The US$ had a mixed outcome against the major pairs today ahead of the Jackson Hole gathering, as traders wait on Janet Yellen’s speech on Friday in the hope that she will provide a hint as to when the Fed might look to raise interest rates. Following on from the recent hawkish comments from various Fed board members, I have a feeling that there is room for disappointment and that she is only likely to reiterate her previous remarks, noting that an additional rate hike is possible in coming months assuming that the economic data continues to show signs of improvement. Commodities have been the main mover of the day and seem to have made up their collective mind that a hike is imminent, with Gold, Silver and WTI all enduring a tough session. US stock markets have also headed lower, weighed down by the energy sector, following the fall in the oil price. In terms of data, the US house price index rose 0.2% mm in June, slightly below the expectation of 0.3% mm.
Although all eyes will be on the start of the 3 day Jackson Hole Symposium, where Janet Yellen is due to speak on Friday, there is a fair bit data due today, particularly from the US. The session will start with the release of the Australian Q2 Private Capital Expenditure, while from the EU the main event will be the German IFO Business Climate/Expectations. Aside from Jackson Hole, the US will also release the July Durable Goods Orders (exp 3.5%mm, 0.5% Ex-Transportation), the flash Markit Services & Composite PMIs, the weekly jobless claims and the Kansas Fed Mfg Activity.
EURUSD: 1.1264
The EUR/USD has drifted lower through the session, in part weighed down by trimming of positions in EurGbp, as Cable continues its rally which has caused traders to cut long Euro positions in the cross. EurUsd has been down to 1.1244 and as we said yesterday, the daily charts look to be rolling over, which would appear to limit the upside for the coming session. On the other hand, ahead of Janet Yellen on Friday I don’t really see too much action on the downside either. Look for a session confined to the 1.1200/1.2300 range.
24 Hour Bias: Neutral
Medium Term Bias: Neutral
Economic data highlights will include:
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German Import Price Index
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German IFO Business Climate/Expectations
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US Durable Goods Orders
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Jobless Claims
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Kansas Fed Mfg Activity
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Jackson Hole Symposium
USDJPY: 100.40
24 Hour Bias: Neutral
Medium Term Bias: Prefer to sell rallies/Mildly bearish
USD/JPY has done little of excitement as it hovers just above the 100.00 level and we should probably expect more of the same today. Technically, the daily momentum indicators look a little heavy although they may be trying to form a base but any rally is likely to see good selling interest as we approach 101.00. On the downside, back under 100.00, 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 that will depend on what Janet Yellen has to say on Friday.
Economic data highlights will include:
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Foreign Bond/Stocks Investment
GBPUSD: 1.3232
24 Hour Bias: Neutral
Medium Term Bias: Mildly Bullish
Cable continues to enjoy its run to higher ground, today making a 3 week high at 1.3272 as Brexit concerns recede, before giving up a little ground. The 4 hour momentum indicators remain fairly flat so it could be a session of chopping around, going nowhere too far while waiting for Janet Yellen on Friday but the dailies still look constructive so we might see a little more upside in coming days, and buying dips is therefore still preferred. As we said before, Cable may be building a triangle formation with parameters at around 1.2870/1.3360, so if we do move higher there should be some decent resistance in the 1.3360/70 area.
Economic data highlights will include:
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n/a
USDCHF: 0.9670
24 Hour Bias: Prefer to sell rallies
Medium Term Bias: Neutral
USD/CHF has followed the lead of EUR/USD and seen the dollar head higher in reaching a peak of 0.9683.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, but with an ongoing bid tone. A fairly neutral stance is favoured, but buying dips may be the plan, looking for a run towards decent resistance at around 0.9700.
Economic data highlights will include:
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Industrial Production
AUDUSD: 0.7610
24 Hour Bias: Prefer to be short and to sell rallies
Medium Term Bias: Neutral
The AUD has had a choppy session (0.7588/0.7633) but continues to hang close to 0.7600 leaving the outlook unchanged. The 4 hour charts continue to 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 0.7650. Initial downside targets, below 0.7600 would once again be at around 0.7585 and then at 0.7560. The Q2 Private Capital Expenditure is due today but it will be offshore headlines that dominate the action and it may just remain choppy again ahead of Jackson Hole.
Economic data highlights will include:
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Private Capital Expenditure (Q2)
NZDUSD: 0.7308
24 Hour Bias: Neutral
Medium Term Bias: Neutral
The Kiwi remains underpinned near 0.7300 and for the time being a neutral stance is required although the dailies do currently remain supportive for the chance of further gains. As with the Aud, it will mostly be offshore headlines that dominate the action ahead of Jackson Hole, and Janet Yellen on Friday.
Economic data highlights will include:
- n/a
Jim Langlands
FX Charts
www.fxchartsdaily.com
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