Forex Crunch GBP/USD Outlook – July 26-30

Forex Crunch GBP/USD Outlook – July 26-30

GBP/USD Outlook – July 26-30

Posted: 24 Jul 2010 03:07 PM PDT


A more quiet week in terms of indicators expects the Pound, but Mervyn King’s public appearance could rock the currency. Here’s an outlook for the 4 events that will move the currency, and an updated technical analysis for GBP/USD.

GBP/USD chart with support and resistance lines on it. Click to enlarge:

british pound forecast

A rate hike in Britain didn’t seem so close – Andrew Sentance remained the only member voting for a rate hike. But the superb GDP changed the whole picture for the the Pound. Will it break the resistance line? Let’s start:

  1. CBI Realized Sales: Published on Tuesday at 10:00 GMT. This indicator from the Confederation of British Industry showed lower sales volume in the past two months, but at least the negative number was better than expected last month – minus 5. A positive number could be seen this time, meaning higher sales volume among the 160 wholesalers and retailers surveyed for this index.
  2. Mervyn King talks: Begins testifying in parliament on Wednesday at 10:45 GMT. The head of the BoE, together with his associates David Miles, Charles Bean, Paul Fisher, and the member that wants a rate hike – Andrew Sentance, will appear in front of the Treasury Select Committee and will lay out the current situation in Britain. With an improvement in jobs, GDP that jumps and rising inflation ,we can expect to hear big hints about a rate hike.
  3. Nationwide HPI: Published on Wednesday at 6:00 GMT. This important housing sector figure showed a drop in prices 5 months ago, but since then, prices are still rising, at least according to this survey. But last month’s small rise of 0.1% creates expectations for a drop this time – a  0.4% drop that will hurt the Pound.
  4. Net Lending to Individuals: Published on Thursday at 8:30 GMT. LAst month’s release for the BoE was great – lending rose to 1.5 billion, the highest level in 4 months, and far beyond expectations. More lending means more economic activity. Net lending is expected to slide down this time to 1.3 billion.
  5. GfK Consumer Confidence: Published on Thursday at 23:00 GMT. This survey, which targets 2000 consumers, hasn’t been so good recently. It has been negative, meaning pessimism, since the financial crisis broke out, and also fell from -14 to -19 in recent months, showing a deteriorating sentiment amongst British consumers. It’s expected to remain unchanged this time.

GBP/USD Technical Analysis

The Pound failed to break the 1.5350 pivotal line twice at the beginning of the week, falling down to support at 1.5130 and trading in this range, ignoring the weak 1.5230 line. On Friday, it broke past 1.5350 and made and peaked at 1.5450, just short of the 1.5472 peak achieved in the previous week.

GBP/USD now ranges higher – between 1.5350 and 1.5470, a new line that was added on last week’s outlook. Above, 1.5520 is a very strong line of resistance that wasn’t breached since February, and was tested several times since then.

Above, 1.57 was a strong support line in 2009, and now provides minor resistance. Above, 1.5833 is already a very strong line, holding the Pound before the fall, and resisting an attempt of recovery at the beginning of the year. Higher, 1.6070 is the next line of resistance, but it’s quite far now.

Looking down below 1.5350, minor support is found at 1.5230, followed by the strong 1.5130 line, which held the pair in past week.

Below, 1.5050 played a role at the beginning of the month, and provides further support. Even lower, 1.4870 is a minor support line, followed by the strong 1.4780 line which held the pair in March and April. There are many more lines below, and they all lead to the year-to-date low of 1.4227.

I turn bullish on GBP/USD.

The whopping GDP jump, backed by rising inflation and an improving job market provide hope that Britain is really recovering, with a rate hike in sight. 1.5520 is a big test.

Further reading:

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USD/CAD Outlook – July 26-30

Posted: 24 Jul 2010 01:07 PM PDT


The monthly release of GDP on Friday is stands out in a light-calendered week. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD.

USD/CAD chart with support and resistance lines on it. Click to enlarge:

canadian dollar forecast loonie

The initial reaction to the rate hike was weak, as the BOC also lowered the economic forecasts. But all in all, the loonie made gains, enjoying good fundamentals. Will the overall activity also be positive?

  1. RMPI: Published on Thursday at 12:30 GMT. The Raw Materials Price Index is significant for Canada, with its export oriented economy. Last month’s number was for the month of May, which saw prices plunge due the economic turmoil – 7.2%. A correction is expected now, with a 1.1% rise.
  2. GDP: Published on Friday at 12:30 GMT. Canada is unique by publishing its GDP once per month. After a strong first quarter, the economy slightly slowed down, with an unchanged GDP last month, for the first time in 8 months. The economy is expected to return to growth now, but probably only 0.1%.

USD/CAD Technical Analysis

The loonie flirted with the 1.0550 line at the beginning of the week, following the rise on the previous Friday. But it then dropped and struggled with 1.04, before closing slightly lower, at 1.0360.

Most lines haven’t changed since last week’s outlook. If the break below 1.04 will hold, the pair will aim for the next target – 1.0280. This was a strong line of support during the previous week, and also way back in October.

Below, the 2009 low of 1.02 is the next line of support, and it’s quite strong. It also worked as a resistance line after the pair went to parity. And parity is indeed the next support line. A break below 1.0000 which will probably not be seen this week, will send the pair towards 0.98, followed by 0.97.

Looking up above 1.04, the 1.0550 line remains an important hurdle for the pair. A convincing break above it will send the pair towards 1.0680, which capped the pair at the beginning of the month.

Higher, 1.0750 was the top border of a long term range, and also worked as a resistance line in May. It’s followed by 1.0850, which stopped the pair in the autumn of 2009 and also in May.

I remain bearish on USD/CAD.

The second rate hike, and the strong Canadian job market, should continue sending the pair south.

Further reading:

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AUD/USD Outlook – July 26-30

Posted: 24 Jul 2010 11:07 AM PDT


Key inflation figures will rock the Aussie in the upcoming week. Here’s an outlook for the Australian events and an updated technical analysis for AUD/USD.

AUD/USD chart with support and resistance lines on it. Click to enlarge:

AUD USD forecast

In a rather calm week, the Aussie rose, enjoying the basic advantages of the economy, with the great employment situation shining. This week, the focus will be on the next rate decision:

  1. PPI: Published on Monday at 1:30 GMT. Producer prices, like consumer prices, are released only once per quarter in Australia, making it a very important release. In the first quarter, prices surprised with a jump of 1%, significantly higher than expected. The recent rise in commodity prices will probably trigger a rise of 1.5% in producer prices this quarter.
  2. CB Leading Index: Published on Tuesday at 1:00 GMT. The Conference Board creates this index out of 7 economic indicators with many of them already released. Nevertheless, the release still impacts the Aussie, especially as it’s released as the week begins. After two months of small rises (0.3% and 0.1%), it’s now expected to remain unchanged.
  3. CPI: Published on Wednesday at 1:30 GMT. This major event will set the tone for the next rate decision, and will rock the Aussie. Q1 saw consumer prices rise by 0.9%, exactly as expected. This triggered the recent pauses in rate hikes. This time, inflation is expected to be similar, with a rise of 1%. A surprising jump will force a rate hike in the near future. Also note the Trimmed Mean CPI (Core CPI in other countries), which is expected to rise by 0.8%, similar to other countries.
  4. Private Sector Credit: Published on Monday at 1:30 GMT. More credit in the private sector means more economic activity. Credit has been expanding in the past 7 months, with a strong 0.5% rise last month. Another expansion is expected this time, but it will probably be more modest – 0.4%.

AUD/USD Technical Analysis

The Aussie continued falling at the beginning of the new week, including a Sunday gap. This gap, at the 0.8660 line, was closed quickly and the pair began rising, jumping above 0.8770 and struggling at 0.8870. But also this line was breached and the pair bounced only upon approaching the round number of 0.90. All in all, the pair made almost 200 pips in the past week.

Note that some of the lines have changed since last week’s outlook. The Aussie is now bound between 0.8870 which turned into a strong line of support, and 0.90, which is a round number which was a swing low in March.

Above, 0.9135 served as a strong support line when the pair was trading higher, and works as a resistance line. Higher, 0.9327 capped the pair many times in 2009 and at the beginning of 2010, and works as a strong line of resistance. Even higher, 0.9405, the 2009 high is the last line of resistance for now.

Looking down below 0.8870, the 0.8770 line provides minor support, and it’s followed by 0.8660, the gap line which also supported the pair beforehand.

Below, we find the 0.8567 line, which worked as a decisive line in the past, mostly as a support line. Below, 0.85000 is another minor line, followed by 0.8316, a double bottom at the beginning of July. The year-to-date low of 0.8066 is the last line.

I remain bullish on the Aussie.

The strong Australian fundamentals, such as the booming job market, will probably receive a boost from inflation figures, triggering another rate hike and more gains for AUD/USD.

Further reading:

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NZD/USD Outlook – July 26-30

Posted: 24 Jul 2010 08:07 AM PDT


The rate decision is the highlight in New Zealand’s events this week – another raise will definitely support the kiwi. Here’s an outlook for the events that will move the kiwi dollar and an updated technical analysis for NZD/USD.

NZD/USD chart with support and resistance lines on it. Click to enlarge:

nzd usd dollar forecast

NZD/USD didn’t really get out of the trade range that we already know. Will it break out this week?

  1. NBNZ Business Confidence: Published on Wednesday at 3:00 GMT. This survey of 1500 businesses has been positive in the past 13 months, indicating optimism in New Zealand’s business community. After peaking at 50.1 points, the indicator made a slide to 40.2 points. A small rise is expected this time.
  2. Rate decision: Published on Wednesday at 21:00 GMT. Alan Bollard didn’t surprise the markets in the previous meeting, and finally increased the Official Cash Rate from 2.50% to 2.75%. Although warning that the current tightening cycle will be milder than the previous one, another hike is expected – to 3%. It’s also important to follow the wording of the RBNZ Rate Statement, which will provide an indication about future moves.
  3. Trade Balance: Published on Wednesday at 22:45 GMT. New Zealand enjoys a surplus in its trade balance for 5 consecutive months. The surplus steadily rose up to 814 billion last month. It’s now expected to make a dip to 369 million.
  4. Building Consents: Published on Thursday at 22:45 GMT. This important housing figure (known elsewhere as building permits) has been very volatile in recent months. After a leap of 8.5% two months ago, it fell by 9.6% last month. This seesaw will probably continue with a rise this time.

NZD/USD Technical Analysis

After the bad close in the previous week, NZD/USD gradually climbed at the wake of the new week. A first attempt around the 0.7160 to 0.72 area met resistance and the pair fell. But this Friday was better, and the pair manged to close around 0.7270, making a neat weekly gain.

NZD/USD is currently bound between 0.72, a round number that is a minor line of support, and 0.7325, which capped it May and also a few weeks ago. Note that some of the lines have changed since last week’s outlook.

Higher, 0.7440 was the a stubborn stronghold at the beginning of the year and is the next resistance line. Above, November’s peak of 0.7520 is the next line of resistance, followed by 0.7640.

Looking down below 0.7160, the next support line is a round number, 0.70. It was tested at the beginning of the past week, as well as beforehand. Below, 0.6910 capped the pair when it was trading lower, and is a minor line of support.

The 0.68 line held the pair in February and also at the beginning of July, making it a strong line of support. There are a few more lines below, with 0.6560 being the most significant one.

I remain bullish on NZD/USD.

The economy in New Zealand is doing well. The rising interest rates expected this week, continue attracting  investors, creating a potential for further rises of the kiwi.

Further reading:

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