| EUR/USD Outlook – May 10-14 Posted: 08 May 2010 10:00 AM PDT 
The rumor that Spain will ask for 280 billion euros of aid began the avalanche that sent the Euro and the other currencies tumbling down. The upcoming week is quite busy, with GDP figures standing out. Here’s an update for the European events and an updated technical analysis for EUR/USD now at lower ground. EUR/USD graph with support and resistance lines on it. Click to enlarge: 
The Greek tragedy was only the tip of the iceberg - debt contagion took over the world news and sent the Euro down. European leaders might provide solutions during the weekend. Later the indicators will speak. Let’s start: - French Industrial Production: Published on Monday at 6:45 GMT. Europe’s second largest economy’s industry stalled last month. This came after a strong month, so it wasn’t too bad. This figure is expected to rise this time.
- Sentix Investor Confidence: Published on Monday at 6:00 GMT. This survey of 2,800 investors made a huge surprise last month by turning positive – this indicates optimism, for the first time since the crisis began. After reaching 2.5 points, it will probably drop, but remain positive.
- German Final CPI: Published on Tuesday at 6:00 GMT. After two months of neat rises in prices, they dropped again last month. The initial release showed a drop of 0.1% in prices, and this will probably be confirmed now.
- German GDP: Published on Thursday at 6:00 GMT. Germany’s economy didn’t grow in the fourth quarter of 2009. This stagnation was also seen in the figure for the whole continent. Germany is the first country to publish its Gross Domestic Product for Q1 of 2010. This will rock the Euro. This is the first, preliminary release.
- French GDP: Published on Wednesday at 6:45GMT. Contrary to Germany, Europe’s second largest economy did grow in the previous quarter – 0.5% – which is quite good. Will it lead the recovery? Probably not.
- Flash GDP: Published on Wednesday at 9:00 GMT. After the initial figure for Q4 showed a nice 0.4% growth rate, this was later revised to 0% – no growth. There is great fear that the Euro-zone will plunge back to recession, starting with a contraction in Q1 of 2010.
- Industrial Production: Published on Wednesday at 9:00 GMT. All European industrial production grew in the past two months quite nicely- 1.6% and 0.7%. Learning from the past, this will probably not be followed this time.
- ECB Monthly Bulletin: Published on Thursday at 8:30 GMT. Although many European banks will closed on Thursday due to Ascension Day, the ECB will release its monthly review of the economies. This statistical data tends to shake the currency.
EUR/USD Technical Analysis The Euro traded between 1.3267 and 1.3080 at the beginning of the week. It made an initial drop above 1.2880 and then began the big collapse to a swing low of 1.2520 before recovering and closing at 1.2750. After losing 450 pips, some lover lines were added on top of last week’s outlook. Euro/Dollar is currently in a range between 1.2707, a minor support line from February 2009 to 1.2886, a support line in May 2009. Looking up, 1.3080 now turns into a resistance line. This is were the 2009 rally of the Euro began. Higher, 1.3267 is also a significant resistance line, working in both roles in recent months. Looking down below 1.2707, the next line of support is 1.2520 – the past week’s low. Lower, 1.24 was a support line at the height of the crisis, followed by 1.2330, the lowest line in 4 years. I remain bearish on the Euro. Hope from the European emergency summit could boost the Euro at the beginning of the week, but the troubles will still remain. Note that the European fundamentals aren’t too good either. This pair receives many great reviews on the web: - Casey Stubbs provides an up-to-date technical analysis for the pair using daily and hourly charts.
- James Chen sees a continued bearish bias.
- Andrei talks about further drops, and marks support and resistance lines.
- Kathy Lien focuses on EUR/GBP and sees further downside also there.
- The Geek Knows reviews the week and looks forward.
Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| AUD/USD Outlook – May 10-14 Posted: 08 May 2010 09:00 AM PDT 
The Australian dollar is expecting another volatile week: job figures and the annual budget release stand out. Will the Aussie recover? Here’s an outlook for this week’s events and an updated technical analysis for AUD/USD. AUD/USD chart with support and resistance lines marked. Click to enlarge: 
Similar to the fifth rate hike, also the past week’s sixth rate hike surprised the markets, but it wasn’t enough. Note this week’s special annual event – the budget release. Let’s start: - ANZ Job Advertisements: Published on Monday at 1:30 GMT. The Australia and New Zealand Banking Group provides a sneak peak towards the official employment figures published later in the week. After a huge leap of 19% in the number of advertised jobs, a smaller rise of 1.8% was seen.
- NAB Business Confidence: Published on Tuesday at 1:30 GMT. National Australia Bank has shows a drop last month – from 19 to 16, but it’s still positive, showing improving conditions, as it did in the past 10 months. A small rise back up can be expected now.
- Annual Budget Release: Published on Tuesday at 9:30 GMT. The Australian Treasury will present the budget to the parliament and will lay out the economic prospects for the next year. This event is likely to rock the Aussie, as well as the kiwi. Also note inflation projections, which impact the interest rates.
- Home Loans: Published on Wednesday at 1:30 GMT. The housing sector has shown signs of weakness lately. The number of loans for homes fell in the past 5 months. Last month’s fall was relatively small – 1.8%, and a drop of 2.9% is now expected.
- Employment data: Published on Thursday at 1:30 GMT. This is the key event. The employment figures should justify the recent, sixth, rate hike. Last month saw a rather moderate rise in jobs – 20K, within expectations. A stronger rise is predicted this time. The Australian unemployment rate, that remained at 5.3%, should drop to 5.2% this time.
AUD/USD Technical Analysis Staying in the higher 0.9220 to 0.9327 range was temporary. AUD/USD fell quickly, stopped to rest above 0.90 and then collapsed to find support at 0.88 before partially recovering to 0.8880. Note that after this volatile week, many lines have changed from last week’s outlook. The Aussie now trades between 0.88, which was a swing low a few months ago and also in the past week, and 0.90, which provided support recently. Looking down, the next line of significant support is at 0.8567. This is a place where the Aussie stopped to rest before climbing up in October 2009, and also a swing low in February. There’s a very minor support line at 0.8735 as well. Below, 0.8340 is the next line of support, but it’s too far off now. The Aussie struggle around this line last summer. Looking up, 0.9135 now provides minor resistance. This line supported the Aussie recently. Higher, 0.9220 is another line of resistance, also switching its role. Even higher, 0.9327, which was a strong barrier many times in recent months, was breached in the past weeks, but continues to be of significance. I remain bullish on AUD/USD. Despite being carried away by the dollar strength, the Aussie’s fundamentals, including the sixth rate hike and the strong job market, should help it outperform European currencies. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| USD/CAD Outlook – May 10-14 Posted: 08 May 2010 08:00 AM PDT 
Various economic events will impact the Canadian dollar in the upcoming week, after the strong rise that was seen in Canadian employment. Here’s an outlook for these events and an updated technical analysis for USD/CAD, now far from parity. USD/CAD chart with support and resistance lines marked. Click to enlarge: 
The Canadian dollar didn’t escape the troubles that began in Greece, went on to Spain and sent the greenback roaring across the board. Note the double-feature trade balance this week. Let’s begin: - Housing Starts: Published on Monday at 12:15 GMT. Canadian monthly housing starts exceeded early expectations in recent months, reaching 201K last time. This release always rocks the loonie. Another small rise is expected this time.
- Trade Balance: Published on Wednesday at 12:30 GMT. Canada enjoyed a surplus in its balance in the past three months. Last month saw a big surplus – 1.4 billion, double the expectations. Note that this figure is released together with the American trade balance. On the southern side of the border, there’s a big deficit. This double-feature event means choppy trading for USD/CAD.
- NHPI: Published on Wednesday at 12:30 GMT. The second housing is also positive – the prices of new homes were on the rise in the past 8 months, although last month’s rise was small – 0.1%. The trend will probably continue with a 0.4% rise.
- Pierre Duguay talks: BOC Deputy Governor Pierre Duguay will begin speaking on Thursday at 18:00 GMT.Duguay finishes his position in July and he might feel more free to speak out on the future of interest rates and the economic situation – thus moving the loonie.
- Manufacturing Sales: Published on Friday at 12:30 GMT. Sales by manufacturers rose by only 0.1% last time, disappointing the markets. Also last month’s number was revised to the downside. A stronger rise of 1.1% is expected this time.
- John Murray talks: BOC Deputy Governor John Murray will also talk in the Carleton university in Ottawa, on Friday at 15:00 GMT, towards the closing time of the markets. Murray proved that he can shake the currency,and might do it again at this sensitive timing.
USD/CAD Technical Analysis At the start of the week, USD/CAD continued range trading between parity and 1.02. It then continued higher and bounced under 1.04,before making a leap to 1.0740. The close at 1.0424 was a big comeback. Some higher lines were added on last week’s outlook. USD/CAD is now supported with the 1.04 line, which worked as a strong support line during many months. Above, 1.0680 is a minor resistance line, being a swing high before the move towards parity began. Higher, 1.0780 is already a very strong line, being the top border of a long-term range. Higher, 1.0850 and 1.1130 provide resistance, but they’re too far away. Looking down below 1.04, the 1.02 line returns to its role as a support line – this was the 2009 low. Parity remains a line of strong struggle. If parity is breached once again, the next lines are 0.98 and 0.97, but they’re too far off. I remain bearish on USD/CAD. The dollar’s storm swept the board in the past wild week, but the loonie managed to recover. Canada’s upcoming rate hike and the strong employment figures we’ve just seen should help stand out and strive towards parity once again. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| GBP/USD Outlook – May 10-14 Posted: 08 May 2010 07:24 AM PDT 
After the Pound was pounded by the British elections, a busy week expects traders: a rate decision, employment and inflation figures are among the events this week. Here’s an outlook for the events this week and an updated technical analysis for GBP/USD. GBP/USD chart with support and resistance lines marked. Click to enlarge: 
Apart from the British elections, the British Pound also suffered from the European troubles. They began with the rumor that Spain would seek aid and turned into an avalanche. Now, the British events will take over: - Rate decision: Published on Monday at 11:00 GMT. This decision was delayed due to the elections and provides a strong start to the week. There are talks that Mervyn King will step up his measures, now that the elections are behind us, as the nflation is rising. While the chance of raising the Official Bank Rate is very small, a different rate statement regarding future policy could boost the Pound, although this King wants a weak Pound
- BRC Retail Sales Monitor: Published on Monday at 23:00 GMT (midnight UK). This “mini retail sales” release, provided by the British Retail Consortium, gives a good picture towards the official figure that will be published later on. In the past two months, the volume of sales grew nicely, including a 4.4% leap last month. A smaller rise is predicted this time.
- Manufacturing Production: Published on Tuesday at 8:30 GMT. The British industry enjoyed a rise of 1.3% in its manufacturing production last month, double the expectations. Manufacturing is 80% of all the industrial production and overshadows it. Note that this figure is volatile, and the impact is quite strong. A rise of 0.3% is expected now.
- NIESR GDP Estimate: Published on Tuesday at 14:00 GMT. TheNational Institute of Economic and Social Research usually provides a good and up to date estimate of the economy’s performance. Last time, it was inline with economists expectations for a 0.4% rise in Q4, but the actual growth was weaker. The figure released now relates to the three months ending in April.
- Employment data: Published on Wednesday at 8:30 GMT. Claimant Count Change represents the change in the number of people claiming unemployment related benefits. In the past two months, this number dropped significantly – over 32,000 people every month – this is excellent. A smaller drop is predicted this time. The unemployment rate jumped to 8% and it’s expected to improve this time. Also note the Average Earnings Index figure that rose by 2.3% last month – quite strong. A drop of 20,000 unemployed people is expected now.
- BOE Inflation Report: Begins on Wednesday at 9:30 GMT. Two days after the rate decision, Mervyn King has another opportunity to impact currency trading. This report doesn’t cover only inflation – it also contains updated economic forecasts and could hint about future rate policy. King will hold a press conference to accompany the release.
- Trade Balance: Published on Thursday at 8:30 GMT. The British trade deficit squeezed last month to 6.2 billion, better than expected. This helped the Pound at that time, and will probably help it this time as well, if the deficit is below 6 billion, but expectations stand on 6.5 billion.
- CB Leading Index: Published on Friday at 9:00 GMT. This index is composed of 7 economic indicators – most of them already released. Nevertheless, this figure from the Conference Board tends to move the Pound. In the past few months, this index made steady rises. A small rise is predicted this time.
GBP/USD Technical Analysis The Pound began the week with some range trading between 1.5120 and 1.5350. After conceding the 1.5120 line, GBP/USD dropped quickly below the previous 2010 low of 1.4780 and bottomed out at 1.4477 before closing at 1.4798. This exciting week forced adding lower support lines on top of last week’s outlook. After closing above 1.4780, the Pound’s range is between 1.4780 (a strong support line) and 1.4975 (a minor resistance line). Looking up, the serious line above is 1.5120. This worked as a strong support line and now works as resistance. Higher, 1.5350 is less strong than it used to be. The line above is 1.5520, but that’s far now. Below, 1.4400 is a line we spoke about before, and was tested with the collapse in the past week. This serves as a strong resistance line. Under this line, 1.4130, which was a low point in March 2009 is another line of support. Even lower, 1.3850, 1.3670 and 1.35 are below, but these lines are too far. At least now… I am bearish on GBP/USD. The hung parliament and the European troubles are stronger than the improving British economy, especially the employment data which will be updated the week. The Pound will probably continue suffering until these issues are resolved. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
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