| EUR/USD Outlook – May 3-7 Posted: 01 May 2010 11:30 PM PDT 
Another crazy week will probably be seen. Apart from the debt issues, we have a rate decision and many more events. Here’s an outlook for this week’s events and an updated technical analysis for EUR/USD. EUR/USD graph with support and resistance lines marked. Click to enlarge: 
Credit downgrades for Greece, Portugal and Spain hurt the Euro this week, but fresh hope helped it recover. The Greek tragedy will stay with us for a long time. OK, let’s see the events:
- Final Manufacturing PMI: Published on Monday at 8:00 GMT. The continent’s manufacturing sector showed a nice advance according to the initial read – 57.5 according to 600 managers surveyed for this index. This number will probably be confirmed.
- Axel Weber talks: Starts speaking on Monday at 9:00 GMT. The leading candidate for replacing Trichet proved to be a very influential figure in handling of the Greek crisis. His speech in Frankfurt is likely to move the Euro.
- German Retail Sales: delayed from last week. After a surprise rise of 1.1% last month, Europe’s largest economy is expected to show a drop of 0.2% in retail sales this time. Germany precedes the all-European figure, making this figure important. They’re expected to remain unchanged now.
- PPI: Published on Tuesday at 9:00 GMT. European producer prices aren’t following consumer prices and remain contained. Last month’s 0.1% rise shows that the Euro-zone’s inflationary pressures aren’t strong. But now, a significant rise is predicted, after Germany’s PPI was high.
- Retail Sales: Published on Wednesday at 9:00 GMT. Consumers in the continent have shown less confidence lately – retail sales squeezed in the past two months with a serious drop of 0.6% last month. A small rise is predicted this time – 0.1%.
- German Factory Orders: Published on Thursday at 10:00 GMT. Germany’s industry is the locomotive of the Euro-zone. After a leap of 5.1% in orders two months ago, orders stalled last month. A fresh rise of 1.4% is predicted this time and will help stabilize the Euro.
- Rate decision: Published on Thursday at 11:45 GMT. Jean-Claude Trichet has no choice but to leave the Minimum Bid Rate unchanged at 1%. He might comment on the deteriorating situation of the countries at the flanks of the continent. Any economic forecast will move the Euro at the press conference due 45 minutes after the release.
- German Industrial Production: Published on Friday at 10:00 GMT. The second industrial release from Germany is weaker than the factory orders. Industrial production didn’t move last month, and also two months ago it hardly rose. A rise is necessary this time, and expectations are rather high – 1.5%.
EUR/USD Technical Analysis After hovering above 1.3267, the pair broke downwards and pierced through last week’s low of 1.32 to bottom out only at 1.3114, very close to the all-important 1.3080 line. It then recovered and managed to close above 1.3267. Note that some lines have changed since last week’s outlook. Looking up, 1.3420 returns to its role as a resistance line, being the immediate barrier for the Euro’s strength. Above, 1.3530 is the next line of resistance, already more important. The high level in recent weeks, 1.37 provides further resistance, and the ultimate line is 1.3850 – EUR/USD collapsed when reaching this line. Looking down, the role of 1.3267 is becoming smaller, yet still notable. Strong support is found at 1.3080. The pair approached this line last week. This was the place where the Euro began the rally of 2009. Even lower, 1.2886 is the next line of support. A Greek default will send EUR/USD to this line. I remain bearish on EUR/USD. The debt issues continue to be a big burden on the Euro, and to provide fuel for the dollar bulls. It will be interesting to see how Trichet relates to the crisis and if the slightly improving indicators will put the brakes on the fall of the Euro. This pair receives many interesting reviews on the web. Here are my favorites: - Casey Stubbs provides an up-to-date technical analysis for the pair using daily and hourly charts.
- James Chen sees the pair descend to key support within downtrend.
- Andrei sees the pair going down, and marks the important lines.
- DailyFX say that the Euro may find temporary reprieve with a Greek bailout approval.
- TheGeekKnows reviews the week and looks forward.
Further reading on Forex Crunch: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| GBP/USD Outlook – May 3-7 Posted: 01 May 2010 11:15 PM PDT 
The general elections will dominate the Pound’s trading this week, yet there are many economic indicators that will also rock the Pound this week. Here’s an outlook for the British events and an updated technical analysis for GBP/USD for the exciting week ahead. GBP/USD graph with support and resistance lines marked. Click to enlarge: 
Note that the Pound also moves on news from continental Europe – debt troubles in Greece, Portugal and Spain have an impact on Britain as well, as Britain also suffers from a high government deficit. OK, let’s start:
- Halifax HPI: Publication time unknown at the moment. This is considered the most accurate house price index, as it is based on a very wide survey – the bank’s internal numbers. After a drop two months ago, house prices jumped back up by 1.1%, hinting that the drop could be temporary. Another rise of 0.6% is expected this time. Consumer prices are also on the rise.
- Manufacturing PMI: Published on Tuesday at 8:30 GMT. Britain’s manufacturing sector showed strength as the 600 purchasing managers surveyed reached a score of 57.2 points, the highest since the outbreak of the financial crisis. It’s expected to remain unchanged this time. This is always a big market mover.
- Net Lending to Individuals: Published on Tuesday at 8:30 GMT. Lending leads to spending and moves the whole economy that showed weak growth. In the past two months, net borrowing passed the 2 billion pound mark, expressing confidence. It’s expected to remain unchanged.
- Nationwide Consumer Confidence: Published on Tuesday at 23:00 GMT (midnight UK). This important survey of consumer confidence is usually released just before the rate decision and hints about the outcome. This time, the rate decision is delayed due to the elections. After many months of steady rise, this index leaped from 74 to 81 two months ago, only fall back down to 72 last month. A return to 80 points is predicted this time.
- Construction PMI: Published on Wednesday at 8:30 GMT. The construction sector posted a great surprise last month – a jump above the all-important 50 point mark – purchasing managers are finally expecting economic expansion. The 53.1 points achieved last time will probably be followed by the same score.
- Services PMI: Published on Thursday at 8:30 GMT. The last purchasing managers’ index refer to the services sector. This sector already reached 58.3 points but disappointed with a drop to 56.5 points this time. A rise above 57 is due now. Note that this release, on election day, means that its impact will be smaller than usual.
- Elections: On Thursday. Results due at 21:00 GMT. Gordon Brown’s ruling Labour party was trailing behind in these elections. But what seemed as a landslide victory for James Cameron’s Tories is now undermined by the growing popularity of the third, underdog party – Nick Clegg’s Liberal Democrats. There is growing fear of a political deadlock – a hung parliament that will hurt the Pound. A clear victory for any party will boost the Pound. Note that the results in the exit polls can change as the votes are counted.
- PPI: Published on Friday at 8:30 GMT. While the official votes are still counted, British producer prices will be released. Prices leaped to an annual rate of 3.6% (PPI Input). Learning from previous leaps, this will probably be followed by a drop in prices. The rise of consumer prices puts more pressure on the Pound.
GBP/USD Technical Analysis The Pound began the week with a drop below the pivotal 1.5350 line. GBP/USD bounced only at 1.5120, which proved to be a strong support line once again. The Pound eventually recovered but closed lower, at 1.5273. The Pound is currently bound to a lower range – 1.5120 to 1.5350. The resistance line of 1.5350 is less important than in previous weeks, after being run over many times. Note that some of the lines have changed since last week’s outlook. Looking up, 1.5520 is the next significant resistance line. It worked as such recently, and worked as a support line when the pair was trading higher. Above, 1.5833 is also a strong resistance line – after failing to breach this line, the pair collapsed. Looking down below 1.5120, the next level of support is at 1.4975, but its rather minor. The most important line is the 2010 low of 1.4780 – this was also a support line in the past. I remain neutral on the Pound. Despite some more decisive polls towards the elections, uncertainty remains high. Also the economic indicators, such as employment, are likely to continue offsetting each other, contributing to the choppy trading. The last 24 hours of the week will determine the direction of the Pound – election results and the American NFP will set the tone. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| AUD/USD Outlook – May 3-7 Posted: 01 May 2010 09:00 AM PDT 
A very busy week expects Aussie traders with the rate decision is the key event. Here’s an outlook for the 11 Australian events, and an updated technical analysis for AUD/USD. AUD/USD graph with support and resistance lines marked. Click to enlarge: Producer prices rose by 1%, higher than expected, but consumer prices rose exactly as expected, raising the tension towards the rate decision. Also note retails sales, building approvals and the trade balance. OK, let’s start: - AIG Manufacturing Index: Published on Sunday at 23:30 GMT. The Australia Industry Group showed three months of expansion in this index, similar to manufacturing PMI. Last month, the score was at 50.2 and it could fall below 50 this time, indicating contraction.
- MI Inflation Gauge: Published on Monday at 00:30 GMT. The government’s CPI came out within expectations, so also this indicator by the Melbourne Institute, will probably not show a rise in inflation – last month’s 0.5% will probably be followed by a smaller rise.
- HPI: Published on Monday at 1:30 GMT. This quarterly indicator made strong jumps in the past 3 quarters, including a 5.2% jump last time – exceeding expectations. A milder rise is predicted this time – 3.2%.
- Commodity Prices: Published on Monday at 6:30 GMT. Australia’s commodity-oriented economy depends on rising prices. After 11 months of year-over-year drops, commodity prices finally rose by 1.4% last month. Another rise is expected this time.
- Rate decision: Published on Tuesday at 4:30 GMT. Yet again, there’s uncertainty towards this decision. Australian economic indicators, especially inflation, hint a yet another rate hike – the sixth one since the crisis. On the other hand, there are mixed statements from senior RBA figures. There is a higher probability for a pause this time, but this uncertainty means that this will be an exciting event, as it was last month, with the surprise rate hike.
- AIG Services Index: Published on Tuesday at 23:30 GMT. According to AIG, the services sector is now expecting contraction. This indicator doesn’t manage to climb above 50 points. At 48.4, it’s predicted to edge up, but not pass the important 50 point mark.
- Building Approvals: Published on Wednesday at 1:30 GMT. Contrary to the HPI, this important housing sector figure dropped in the past two months and hurt the Aussie. Rises were expected each time. Also now, a rise is predicted – 0.9%.
- Retail Sales: Published on Thursday at 1:30 GMT. High volatility has been seen in this important consumer-related figure. A rise of 1.2% in February was followed by a drop of 1.4%. This time, a rise is predicted. Sustainable consumer spending is necessary for further rate hikes. A rise of 0.8% is expected.
- Trade Balance: Published on Thursday at 1:30 GMT, together with retail sales. Australia has a deficit in its trade balance in the past 11 months. After squeezing down to 1.1 billion, the deficit rose back 1.9 billion. A small rise is expected this time.
- AIG Construction Index: Published on Thursday at 23:30 GMT. AIG’s last figure completes the picture for the housing sector. After making a leap to 57.7 points, showing bullishness in this sector, the index quickly deteriorated to 48.7 points – below 50. It’s now expected to rise back up above 50 points.
- RBA Monetary Policy Statement: Published on Friday at 1:30 GMT. Three days after the rate decision, this indicator completes the central bank’s forecasts for the next quarter. It could contain hints about the next moves in the tightening cycle.
AUD/USD Technical Analysis The Aussie began the week with a drop under 0.9220 and reached 0.9135. It then recovered but couldn’t break the 0.9327 resistance line. The close at 0.9240 is slightly lower than last month. Note that some lines have changed since last week’s outlook. The current range of the Aussie is 0.9220 to 0.9327 – this important resistance line was broken in recent weeks several times, but continues to play an important role. Higher, 0.9366 is a minor resistance line. It was the peak at the beginning of April. Higher, 0.9405, the 2009 high, continues to be the highest level in sight, at least now. Looking down below 0.9220, the next line of support is 0.9090, which worked as a support and resistance line many times in the past. Below, the round 0.90 line provides further support, as it was the swing low at the end of March. Even lower, 0.8735 was December’s low and it’s followed by 0.8567, the lowest spot since October. I remain bullish on the Aussie. Australian and also Chinese indicators point to a bullish outlook for the Aussie. Another rate hike will add more strength. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| NZD/USD Outlook – May 3-7 Posted: 01 May 2010 08:00 AM PDT 
The kiwi finished the week higher, and now expects the all-important employment figures. Here’s an outlook for the events in New Zealand and an updated technical analysis for NZD/USD. NZD/USD graph with support and resistance lines marked. Click to enlarge: 
The rate decision was mixed – on one hand, Alan Bollard declared that the rates will rise during 2010, but clearly said some factors will “reduce the extent to which the OCR will need to be increased relative to previous cycles” – meaning that the interest won’t rise too much. OK, let’s start. The technical analysis will follow:
- ANZ Commodity Prices: Published on Monday at 3:00 GMT. New Zealand, an exporter of commodities depends on their prices. Prices have risen in the past 13 months, although the moves became more mild. Last month’s 1.8% rise will probably be followed by a similar rise.
- Labor Cost Index: Published on Monday at 22:45 GMT. This quarterly index combines both employment and inflation. New Zealand’s labor cost rose between 0.3% to 0.5% in the past year- very stable. A rise above 1% is necessary for raising the chances of a future rate hike, but only 0.4% is rpedicted.
- Employment data: Published on Wednesday at 22:45 GMT. New Zealand publishes its employment figures only once per quarter. The situation isn’t as good as in Australia. In the past year, employment squeezed every time. This time, the drop of 0.1% will probably be followed by a rise of the same scale. The problem last quarter was with the unemployment rate – it leaped from 6.5% to 7.3%, far higher than expected. No change in the unemployment rate is predicted this time, but the employment change number will probably rise by 0.3%.
NZD/USD Technical Analysis The kiwi had a good start to the week, rising above 0.72, but this was short-lived. It then fell to 0.71, before making a second ascent. This time, NZD/USD broke through 0.72 and bounced only at the next resistance line – 0.7320. After closing at 0.7269, the kiwi’s range is 0.72 to 0.7320. Note that some lines have been added on last week’s outlook. Below, 0.7050 continues to be a minor line of support, followed by the round number of 0.70. Even lower, 0.68 is the next support line, being the bottom in February. Looking up, a break of 0.7320 will send the kiwi towards the 0.7440 resistance line, which was a stubborn peak at the beginning of the year. Higher, the next significant resistance line is the 0.7634, which was the peak in October, and the highest since 2008. I am bullish on NZD/USD. Despite stating that the tightening cycle will be milder than previous ones, the clear intent to raise the rates pushes the kiwi higher. The quarterly employment figures will determine the next moves. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| USD/CAD Outlook – May 3-7 Posted: 01 May 2010 07:00 AM PDT 
After a bad week, the Canadian now dollar expects the important employment figures among other indicators. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD. USD/CAD graph with support and resistance lines marked. Click to enlarge: 
Canada mostly suffered from risk aversive trading due to the expanding Greek crisis. But on Friday, weak Canadian GDP also contributed to the loonie’s retreat. Fresh data will set its direction. Let’s start: - Building Permits: Published on Thursday at 12:30 GMT. This important indicator leaped 5 months ago, and has been falling short of expectations since then. Two consecutive months of drop will probably be followed with a rise this time – showing that the housing sector is aligning with other factor of the economy.
- Ivey PMI: Published on Thursday at 14:00 GMT. The Richard Ivey School of Business’ important index recovered from a drop at the beginning of the year and reached 57.8 points – the highest since October. It’s predicted to edge up to 59.3 points and support the loonie.
- John Murray talks: Starts speaking on Friday at 2:00 GMT. A rate hike in Canada is imminent, yet the timing – June 1st or July 20th is still a mystery. BOC Deputy Governor John Murray could shed some light on this issue.
- Employment data: Published on Friday at 11:00 GMT. Canada’s job figures disappointed last month – the unemployment rate remained at 8.2% and didn’t drop. Also the employment change number showed a smaller-than-expected rise in jobs. the unemployment rate isn’t expected to move, but a rise of 20.3K jobs that is predicted will probably help the loonie. This can boost the Canadian dollar in this release – 90 minutes before the American Non-Farm Payrolls.
USD/CAD Technical Analysis After closing below parity last week, USD/CAD rose above this critical line and made a first test to break the 1.02 line. It then fell towards parity and rose again to close at 1.0176. The lines haven’t changed since last week’s outlook. The current range of the pair will continue to be 1.0000 to 1.0200. The resistance line at 1.01 is a very minor one. 1.02 was the 2009 low. Above, 1.03 was a swing high before USD/CAD approached. Above, 1.04 was the bottom border of a long time range and provides strong resistance. Below parity, 0.98 is the next line of support, being a support line during the last period that the pair was below parity. 0.97 is a stronger line below. I remain bearish on USD/CAD Despite the weaker GDP in February, the upcoming rate hike and the overall situation of the Canadian economy continue pointing the direction of the pair. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
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