| EUR/USD Outlook – February 1-5 2010 Posted: 30 Jan 2010 07:04 AM PST 
EUR/USD had a terrible week, reaching 6 month lows against the dollar, with the final push on Friday’s American GDP. The upcoming week is quite busy, with a rate decision being the highlight. Here’s an outlook for the upcoming 8 events in Europe and an updated technical analysis for EUR/USD. EUR/USD chart with support and resistance lines marked on it. Click to enlarge: 
As the first month of 2010 ends, the predictions for the EUR/USD seem correct at the moment – most forecasts saw the dollar gaining against the Euro. Let’s start the review. The technical analysis will follow: - German Retail Sales: Publication time is unknown at the moment. Europe’s largest economy saw a very disappointing drop in this important indicator last month – a drop of 1.1%. German consumers aren’t so confident as they were a few months ago. A rise of 1.1% is predicted this time.
- Final Manufacturing PMI: Published on Monday at 9:00 GMT. The continent’s manufacturing sector has been expanding in the past 3 months – score above 50. Last month’s number was 52 according to the preliminary release, and it’s expected to be confirmed now.
- PPI: Published on Tuesday at 10:00 GMT. Contrary to consumer prices, European producer prices haven’t picked up. In the past two months, rises were seen, but they were small – 0.3% and 0.1%. Note that this release lags the German and French releases which were published earlier. An unchanged figure is expected now.
- Final Services PMI: Published on Wednesday at 9:00 GMT. Completing Monday’s manufacturing sector, the services sector has been expanding for already 4 months. Last month saw a drop from 53.6 to 52.3 points, but still in the positive zone. It’s predicted to be confirmed this time.
- Retail Sales: Published on Wednesday at 10:00 GMT. Although France and Germany already publish their numbers earlier, this important consumer indicator still has a tendency to disappoint and hurt the Euro. Retail sales dropped by 1.2% last month. This time, a rise of 0.4% is expected.
- German Factory Orders: Published on Thursday at 11:00 GMT, just before the rate decision. The continent’s industrial giant still pulls the Euro zone forward. Last month saw a (revised) rise of 2.8% in factory orders. The initial number disappointed at first, especially after a negative month, but Germany is still doing well. A small rise of 0.2% is predicted this time.
- Rate decision: Published on Thursday at 12:45 GMT. Jean-Claude Trichet probably has no choice but to leave the rates unchanged. Unemployment in Euroland reached 10%, and the recovery, especially in the far flanks of the continent looks very fragile. Inflation has picked up, but an annual rate of 1% is still no threat. The 1% Minimum Bid Rate will stay. 45 minutes after the publication, he will speak at the ECB Press Conference. The tone of his words, hopeful or weary, will set the tone for the Euro’s trading.
- German Industrial Production: Published on Friday at 11:00 GMT. Completing the factory orders figure from the previous day, Germany’s industrial output is expected to follow last month’s 0.7% rise with a similar number – 0.5%. This follows volatile months of rises and drops.
EUR/USD Technical Analysis The Euro had a good start to the week, rising to 1.4196 to test the 1.42 resistance line. It then began losing ground. It made a first dip below 1.40 and rose back up in a sharp false break. Then, it fell again, especially on Friday and went below 1.39. EUR/USD has dropped to a lower range. This range is bound by 1.40, the previous support line, and 1.3750, which is already a huge support line. This was a clear line of support and resistance in the past, during the beginning of 2009, and EUR/USD will have a hard time falling below it. If this does happen, 1.3420 is the next support line -it worked as such way back in June. Looking up above 1.40, the next line of resistance is 1.42, the previous border of the range. Even higher, 1.4450 worked as a resistance line many times in the past. There are many lines above that. lines that were mentioned in last week’s outlook, but they are too far now to mention. I remain bearish on the Euro. With a fifth of the young population unemployed, and ongoing Greek trouble, the Euro is weak. It’s currently approaching a strong support line, so further drops seem limited at 1.3750 for the upcoming week. This pair receives lots of great technical analysis on the web. Here are a few: - Casey Stubbs asks when this bleeding will stop, and provides possible answers.
- James Chen reviews the key breakdown.
- The Geek Knows reviews the past week and looks forward using his Koala system.
I’ll add more as they emerge. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| GBP/USD Outlook – February 1-5 2010 Posted: 30 Jan 2010 07:03 AM PST 
British growth was dwarfed by the American one, and the Pound ended the week lower. The upcoming week provides lots of important releases, with an interesting rate hike being the highlight. Here’s an outlook for the upcoming week in the Pound, and an updated technical analysis for GBP/USD. GBP/USD chart with support and resistance lines marked on it. Click to enlarge: 
Britain is officially out of recession, but the growth rate is very small, 0.1%, and this can be easily erased in the upcoming revisions. How will this be reflected in the rate decision? Let’s start the review. The technical analysis will follow: - Halifax HPI: Publication time is unknown at the moment. This is a late though accurate house price index. According to HBOS, prices have risen in the past 6 months. Last month saw a slower rise of 1%. This rise is expected to ease once again to 0.9%. A rise in house prices is fueling inflation, but this doesn’t impress Mervyn King.
- Manufacturing PMI: Published on Monday at 9:30 GMT. This important indicator provides a strong start for the week. Britain’s manufacturing sector has been expanding in the last quarter of 2009, reaching a score of 54.1 points. This good number, within a safe distance of the pivotal 50 line, is expected to remain almost unchanged, and rise to 54.2.
- Net Lending to Individuals: Published on Monday at 9:30 and overshadowed by the previous figure. Growing borrowing means more confidence and more spending. Britain enjoyed 4 straight months of positive lending, with a positive surprise of a 1.1 billion result last month. Net lending is expected to ease to 0.9 billion this time.
- Construction PMI: Published on Tuesday at 9:30 GMT. Contrary to the rising house prices, the construction sector is still contracting. Purchasing managers’ index in this sector did not recover from the global crisis and is still under 50. Last month saw a modest rise to 47.1, and this time expectations stand on 48.3 points, the highest in almost two years.
- Nationwide Consumer Confidence: Published on Wednesday at midnight GMT. This important survey made nice gains throughout 2009, but slipped down from 74 to 69 points last month. Consumer confidence is necessary for economic recovery. It’s expected to edge up this time.
- Services PMI: Published on Wednesday at 9:30 GMT. According to purchasing managers, the services sector is doing better than the manufacturing one. A positive score has been seen for 8 months, with three recent months of high values (56.8 last month). This good stability is predicted to remain, with 56.6 this time – strong expansion.
- Rate decision: Published on Thursday at 12:00 GMT. Mervyn King is expected to leave the Official Bank Rate at 0.5% for another month. Last month’s decision didn’t really move the Pound. But this time, the money is running out of the Quantitative Easing program. The bank’s Asset Purchase Facility had 7 billion pounds left, and the estimation was that money was running out of it. Will they expand the program? There’s a slim chance of this. The improvement in employment and inflation aren’t impressing King. We’ll get an updated view in the MPC Rate Statement.
- PPI: Published on Friday at 9:30 GMT. One wild month of rises was quickly forgotten when producer prices went back to normal in the two months that followed – both saw a 0.1% rise in prices. This time, another modest rise is expected – 0.4% in the important PPI Input and 0.3% in the less important PPI Output.
GBP/USD Technical Analysis Throughout most of the week, GBP/USD was ranging between (and around) 1.6110 and 1.6260. These lines were seen in last week’s outlook. And on Friday, this line was broken and GBP/USD dropped sharply to close below 1.60. Looking down, I’ve added another minor resistance line at 1.5833. This was the bottom near the end of 2009. A much more important line appears at 1.5720 – a major support line that was tested several times and not breached since May 2009. The Pound began a comeback from this line, and now it’s becoming closer again. Even lower, 1.5350 served as a resistance line twice in the past, and is now an important support line. Looking up, 1.6110 turns into the immediate resistance line. 1.6270 follows, and the next peak is 1.6450. There are more significant resistance lines up there, but they’re too far now. My sentiment is neutral on the GBP/USD. The weak growth figure was disappointing, but Britain has seen many good figures, such as employment to keep it above the strong support line, in a lower but steady range. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| AUD/USD Outlook – February 1-5 2010 Posted: 30 Jan 2010 07:02 AM PST 
The Aussie had a disappointing week, surrendering to the greenback’s strength. The upcoming features a probable fourth consecutive rate hike that might lift the Aussie. There are many more indicators. Here’s an outlook for the Australian dollar, and an updated technical analysis for AUD/USD. AUD/USD chart with support and resistance lines marked on it. Click to enlarge: 
This week is loaded with Australian figures, some delayed from previous weeks. The high interest rate will be in the limelight at the beginning of the week, but will later be overshadowed by more figures. Let’s start the review. The technical analysis will follow: - NAB Quarterly Business Confidence: Publication time is unknown at the moment. This has been delayed from last week. In addition to the monthly release, National Bank Australia publishes a quarterly number as well. After 6 consecutive quarters of negative numbers, meaning worsening conditions, this survey of 1000 businesses was positive last quarter, scoring 16 points. A similar number is expected now
- HIA New Home Sales: Publication time is unknown at the moment. The Housing Industry Association has shown a small rise of 0.3% in the number of sales last month, after two months of big drops. Another small rise is predicted this time.
- AIG Manufacturing Index: Published on Sunday at 22:30 GMT. 200 manufacturers are surveyed by the Australian Industry Group about their expectations for future conditions. This index slipped below 50 last month, hitting a score of 48.5. This indicates that the manufacturing sector is contracting. It happened after 4 positive months. It’s predicted to rise this time.
- MI Inflation Gauge: Published on Sunday at 23:30 GMT. After seeing a rather strong CPI in Q4, the Melbourne Institute supplies an unofficial peek in into the first month of 2010. The past two month saw a steady rise of 0.3% in prices. A similar rise is predicted this time.
- ANZ Job Advertisements: Published on Monday at 00:30 GMT. Similar to the strong Australian job market, this unofficial release shows a rise in jobs. They measure the number of jobs advertised on newspapers, and printed a rise of 6% this time. Another rise is predicted this time, but it will probably be more modest.
- HPI: Published on Monday at 00:30 GMT. This official house price index showed strong rises in prices in the past two months – 4.2% every month. A rise in house prices also impacts inflation and the upcoming rate decision. HPI is predicted to rise by 3.7% this time.
- Commodity Prices: Published on Monday at 5:30 GMT. Australia’s commodity exports are vital to the economy. This year over year indicator still shows negative numbers, but they have squeezed. Last month saw a y/y drop of 16.6%. This month will probably be closer to zero.
- NAB Business Confidence: Published on Tuesday at 00:30 GMT. The monthly survey of 350 businesses has shown a rise in confidence, with a score of 19 points last time, the highest in many years. This positive number means optimism which is expected to continue, but it will probably not reach new highs.
- Rate decision: Published on Tuesday at 3:30 GMT. Australia stands out with a high interest rate of 3.75%. The current rate comes after 3 consecutive 0.25% rate hikes. Hlenn Stevens’ RBA will probably make a fourth hike to 4% in this decision. Inflation, as seen in last week’s quarterly CPI is OK, and the job market sure is hot, with last month’s unemployment rate falling to 5.5%. All this leads to a probably rise in the Cash Rate. The accompanying RBA Rate Statement will hint about future policy and may also move the Aussie.
- AIG Services Index: Published on Tuesday at 22:30 GMT. The complementary figure for last the manufacturing index printed 50 points last month – the pivotal point between expansion and contraction. This came after 2 months of higher numbers. A score above 50 is predicted this time as well.
- Trade Balance: Published on Wednesday at 22:30 GMT. Since May 2009, Australia has seen a deficit in the balance of imported and exported goods. Last month, this deficit squeezed to 1.7 billion. But now it’s expected to expand again to 2.36 billion.
- Retail Sales: Published on Thursday at 00:30. This all-important consumer figure isn’t very stable. It changes from expansion to contraction every month or two. A stronger than expected rise was seen last month – 1.4%. This helped the Aussie. A more modest rise is predicted this time – 9,3%.
- Building Approvals: Published on Thursday at 00:30, and it’s overshadowed by the retail sales release. Also this isn’t a stable indicator, but it has been mostly positive in recent months. The number of building approvals, which impacts the whole economy, rose by 5.9% last month. They are expected to remain unchanged this time.
- AIG Construction Index: Published on Thursday at 22:30 GMT. The last PMI-like figure from AIG is the weakest. It has been under the 50 mark during most of 2009, with only two months above the water. Last month it got close to 50, but from the bottom – 49.3 points. It’s predicted to rise above 50 this time.
- RBA Monetary Policy Statement: Published on Friday at 00:30 GMT. Almost three days after the rate decision, the RBA provides it’s own quarterly view about the economy. The timing isn’t always this close. The report will sure impact the Aussie and supply a strong ending to a very busy week.
AUD/USD Technical Analysis The Aussie traded in a range between the 0.9090 resistance line and the important 0.8950 support line. After an initial false breakdown, Friday’s dollar storm was too strong for the Aussie which closed the week at 0.8836. The lines haven’t changed since last week’s outlook. 0.8950 turns into an initial and strong resistance line. Above this line, the aforementioned 0.9090 line is another line of resistance. Further above, 0.9170 served as a support line for a short time and provides an additional minor support line. 0.9322 is a very strong resistance line, being tested many times. Looking below, 0.8735 was the bottom during the previous breach of 0.8950 (December) and now supplies immediate support. A stronger support line appears at 0.8567, a place where the Aussie pauses to rest before going up. Even lower, 0.8477 is a very strong support line, serving as long-standing resistance line during 2009. I am neutral on AUD/USD. Despite the recent losses and China’s tightening measures, Australia has a strong economy, seen in a much better job market than the American one. A rate hike should keep it stable. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| USD/CAD Outlook – February 1-5 2010 Posted: 30 Jan 2010 07:01 AM PST 
The Canadian dollar also lost ground to the greenback, but didn’t lose any important lines. The upcoming week provides important job figures among other indicators. Here’s an outlook for the Canadian dollar and an updated technical analysis for USD/CAD. USD/CAD chart with support and resistance lines marked on it. Click to enlarge: 
American GDP was excellent, but lucky for Canada, also its monthly GDP was published at the same time and it exceeded early expectations, rising by 0.4% and enjoying an upwards revision of the previous month’s number. Let’s start the review. The technical analysis will follow: - Building Permits: Published on Thursday at 13:30 GMT. Canada’s permits made a huge leap of 18% two months ago, and this resulted in a “hangover” last month – a drop of 4.6%. This figure is important for the whole economy and it’s predicted to rise by 3.3% this time.
- Ivey PMI: Published on Thursday at 15:00 GMT. The Richard Ivey Business School has has a reputable gauge of the economy, that tends to shake the economy. After making excellent gains and reaching 61.7 points, the last two months have seen a speedy deterioration, with a drop to 48.4 points last month. A score below 50 means economic contraction – loonie negative. It’s predicted to lift its head up above 50 – to 51.3 points.
- Mark Carney talks: His speech begins at Winnipeg on Thursday at 18:45 GMT. The head of the central bank disappointed with an unchanged interest rate policy last month. This significantly hurt the loonie, and USD/CAD eventually rose above 1.04, and continued north. He’ll have a chance to say something positive in this speech.
- Employment Data: Published on Friday at 12:00 GMT, 90 minutes before the American NFP. Canada’s job market is improving gradually. Two months ago, we’ve seen a rise of almost 80,000 jobs, which was superb. The Employment Change figure slightly disappointed last month with a drop of 2,600 jobs. The Unemployment Rate figure has been more stable, easing from 8.6% to 8.5% two months ago, and remaining stable last month. It seems that the situation is stabilizing, after many swings in previous months. A rise of 15,300 jobs is predicted now. The Unemployment Rate is expected to remain unchanged.
USD/CAD Technical Analysis After losing the 1.04 line last week, USD/CAD traded through a significant portion of the 1.04-1.0750 range, mostly between 1.0530 to 1.07, closing at 1.0704. The lines haven’t changed from last week’s outlook. As aforementioned, 1.0750 is a strong resistance resistance line. Above this line, 1.0850 was the previous peak, and serves as a minor resistance line. If the greenback continues to rally, the next line of resistance is 1.1130, a line that was successfully tested several times in 2009. Looking down, 1.0530 is a very minor support line inside the range. 1.04 is a major line, followed by 1.02 – the bottom of the previous line and the 2009 low. Parity is lower, but too far… I turned bearish on USD/CAD The Canadian economy weathered this greenback storm in a nice manner, and has a strong resistance line to defend it. I believe that it won’t lose this range, and that the Canadian employment numbers will get the pair to lower areas of the range. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
No comments:
Post a Comment