Forex Crunch USD/CAD Outlook – August 9-13

Forex Crunch USD/CAD Outlook – August 9-13

USD/CAD Outlook – August 9-13

Posted: 07 Aug 2010 05:41 PM PDT


A few interesting releases expect the loonie. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

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

Canadian Dollar Forecast

Canada’s employment figures were very disappointing, and only a bigger disappointment in Non-Farm Payrolls from the US stopped USD/CAD from going higher. Let’s start:

  1. Housing Starts: Published on Tuesday at 12:30 GMT. This important housing sector figure always rocks the loonie. After peaking at 201K, the annualized number of starts fell to 193K. A small rise is expected this time. A jump back above 200K will sure help the loonie, but expectations are low – 185K.
  2. NHPI: Published on Tuesday at 12:30 GMT. The New Housing Price Index is a very steady indicator – it rose by 0.3% each time in the past three month, showing the stability of the housing sector. A rise in a smaller scale will probably be seen now. Note that this publication is slightly overshadowed by the housing starts number.
  3. Trade Balance: Published on Wednesday at 12:30 GMT. Canada’s balance dropped to a deficit last month – of 500 million, after previous months that showed a surplus, at least in the first release. A surplus of 400 million is expected now. This figure is release simultaneously with the American trade balance, that stands on a deficit of over 40 billion. This double-feature releases means high volatility for USD/CAD.
  4. New Motor Vehicle Sales: Published on Friday at 12:30 GMT. After two weak months that saw big drops in vehicle sales, this consumer indicator rose by 0.2% last month. A bigger increase is due now – 2.1%.

USD/CAD Technical Analysis

Tight range trading, between 1.0280 and 1.02 characterized the pair’s trading at the beginning of the week. It then broke below 1.02 and got close to the next support line of 1.01 before bouncing back up and closing at 1.0270.

Most lines haven’t changed since last week’s outlook. USD/CAD is back to the 1.02 – 1.0280 range. Above 1.0280, the next line of resistance is 1.04.

1.04 was the long term support line of the 1.04 to 1.0750 range, and now works as a tough resistance line. Above, 1.0550 stopped the pair several times in the past, and is a minor resistance line.

The next line of resistance is at 1.0680, which stubbornly held the pair in June and several times in July. Apart from being the long term top border of the range, 1.0750 was also tested in May. Above, 1.0850 was a swing high in 2009 and a swing high in May as well.

Looking down under 1.0280, the 2009 low of 1.02 is the next support line. Note that it also worked as resistance after the pair hit parity in April. Lower, 1.01 is a minor line of resistance, and it's followed by the ultimate support line – parity.

I remain bearish on USD/CAD.

Despite the blow from the employment figures, the situation in Canada is still great, and the Federal Reserve could weaken the greenback, sending USD/CAD for another attempt on parity.

Further reading:

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NZD/USD Outlook – August 9-13

Posted: 07 Aug 2010 02:00 PM PDT


Retail sales and other figures will shape the direction of the kiwi in the upcoming week. Here’s an outlook for the events that will move the New Zealand dollar, and an updated technical analysis for NZD/USD.

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

nzd usd forecast

The kiwi was hurt by the disappointing employment figures, that showed a worrying leap of the unemployment rate to 6.8%. This erased some of the kiwi’s gains. Will we see positive numbers this time? Let’s start:

  1. Business NZ Manufacturing Index: Published on Wednesday at 22:30 GMT. This survey of manufacturers is very similar to purchasing managers’ indices in other countries. Since last September, this figure was positive – above 50 points. From 56.2 points last month, the index is expected to edge up to new highs.
  2. FPI: Published on Wednesday at 22:45 GMT. New Zealand is a huge exported of food, making it dependent on prices. The Food Price Index rose by 1.3% last month, after two months of drops. It’s expected to continue rising now.
  3. Retail Sales: Published on Thursday at 22:45 GMT. This important consumer figure always shakes the kiwi. Retail sales rose by 0.4% and are expected to rise by the same scale now. Core retail sales caused worries last month when the drop by 0.2%, and are now expected to rise by 0.6% each.

NZD/USD Technical Analysis

The kiwi managed to rise above 0.7325 which it flirted with in the previous week but struggled to hold on to it. Employment data in New Zealand sent it down in the middle of the week, before American employment data on Friday helped it close at 0.7330, just above this resistance line.

Note that some lines were modified since last week’s outlook. If 0.7325 holds this time, the road is open towards the next line of resistance – 0.7440 – the stubborn top at the beginning of the week.

Higher, November’s peak of 0.7523 provides the next resistance line, and it’s followed by 0.7634, a peak in October.

The next line of resistance comes from the era before the global crisis – July 2008. 0.7760 was a resistance line back then, and was a support line beforehand.

Looking down below 0.7325, the round number of 0.72 provides strong support for the kiwi. The next support line is quite close – 0.7160 which capped the pair in June.

The next round number of 0.70 serves as further support. It’s followed by 0.6910 which capped the pair at the beginning of the year.

I turn neutral on NZD/USD.

The employment figures were very disappointing and will probably cause pauses in raising the rates. On the other hand, US weakness can support the kiwi.

Further reading:

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AUD/USD Outlook – August 9-13

Posted: 07 Aug 2010 11:01 AM PDT


The release of employment data is the main event for the rising Aussie. Here’s an outlook for the Australian events, and an updated technical analysis for AUD/USD.

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

aud usd forecast

Glenn Stevens left the interest rate unchanged at 4.50%, exactly as expected. The Aussie enjoyed other figures and US weakness to rise. Will this continue? It now depends on jobs. Let’s start:

  1. ANZ Job Advertisements: Published on Monday at 1:30 GMT. Delayed from last week. This unofficial employment gauge serves as warm up for the official job figures due 9 days later. The amount of jobs advertised in the media made a nice rise of 2.7%, going hand in hand with the improvement seen in the official figures. Another rise is expected this time.
  2. Home Loans: Published on Monday at 1:30 GMT. After a few months of drops in loans – the outcome of the rate hikes, Australians took more mortgages last month. After rising by 1.9% last months, loans are expected to drop by 2.1% this time. Note that the ANZ job advertisements slightly overshadows this release.
  3. NAB Business Confidence: Published on Tuesday at 1:30 GMT. National Bank Australia surveys 350 businesses for this important gauge. After peaking at 19 points, this indicator dropped gradually to 4 points last month, still positive – meaning economic improvement. It’s expected to rise now.
  4. Westpac Consumer Sentiment: Published on Wednesday at 00:30 GMT. This bank surveys consumers – 1200 of them. After three months of drops, consumers’ mood became optimistic once again, with confidence leaping by 11.1% last month. A much smaller rise will probably be seen now.
  5. MI Inflation Expectations: Published on Thursday at 1:00 GMT. Melbourne Institute fills in for the government, that published inflation data only once a quarter. Inflation expectations dropped to 3.3% last month – a drop that goes hand in hand with the low CPI. This time, inflation isn’t expected to continue dropping. A rise above 4% will boost the Aussie.
  6. Employment data: Published on Thursday at 1:30 GMT. Australia enjoyed 4 excellent months of growth in jobs (employment change), exceeding expectations each time. This was accompanied by a drop in the unemployment rate, to 5.1%. This has been one of the main drivers of the currency. Good figures are expected again – another gain of 20,100 jobs and an unchanged unemployment rate, remaining low. These should boost the Aussie.

AUD/USD Technical Analysis

The Aussie began the week with a storm, jumping above the 0.9070 it struggled with in the previous week. It then traded in a tight range between 0.9070 to 0.9135, and it eventually broke this strong barrier as well. After touching the next resistance line of 0.9220 it closed lower, at 0.9177.

Some lines were modified since last week’s outlook. The Aussie is range bound between 0.9220, which was a support line in April, and 0.9135 which was a support line in May.

Looking down, 0.9070 now turns into a support line, after capping the pair recently. Below, the round number of 0.90 is the next support line – it was also a swing low in March.

Lower, 0.8870 was a stubborn resistance line in June and in July and now works as strong support. There are many more lines below, but they’re too far at the moment.

Above 0.9220, the next line one of the most persistent lines – 0.9327, which first capped the pair in October 2009, and continued being tested many times afterwards.

Higher, 0.9360 was a peak in April and works as a minor resistance line. The 2009 high of 0.94 is the next line of resistance, and it’s followed by 0.95 which was an important line in 2008.

I remain bullish on the Aussie.

Australia continues to enjoy a surplus in its trade balance, a high interest rate, and it should receive a boost from job data, which tends to exceed expectations.

Further reading:

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GBP/USD Outlook – August 9-13

Posted: 07 Aug 2010 08:00 AM PDT


Employment data and King’s report about inflation are the limelight of this week’s events. Here’s an outlook for the events that will rock the Pound, and an updated technical analysis for GBP/USD.

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

The British Pound made another nice week of rises. Will this continue? It seems that more serious moves about the interest rate are necessary. We could get them this week. Let’s start:

  1. BRC Retail Sales Monitor: Published on Monday at 23:00 GMT (midnight UK). This unofficial retail sales release shows that consumers bought more in the past two months. While this figure is not as wide as the official number, it has a strong impact. A rise in a smaller scale is expected now.
  2. RICS House Price Balance: Published on Monday at 23:00 GMT. The Royal Institution of Chartered Surveyors has shown that the real estate market is cooling again, with less regions reporting an increase in prices. From a peak of 35%, the figure dropped to 9% and will probably drop once again to 5%.
  3. Trade Balance: Published on Tuesday at 8:30 GMT. Britain’s deficit rose to 8.1 billion last month, the highest level in 17 months, hurting the Pound, as it happened also beforehand. This deficit will probably squeeze now to around 7.7 billion.
  4. CB Leading Index: Published on Tuesday at 9:00 GMT. The growth rate in this composite index dropped from over 1% to 0.3% last month, the lowest in a year. This time, the composite index built of 7 indicators will probably rise by more than 0.5%.
  5. Nationwide Consumer Confidence: Published on Tuesday at 23:00 GMT – delayed from last week. This survey of 1000 consumers is “over the hill”, dropping from 81 to 63 points. Another drop is expected now to 60 points. Note that in this case, the delay weakens the impact.
  6. Employment data: Published on Wednesday at 8:30 GMT. Britain enjoyed a significant drop in the number of people claiming unemployment benefits in the past few months, exceeding expectations (Claimant Count Change). The drop of almost 21K last month will probably be followed by another drop of 17.9K this time, in the month of July. The unemployment rate for June will probably remain unchanged at 7.8% in June. Another drop will boost the Pound. This figure is accompanied by the Average Earnings Index, which will probably rise in a rate lower than last month’s 2.7% rise.
  7. BOE Inflation Report: Published on Wednesday at 9:30 GMT. While cable traders still analyze the employment data, Mervyn King, head of the BoE, will present the inflation report in a press conference. It will be very interesting to see how King relates to the rising inflation, after finally acknowledging its risks. Will we see hints of an upcoming rate?

GBP/USD Technical Analysis

The Pound began the week with a struggle around the minor resistance line of 1.5720. As it made an upwards breakout, it cleared 1.5833 quite easily. Then, 1.5833 turned into a support line, as the pair traded between 1.5833 and 1.60 (a new line that didn’t appear on last week’s outlook.), before closing at 1.5939.

The round number of 1.60 is the immediate level of resistance. It’s followed by 1.6080 which was a support line in January and now works as resistance. Higher, 1.6270 last worked as a resistance line in January and beforehand as a support line.

The peak at 1.6450 works as the next minor line of resistance, and it’s followed by 1.6720, which capped the pair several times at the end of 2009.

Looking down, 1.5833 turns into a strong support line. It’s followed by the minor line of 1.5720 which was a support line in 2009 and then by 1.5520, which capped the pair in April and worked as support in February.

Below, 1.5470 is very close, holding the pair a few weeks ago. 1.5350 was a recent resistance line, and now serves as a line of support. It’s followed by 1.5230 which was a stubborn line at the beginning of July.

I remain bullish on GBP/USD.

Fresh employment data and Mervyn King’s talk about inflation can provide the pair with new strength to rise, after clearing the strong barriers.

Further reading:

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