USDJPY positive range theme aims higher; risk of shift to more bullish tone

  • We have stated in client reports this week that “within the range, the risk is skewed higher this week, for 102.00 and maybe then to key resistance at 102.23/36!”
  • The push above the lower level has signalled a more constructive tone to the range theme with risk through midweek for a challenge to barriers clustered at 102.22/28/36.
  • Only above the higher level would signal a more bullish shift and we see a likely stall here on a first test.
  • Only back below 101.70/65 set a more defensive range theme.

WHAT CHANGES THIS?

  • Upside: Above 102.36 signals a bull tone for 102.65 and 102.80 targets.
  • Downside: Below 101.06 signals a bear tone for 100.75 and 100.00 targets.

Please see full report with levels and latest screencast here: http://members.marketchartist.com/Daily/USDJPY.pdf

4 Hour USDJPY Chart

 

 

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The world of forex is once again in slow motion leading up to the first Friday of the new month, a Judgment Day of sorts. No, Armageddon is not in the near term, and the Book of Revelations never revealed any truths about foreign currency pairs, but the release of employment data by the Department of Labor has become a respected day of reckoning, at least for traders. Someone should check the Mayan calendar to see if they mentioned a flat-lining of market activity in 2014 and when it might end.

During these summer doldrums, however, the event risk surrounding this important data release is about the only thing that can budge any market from its sluggishness. In just the past week, the Euro has had two ranging days below 20 pips, something that has never happened since its creation, but forever the optimist, most analysts are truly expecting something to break the ice this week. With second quarter GDP, the FOMC, and Friday’s infamous NFP release, there should be cause for celebration.

But for now, it’s time to hold onto your seats or keep your powder dry or choose whatever metaphor conveys caution before a storm. One only needs to look to the options market to determine a strangeness in the wind. Implied forex volatilities for major pairs for the month have dropped to low single digits, which is not a call for alarm, but actual volatilities are even lower. Yet the U.S Dollar has been on a tear of late, rising like a star, as the accompanying chart below reveals:

 

The USD Index typically forms very well-defined channels, as depicted by the dotted green lines on the chart. The sudden launch of white candles has been dramatic, but there have been few articles that noted this sudden resurgence. A few weeks back, it bounced off the lower channel boundary, blasted through its 2013 year ending valuation, and has now been hugging the upper Bollinger Band for several trading sessions. This silent march of appreciation has been steep, steeper than a 45-degree angle, which is a situation that terrifies most analysts. However, shorting the Dollar has not been vogue, although shorting the Euro seems the rage at the moment.

What has been voiced is that this week could be stellar for the mighty buck. Looking first back to implied versus actual volatilities, we have the Euro – 4.5% versus 3.1%; the Pound – 4.6% versus 2.5%; and the Yen – 4.9% versus 3.5%. According to one analyst, “It partly reflects fear that volatility may rise sharply. It may also partly reflect dealers reluctance to take on the risks and costs without getting compensated.” Yes, profit margins have been squeezed to the breaking point. Something has got to give.

First quarter negative GDP results caused heartburn all around, due in part to a horrific winter, but expectations are that the second quarter will literally blow the socks off any notion that that a recession is in the works. Ms. Yellen is not expected to announce anything earthshaking related to policy changes. Bond purchases may be cut again by $10 billion per month, but the choice of adjectives and adverbs in the Fed’s statement will tell the real story. That leaves payroll and inflation data on Friday as two elephants on the trading floor.

Sooo, will the intrepid greenback assault the ramparts and break on through to the other side, a kind tribute to Jim Morrison of the Doors who did just that in July of 1971? Or, must we bear through another sluggish month while Europeans vacation on the Mediterranean and we homebodies try to make a buck at forex?

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Cable risk of a more bearish bias

  • A low level digestion Monday and we simply restate the view from recent client reports that “whilst below 1.7152, we see a bias lower”.
  • The push last week through the 1.7010/00, retrace/ chart area reinforced the previous push through the “neckline” support from mid-June to maintain a negative tone to the range (range seen as 1.7192-1.6952).
  • The growing risk is for a late July test to 1.6952 and more negative shift.
  • WHAT CHANGES THIS?
  • Downside: Below 1.6952 would set a more bearish theme to target 1.6923 and then retrace level at 1.6885.
  • Upside: A push above 1.7192 aims for a Fibo extension target at 1.7255 and the long term retrace at 1.7335.

 

Please see full report with levels and latest screencast here: http://members.marketchartist.com/Daily/GBPUSD.pdf

 

4 Hour GBPUSD Chart

 

 

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EURUSD overshoot threat is to 1.3295

  • We stated in our last client report that “whilst minimally below 1.3490/95, we see negative pressures intact for still further erosion into latter July (and likely Friday)”  and an end of week probe to another new low for the year dismissed the neutral outside Thursday pattern.
  • Moreover, this activity has reinforced the bearish extension through 1.3477, the prior 2014 low.
  • We still see risk to chart and retrace supports at 1.3400 and 1.3375 respectively.
  • Overshoot threat is now to the 1.3295 spike low.

WHAT CHANGES THIS?

  • Above 1.3550 eases bear risks; through 1.3628 signals a neutral tone, only shifting positive above 1.3652.

Download our full report with latest screencast & levels here: http://members.marketchartist.com/Daily/EURUSD.pdf

 

4 Hour EURUSD Chart

 Daily EURUSD Chart

 

 

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GBPUSD top developing; threat of a more bearish bias

  • We restate the view from our recent client reports that “whilst below 1.7152, we see a bias lower” and the push last week through the 1.7010/00 retrace/ chart area leaves threat for a more bearish shift.
  • This activity has reinforced the push through the “neckline” support from mid-June to maintain a negative tone to the range (range seen as 1.7192-1.6952).
  • The growing risk is for a July test to 1.6952 and more negative shift.

WHAT CHANGES THIS?

  • Downside: Below 1.6952 would set a more bearish theme to target 1.6923 and then retrace level at 1.6885.
  • Upside: A push above 1.7192 aims for a Fibo extension target at 1.7255 and the long term retrace at 1.7335.

 

Please see full report with levels and latest screencast here: http://members.marketchartist.com/Daily/GBPUSD.pdf

 

4 Hour GBPUSD Chart

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Key Fundamental Forex Events and Forecasts for the Coming Week

The following table lists the key economic data and other events that are due out during the week of July 28th – August 1st, with release times displayed for the GMT time zone.

The list also includes the current market consensus forecast for each event and indicates what sort of deviation might affect the forex market valuation of the indicated currency positively.

Monday, July 28th

  • 3:00pm USD Pending Home Sales (-0.2% expected, > good for currency)

Tuesday, July 29th

  • 12:30am JPY Household Spending (-3.7% expected, > good for currency)
  • 12:50am JPY Retail Sales (-0.4% expected, > good for currency)
  • Tentative AUD HIA New Home Sales (-4.3% expected, > good for currency)
  • 9:30am GBP Net Lending to Individuals (2.6B expected, > good for currency)
  • 2:00pm USD S&P/CS Composite-20 HPI (9.8% expected, > good for currency)
  • 3:00pm USD CB Consumer Confidence (85.5 expected, > good for currency)
  • 11:45pm NZD Building Consents (-4.6% expected, > good for currency)

Wednesday, July 30th

  • 12:50am JPY Preliminary Industrial Production (-1.0% expected, > good for currency)
  • All Day EUR German Preliminary CPI (0.2% expected, > good for currency)
  • 8:00am CHF KOF Economic Barometer (101.1 expected, > good for currency)
  • 8:00am EUR Spanish Flash CPI (0.2% expected, > good for currency)
  • 8:00am EUR Spanish Flash GDP (0.5% expected, > good for currency)
  • Tentative EUR Italian 10-year Bond Auction (last average yield 2.81 percent with a 1.4 bid to cover ratio expected, > good for currency)
  • 1:15pm USD ADP Non-Farm Employment Change (234K expected, > good for currency)
  • 1:30pm CAD RMPI (0.6% expected, > good for currency)
  • 1:30pm USD Advance GDP (3.1% expected, > good for currency)
  • 1:30pm USD Advance GDP Price Index (1.8% expected, > good for currency)
  • 3:30pm USD Crude Oil Inventories (last -4.0M expected, > good for currency)
  • 7:00pm USD FOMC Statement (hawkish = good for currency)
  • 7:00pm USD Federal Funds Rate Decision (unchanged at <0.25% expected, > good for currency)

Thursday, July 31st

  • 2:30am AUD Building Approvals (0.2% expected, > good for currency)
  • 2:30am AUD Import Prices (-1.4% expected, > good for currency)
  • 2:30am JPY Average Cash Earnings (0.7% expected, > good for currency)
  • 7:00am EUR German Retail Sales (1.1% expected, > good for currency)
  • 7:00am GBP Nationwide HPI (0.6% expected, > good for currency)
  • 7:45am EUR French Consumer Spending (0.3% expected, > good for currency)
  • 8:55am EUR German Unemployment Change (-5K expected, < good for currency)
  • 10:00am EUR CPI Flash Estimate (0.5% expected, > good for currency)
  • 10:00am EUR Core CPI Flash Estimate (0.8% expected, > good for currency)
  • 10:00am EUR Unemployment Rate (11.6% expected, < good for currency)
  • 1:30pm CAD GDP (0.3% expected, > good for currency)
  • 1:30am USD Weekly Initial Jobless Claims (306K expected, < good for currency)
  • 1:30am USD Employment Cost Index (0.5% expected, > good for currency)
  • 2:45pm USD Chicago PMI (63.2 expected, > good for currency)

Friday, August 1st

  • 2:00am CNY Manufacturing PMI (51.4 expected, > good for currency)
  • 2:30am AUD PPI (0.7% expected, > good for currency)
  • 2:45am CNY HSBC Final Manufacturing PMI (52.0 expected, > good for currency)
  • 4:30am JPY BOJ Governor Kuroda speaks (hawkish = good for currency)
  • All Day CHF Bank Holiday
  • 8:15am EUR Spanish Manufacturing PMI (54.8 expected, > good for currency)
  • 8:45am EUR Italian Manufacturing PMI (52.8 expected, > good for currency)
  • 9:30am GBP Manufacturing PMI (57.2 expected, > good for currency)
  • 1:30pm USD Non-Farm Payrolls (230K expected, > good for currency)
  • 1:30pm USD Unemployment Rate (6.1% expected, < good for currency)
  • 1:30pm USD Average Hourly Earnings (0.2% expected, > good for currency)
  • 1:30pm USD Core PCE Price Index (0.2% expected, > good for currency)
  • 1:30pm USD Personal Spending (0.5% expected, > good for currency)
  • 2:55pm USD Revised University of Michigan Consumer Sentiment survey (81.5 expected, > good for currency)
  • 3:00pm USD ISM Manufacturing PMI (56.1 expected, > good for currency)

Technical Forecast and Levels to Watch for the Majors This Week

EURUSD: Lower

Resistance:

Initial: 1.3433/41, 1.3451, 1.3473/82, 1.3489/1.3524, 1.3538, 1.3546/88, 1.3597, 1.3602/15, 1.3621/31, 1.3639/50, 1.3663/76, 1.3682/86, 1.3685/1.3710, 1.3714/16, 1.3731/39, 1.3748, 1.3758/74, 1.3784/98, 1.3807, 1.3810/20, 1.3824, 1.3832/36, 1.3845/54, 1.3864, 1.3875/78, 1.3888/92, 1.3905/14, 1.3937, 1.3947, 1.3966/69, 1.3993/1.4000, 1.4246 and 1.4500/17.

Above: 1.4695 and 1.4939.

Support:

Initial: 1.3416, 1.3398/1.3409, 1.3376/89, 1.3344/53, 1.3318/24, 1.3305/08, 1.3294/99, 1.3222/42, 1.3187/1.3206, 1.3172/77, 1.3161/65, 1.3126, 1.3093/1.3106, 1.3077, 1.3059/66 and 1.3047.

Below: 1.3000, 1.2904/98, 1.2837/79, 1.2821, 1.2795/1.2805, 1.2744/54, 1.2623/92, 1.2588/89, 1.2501/19, 1.2407/96, 1.2381/91, 1.2323/33, 1.2241/55, 1.2162, 1.2143, 1.2133, 1.204132 and 1.1938.

 

USDJPY: Mildly Lower

Resistance:

Initial: 101.90/102.04, 102.13/14, 102.26, 102.35/36, 102.49/52, 102.57/82, 102.93/103.01, 103.30, 103.37/43, 103.73/75, 103.82, 103.91, 104.07/19, 104.36, 104.63, 104.83/91, 105.18, 105.33 and 105.41/43.

Above: 107.18, 108.42, 110.39/47 and 111.60.

Support:

Initial: 101.60/83, 101.52/56, 101.42/43, 101.30/32, 101.08/27, 100.82/86, 100.75, 100.60/65, 100.38/48, 100.22, 100.00, 99.94, 99.66, 99.40, 99.25, 99.13/14, 99.00, 98.84/92, 98.63/72, 98.48/53, 98.28, 98.20, 98.08, 97.75/83, 97.49/63, 96.90/97.05, 96.81, 96.65/70, 96.55/56, 96.05, 95.79/80, and 95.44.

Below: 94.90/95.07, 94.87, 94.55, 94.19, 94.05, 93.76, 93.78 93.68, 93.50, 93.17, 92.77/95, 92.14/30, 91.19, 90.85, 90.20/32, 89.40/66, 88.05, 87.95/99 and 87.79.

 

GBPUSD: Mildly Higher

Resistance:

Initial: 1.6995, 1.7010, 1.7035, 1.7042/51, 1.7058/62, 1.7084, 1.7094/99, 1.7107, 1.7130, 1.7167, 1.7176/78 and 1.7190.

Above: 1.7440.

Support:

Initial: 1.6960, 1.6951, 1.6919/20, 1.6902/09, 1.6874/81, 1.6831/44, 1.6819/22, 1.6812, 1.6802, 1.6785, 1.6777, 1.6768, 1.6755, 1.6745, 1.6730/37, 1.6716/24, 1.6692/98, 1.6683, 1.6665/67, 1.6640/56, 1.6624, 1.6611/17, 1.6592, 1.6576/86, 1.6548, 1.6516, 1.6484, 1.6458/65, 1.6441, 1.6417/18,1.6400, 1.6394, 1.6380/83, 1.6376, 1.6348, 1.6336, 1.6298/1.6309, 1.6290, 1.6251/62, 1.6239/46, 1.6222/24, 1.6215/16, 1.6195/98, 1.6177, 1.6155, 1.6130/36, 1.6109/21, 1.6083/96, 1.6071/77, 1.6051/66, 1.6001/08, 1.5975/91, 1.5956/61, 1.5948, 1.5900/27, 1.5886/93, 1.5874/77, 1.5853, 1.5844, 1.5825, 1.5803/07, 1.5775/81, 1.5750, 1.5714/17, 1.5683/92, 1.5673, 1.5624/56, 1.5601/15, 1.5591, 1.5561/68, 1.5538/45 and 1.5514/16.

Below: 1.5498/99, 1.5476/79, 1.5458, 1.5434, 1.5427, 1.5403/21, 1.5313/92, 1.5304, 1.5293, 1.5260/62, 1.5237/39, 1.5208/23, 1.5198, 1.5173/87, 1.5164, 1.5152/57, 1.5130, 1.5123, 1.5101, 1.5092, 1.5081, 1.5072/75, 1.5026/32, 1.5013, 1.5007. 1.4985, 1.4966/67, 1.4884, 1.4872, 1.4856, 1.4830, 1.4812 and 1.4785, 1.4345 and 1.4232.

 

AUDUSD: Higher

Resistance:

Initial: 0.9391/98, 0.9404/10, 0.9420/24, 0.9428/33, 0.9440/47, 0.9455/57, 0.9469 and 0.9483/86.

Above: 0.9500, 0.9524/27, 0.9536/42, 0.9571, 0.9585, 0.9592, 0.9620, 0.9640, 0.9664, 0.9676, 0.9689/96, 0.9710, 0.9732, 0.9757, 0.9791/94, 0.9841/96, 0.9900, 0.9925/83, 1.0000/18, 1.0052, 1.0099/1.0100, 1.0114/17, 1.0148/51, 1.0165/77 and 1.0181/82.

Support:

Initial: 0.9359/86, 0.9343/53, 0.9311/28, 0.9304, 0.9291/94, 0.9279/86, 0.9268/72, 0.9251, 0.9232, 0.9214/26, 0.9201/08, 0.9179/89, 0.9162/67, 0.9147, 0.9127/37, 0.9110/19, 0.9102, 0. 9072/79, 0.9061/66, 0.9054/57, 0.9042/48, 0.9041, 0.9035, 0.8994/0.9008, 0.8981/87, 0.8967/69, 0.8951/57, 0.8923/36, 0.8918, 0.8906/12, 0.8887/92, 0.8869, 0.8857/61, 0.8842/47, 0.8819/25, 0.8762/70, 0.8729, 0.8693, 0.8659, 0.8578 and 0.8512.

Below: 0.8066 and 0.7674.

 

USDCAD: Mildly Higher

Resistance:

Initial: 1.0813, 1.0820/21, 1.0839/40, 1.0849, 1.0852/57, 1.0873/86, 1.0894, 1.0909, 1.0915, 1.0925/28, 1.0934/45, 1.0954/59, 1.0962/66, 1.0982/1.1001, 1.1032/53, 1.1069/70, 1.1089, 1.1099, 1.1102/09, 1.1116/32, 1.1141, 1.1152, 1.1158, 1.1172/73, 1.1194, 1.1223 and 1.1277.

Above: 1.1723, 1.2985, 1.3007/14 and 1.3062.

Support:

Initial: 1.0793, 1.0742/85, 1.0736, 1.0726, 1.0717, 1.0702/09, 1.0693, 1.0668/79, 1.0646/60, 1.0619/29, 1.0608,1.0580/87, 1.0567/71, 1.0558/59, 1.0546, 1.0519/22, 1.0506, 1.0496/1.0502, 1.0471/87, 1.0459, 1.0441/44, 1.0414/18, 1.0401/04, 1.0390/92, 1.0379, 1.0355/68, 1.0333, 1.0324, 1.0309/12, 1.0283/1.0305, 1.0270/76, 1.0262, 1.0244/55, 1.0233/35, 1.0199/1.0226, 1.0172/82, 1.0165, 1.0151/56, 1.0148, 1.0128/42, 1.0103/05, 1.0081/99, 1.0050/56, 1.0029/34, 1.0018 and 1.0012.

Below: 0.9993/98, 0.9984, 0.9969, 0.9945/60, 0.9931, 0.9922, 0.9902/07, 0.9899, 0.9858, 0.9814/26, 0.9724/99, 0.9686, 0.9645, 0.9631, 0.9525, 0.9445 and 0.9405.

 

NZDUSD: Mildly Higher

Resistance:

Initial: 0.8560/61, 0.8571/78, 0.8584/90, 0.8602/05, 0.8633/41, 0.8647/53, 0.8660/67, 0.8671/74, 0.8693/0.8700, 0.8712/18, 0.8734, 0.8744, 0.8764/77, 0.8789, 0.8792, 0.8821 and 0.8834.

Above: 0.8840.

Support:

Initial: 0.8542/53, 0.8532/37, 0.8523/25, 0.8504/18, 0.8499, 0.8487/89, 0.8472/79, 0.8423/59, 0.8413, 0.8376/0.8406, 0.8359/66, 0.8322/53, 0.8302/16, 0.8291/95, 0.8285/87, 0.8280, 0.8271, 0.8263, 0.8250/55, 0.8221/41, 0.8204/14, 0.8195/97, 0.8186, 0.8171, 0.8160/63, 0.8147/53, 0.8114/37, 0.8100/09, 0.8078/82, 0.8049/60, 0.8030, 0.7989/0.8013, 0.7967, 0.7932, 0.7903/06, 0.7888, 0.7872, 0.7856/57, 0.7838/46, 0.7829, 0.7819 and 0.7804.

Below: 0.7795, 0.7783, 0.7760, 0.7751/58, 0.7731/34, 0.7705/23, 0.7697, 0.7681/86, 0.7605/76 and 0.7500/85.

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Key Fundamental Forex Events for the Week of July 21st through July 25th

The following table lists the key economic data and other events that came out during the week of July 21st through July 25th, with release times displayed for the GMT time zone.

The list also indicates how much each release deviated from the market consensus forecast upon release, as well as what the affected major currency pair or pairs did after each event or set of events.

 Monday, July 21st

All Day JPY Bank Holiday

11:00am EUR German Buba Monthly Report noted that, “Under these conditions, the German economy is likely to expand by almost 2% this year in calendar-adjusted terms, while the pace of growth is set to gradually decline over the next two years. The year-on-year rates would shrink from 1.9% in 2014 to 1.6% in 2016. Nevertheless, economic growth would still significantly outstrip potential growth meaning that, starting from normal utilisation, aggregate capacity utilisation would rise noticeably. At the end of the forecast horizon, normal capacity utilisation would be exceeded by almost 2%.”  The currency fell.

Tuesday, July 22nd

  • 12:25am AUD RBA Assistant Governor Debelle said that, “Now… so let me just start with a couple of numbers, so Latin America is about one and a half to two percent of Australian offshore investment…so it’s not a particularly large number, so there’s plenty of uh…upside to that. So Brazil is around about half of that…so that by far and away the major destination for funds flowing from Australia into Latin America. Most of it is in the form of equity.”   The currency rose.
  • 4:00am AUD RBA Governor Stevens said that, “I would argue for realism, as opposed to either naïve optimism or determined pessimism. Certainly earlier expectations about risk and return were too optimistic. We have been through a period of adjustment. But it’s doubtful that the desire to experiment and innovate has entirely disappeared. And it seems unduly pessimistic to think that everything that can be invented has been, or that every improvement to existing ways of doing things has already been implemented. And unless we think the tendency for human optimism has been completely drummed out of us, animal spirits in the ‘real economy’ will surely improve at some point.”   The currency rose.
  • 7:00am CHF Trade Balance 1.38B versus 2.97B expected.  The currency fell.
  • 9:30am GBP Public Sector Net Borrowing 9.5B versus 10.3B expected.  The currency fell.
  • 11:00am GBP CBI Industrial Order Expectations 2 versus 9 expected.  The currency fell.
  • 1:30pm USD Core CPI 0.1% versus 0.2% expected.  The currency rose.
  • 1:30pm USD CPI 0.3% versus 0.3% expected.  The currency rose.
  • 3:00pm USD Existing Home Sales 5.04M versus 4.98M expected.  The currency rose.

Wednesday, July 23rd

  • 2:30am AUD CPI 0.5% versus 0.5% expected.  The currency rose.
  • 2:30am AUD Trimmed Mean CPI 0.8% versus 0.8% expected.  The currency rose.
  • 9:30am GBP MPC Asset Purchase Facility 375B versus unchanged at 375B, votes 0-0-9 as expected.  The currency fell.
  • 9:30am GBP MPC Official Bank Rate 0.50% versus unchanged at 0.50%, votes 0-0-9 as expected.  The currency fell.
  • 9:30am GBP BBA Mortgage Approvals 43.3K versus 43.4K expected.  The currency fell.
  • 11:00am GBP CBI Realized Sales 21 versus 18 expected.  The currency fell.
  • 12:45pm GBP BOE Governor Carney said that, “The UK, the Commonwealth and the world have always drawn inspiration from great Scots. We must continue to do so if we want to win our economic marathon. Paterson showed us the need for a central bank. Its modern variant is a leading macroprudential institution, well equipped to face the challenges of promoting a balanced expansion. Hume demonstrated the virtues of free trade. The UK, already one of the most open economies, can help lead the development of new EU trade deals as our businesses diversify their markets. Smith showed us the importance of social capital.”   The currency fell.
  • 1:30pm CAD Core Retail Sales 0.1% versus 0.3% expected.  The currency rose.
  • 1:30pm CAD Retail Sales 0.7% versus 0.6% expected.  The currency rose.
  • 3:30pm USD Crude Oil Inventories -4.0M versus last -7.5M.  The currency rose.
  • 10:00pm NZD Official Cash Rate Decision 25 bp rise from 3.25% to 3.50% as expected.  The currency rose.
  • 10:00pm NZD RBNZ Rate Statement noted that, “Today’s move will help keep future average inflation near the 2 percent target mid-point and ensure that the economic expansion can be sustained. Encouragingly, the economy appears to be adjusting to the monetary policy tightening that has taken place since the start of the year. It is prudent that there now be a period of assessment before interest rates adjust further towards a more-neutral level. The speed and extent to which the OCR will need to rise will depend on the assessment of the impact of the tightening in monetary policy to date, and the implications of future economic and financial data for inflationary pressures.”  The currency fell.
  • 11:45pm NZD Trade Balance 247M versus 155M expected.  The currency fell.

Thursday, July 24th

  • 12:50am JPY Trade Balance -1.08T versus -1.11T expected.  The currency fell.
  • 2:45am CNY HSBC Flash Manufacturing PMI 52.0 versus 51.2 expected.
  • 8:00am EUR Spanish Unemployment Rate 24.5% versus 25.9% expected.  The currency was unchanged.
  • 8:00am EUR French Flash Manufacturing PMI 47.6 versus 48.5 expected.  The currency was unchanged.
  • 8:00am EUR French Flash Services PMI 50.4 versus 48.9 expected.  The currency was unchanged.
  • 8:30am EUR German Flash Manufacturing PMI 52.9 versus 52.2 expected.  The currency was unchanged.
  • 8:30am EUR German Flash Services PMI 56.6 versus 54.7 expected.  The currency was unchanged.
  • 9:00am EUR EZ Flash Manufacturing PMI 51.9 versus 52.0 expected.  The currency was unchanged.
  • 9:00am EUR EZ Flash Services PMI 54.4 versus 52.7 expected.  The currency was unchanged.
  • 9:30am GBP Retail Sales 0.1% versus 0.2% expected.  The currency fell.
  • 1:30pm USD Weekly Initial Jobless Claims 284K versus 310K expected.  The currency rose.
  • 2:45pm USD Flash Manufacturing PMI 56.3 versus 57.5 expected.  The currency rose.
  • 3:00pm USD New Home Sales 406K versus 485K expected.  The currency rose.

Friday, July 25th

  • 12:30am JPY Tokyo Core CPI 2.8% versus 2.7% expected.  The currency fell.
  • 2:00am NZD ANZ Business Confidence survey 39.7 versus 42.8 expected.  The currency fell.
  • 7:00am EUR GfK German Consumer Climate survey 9.0 versus 8.9 expected.  The currency fell.
  • 9:00am EUR German Ifo Business Climate survey 108.0 versus 109.6 expected.  The currency fell.
  • 9:00am EUR EZ M3 Money Supply 1.5% versus 1.1% expected.  The currency fell.
  • 9:00am EUR Private Loans -1.7% versus -1.8% expected.  The currency fell.
  • 9:30am GBP Preliminary GDP 0.8% versus 0.8% expected.  The currency fell.
  • 1:30pm USD Core Durable Goods Orders 0.8% versus 0.6% expected.  The currency rose.
  • 1:30pm USD Durable Goods Orders 0.7% versus 0.4% expected.  The currency rose.

Technical Recap for the Majors This Week

EURUSD:

Forecast: Mildly Lower
Actual: Mildly lower from a 1.3529 open to a 1.3431 close.
 
USDJPY:
Forecast: Mildly Lower
Actual: Mildly higher from a 101.34 open to a 101.84 close.
                                                      
GBPUSD:
Forecast: Mildly Higher
Actual: Lower from a 1.7081 open to a 1.6970 close.
 
AUDUSD:
Forecast: Higher
Actual: Mildly higher from a 0.9396 open to a 0.9409 close.
 
USDCAD:
Forecast: Mildly Lower
Actual: Mildly higher from a 1.0734 open to a 1.0779 close.
 
NZDUSD:
Forecast: Higher
Actual: Lower from a 0.8694 open to a 0.8547 close.

continue reading »

Key Fundamental Forex Events for the Week of July 21st through July 25th

The following table lists the key economic data and other events that came out during the week of July 21st through July 25th, with release times displayed for the GMT time zone.

The list also indicates how much each release deviated from the market consensus forecast upon release, as well as what the affected major currency pair or pairs did after each event or set of events.

 Monday, July 21st

All Day JPY Bank Holiday

11:00am EUR German Buba Monthly Report noted that, “Under these conditions, the German economy is likely to expand by almost 2% this year in calendar-adjusted terms, while the pace of growth is set to gradually decline over the next two years. The year-on-year rates would shrink from 1.9% in 2014 to 1.6% in 2016. Nevertheless, economic growth would still significantly outstrip potential growth meaning that, starting from normal utilisation, aggregate capacity utilisation would rise noticeably. At the end of the forecast horizon, normal capacity utilisation would be exceeded by almost 2%.”  The currency fell.

Tuesday, July 22nd

  • 12:25am AUD RBA Assistant Governor Debelle said that, “Now… so let me just start with a couple of numbers, so Latin America is about one and a half to two percent of Australian offshore investment…so it’s not a particularly large number, so there’s plenty of uh…upside to that. So Brazil is around about half of that…so that by far and away the major destination for funds flowing from Australia into Latin America. Most of it is in the form of equity.”   The currency rose.
  • 4:00am AUD RBA Governor Stevens said that, “I would argue for realism, as opposed to either naïve optimism or determined pessimism. Certainly earlier expectations about risk and return were too optimistic. We have been through a period of adjustment. But it’s doubtful that the desire to experiment and innovate has entirely disappeared. And it seems unduly pessimistic to think that everything that can be invented has been, or that every improvement to existing ways of doing things has already been implemented. And unless we think the tendency for human optimism has been completely drummed out of us, animal spirits in the ‘real economy’ will surely improve at some point.”   The currency rose.
  • 7:00am CHF Trade Balance 1.38B versus 2.97B expected.  The currency fell.
  • 9:30am GBP Public Sector Net Borrowing 9.5B versus 10.3B expected.  The currency fell.
  • 11:00am GBP CBI Industrial Order Expectations 2 versus 9 expected.  The currency fell.
  • 1:30pm USD Core CPI 0.1% versus 0.2% expected.  The currency rose.
  • 1:30pm USD CPI 0.3% versus 0.3% expected.  The currency rose.
  • 3:00pm USD Existing Home Sales 5.04M versus 4.98M expected.  The currency rose.

Wednesday, July 23rd

  • 2:30am AUD CPI 0.5% versus 0.5% expected.  The currency rose.
  • 2:30am AUD Trimmed Mean CPI 0.8% versus 0.8% expected.  The currency rose.
  • 9:30am GBP MPC Asset Purchase Facility 375B versus unchanged at 375B, votes 0-0-9 as expected.  The currency fell.
  • 9:30am GBP MPC Official Bank Rate 0.50% versus unchanged at 0.50%, votes 0-0-9 as expected.  The currency fell.
  • 9:30am GBP BBA Mortgage Approvals 43.3K versus 43.4K expected.  The currency fell.
  • 11:00am GBP CBI Realized Sales 21 versus 18 expected.  The currency fell.
  • 12:45pm GBP BOE Governor Carney said that, “The UK, the Commonwealth and the world have always drawn inspiration from great Scots. We must continue to do so if we want to win our economic marathon. Paterson showed us the need for a central bank. Its modern variant is a leading macroprudential institution, well equipped to face the challenges of promoting a balanced expansion. Hume demonstrated the virtues of free trade. The UK, already one of the most open economies, can help lead the development of new EU trade deals as our businesses diversify their markets. Smith showed us the importance of social capital.”   The currency fell.
  • 1:30pm CAD Core Retail Sales 0.1% versus 0.3% expected.  The currency rose.
  • 1:30pm CAD Retail Sales 0.7% versus 0.6% expected.  The currency rose.
  • 3:30pm USD Crude Oil Inventories -4.0M versus last -7.5M.  The currency rose.
  • 10:00pm NZD Official Cash Rate Decision 25 bp rise from 3.25% to 3.50% as expected.  The currency rose.
  • 10:00pm NZD RBNZ Rate Statement noted that, “Today’s move will help keep future average inflation near the 2 percent target mid-point and ensure that the economic expansion can be sustained. Encouragingly, the economy appears to be adjusting to the monetary policy tightening that has taken place since the start of the year. It is prudent that there now be a period of assessment before interest rates adjust further towards a more-neutral level. The speed and extent to which the OCR will need to rise will depend on the assessment of the impact of the tightening in monetary policy to date, and the implications of future economic and financial data for inflationary pressures.”  The currency fell.
  • 11:45pm NZD Trade Balance 247M versus 155M expected.  The currency fell.

Thursday, July 24th

  • 12:50am JPY Trade Balance -1.08T versus -1.11T expected.  The currency fell.
  • 2:45am CNY HSBC Flash Manufacturing PMI 52.0 versus 51.2 expected.
  • 8:00am EUR Spanish Unemployment Rate 24.5% versus 25.9% expected.  The currency was unchanged.
  • 8:00am EUR French Flash Manufacturing PMI 47.6 versus 48.5 expected.  The currency was unchanged.
  • 8:00am EUR French Flash Services PMI 50.4 versus 48.9 expected.  The currency was unchanged.
  • 8:30am EUR German Flash Manufacturing PMI 52.9 versus 52.2 expected.  The currency was unchanged.
  • 8:30am EUR German Flash Services PMI 56.6 versus 54.7 expected.  The currency was unchanged.
  • 9:00am EUR EZ Flash Manufacturing PMI 51.9 versus 52.0 expected.  The currency was unchanged.
  • 9:00am EUR EZ Flash Services PMI 54.4 versus 52.7 expected.  The currency was unchanged.
  • 9:30am GBP Retail Sales 0.1% versus 0.2% expected.  The currency fell.
  • 1:30pm USD Weekly Initial Jobless Claims 284K versus 310K expected.  The currency rose.
  • 2:45pm USD Flash Manufacturing PMI 56.3 versus 57.5 expected.  The currency rose.
  • 3:00pm USD New Home Sales 406K versus 485K expected.  The currency rose.

Friday, July 25th

  • 12:30am JPY Tokyo Core CPI 2.8% versus 2.7% expected.  The currency fell.
  • 2:00am NZD ANZ Business Confidence survey 39.7 versus 42.8 expected.  The currency fell.
  • 7:00am EUR GfK German Consumer Climate survey 9.0 versus 8.9 expected.  The currency fell.
  • 9:00am EUR German Ifo Business Climate survey 108.0 versus 109.6 expected.  The currency fell.
  • 9:00am EUR EZ M3 Money Supply 1.5% versus 1.1% expected.  The currency fell.
  • 9:00am EUR Private Loans -1.7% versus -1.8% expected.  The currency fell.
  • 9:30am GBP Preliminary GDP 0.8% versus 0.8% expected.  The currency fell.
  • 1:30pm USD Core Durable Goods Orders 0.8% versus 0.6% expected.  The currency rose.
  • 1:30pm USD Durable Goods Orders 0.7% versus 0.4% expected.  The currency rose.

Technical Recap for the Majors This Week

EURUSD:

Forecast: Mildly Lower
Actual: Mildly lower from a 1.3529 open to a 1.3431 close.
 
USDJPY:
Forecast: Mildly Lower
Actual: Mildly higher from a 101.34 open to a 101.84 close.
                                                      
GBPUSD:
Forecast: Mildly Higher
Actual: Lower from a 1.7081 open to a 1.6970 close.
 
AUDUSD:
Forecast: Higher
Actual: Mildly higher from a 0.9396 open to a 0.9409 close.
 
USDCAD:
Forecast: Mildly Lower
Actual: Mildly higher from a 1.0734 open to a 1.0779 close.
 
NZDUSD:
Forecast: Higher
Actual: Lower from a 0.8694 open to a 0.8547 close.

continue reading »

Yawn! What is it going to take to wake up our forex markets? The Euro just posted a daily traded range of 19 pips, the first time below 20 in eons. Brokers and traders alike are considering career changes. Speculators are already distorting market pricing, if the Kiwi is any indication. The central bankers from the “Land of the long white cloud” summoned up some courage and raised their interest rate by 0.25%. The Kiwi quickly fell in active trading, the opposite of what most anyone expected, but speculation, as the current argument goes, had already priced in the change. Sell on the news was the market’s knee-jerk reaction.

Profit margins, if there are any at this juncture, are paper-thin. It is time to be cautious of the types of games that proliferate the forex landscape when times are tough. Big money will try to jerk market pricing one way or another, if only to clean up on stop-loss orders that have been conveniently been placed 25-30 pips within market pricing. The same scavengers will try to create a trend where there is none, if only to grab positions on the cheap and then to let the real market forces rush back to destroy the vacuum. Greed may make the world go round, but it can be very unpleasant at times.

So where does one go to find a sane market these days? Australia and Asia tend to be the destinations of choice when the rest of the market seems to have lost its way. The “AUD/USD” has been bumping up against some heavy resistance of late, but it has not wavered from the fight. Like a two-fisted brawler from its earlier wild-west days, it has continued to fight against conventional wisdom, even when everyone believes the challenge to be too great. The chart below tells this story:

 

It is easy to name the phases, three to be exact, for the Aussie over the past year. When China decelerated, the Aussie quickly followed suit. When China put its foot down on the accelerator, then Australia responded in kind, but the latest stall within a tightly traded range is driven by a general slowdown in all markets and a grudging acceptance that the new paradigm may be slow global growth for some time.

But something happened on the way to the forex forum. CPI data out of Australia this week reported a year-over-year growth rate of 3%. BAM! The Aussie assaulted the ramparts once more. Mario Draghi might consider a boondoggle down under to discover what it takes to muster inflation, since Europe cannot seem to find the magic formula. Next up was HSBC to announce its preliminary PMI data for China, a 52% figure, its highest mark since January of 2013 and an indication that Chinese factories might actually be expanding their efforts. BAM! The Aussie was boosted again.

As always, the question now is what’s next? Can the Aussie accelerate again and blow past $0.95? Is parity with the greenback really in the cards? The Kumo Cloud seems ready to launch, and the Stochastics indicator is rising, barely above middle ground at this stage. Is the RBA still trying to talk the Aussie down and bow to political pressure? Surprisingly, the members of the RBA have suddenly become tightlipped, shying away from any mention of the strength of the local currency in their respective speaking engagements.

So what do we believe? At this juncture, one would expect the Aussie to set a new high for 2014 by cruising right on through the $0.95 threshold, but when it gets to the other side, beware of speculator games.

continue reading »

Yawn! What is it going to take to wake up our forex markets? The Euro just posted a daily traded range of 19 pips, the first time below 20 in eons. Brokers and traders alike are considering career changes. Speculators are already distorting market pricing, if the Kiwi is any indication. The central bankers from the “Land of the long white cloud” summoned up some courage and raised their interest rate by 0.25%. The Kiwi quickly fell in active trading, the opposite of what most anyone expected, but speculation, as the current argument goes, had already priced in the change. Sell on the news was the market’s knee-jerk reaction.

Profit margins, if there are any at this juncture, are paper-thin. It is time to be cautious of the types of games that proliferate the forex landscape when times are tough. Big money will try to jerk market pricing one way or another, if only to clean up on stop-loss orders that have been conveniently been placed 25-30 pips within market pricing. The same scavengers will try to create a trend where there is none, if only to grab positions on the cheap and then to let the real market forces rush back to destroy the vacuum. Greed may make the world go round, but it can be very unpleasant at times.

So where does one go to find a sane market these days? Australia and Asia tend to be the destinations of choice when the rest of the market seems to have lost its way. The “AUD/USD” has been bumping up against some heavy resistance of late, but it has not wavered from the fight. Like a two-fisted brawler from its earlier wild-west days, it has continued to fight against conventional wisdom, even when everyone believes the challenge to be too great. The chart below tells this story:

 

It is easy to name the phases, three to be exact, for the Aussie over the past year. When China decelerated, the Aussie quickly followed suit. When China put its foot down on the accelerator, then Australia responded in kind, but the latest stall within a tightly traded range is driven by a general slowdown in all markets and a grudging acceptance that the new paradigm may be slow global growth for some time.

But something happened on the way to the forex forum. CPI data out of Australia this week reported a year-over-year growth rate of 3%. BAM! The Aussie assaulted the ramparts once more. Mario Draghi might consider a boondoggle down under to discover what it takes to muster inflation, since Europe cannot seem to find the magic formula. Next up was HSBC to announce its preliminary PMI data for China, a 52% figure, its highest mark since January of 2013 and an indication that Chinese factories might actually be expanding their efforts. BAM! The Aussie was boosted again.

As always, the question now is what’s next? Can the Aussie accelerate again and blow past $0.95? Is parity with the greenback really in the cards? The Kumo Cloud seems ready to launch, and the Stochastics indicator is rising, barely above middle ground at this stage. Is the RBA still trying to talk the Aussie down and bow to political pressure? Surprisingly, the members of the RBA have suddenly become tightlipped, shying away from any mention of the strength of the local currency in their respective speaking engagements.

So what do we believe? At this juncture, one would expect the Aussie to set a new high for 2014 by cruising right on through the $0.95 threshold, but when it gets to the other side, beware of speculator games.

continue reading »