rates on hold for an extended period after data earlier in the week showed that U.S. first quarter growth was revised sharply lower.
The dollar weakened across the board after the Commerce Department said Wednesday that the economy contracted at an annual rate of 2.9% in the first three months of the year, compared to the consensus forecast for a decline of 1.7%.
U.S. first quarter GDP was initially reported to have increased by 0.1%, but was subsequently revised to show a contraction of 1.0%.
The dollar came under additional pressure after data on Thursday showed that U.S. consumer spending rose by just 0.2% in May, below forecasts for 0.4%.
The euro was flat against the yen late Friday, with EUR/JPY at 138.45, and ended the week down 0.22%.
The yen was boosted after stronger-than-forecast data on Japanese retail sales for May curbed expectations for additional monetary easing by the Bank of Japan.
In the week ahead, investors will be looking to the U.S. nonfarm payrolls report on Thursday for further indications on the strength of the labor market, while Monday’s euro zone inflation report will also be in focus, ahead of the European Central Bank’s policy meeting and press conference on Thursday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, June 30
- The euro zone is to produce preliminary data on
consumer price inflation, which accounts for the majority of overall
inflation. Meanwhile, Germany is to publish data on retail sales, the
government measure of consumer spending, which accounts for the majority
of overall economic activity.
- The U.S. is to produce data on manufacturing activity in the Chicago region and a report on pending home sales.
Tuesday, July 1- The euro zone is to release data on the unemployment
rate. Germany is release data on the change in the number of people
unemployed, while Spain and Italy are to release reports on
manufacturing activity.
- Later Tuesday, the Institute of Supply Management is to publish a report on U.S. manufacturing activity.
Wednesday, July 2- In the euro zone, Spain is release data on the change in the number of people unemployed.
- The U.S. is to release the ADP report on private sector job creation, as well as data on factory orders.
- Later Wednesday, Fed Chair Janet Yellen is to speak at an event in Washington; her comments will be closely watched.
Thursday, July 3- The euro zone is to release data on retail sales, while
Spain and Italy are to publish data on service sector activity. The ECB
is to announce its benchmark interest rate. The announcement is to be
followed by a press conference with President Mario Draghi.
- The U.S. is to release data on the trade balance, as well as the weekly report on initial jobless claims.
- The
U.S. is also to publish what will be closely watched government data on
nonfarm payrolls and the unemployment rate, one day ahead of schedule
due to the fourth of July holiday.
- Later Thursday, the ISM is to publish a report service sector activity.
Friday, July 4Weekend Edition with Tyler Reesor
Using precious metals and rare coins to ones portfolio can help diversify and protect from volatile market moves. Tyler Reesor of RCW Financial joins Merlin for a look at how to mix rare coins into ones financial portfolio. Tyler also shares with listeners some of the significant advantages as well as tax benefits rare coins provide. Tyler also shares with listeners a coin from 1793 valued at nearly $200,000! The duo also take a look at some of the current macro economic data and how it might shape markets going forward.
2014-06-30 06:00 GMT (or 08:00 MQ MT5 time) | [EUR - German Retail Sale]
if actual > forecast = good for currency (for EUR in our case)
[EUR - German Retail Sale] = Change in the total value of inflation-adjusted sales at the retail level, excluding automobiles and gas stations. It's the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
Also Called : Real Retail Sales.
==========
German Retail Sales Fall Unexpectedly In May
German retail sales fell unexpectedly in May from the prior month, official data revealed Monday.
Retail sales were down 0.6 percent month-on-month in May, but slower than the 1.5 percent drop seen in April, provisional results from Destatis showed. This was the second consecutive fall in sales. Economists had forecast a 0.8 percent rise in turnover in May.
Meanwhile, retail turnover grew 1.9 percent in May from the same period of last year, when it was expected to rise by 1 percent. Nonetheless, the rate of growth slowed from 3.2 percent logged in April.
Compared with the previous year, turnover in retail trade was in the first five months of the year in real terms 1.4 percent larger than that in the corresponding period of the previous year.
The saga at 0.9400 in AUD/USD continues
We’ve had more episodes at 0.9400 than Dallas and we could have yet another failure on the cards.
We’ve just knocked below it but only by 4 pips but it’s looking like more upside disappointment for the bulls.
Since the beginning of the month the 100 h4 ma has acted as good support and at 0.9380 is worth watching.
Further down we have the 200 h4ma coinciding with the 55 dma at 0.9329/33.
While we remain below 0.9450 the risk of a bigger fall looms larger.
2014-06-30 14:30 GMT (or 16:30 MQ MT5 time) | [USD - Dallas Fed Manufacturing Business Index]
[USD - Dallas Fed Manufacturing Business Index] = The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state's factory activity. Firms are asked by Federal Reserve Bank of Dallas whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month. Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase.
==========
DALLAS FED MANUFACTURING HEATS UPThe Dallas Fed's latest manufacturing outlook survey is out, and the numbers look good.
The headline index jumped to 11.4 in June from 8.0 in May.
Economists were looking for a reading of 8.5.