Early Friday trade was all about the Yen JPY/AUD after the BOJ disappointed traders by easing policy but not to the extent that the market was hoping, causing some wild gyrations in both USD/JPY USD/JPY and all the associated crosses. Later on it was the turn of the provisional Q2 GDP figure, where the headline disappointed badly, at 1.2%qq vs the expected reading of 2.6%, and which came on top of a downward revision of the previous Q1 figure. This undermined the dollar and added even further to the Yen strength heading into the weekend. All the other major currencies also gained against the dollar, which is beginning to look as though it may be in for further headwinds in the week ahead. In the other asset classes, the metals were firmer once again on the back of the weak dollar, while WTI languished. Stocks were steady.
The coming week will be a big one for data, culminating, as usual with the first Friday of the month, in the US Unemployment and NFP data. There is plenty to get through before then though, starting today with the global Mfg PMIs and the Mfg ISM out of the US. Australia kicks things off with the TD Inflation and the New Home Sales, while from China the Official and Caixin Mfg and Non-Mfg PMIs are due. Elsewhere during the week, the focus will be on the RBA Meeting (Tues), The ECB Non-MPC Meeting (Wed), BOE Meeting (Thur) and finally the US Jobs data on Friday. Have a good week.
EURUSD: 1.1160
EURUSD - Support and Resistance Levels
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24 Hour Bias: Prefer to buy dips
Medium Term Bias: Neutral
The US$ came under broad pressure following the soft US GDP on Friday and the charts are generally hinting that this may continue to be the trend over the next session or two. With the 4-hour momentum indicators pointing higher and the dailies also looking a little more constructive buying dips would seem to be the plan early in the week. Further out I remain neutral and would expect the choppy range trade to continue.
Economic data highlights will include:
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M: EU Markit Mfg PMIs, ISM Mfg PMI, Construction Spending
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T: EU PPI, US Personal Consumption/Expenditure Index, Personal Spending, API weekly Crude Oil Stock Inventory, ISM NY Index
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W: EU Services/Composite PMIs, Retail Sales, US Services/Composite/Non-Mfg PMIs, ADP Jobs data, EIA weekly crude oil stock change
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T: EU Economic Bulletin, US Factory Orders, Jobless Claims
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F: German Factory Orders, US unemployment data/NFP/Average Hourly Earnings, Baker Hughes Oil Rig Count, Consumer Credit Change.
USDJPY: 102.10
24 Hour Bias: Prefer to sell rallies
Medium Term Bias: Neutral
Yen has fallen sharply from last week's highs and from the look of the 4 hour charts it may have further to go although there should be some decent support at around 101.40/50, should we see it. The daily charts look rather neutral though, so while the pressure may remain to the downside for now it will be choppy, particularly if we approach100.00, when we can expect the BOJ to increase the volume by complaining about against the strengthening Yen. Intervention should not be ruled out, although doubtful at this stage.either direction so a cautious stance is required. If the BOJ sit on their hands and do nothing, then expect the chance of a test of 100.00 in the next few sessions.
Economic data highlights will include:
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M: Nikkei Mfg PMI
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T: Consumer Confidence Index
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W: BOJ Minutes
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T:
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F:
GBPUSD: 1.3230
24 Hour Bias: Neutral - Choppy
Medium Term Bias: Cautiously Bullish - Prefer to buy dips
Cable traded up to a high of 1.3300 on Friday before giving up some of its gains but overall it remains volatile within the broad 1.3000/1.3400 rage and this may continue to be the case, at least for the first half of the week. With the growing concerns over the post-Brexit economic outlook and the BOE Meeting due on Thursday, there is growing speculation of a rate cut and/or a resumption of the QE programme which would seem to suggest that the pressure is more likely to continue to be on the downside. Most analysts seem to suggest that the BOE will cut the Bank rate to 0.25% from 0.5%. Until then it looks set to remain choppy and for the time being the daily momentum indicators do remain supportive, so unless we break below 1.3000 I still prefer to look for a dip to buy into, hoping for another recovery towards 1.3400. SL on long positions should be kept tight, below 1.3050, or more ideally, just below 1.2950 and I would be square prior to the BOE decision.
Economic data highlights will include:
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M:
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T:
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W:UK Services PMI, Inflation Report Hearing
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T: BOE Meeting/Statement/Minutes/Vote Count/APP Facility
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F:
USDCHF: 0.9690
24 Hour Bias: Prefer to sell rallies
Medium Term Bias: Neutral
USDCHF has sharply reversed in the wake of the FOMC decision and accelerated its move lower on Friday by falling to a low of 0.9635. Although the hourlies are now oversold, both the 4 hour and daily charts are now pointing lower, so selling rallies is now preferred, at least in the short term as we look for the dollar weakness to continue.
Economic data highlights will include:
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M: Holiday
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T: Retail Sales
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W:
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T:
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F:
AUDUSD: 0.7600
24 Hour Bias: Neutral
Medium Term Bias: Prefer to sell rallies
The soft US$ worked in favour of the AUD on Friday as traders went looking for yield after the USQ2 GDP suggested that the Fed will not be in a hurry to hike rates any time soon. For the time being the AUD may chop around at current levels although it may run out of steam ahead of the RBA Meeting, with the market generally leaning towards the chance of an easing. If the RBA do nothing then the AUD will fly higher and in the short term, with the 4-hour momentum indicators pointing higher, buying dips seems to be the plan. I would be square heading into the RBA, tomorrow.
Economic data highlights will include:
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M: AIG Mfg PMI, TD Inflation, HIA New Home Sales, China Official/Caixin Mfg PMIs, Non-Mfg PMI
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T: Building Permits, Trade Balance, RBA Interest Rate Decision/Statement, RBA Commodity Index
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W: AIG Services PMI, China Caixin Services PMI
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T: Retail Sales
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F: AIG Construction PMI, RBA Monetary Policy Statement
NZDUSD: 0.7210
24 Hour Bias: Neutral
Medium Term Bias: Prefer to sell rallies
As with the AUD, the Kiwi headed sharply higher, to 0.7228 on Friday, by taking advantage of the soft US$ as traders hunted for yield. It may remain underpinned for the time being, as suggested by the 4-hour momentum indicators, but the dailies are now flat, and with a RBNZ rate cut looming on the horizon, the short side is preferred in the medium term. The RBNZ will not like the Kiwi back at these levels.
Economic data highlights will include:
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M:
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T: Inflation Expectations (Q3)
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W: NZ Unemployment, ANZ Commodity Price Index
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T:
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F:
Originally published by AxiTrader