Markets remain relatively stable ahead of this week's Jackson Hole meeting although, of note, the S&P 500 did by a fraction make a new all time high and oil managed a decent rebound from the correction of the last 24 hours. In terms of data, U.S. new-single-family home sales unexpectedly surged in July, reaching their highest level in nearly nine years amid robust demand, bolstering the view that economic growth will pick up in the third quarter and underpinning the hawkish view over the last few days of various Fed board members. Earlier in the session, the EU PMIs disappointed and ensured that any Euro strength was undermined.
It looks like being another fairly rangebound session unless any Fed board members stand up to say something with regards to policy ahead of Jackson Hole. There is little data to go on today, although NZ leads off shortly with the July Trade Balance (exp $-320 mio). From the EU, Germany will have the Q2 GDP (exp 0.4%mm, 3.1%yy) and then later it will be the US House Price Index (June) and the Existing Home Sales (July) that will be the focus. The EIA Crude Oil Stocks Weekly Change will also be released which may provide another leg up/down for the oil price. All up, expect further sideways action while waiting for Janet Yellen, on Friday/Saturday.
EURUSD: 1.1305
No change in view after a tight 50 point range as the Euro hugs close to 1.1300 against the dollar. The 4 hourlies are offering little hint, while the dailies still appear to be mildly positive although they may be close to rolling over. For the time being, buying dips is mildly preferred but without looking for too much on the topside. If the Euro fails to make any impact soon, it could be that it runs out of steam and then begins to head lower again but ahead of Jackson Hole it may just remain choppy but without too much direction.
24 Hour Bias: Neutral
Medium Term Bias: Mildly Bullish
Economic data highlights will include:
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German GDP
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US House Price Index
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Existing Home Sales
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EIA Crude Oil Stocks Weekly Change
USDJPY: 100.25
24 Hour Bias: Neutral
Medium Term Bias: Prefer to sell rallies/Mildly bearish
Yen has had a tight 40 point range, once again using 100.00 as a pivot. Technically, the daily momentum indicators still look a little heavy although they may be trying to form a base. A retest of the recent 99.50 lows would seem possible although there was decent buying interest as we approached that level on a couple of occasions last week and we need to see a break to the downside quite soon if we are going to see any real momentum. This would seem rather unlikely today and another rangebound session would seem to be the most likely outcome. . A break of 99.50 however would then target the 24 June low at 98.94 and possibly lower, although the talk of a Fed rate hike may slow any downside momentum. Expect increasing volume of complaint from the BOJ should we remain below 100.00, which will make for some choppy conditions.
Economic data highlights will include:
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Leading Economic Index
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Coincident Index
GBPUSD: 1.3195
24 Hour Bias: Neutral
Medium Term Bias: Mildly Bullish
Cable again tried the upside but found decent sellers just above 1.3200 although it has not backed off too far from there and further upside would seem possible. On the other hand the 4 hour charts now appear to be pretty flat so it could be a session of chopping around, going nowhere too far while waiting for JH. The dailies still look constructive though, so we might see a little more upside in coming days, and buying dips is therefore still mildly preferred. As we said before, Cable may be building a triangle formation with parameters at around 1.2870/1.3365, which at least gives us a decent range to play with!
Economic data highlights will include:
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n/a
USDCHF: 0.9630
24 Hour Bias: Prefer to sell rallies
Medium Term Bias: Neutral
It has been a tight day, with US$Chf confined to a 40 point range. The 4 hour charts still look constructive for further gains ahead, while the dailies looks to be flattening out somewhat and it appears that it may remain choppy ahead of Jackson Hole. A fairly neutral stance is required today.
Economic data highlights will include:
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Trade Balance
AUDUSD: 0.7615
24 Hour Bias: Prefer to be short and to sell rallies
Medium Term Bias: Neutral
The AUD ran out of steam on the upside today at around 0.7655, while at the same time holding on above 0.7600, to make for a tight day’s trade. The 4 hour charts now offer little hint in either direction but with the dailies still looking mildly negative I prefer to sell into rallies and to strategically trade from the short side, with a stop, today placed above the 200 HMA at around 0.7675. Initial downside targets, below 0.7600 would once again be at around 0.7560 although. It is a light data week for the Aud and it will be offshore headlines that dominate the action and it may just remain choppy now ahead of Jackson Hole.
Economic data highlights will include:
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Construction Work Done
NZDUSD: 0.7290
24 Hour Bias: Neutral
Medium Term Bias: Neutral
The Kiwi shot higher yesterday following the words of wisdom from the RBNZ Governor, but having reached a 15 month high of 0.7343 it has since consolidated closer to 0.7300, which we saw at round this time yesterday For the time being a neutral stance would appear to be the plan and as with the Aud, it is a light data week for the Kiwi and it will mostly be offshore headlines that dominate the action.
Economic data highlights will include:
- Trade Balance
Originally published by AxiTrader
Jim Langlands
FX Charts
www.fxchartsdaily.com
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