Forex Weekly Outlook August 3-7 (based on forexcrunch article)
US ISM Manufacturing PMI, Trade Balance, ISM
Non-Manufacturing PMI, Rate decision in Japan, Employment data from New
Zealand, Canada and the US, including the all-important NFP report. Join
us as we explore this week’s market movers.
Last week the FOMC issued its rate statement reaffirming
that the US economy continues to strengthen, leaving the door open for a
possible interest rate hike in September. Policymakers noted the
economy has rebounded from the slowdown, despite a downturn in the
energy sector. The Fed also stated that the employment market saw solid
gains in recent months, suggesting continued jobs growth. The Fed
maintained its rates unchanged and noted the labor market needs to
advance “some” more and inflation has to rise towards the 2% medium-term
target, before the Fed decides to raise rates. Will we see a rate hike
NFPs, BoE and RBA Will Stir Volatility Even If Risk Trends Hold Steady (based on dailyfx article)
"The most high-profile indicator on the list is the NFPs, but labor
data's wage component and Monday's PCE inflation report speak more
directly to rate forecasting. High level event risk for the UK and
Australia should also have traders keeping tabs on Pound and Aussie sets
going forward. We look at the event risk and market potential ahead in
the weekend Trading Video."
Fundamental Weekly Forecasts for US Dollar, AUDUSD, GBPUSD. USDJPY and GOLD (based on dailyfx article)
- "This week, we will come across two particular indicators in a busy docketthat are important for shaping rate expectations. Monday’s PCE deflator is the Fed’s favored inflation measure. Friday’s
July labor report will generate headlines with its NFP print, but the
policy speculation will center on the wages component – the wellspring of inflation. If this data misses or beats, few will miss the implications."
- "GBP/USD may continue to face range-bound prices
ahead of the BoE meeting, and the fresh developments coming out of the
central bank may set the tone for August as market participants weigh
the outlook for monetary policy. In turn, we are still waiting for a
break & close above near-term resistance around 1.5630 (38.2%
retracement) to 1.5650 (38.2% expansion) to favor a more bullish outlook
for the sterling, but a cautious tone from the BoE may drag on the
exchange rate and spur a test of support around 1.5330 (78.6% expansion)
to 1.5350 (50% retracement)."
- "The onset of risk aversion triggered by the prospect
of US tightening even as growth in the Eurozone and China remains
sluggish, threatening the outlook for global performance at large, may
bode doubly ill for the Australian unit."
- "The US Dollar
remains relatively strong as interest rate traders predict the Fed will
raise rates as early as September, but the official focus on data
leaves risks clearly to the downside for the Greenback. This dynamic
leaves the Japanese Yen especially exposed as it has historically been
one of the most interest rate-sensitive currencies. Watch for outsized USD/JPY reactions to Friday’s NFPs data to guide overall direction through the foreseeable future."
- "From a technical standpoint gold has continued to
respect a critical support confluence noted last week at ~1070/73. The
trade remains vulnerable for a rebound while above this region heading
into August open initial resistance seen at the 2014 lows at 1130. The
broader outlook for gold remains bearish while sub 1145/51 with a break
of the lows targeting the 2010 low at 1044 backed by a key longer-term
Fibonacci confluence lower down at 975/80. We’ll keep an eye on the
August opening range for further guidance on our near-term directional
bias with a breach of the recent consolidation range between below 1103
shifting the immediate focus higher."
Weekly Fundamentals by Morgan Stanley: USD, EUR, JPY, GBP, CAD (based on efxnews article)
USD: Bullish"We expect USD
strength to be focused against EM and commodity currencies."
investors have hedged equity positions in Europe with short EUR. This suggests that in an environment
where commodity currencies and EM may sell off, risk generally could
take a hit, adding some support to EUR in the near term. Over the medium
to longer term, however, we retain our bearish view on EUR."
JPY: Neutral"We believe the BoJ is likely to refrain from further easing barring an
unforeseeable shock to inflation, which should offer support to JPY.
The central bank is likely focused on its new core CPI measure which
does not include energy, and has grown steadily over recent months."
GBP: Bullish"GBP performance will unfold in three phases going
forward. First, broad-based GBP strength heading into the August 6 MPC
meeting, where we expect the first vote for a rate hike. Second, a more
selective approach after the August meeting. Finally, given the
longer-term headwinds to UK growth from fiscal tightening and political
uncertainty, the currency may lose steam after the first hike."
CAD: Bearish"We like
buying USDCAD on this dip, believing that as oil price uncertainty
continues to mount, USDCAD will continue to head higher, testing the
levels reached at the end of last week. On top of this, the second round
impact of the lower oil price on the economy is likely to continue to
be seen, possibly in upcoming employment data."
Skandinaviska Enskilda Banken: Outlooks For EUR/USD, USD/JPY, AUD/USD, SP500 (based on efxnews article)
EURUSD: rejection from the 55-day MA'The up and
down move on Friday became the third consecutive rejection from the 55d
ma band (since the return below it a month ago). The behavior is showing
that bearish forces are at play and increasingly so given the return to
a negative slope. We are thus looking for additional selling.'
USDJPY: new attempt to be above the key level 'Given the
violation of the B-wave high (and a three wave setback from Thursday’s
peak) there’s a high probability of a soon more successful break higher
(targeting a new trend high). For today we see 124.37 as the trigger
point for the next step higher.'
AUDUSD: Signs for sellers'The spinning
candle (small net move and big spikes to both sides) and the spring
bottom are both signs of exhaustive sellers. There’s clearly a potential
for the pair to bounce back to retest the 2001 trend line (or even back
up to the 0.75- area) during the coming week.'
S&P 500: Higher again'As long as the recent
correction low remains unbroken a positive view should be kept in place
(the July candle also developed into a mildly bullish piercing pattern).
The entire structure since May can also be seen as an inverted head and
shoulders formation, here seen as an upside continuation pattern.'
Societe Generale: EURUSD and Non-Farm Payrolls (based on efxnews article)
Societe Generale made some review for Non-Farm Employment Change report (Change in the number of employed people during the previous month, excluding the farming industry) which will be on Friday:
Deutsche Bank - Get Ready For An August-October 'Jump' In USD/JPY (based on efxnews article)
Deutsche Bank made a forecast for USDJPY for August-October 2015 and for 2016:
Let's evaluate this situation using Pivot Points and s/r levels.
summarize above mentioned data so we can understand the following: the
price is on primary bullish condition with the nearest target as 125.85.
The next target is R1 Pivot at 127.96, and we may expect for this next target to be broken by the end of this year for example.
Bank of Tokyo-Mitsubishi - 'we target EUR/USD at parity by year-end and at 0.96 by Q1'16-end' (based on efxnews article)
Bank of Tokyo-Mitsubishi (BTMU) made their fundamental forecasts for EURUSD based on some fundamental factors:
Bank of Tokyo-Mitsubishi (BTMU) forecasts for EURUSD to be at parity by year-end and at 0.96 by Q1'16-end.
By the way, the price is located to be below yearly Central Pivot at 1.2729 for the primary ranguing between S1 Pivot at 1.1466 and S2 Pivot at 1.0834, and the next target in the case the bearish trend will be continuing is S3 Pivot at 0.9571. So, the Bank of Tokyo-Mitsubishi (BTMU) is right with their forecast.
if hawkish > expected = good for currency (for AUD in our case)
More hawkish than expected = Good for currency
[AUD - Cash Rate and RBA Rate Statement] = Interest rate charged on overnight loans between financial intermediaries. Short term interest rates are the paramount factor in currency valuation
- traders look at most other indicators merely to predict how rates
will change in the future. RBA Rate Statement is among the primary tools the RBA Reserve Bank Board uses to
communicate with investors about monetary policy. It contains the
outcome of their decision on interest rates and commentary about the
economic conditions that influenced their decision. Most importantly, it
discusses the economic outlook and offers clues on the outcome of
"The Federal Reserve is expected to start increasing its policy rate later this year, but some other major central
banks are continuing to ease policy. Hence, global financial conditions remain very accommodative. Despite
fluctuations in markets associated with the respective developments in China and Greece, long-term borrowing rates
for most sovereigns and creditworthy private borrowers remain remarkably low."
"The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on
economic and financial conditions to be received over the period ahead will inform the Board's ongoing
assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable
growth and inflation consistent with the target."
AUDUSD M5: 94 pips price movement by AUD - Cash Rate news event
EURUSD Breakout Fails (based on dailyfx article)
After traversing its daily 30 pip range, the EURUSD has opened the US trading session with a false breakout. Prices attempted a move above today’s R4 Camarilla pivot at 1.0979, but this bullish breakout quickly reversed. Prices are currently tradingback inside of today’s pivot range. As seen below, the EURUSD’s trading range begins at resistance found at the R3 pivot, at a price of 1.0964. If price continues to decline through values of support, traders will begin to look for price to target the S3 pivot found at a price of 1.0934.