Issue №64 from 05/09/2015
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GBP/USD This week was rather negative for the pound, which showed a considerable decline since opening trades at 1.5406 on Monday. Percentage wise, GBP/USD did show the expected change in price, although in the direction opposite to the one forecasted by analysts. On Monday, the cable’s decline was stipulated by stronger dollar, but negative Manufacturing PMI data of Tuesday did not support the pair either, sending it as low as 1.53. The Construction PMI was also lower on Wednesday, and Services PMI numbers came out in red light on Thursday, too. Eventually, the pair end up trading at 1.5245, almost 6 figures lower than the highs of the previous week. Next week, data is expected from UK, including BRC Retail Sales Monitor, Manufacturing and Industrial Production, Trade Balance and interest rate decision. Extremely high volatility is expected on Thursday and Friday next week.
GBP/USD (D1; September 5 2015)
Taking into consideration bearish movements of this week, it is clear that market will be expecting to see some correction very shortly. While it is unlikely that interest rate will be changed next week, the ratio of MPC member votes will be very important for the direction of GBP. It is expected that the pair will aim to recover its positions and return to its previous consolidation corridor in between 1.5425 and 1.5690in September. Talking long term trades, it seems as a very advantageous time to open long positionsnow with target set at 1.58 for when MPC actually raises the interest rate next year.
EUR/USD stayed within its consolidation between 1.1156 and 1.1330 after opening trades at 1.1174 on Monday, but Friday showed a considerable decline to 1.1174 level.Data showed positive CPI dynamics in euro zone, after which we saw a great contraction of German Unemployment and EU unemployment in whole. However, Manufacturing PMI was slightly lower than expected at 52.2 versus forecasts of 52.4. The PPI data was in line with expectations while Services PPI and Markit Composite PMI came out in green light. Retail Sales were also higher than expected. The Eurogroup meeting is scheduled for next Friday, so the outcome and any comments from theofficialswill be closely watched by investors.
EUR/USD (D1; September 5 2015)
The forecastsfor EUR/USD are mostly bearish in view of few factors. Firstly, it is the inflation expectations in Euro Zone. As was previously stated by European Commission officials, the inflation targets can possibly be missed in view of lower commodity prices. Subsequently, this can lead to adopting further QE measures, which will push the single currency lower. On the US side, the expectations of a rate hike still prevail – it is only the timing that is not clear. By the end of this year, experts are again expecting the parity. In medium term, opening short positions with take profit level at 1.09 seems to be a viable option.
NZD/USD started losing ground on Monday amid strengthening of the greenback despite higher than expected Building Consents number. This week, data from New Zealand also suggested that Terms of Trade Index was higher than expected in the second quarter at 1.3%, while Private Sector Credit rose 0.6%, higher than anticipated. The pair was supported on Thursday when the attention point returned from Chinese turmoil back to the US side. Next week, investors are viewing NZ Current Account and Interest Rate decision, which, can possibly be lowered. The pair is currently trading at 0.6373.
NZD/USD (H4; September 5 2015)
After previously breaking through the strong support level at 0.65 level, the pair set its next target at 0.6196 (lows of July 2009). Both fundamental and technical data indicate there is still much space for decline with moving averages pointing down. QE implementation in NZ is also possible at the end of this year. The main points of attention are Chinese economy growth, Interes rate decision in the US and NZ fundamental data.
USD/CAD started forming its bullish trend in the beginning of April and the pair did not break out of the corridor even once since then. Moreover, the most recent developments show that bearish activity is forming somewhat a narrower trend corridor close to the current resistance level, which indicates a high likelihood of sharp rise in the near future. Canadian data was mixed with current account deficit widening even more than expected, GDP growing by 0.5% in the second quarter, and Trade Balance deficit contracting almost twice more than expected with 0.59B figure against -1.30B forecast.
USD/CAD (D1; September 5 2015)
After passing the previous target of 1.32, the pair was expected to soar even more rapidly to the next target at 1.3420. However, this week showed a more modest growth pace. The forecasts remain bullish for the long term, and the current target might be reached as soon as next week, according to the technical data. Support might be found at 1.3122. Moreover, the RSI indicator suggests the “overbought” zone has not yet been reached, which means market can open with a gap on Monday, so beware of the sharp moves.
AUD/USD opened trades at 0.7153 and was moving down for the rest of the week reaching the psychological level of 0.70 and even falling lower to 0.6982 on Wednesday. The Australian data was mostly negative as ANZ Business Confidence was down 29.1% in August, Current Account deficit widened more than expected, GDP did not show the anticipated growth pace and retail sales volumes contracted 0.1%. On the US side, the ISM Manufacturing PMI came out in red light, ADP Nonfarm Employment Change was lower than predicted and ISM Non-Manufacturing PMI, on the other side,showed robust growth in August. Next week, data is expected including Chinese Caixin Services PMI, NAB Business Confidence, Australian Home Loans, employment data from Australia and Chinese CPI.
AUD/USD (D1; September 5 2015)
Talking of AUD, there have not been any major changes to the expectations both in the long and medium terms. The pair continues its downfall within the boundaries of its moving averages, while there is no support seen for the pair in terms of Australian fundamental data. The new target is set at 0.6873, which might be reached in course of two following weeks. On the upside, the pair might see some resistance at 0.7064, from where the bearish move will continue.
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