EUR/USD - Euro Shrugs Off Weak German PPI
EUR/USD is firm on Friday, as the pair is back above the 1.36 line,
after some gains earlier in the week. On the release front, German PPI
posted its third consecutive decline, as Eurozone inflation indicators
continue to falter. There was better news from Eurozone Current Account,
which improved in May. Although US markets are open on Friday, there
are no releases on the schedule, so traders should be prepared for a
quiet day from the pair.
Eurozone inflation rates continued to
look dismal in May, as German PPI posted another decline, coming in at
-0.2%. The manufacturing inflation index has failed to post a gain in
2014, pointing to weakness in the German manufacturing sector. The ECB
lowering rates earlier in the month, declaring that the moves were
intended to bolster weak growth and inflation levels in the region.
However, we'll have to wait for the June inflation data to see if the
ECB's moves push inflation to higher levels. If not, the euro could lose
ground against the dollar. Earlier in the week, German ZEW Economic
Sentiment lost ground, although somewhat surprisingly, the same Eurozone
indicator showed improvement. We'll get a look at Eurozone Consumer
Confidence later on Friday. The markets are expecting another weak
reading in May.
On Wednesday, the Federal Reserve continued to taper to its QE program,
reducing the scheme by $10 billion, to $35 billion/month. If all goes as
planned, the Fed could wind up QE in the fall. The Fed also hinted that
interest rates will continue to stay low for the foreseeable future,
which likely means that we won't see any rate hikes before the first
quarter of 2015. With regard to economic activity, the Fed noted that
the recovery is continuing, but it reduced its forecast of economic
growth to 2.1-2.3%, down from an earlier forecast of around 2.9 percent.
The bottom line? There were no dramatic items in the Fed statement,
with one analyst describing current Fed policy as "steady as she goes".
The US dollar has responded with losses against its major rivals, and
the euro has added about 70 points this week and pushed across the 1.36
Chart USD/CNY 1-Yr Update: Consolidation prevails
20 Jun USD/CNY 1-Yr NDF Daily01::22 GMT - Starting the new day on a consolidative tone and ability to clear the 6.2415 resistance will revive upmove from 6.2010 low towards 61.8% mark at 6.2421 ahead of 6.2445. On the downside, dip below 6.2255 support will jeopardise this 1-1/2 week upmove. [W.T]R5: 6.2526 9 Jun highR4: 6.2507 30 May low, breakR3: 6.2445 6 Jun lowR2: 6.2421 61.8% of 6.2675-6.2010 dropR1: 6.2415 18 Jun highS1: 6.2255 17 Jun lowS2: 6.2220 12 Jun highS3: 6.2127 13 Jun lowS4: 6.2040 11 Jun lowS5: 6.2010 10 Jun low
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EUR/USD at Trendline; USD/CAD Breaks Support (based on forexminute article)
A main theme in the forex market this week was the USD softening after
the FOMC. Let’s see how that manifested in the EUR/USD. Today, Strong
retail sales and hot inflation data from Canada is boosting the Loonie.
Let’s take a look at the USD/CAD.
EUR/USD rallied this week after putting in a price bottom last
week. There was broad USD-weakness after the FOMC event risk, and the
EUR/USD popped up from the price bottom, only to stalled at 1.3643. As
we get into the 6/20 session, we see that traders faded the pair down to
a rising trendline. A break below 1.3550 should clear the trendline and
the moving averages in the 4H chart. If the RSI also dips below 40,
then we could be looking at a bearish continuation signal, refocusing
traders on the 1.35 handle and the 1.3476 low on the year. Above 1.3560,
the pair remains bullish in the very short-term, with upside toward
1.3676 June high.
USD/CAD is blasting through consolidation support today after very
hot inflation and*retail sales data from Canada. The CPI in May came in
at 0.5% on the month, and 2.3% on the year. This was a pick up from
April’s reading and also beat most economists’*forecasts. Retail sales
also grew 1.1% in April, faster than the 0.1% in March. Economists had
forecast a 0.4% growth.
As both inflation and demand data moved higher and beat estimates,
USD/CAD fell below its recent consolidation support at 1.0815. The dip
is also breaking below the 200-day SMA. The 1.0737 pivot might provide
some short-term support. But as long as price is below 1.09, there is
downside risk toward the low on the year near 1.06, and the Dec. 2013
low at 1.0560.
EUR/USD hold key Gann level (based on dailyfx article)
USD/JPY nearing important break (based on dailyfx article)
End of month important for Gold (based on dailyfx article)
GE Wins France’s Support for Alstom Merger
France picked General Electric to form a partnership with Alstom
on Friday, dismissing a joint bid by Siemens and Mitsubishi Heavy
Industries. However, the France government said the agreement needed
some work and it would acquire a 20% stake in the firm.
France’s Economy Minister Arnaud Montebourg said he had invoked a
recently-created state order to dismiss the two existing offers in their
current forms, saying they didn’t address strategic interests of the
country. Montebourg said he had submitted new demands to GE chief
executive Jeff Immet.
The decision brought to a conclusion weeks of uncertainty around one of
the toughest industrial battles in Europe in years, although it’s still
not known what form the alliance will take, which GE hopes will allow
it entry to new energy markets.
“The points we have raised with General Electric are precise and technical but necessary,” Montebourg is quoted by Reuters
as telling reporters after two days of discussions with chiefs of the
three bidders, President Francois Hollande and senior ministers.
The minister added that France required a deal that ascertained energy
independence, creation of employment within the domestic market and the
keeping of core decision making hubs in France.
He said the overture from Siemens and Mitsubishi Heavy Industries was
“very serious”, having supported it himself, but the government of
France had already made its decision.
Montebourg admitted that GE would buy Alstom’s high-stakes gas turbine
unit and talks would follow regarding the nature of partnerships in
other sectors of the energy industry including nuclear and renewable.
France is poised to hold the highest number of Alstom shares, as a
single entity, after buying a 20% stake out of the 29% held by Bouygues
in the company.
But according to the New York Times,
the deal may confirm foreign-investor concerns that the current French
regime is not ready for a free market and to make policy changes needed
to revamp the country’s stalled economy.
GBPUSD Fundamentals (based on dailyfx article)
The British Pound extended the advance from earlier this month, with the
GBP/USD climbing to a fresh yearly high of 1,7062, and the bullish
sentiment surrounding the sterling may gather pace in the week ahead
should we see a growing number of Bank of England (BoE) officials show a
greater willingness to normalize monetary policy sooner rather than
Even though the BoE Minutes showed a unanimous vote to retain the current policy at the June 5 meeting,
the official statement sounded more hawkish this time around as the
central bank talked up the risk for a rate hike in 2014. Indeed, there
appears to be a growing dissent within the Monetary Policy Committee
(MPC) as voting-member Ian McCafferty argues that the central
bank should start to normalize monetary policy before the output gap is
‘fully’ closed, and we may see a larger rift at the July 10 meeting as
the board anticipates a faster recovery in the second-half of this
With the BoE scheduled to testify on its May inflation report next
week, the fresh batch of central bank rhetoric may further boost the
appeal of the British Pound, and the GBP/USD may continue to carve
higher-highs & higher-lows during the summer months should Governor
Mark Carney lay out a more detailed exit strategy. With that
said, the growing deviation in the policy outlook will be another theme
to watch as the Federal Reserve remains in no rush to move away from
its zero-interest rate policy (ZIRP), and we may see the British Pound
appreciate throughout the second-half of the year as interest rate
expectations for the U.K. pick up.
As a result, the next topside object for the GBP/USD comes in around
1.7110-20 (78.6% Fibonacci expansion), and we will retain a bullish
outlook for the pair as price & the Relative Strength Index (RSI)
retain the upward trend from earlier this year.