Janet Yellen signaled her growing conviction that the Fed will raise interest rates in the weeks or months ahead when she spoke at Jackson Hole on Friday. The Fed’s decision appears to hinge on whether the Labor Department’s jobs report due on Friday continues to show a steady improvement in jobs being created. The US$ had a wild ride of it, initially heading lower but then reversing sharply after the Fed Vice Chair, Fischer, said in response to a question that Yellen’s comments are consistent with a possible rate hike in September. The dollar finished close to its highs against most counterparts and is opening the week on a firm note, particularly against the Yen after BOJ Governor said at Jackson Hole that the BOJ will act without hesitation, if necessary, to revive inflation.. Stocks and Commodities had an equally volatile session but closed the day not too far from where they had opened, seemingly unfazed by the prospect of higher rates.
The coming week is going to be another busy one with plenty of activity on most days, but culminating in the US Employment data on Friday (Exp 4.8%, +165K). Ahead of that, highlights will be the German CPI (Tuesday), EU CPI, German/EU Unemployment and US ADP Jobs figures (Wed) and the global Manufacturing PMIs (Thur). The week's kicks off today with the release of the US Personal Consumption/Expenditure and some regional Fed manufacturing data.
EURUSD: 1.1185
Friday’s close seems to suggest that the dollar generally has further upside potential in the days ahead which looks likely to keep the Euro under some pressure. With both the 4 hour/daily momentum indicators now pointing lower trading from the short side and selling into strength is preferred. A move back above 1.1300 would negate the bearish stance and would suggest further consolidation. The real action won’t be seen possibly until Friday when the US jobs data is due. A soft outcome would see all any dollar gains reversed while a strong figure, underlining the potential for an imminent rate hike will see further gains.
24 Hour Bias: Mildly Bearish
Medium Term Bias: Mildly Brarish
Economic data highlights will include:
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M: German Import/Export Index, US Personal Spending/Income, Personal Consumption/Expenditure, Dallas Fed Mfg Business Climate
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T: EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate Provisional (Aug), German CPI, Case Shiller House Price Index, Consumer Confidence, API Weekly Crude Oil Stock Inventory
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W: German Retail Sales, German/EU Unemployment, EU CPI, US ADP Jobs data, Chicago Purchasing Managers Index, Pending Home Sales, EIA Crude Oil Stocks Weekly Change
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T: EU Manufacturing PMIs, US Markit/Ism Manufacturing PMIs, ISM Prices Pain, Construction Spending, Total Vehicle Sales
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F: EU PPI, US Jobs/NFP/Average Hourly Earnings, Trade Balance, ISM NY Index, Baker Hughes Oil Rig Count
USDJPY: 102.00
24 Hour Bias: Mildly Bullish
Medium Term Bias: Mildly bullish
Huge volatility post Yellen ensured a nasty squeeze of Yen long positions and Friday’s close seems to suggest that USD/JPY has further upside potential in the days ahead and with both the 4 hour/daily momentum indicators now pointing higher, trading from the long side and buying dips is preferred. A move back below 101.00 would negate the bullish view and would suggest further consolidation.
Economic data highlights will include:
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M:
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T: Retail Trade, Unemployment
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W: Housing Starts, Construction Orders
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T: Foreign Bond/Stocks Investment, Nikkei Mfg PMI
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F: Consumer Confidence Index
GBPUSD: 1.3130
24 Hour Bias: Mildly Bearish
Medium Term Bias: Neutral
Cable briefly reached a 3 week high but then closed lower, making a key day reversal in the process and suggesting further weakness ahead. Overall the triangle formation, mentioned before still dominates the action but a test of the 1.3100 and lower would seem possible in the next few days given the mildly negative look of the 4 hour charts. The dailies though have yet to turn lower so it could be that Cable gyrates around current levels for the session and with today being a UK Bank Holiday the interest is likely to be diminished and liquidity will be thinner than normal.
Economic data highlights will include:
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M: Bank Holiday
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T: Consumer Credit, Net Lending to Individuals, Consumer Confidence
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W:
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T: UK Manufacturing PMI
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F: UK Construction PMI
USDCHF: 0.9780
24 Hour Bias: Mildly Bullish
Medium Term Bias: Mildly Bullish
USD/CHF had a sharp move higher heading into Friday’s close after Yellen/Fischer spoke and the price action seems to suggest that US$Chf has further upside potential in the days ahead. With both the 4 hour/daily momentum indicators now pointing higher, trading from the long side and buying dips is preferred. Note that the hourlies are becoming overbought and, having come a long way on Friday, it may be that we need some consolidation and possibly a bit of a correction before we can make further upside progress. A move back below 101.00 would negate the bullish view and would suggest further consolidation.
Economic data highlights will include:
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M:
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T:
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W: UBS Consumption Indicator
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T:
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F:
AUDUSD: 0.7560
24 Hour Bias: Mildly Bearish
Medium Term Bias: Mildly Bearish
A brief sortie to 0.7692 was quickly reversed n Friday, with the Aud closing at session lows of 0.7560. With both the 4 hour/daily momentum indicators now pointing lower, trading from the short side and selling into strength is preferred although the rising trend support, seen on the charts may yet provide some support in the near term. Once that is convincingly taken out, the next support levels are at 0.7500/20. Rallies should now be limited to 0.7600.
Economic data highlights will include:
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M:
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T: Building Permits (July)
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W:
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T: AIG Manufacturing PMIs
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F: China Official/ Non-Official Manufacturing PMIs, Caixin China Mfg PMI, RBA Commodity Index
NZDUSD: 0.7220
24 Hour Bias: Prefer to sell rallies
Medium Term Bias: Mildly Bearish
The Kiwi reached a new trend high on Friday, at 0.7380 before reversing sharply to close near the day’s lows of 0.7220, making a key day reversal in the process. With the momentum indicators seemingly aligning to point lower, selling into strength is preferred although we are currently sitting on a couple of Fibo levels which may provide some short term support and the chance of a mild squeeze higher. The daily charts have been showing a growing sign of bearish divergence which, after stopping out plenty of shorts when making a new trend high on Friday, may now add credence to the prospect of further downside momentum.
Economic data highlights will include:
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M:
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T: Building Permits (July), Global Dairy Trade Index
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W:
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T: Terms of Trade (Q2)
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F:
Originally published by AxiTrader
Axitrader.com.au
Jim Langlands
FX Charts
www.fxchartsdaily.com
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