Forex Crunch GBP/USD Outlook – July 19-23

Forex Crunch GBP/USD Outlook – July 19-23

GBP/USD Outlook – July 19-23

Posted: 18 Jul 2010 04:26 AM PDT


The initial release of GDP, meeting minutes and retail sales are part of the events that will rock the Pound in a busy week. Here’s an outlook for the British events and an updated technical analysis for GBP/USD.

GBP/USD daily chart with support and resistance lines marked. Click to enlarge:

gbp usd

The Pound got out of the range it was stuck in, and made a move forward, enjoying another impressive drop in unemployment. It failed to break an important resistance line. Will it happen this week? Let’s start:

  1. Rightmove HPI: Published on Sunday at 23:00 GMT. Rightmove has shown 6 straight months of rises in prices of homes. In the past two months, the gains have been rather weak. Following last month’s 0.3% rise, a similar rise is expected now. This will provide a shaky start for the week.
  2. Mortgage Approvals: Published on Tuesday at 8:30 GMT. The second housing figure comes from an official source – the Bank of England. The preliminary release of approvals is expected to show a rise – from 50K to 52K. Note that the number tends to change in the final release, but the initial publication has a stronger impact on the Pound.
  3. Public Sector Net Borrowing: Published on Tuesday at 8:30 GMT. Last month saw a surge in lending by the government – 16 billion, after a 8 billion in the previous month. A rise to 13.2 billion is expected now, in the first release for the new government.
  4. MPC Meeting Minutes: Published on Wednesday at 8:30 GMT. Andrew Sentance, which voted for raising the interest rate to 0.75% last month, probably did it again, but remained the only one. The Bank of England left the rate unchanged at 0.5%. If another member voted to raise the rates, the protocols will boost the Pound.
  5. CBI Industrial Order Expectations: Published on Tuesday at 10:00 GMT.  550 manufacturers are surveyed for this important indicator. After an improvement, this indicator fell back down last month to -23 points. A negative figure means expectations for weaker order volume. Another drop to minus 25 points will probably be seen now.
  6. Retail Sales: Published on Thursday at 8:30 GMT. This major consumer indicator surprised with a neat rise last month – 0.6%. Consumers in Britain continue being optimistic and increase their spending. Another nice rise is likely to happen now – 0.5%.
  7. GDP: Published on Friday at 8:30 GMT. The first release of GDP for the second quarter will rock the Pound, and will provide a strong finish to the week. After two quarters of weak growth following the recession, Britain is expected to see stronger growth this time – 0.6%. Such a result will boost the Pound bulls. Note that the NIESR institute showed a similar growth rate in Q2, so expectations are high.
  8. BBA Mortgage Approvals: Published on Friday at 8:30 and overshadowed by the GDP release. The British Bankers’ Association represents two thirds of mortgages – which the housing sector relies on. Stability is expected here for the third month in a row, with an insignificant rise from 36.7 to 37K.

GBP/USD Technical Analysis

The Pound fell at the beginning of the week, trading between 1.4950 and 1.5130. When it moved forward, the move was strong. The pair settled above 1.5220 and then jumped above 1.5350. After failing to reach 1.5520, GBP/USD lost the 1.5350 support line and closed at 1.5291.

Some lines have changed since last week’s outlook. The Pound now ranges between 1.5350, which was a pivotal line back in April, and 1.5220, which served as a strong resistance line in recent weeks, and now works as a support line.

Looking down, the next minor support line is 1.5130, which was a support line in April. The next line is 1.4950, which supported the pair in the past week, and also had the same role in March.

Lower, 1.4780 held the Pound before it collapsed in May, and then worked as a resistance line. There are many lines below until the year-to-date low of 1.4230.

Looking up, 1.5350 returns to its role as a pivotal line. Above, 1.5520 is a very strong line of resistance. It worked as such many times in April and May.

Higher, 1.57 provided support for the pair in 2009, and is now a minor line of support. Above, 1.5833 worked in both directions at the beginning of the year, and provides a strong line of resistance now. The next line of support it 1.6080, quite far at the moment.

I am neutral on GBP/USD.

The improving employment situation in Britain, together with the inflation that is still high, balances the debt issues and the fear of a double dip recession.

Further reading:

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EUR/USD Outlook – July 19-23

Posted: 18 Jul 2010 01:26 AM PDT


After the recent rally, a busy week expects Euro/Dollar traders. Apart from many important indicators, Friday’s stress tests are critical for the Euro. Here’s an outlook for the European events and an updated technical analysis for EUR/USD, now in higher ground.

EUR/USD daily chart with support and resistance lines marked. Click to enlarge:

euro dollar forecast

The Euro continued riding on the greenback’s weakness in the past week, and disregarded a credit downgrade for Portugal. Currently, German strength holds the Euro-zone. Will this continue? Let’s start:

  1. Current Account: Published on Monday at 8:00 GMT.  The difference in value between money transfers, services and goods (the trade balance figure) turned negative last month – a deficit of 5.1 billion. This deficit is expected to squeeze this time to 3 billion, helping the Euro.
  2. German PPI: Published on Tuesday at 6:00 GMT. Producer prices in Europe’s largest economy surprised to the upside in the past few months. But after two months above 0.5%, a modest rise of 0.3% was seen last month, and this will probably be followed by a more modest 0.2% rise this time, easing inflationary pressures.
  3. Flash PMI: Published on Thursday – first in France at 7:00 GMT, then in Germany at 7:30, and finally for the whole continent at 8:00. This is a very volatile hour for the Euro, even though these indicators usually don’t make big surprises. All indicators are above 50 points, meaning economic expansions, and all of them are expected to tick down, very modestly. The all-European manufacturing PMI will probably slip from 55.6 to 55.2 and services from 55.5 to 55. Similar drops are expected in Germany and France.
  4. Industrial New Orders: Published on Thursday at 9:00 GMT. This important indicator had a few positive surprises and rose very nicely in recent months. Last month was different – a modest rise of 0.6%, much less than expected. Now expectations are even lower – a drop of 0.1%. EUR/USD will rock on this release.
  5. Consumer Confidence: Published on Thursday at 14:00 GMT.  This official survey of 2300 consumers is negative for a very long time. The score of minus 17 will probably be repeated once again – meaning stable pessimism. Only a big gain will help the Euro here.
  6. French Consumer Spending: Published on Friday at 6:45 GMT. Europe’s second largest economy has seen volatile times – a rise of 1.6% was followed by a drop of 1.3% and then a rise of 0.7%. Economists once again expect a more steady change – a rise of 0.3%, but learning from the near past, a drop will probably be seen.
  7. German Ifo Business Climate: Published on Friday at 8:00 GMT. This highly regarded survey of 7,000 businesses has been very positive in the past year, climbing steadily even when other indicators fell. It actually reflects the better state of Germany, in comparison to its fellow members in the Euro-zone. Last month saw another small rise from 101.5 to 101.8, and now it’s expected to fall back down to 101.5.
  8. NBB Business Climate: Published on Friday at 13:00 GMT. Despite coming from a small country, this survey of 6,000 people is highly regarded and tends to move the Euro. The figure has been negative for many months, indicating expectations for worsening economic conditions. After getting close to 0 in April, it retreated once again and hit -7.7 last month. Another drop to 7.9 is predicted now.
  9. Stress Test Results: Published on Friday. This is a critical event for the Euro. After the huge turmoil that the European debt issues caused in May, the results of these tests will rock the Euro. The methods used in these tests might be controversial, but it doesn’t matter – a positive result will boost the Euro and will create a feeling that the crisis is over, while worrying results will send it down.

EUR/USD Technical Analysis

Euro/Dollar continued struggling with the 1.2672 line at the beginning of the week. It later made a convincing break above this line and then continued above 1.28 (a new line that didn’t appear on last week’s outlook) and managed to cross 1.2880 before closing at 1.2927.

The pair is now bound between 1.2880, which was a support line back in May 2009 and the round number of 1.30 which it tackled in the past week.

Looking up, a significant line of resistance appears at 1.3110. EUR/USD was supported on this line before it collapsed, and found resistance at that point after the collapse.

Higher, 1.3267 was another strong line of support that turned into a resistance line now. Above, 1.3435 had the same role of a support line at the beginning of the year and serves as the next resistance line. 1.37 was a resistance line in April, and is the final resistance line for now.

Looking down, 1.28 provides immediate support, working as a resistance line in the past week. Lower, the previous resistance line of 1.2672 is a strong line of support.

Lower, 1.2520 is a minor line of support, followed by the stronger 1.2460 which held the pair before the recent rally.

The significant lines below are 1.2150, which was a clear line in both directions and 1.20.

I am neutral on EUR/USD.

The convincing break of 1.2670 and the worsening conditions in the US send the Euro up. While the situation in Europe hasn’t significantly improved, these rises cannot be ignored. The stress tests results on Friday will be very important for the debt crisis and the Euro. I think that the pair will trade in a range till then.

This pair receives excellent reviews on the web. Here are my favorites:

  • Andrei continues to see a sell trend for the Euro in his technical analysis.
  • James Chen marks th next lines of resistance for the rising Euro.
  • Mohammed Isah sees further bullish momentum and sets a new target for the pair.
  • Casey Stubbs has updated analysis for the pair.
  • TheGeekKnows reviews the week and looks forward.

Further reading on Forex Crunch:

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USD/CAD Outlook – July 19-23

Posted: 18 Jul 2010 12:24 AM PDT


Loonie traders expect a busy week, with important releases every day of the week, with the rate decision being the main highlight. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

USD/CAD daily chart with support and resistance lines marked. Click to enlarge:

Canadian dollar forecast

The Canadian dollar continued enjoying the superb employment figures that we’ve seen in the previous week. It will be interesting to see how jobs impact the rate decision, but there are other factors as well. Let’s start:

  1. Foreign Securities Purchases: Published on Monday at 12:30 GMT. This indicator shows the flow of foreign money into Canada, and serves as a vote of confidence. After turning negative two months ago, the number surprised again, but this time to the upside – 12.36 billion, the highest level in 7 months. A lower outcome is expected now – 8 billion.
  2. Rate decision: Published on Tuesday at 13:00 GMT. Mark Carney’s BOC made the initial rate hike last month. Canada’s Overnight Rate currently stands at 0.50% and is likely to get another boost to 0.75%. Despite one month of a stall in the GDP, the job market is doing well, and the steady global recovery supports another hike. It’s also important to note the accompanying statement, which will provide hints for the future.
  3. Wholesale Sales: Published on Wednesday at 12:30 GMT. The total value of sales at the back end, the wholesaler level, is quite volatile. After a strong rise two months ago, the volume of sales dropped by 0.3% last month, disappointing the loonie. A small rise of 0.3% is expected this time.
  4. Retail Sales: Published on Thursday at 12:30 GMT. This key consumer figure was terrible last month – retail sales fell by 2%, and also core retail sales, closely watched by the central bank, fell by 1.2%. After these strong drops, both indicators are expected to correct this time and rise by 0.5%. The loonie will rock on this release.
  5. BOC Monetary Policy Report: Published on Thursday at 14:30 GMT. The report lays out the bank’s views about inflation, employment and growth, and may contain future prospects, including the interest rate. 45 minutes after the release of this important report, BOC governor Mark Carney will hold a press conference and may release some interesting quotes.
  6. CPI: Published on Friday at 11:00 GMT. Canadian inflation is under control. Both CPI and Core CPI rose by 0.3% last month, very stable indeed. A significant rise in consumer prices will force the bank to raise the rates at an accelerated pace. This is a strong indicator to close the week.

USD/CAD Technical Analysis

Tight range trading characterized the pair at the beginning of the week. USD/CAD traded between 1.0280 (a new line that didn’t in appear in last week’s outlook) and 1.04. Towards the end of the week, USD/CAD made a breakout to the upside, and it finished at 1.0571, just above the 1.0550 line.

The pair now ranges between the 1.0550 line it just broke (a minor line) and 1.0680 which served as a stubborn line of resistance earlier this month and also at the beginning of June.

Higher, 1.0750 was the top border of a long-term range, and also served as resistance in May. Above, 1.0850 was a swing peak back in 2009 and had the same functionality just in May. The final line is 1.1130 which was a double top in the past.

Looking down below 1.0550, the next line of support is 1.04, which worked as a line of resistance during most of last week. Lower, 1.0280 is the next line, and it’s followed by 1.02, which was the 2009 low and also worked as resistance when the pair traded lower.

On the way down, there’s a minor area of resistance at 1.01, and it’s followed by the ultimate line of support – parity.

I remain bearish on USD/CAD.

The strength of the Canadian economy and the expected rate hike in the upcoming week should give a boost to the loonie.

Further reading:

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AUD/USD Outlook – July 19-23

Posted: 17 Jul 2010 10:31 AM PDT


Four events await Aussie traders in the upcoming week. Here’s an outlook for these events and an updated technical analysis for AUD/USD.

AUD/USD daily chart with support and resistance lines marked. Click to enlarge:

aud usd forecast

Australia’s home loans finally rose. This positive figure joined the employment figures we’ve seen beforehand and boosted the Aussie.

  1. Monetary Policy Meeting Minutes: Published on Tuesday at 1:30 GMT. We’ve seen two consecutive months of pauses in rate hikes, something that didn’t happen for quite a while. The minutes will show us what the different members think of state of the economy, and more importantly, when they see another hike.
  2. Glenn Stevens talks: Starts speaking on Tuesday at 3:05 GMT. Soon after the release of the minutes, the head of the RBA will give a speech titled “Some Long-Run Effects of the Financial Crisis”. His words almost always rock the Aussie, and this one in Sydney will probably be no different.
  3. MI Leading Index: Published on Wednesday at 00:30 GMT. The Melbourne Institute composes this index out of 9 economic indicators, that some of them have already been released. Nevertheless, the release has an impact on the currency. Last month’s unchanged figure will probably be followed with a rise this time.
  4. Import Prices: Published on Friday at 1:30 GMT. After a full year of drops in import prices, this quarterly index finally rose in Q1, by 0.3%, exceeding expectations. Another rise is expected this time. A rise in import prices has a direct impact on inflation.

AUD/USD Technical Analysis

After tight range trading between 0.8660 and 0.8770, AUD/USD made a break and peaked at 0.8870. It then collapsed and closed at 0.8660, which is turns into a pivotal line. Note that some of the lines have changed since last week’s outlook.

From the close at the support / resistance line, the Aussie can go back up and make another attempt towards 0.8770, which provides immediate resistance. Stronger resistance is found at 0.8915 which worked as a support and resistance line many times in the past.

Higher, the round number of 0.90 is the next resistance line, and it’s followed by 0.9135 which served as a support line in April. Even higher, the next significant resistance line is 0.9327, which was a resistance line during many months.

Looking down, 0.8567 continues to be an important line of support. It worked as such when the Aussie was trading higher last year, and worked as a resistance line after the pair plunged. Lower, 0.8500 is a minor line of support. Also 0.8390 is a minor line, and it’s followed by 0.8315, which was a double bottom recently.

Even lower, there are many lines. 0.8240 is a minor line, and it’s followed by the year-to-date low of 0.8066.

I remain bullish on the Aussie.

The Australian fundamentals, including the strong job market and also the recovering housing sector, continue to shine on Australia.

Further reading:

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NZD/USD Outlook – July 19-23

Posted: 17 Jul 2010 07:31 AM PDT


This week’s isn’t too busy with indicators, so the technicals will play a significant role in the kiwi’s trading. Here’s an outlook for the events in New Zealand and an updated technical analysis for NZD/USD.

NZD/USD daily chart with support and resistance lines marked. Click to enlarge:

new zealand dollar nzd forecast

Retail sales disappointed once again in New Zealand, hinting that the rates could rise more slowly than expected. Nevertheless, the kiwi is enjoying risk aversive trading and it’s rising. Let’s start:

  1. Visitor Arrivals: Published on Wednesday at 22:45 GMT. New Zealand’s economy depends on tourism, making this figure very important. After a disappointing drop of 1.8% two months ago, the number of visitors rose by 1% last month. A drop is expected this time, due to seasonal reasons.
  2. Credit Card Spending: Published on Wednesday at 3:00 GMT. Consumer spending is reflected quite well in credit card spending. The RBNZ has shown 7 months of growth in spending, with a nice rise of 3.4% last month. A smaller rise will probably be seen this time.

NZD/USD Technical Analysis

The kiwi began the week with some range trading, and then made a breakout and rose above 0.7160. An attempt to reach the strong resistance line of 0.7325 failed, and the pair fell sharply towards the end of the week to close at 0.7102.

Note that some lines have changed since last week’s outlook. NZD/USD now trades between 0.7160 and the round number of 0.70, which provides strong support.

Looking down, 0.6910 served as a strong line of resistance in May and also last August and now works as support. Below, 0.68 provided support a few weeks ago and also in February and works as a strong line of support.

There are more lines below, but the most significant one worth mentioning is the year-to-date low of 0.6560.

Looking up above 0.7160, the next line is 0.7325, that proved itself in the past week. Higher, 0.7440 worked as a stubborn line of resistance at the beginning of the year, and will cap the kiwi if it breaks above 0.7325.

Even higher, 0.7520 was a peak in November, and it’s followed by 0.7630, which was the highest level since the outbreak of the financial crisis.

I remain bullish on NZD/USD.

Despite worsening global conditions, the economy in New Zealand is doing well, and the rising interest rates attract investors, creating a potential for further rises.

Further reading:

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