My forecasts by EURUSD, GBPUSD, USDCHF, USDJPY, GOLD - page 37

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GBP/USD edges lower after U.K. PMI report

The pound edged lower against the U.S. dollar on Monday, after the release of tepid economic reports from the U.K., although Friday's disappointing U.S. data continued dampen demand for the greenback.

GBP/USD hit 1.6726 during European morning trade, the session low; the pair subsequently consolidated at 1.6729, slipping 0.14%.

Cable was likely to find support at 1.6693, the low of May 29 and resistance at 1.6816, the high of May 28.

Markit research group said the U.K. manufacturing purchasing managers's index ticked down to 57.0 in June, from a reading of 57.3 the previous month, in line with expectations.

A separate report showed that net lending to individuals in the U.K. rose by £2.4 billion in April, below expectations for a £2.7 billion increase, after a downwardly revised £2.8 billion gain in March.

Meanwhile, the dollar remained under pressure after data on Friday showed that U.S. consumer spending fell 0.1% in April from a month earlier, missing forecasts for a 0.2% increase. Personal income rose 0.3%, in line with forecasts.

Separately, the final reading of the University of Michigan's consumer-sentiment index for May came in at 81.9, up slightly from a preliminary reading of 81.8, but falling short of forecasts for 82.5.

Sterling was higher against the euro, with EUR/GBP edging down 0.12% to 0.8127.

In the euro zone, Markit said that Spain's manufacturing PMI rose to 52.9 this month, from 52.7 in May, in line with market expectations.

Italy's manufacturing PMI slipped to 53.2 in June, from a reading of 54.0, compared to expectations for a fall to 53.7.

 

GBP/USD forecast for the week of June 9

The GBP/USD pair had a slightly positive week over the last 5 sessions, as we continue to bounce around the 1.68 level. This market is still very bullish as far as we can tell, and we are approaching an area that we could consider to be an uptrend line. Nonetheless, we still have a target of 1.70 before it’s all said and done, and as a result we are buyers. We believe that there is a significant “floor” in this market all the way down to the 1.65 handle. That area getting broken to the downside would be very negative, but we do not see that happening anytime soon.

 

USD/JPY Forecast June 9-13

USD/JPY moved up and returned to the previous range after breaking above downtrend resistance. The upcoming week features a rate decision which is only part of a busy calendar. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

While the BOJ will probably refrain from more stimulus, it can certainly push for a lower yen. The US economy stayed away from surprises and saw a nice gain of 217K jobs, exactly as expected. Is the pair comfortable in this range or ready to move forward?

  1. GDP: Sunday, 23:50. The final read of GDP growth for Q1 2014 is expected to confirm the strong 1.5% number reported in the initial publication. The strong growth rate was in anticipation to the sales tax hike in April, but also shows strength in the Japanese economy.
  2. Current Account: Sunday, 23:50. Since the terrible earthquake of March 2011, Japan imports more energy and this eventually tipped the current account balance to negative. After a deeper deficit of 0.78 trillion yen in March, a smaller deficit is expected for April.
  3. Bank Lending: Sunday, 23:50. The growth of bank lending is another measure of growth of the economy. Growth has been quite stable, with an annual rise of 2.1% in April. In May, the same figure is predicted.
  4. Consumer Confidence: Monday, 5:00. Around 5000 households are surveyed for this barometer of consumer confidence by the government. After a drop to 37 points in April, a small rise is expected in May.
  5. Economy Watchers Sentiment: Monday, 5:00. This survey of workers plunged in April, probably due to the tax hike. It went from positive ground at 57.9 points to only 41.6. A bounce back up towards the 50 points line (separating optimism from pessimism) is expected now.
  6. Tertiary Industry Activity: Monday, 23:50. The value of services bought by businesses rose by 2.4% in March, but this was probably a one time boost before the tax hike in April. A significant fall is likely now.
  7. M2 Money Stock: Monday, 23:50. The amount of money in circulation and in banks is another peripheral measure of inflation. After growth rates of above 4% (year over year), both March and April have seen lower growth rates. A rise from last month’s 3.4% figure is expected for May.
  8. BOJ Monthly Report: Tuesday, 5:00. The Bank of Japan publishes a monthly report discussing the current economic conditions, and this also provides hints about future policy. The BOJ is likely to assess the impact of the sales tax on the economy.
  9. Machine Tool Orders: Tuesday, 6:00. This is the preliminary report for May by the JMTBA. New orders of machine tools is at the back end of production and has future implications. After a very strong growth rate of 48.7% in April, a slower growth rate is likely now.
  10. BSI Manufacturing Index: Tuesday, 23:50. This official Business Survey Index by the BOJ has risen to 12.5 points in Q1 2014. A drop is likely in Q2. Note that the early nature of the publication makes this a highly important indicator.
  11. Core Machinery Orders: Wednesday, 23:50. While this indicator is quite volatile, it tends to move markets quite strongly. A jump of 19.1% was recorded in March in private sector POs for machines. A big drop is likely in April.
  12. Rate decision: Friday. No change is expected from the Bank of Japan that meets quite frequently. However, the central bank has a lot of new data about the impact of the sales tax hike in April and could release interesting comments in the press conference. If the BOJ expresses satisfaction about the reception of the tax, expectations for more stimulus could be set aside. Otherwise, the door remains open. There is a good chance that the BOJ will leave the door open in order to keep the pressure on the yen.
  13. Industrial Production: Friday, 4:30. This is the revised figure for April. The initial publication showed a big plunge of 2.5% in output. A bounce is likely now.

* All times are GMT

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The AUD & NZD Climb On Positive Sentiment & ECB Stimulus

The Great British Pound is trading at 1.6756 in the red as the US dollar gained in early trading. Britain’s strengthening recovery has probably pushed the economy back above its pre-crisis level, ending the longest period of below-peak output in a century. The National Institute of Economic and Social Research estimates gross domestic product rose 0.9 percent in the three months through May. That puts it about 0.2 percent above where it was in January 2008. Sterling hit an 18-month high against the euro and recovered ground against the dollar on Tuesday, after data showed Britain’s industrial output expanded at its fastest annual pace in more than three years in April.

The euro fell 0.3 percent to 80.64 pence after the data from around 80.80 pence beforehand. It equaled an 18-month low struck last week after the European Central Bank cut interest rates and announced other easing measures to ward off disinflation in the euro zone. By contrast, the latest UK data added to growing expectations the Bank of England may tighten interest rates in early 2015. Industrial output rose by 0.4 percent on the month, as forecast, to leave it 3.0 percent higher than a year ago, its biggest rise since January 2011. Manufacturing output also rose by 0.4 percent in April, in line with expectations. The diverging policy outlook has pushed the difference in yields between British and German 10-year government bonds to its widest since 1997. The prospect of the BoE raising rates well before central banks in Europe and the United States, reflecting an economy that is doing better than many of its peers, is at the heart of sterling’s surge over the past year. The euro is trading at 1.3531 down by 15 points this morning while the EURGBP edged down to 0.8076

Across the Pacific, the Japanese yen held a three-day gain versus the euro amid speculation the Bank of Japan will refrain from expanding stimulus at a policy meeting this week, diverging from the European Central Bank that unveiled record easing last week. The EURJPY is trading at 138.26 and at 102.26 against the greenback. A gauge of expected price swings for the yen against the dollar remained near a record low before BOJ Governor Haruhiko Kuroda speaks after the central bank decision on June 13.

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GBP/USD forecast for the week of June 16

The GBP/USD pair rose during the course of the week, slamming into the 1.70 handle. This area offered resistance again, and now as a result we closed just below it. However, if we can get above the 1.70 level, we feel that this market goes much, much higher. In fact, the market should head to the 1.75 level if we get clear that area, making it a very bullish market to be in. We have no interest in selling this market, and believe that short-term pullbacks will continue to bring in buyers.

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USD/JPY forecast for the week of June 9, 2014

The USD/JPY pair broke higher during the previous week, cracking the top of the hammer that had formed the week before. However, the market is still within consolidation, thereby making this a difficult pair to trade for the longer term focused investor. Pullbacks should continue to offer buying opportunities, and we see far too much in the way of resistance at both the 103 and the 104 levels, and as a result we feel that the market is probably one that is best suited for short-term traders, at least for now.

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USD/JPY Forecast June 16-20

USD/JPY got comfortable in the old range. Can it make another break? Trade balance and the meeting minutes from the BOJ are the main events. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

Japan grew more than earlier reported. With a strong growth rate of 1.6%, it seems less likely that the BOJ will need to act. Nevertheless, the central bank would certainly prefer a weaker yen and made sure that this happens with its open door message in the rate decision. In the US, the ship continues to move nicely forward, and the higher US yields also support the pair.

  1. BOJ Monthly Report: Monday, 5:00. This monthly assessment of the economy, inflation and growth sometimes contains hints to the next moves by the BOJ. A cautious report is likely.
  2. Trade balance: Tuesday, 23:50. The cost of importing more energy after shutting down nuclear reactors has tipped the trade balance (but for a change not the current account) to negative. After a deficit of 0.84 trillion yen in April, a wider deficit is likely in May: 1.01 trillion yen.
  3. Meeting Minutes: Tuesday, 23:50. While these are not meeting minutes from the very latest BOJ decision, the look into the discussions of the central bank certainly provide insights as the highly anticipated July decision approaches.
  4. All Industries Activity: Thursday, 4:30. This official government figure showed a rise of 1.5% in activity during the month of March, just before the sales tax hike. For April, a sharp fall of 3.7% is expected in the activity of all industries. Note that a large part of the data making this report has already been released, thus softening the impact.

* All times are GMT

source

 

UK May inflation falls to 1.5% – GBP/USD drops to bottom of range

Quite a shortcoming in key UK data: CPI dropped to 1.5%, a level unseen in a long time. Apart from the HPI, all the other figures also came short of predictions. Headline CPI was expected to drop to 1.7% in May from 1.8% in April. Core CPI was predicted to fall to 1.7% from 2% but in fact slid to 1.6%. The Retail Price Index (RPI) carried expectations to remain unchanged at 2.5% but dropped to 2.4%.

GBP/USD traded at around 1.6980 before the initial publication, climbing from lower ground seen earlier in the day. The pair is now reversing the small gains and falling to 1.6940.

Looking at the chart, GBP/USD is now at the bottom of the post-Carney range.

Other figures: HPI was expected to continue advancing from 8% to 9.1%, reflected to steaming hot housing sector and the actual number is 9.9%. Producer prices were estimated to have rise by 0.1% in both Input and Output measure, m/m but they both came out negative: PPI Input dropped by 0.9% while PPI Output shed 0.1% m/m.

Cable finally made the break above 1.70 yesterday, but after reaching a multi-year peak of 1.7011, it retreated. The post GFC high of 1.7042 is looming above. For more levels, events and analysis, see the GBPUSD forecast.

This is the first major publication in the UK this week. The second one is the release of the MPC Meeting Minutes from the June meeting. Given Carney’s comments, there is a chance that we will discover that one member voted for a rate hike.

We have already heard from David Miles, an MPC member, that said that he may vote for a rate rise before his term ends in May 2015.

A rate hike could come earlier than expected, perhaps even in late 2014.

source

 

GBP/USD forecast for the week of June 23, 2014

The GBP/USD pair went back and forth during the course of the week, but closed above the 1.70 handle, a significant move to the upside. That was a pretty strong barrier for us, and we believe that it opens the way to the 1.75 level as a target. It will probably take a bit of time, but we do believe that eventually that level gets hit. If we pull back from here, we would fully anticipate buyers stepping into the market and lifting the British pound yet again.

 

USD/JPY forecast for the week of June 23, 2014

The USD/JPY pair went back and forth over the course of the week, as we continue to meander in a fairly tight consolidation area. It’s a bit difficult for longer-term traders to be involved in this market, and until we break well above the 103 level, we do not see much of a trade to the long side. As far selling is concerned, we think that there is simply far too much support below to even consider it at this point in time. Ultimately, we do believe that this market breaks out to the upside, but it might take a while.

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