| EUR/USD Outlook – June 14-18 Posted: 13 Jun 2010 03:13 AM PDT 
The important ZEW survey and inflation figures will draw attention in this week’s Euro trading. Here’s an outlook for the events that will move the Euro, and an updated technical analysis for EUR/USD. Will the recovery continue? Or was it a temporary pause on the way down? EUR/USD graph with support and resistance lines on it. Click to enlarge: 
The European debt issues haven’t been resolved, but there’s less turmoil in the markets. The austerity measures will probably trigger a double dip recession, but the markets are already getting used to this idea. Let’s start: - Industrial Production: Published on Monday at 9:00 GMT. Industrial output surprised in the past three months, growing at a stronger scale than expected. After rising by 1.3% last time, only half the growth is predicted now – 0.7%. Note that Germany and France, who publish their figures earlier, pull the zone forward.
- German ZEW Economic Sentiment: Published on Tuesday at 9:00 GMT. This very important survey of 350 investors and analysts has a strong impact on the Euro. Last month’s number reflected the economic turmoil in Europe, as the result fell more than expected – to 45.8 points. A small recovery to 48.7 points is expected now, showing the relative stability seen in past few weeks. The all-European figure fell to 37.6 points, also stronger than predicted, and it’s now expected to rise back to 41.2 points. The German number has a bigger impact.
- CPI: Published on Wednesday at 9:00 GMT. European inflation is rising, and is currently under control. CPI is expected to show an annual rise of 1.6%, and Core CPI at 0.8%. Jean-Claude Trichet doesn’t have to worry about rate hikes at the moment. A bigger jump in prices will cause a serious headache.
- ECB Monthly Bulletin: Published on Thursday at 8:30 GMT. This bundle of economic data is what the ECB saw before its eyes before making the recent rate decision. It can reveal interesting data that can move the Euro.
- Axel Weber talks: Starts speaking on Thursday at 12:00 GMT. The leading candidate to replace Jean-Claude Trichet will talk in a conference in Frankfurt. This influential member of the ECB might speak his mind about the current state of the European debt problems, and usually shakes the currency.
- German PPI: Published on Friday at 6:00 GMT. In the past two months, producer prices have risen at a higher-than-expected rate in the Euro-zone’s largest economy. After the 0.8% rise last time, prices are predicted to rise by only 0.2%. A third straight months of rises will cause worries.
EUR/USD Technical Analysis The beginning of the week was awful for the Euro, as it made a dive to new multi-year lows and bottomed out at 1.1876. From there it bounced back up and managed to settle above 1.20. The previous 1.2142 support line, mentioned in previous outlooks is now a resistance line at 1.2150. This currently caps the Euro’s recovery. Above 1.2150, the next line of resistance is at 1.2330, the “Lehman levels” seen at the height of the financial crisis in October 2008. Above, 1.2460 was a high point and now works as the next resistance line. It’s followed by 1.2670 which was a swing high. There are more lines of resistance higher, but the Euro will probably not approach them soon. Looking down, 1.20 returned to its role as a line of support, being a round number that many politicians look at. Below, the new record low of 1.1876 provides further support. Even lower, 1.17 is a symbolic value – the Euro launched at this level in 1999, and it’s followed by the 2005 low of 1.1630. A drop below this line will send the pair to levels last seen in 2003. I remain bearish on the Euro. The recovery of the Euro wasn’t backed by substantial data. Many “Club Med” countries suffer from debt issues, and the stronger countries cannot prevent another recession. The disease is contagious. This pair receives lots of great reviews on the web. Here are my picks: - Casey Stubbs shows us his trading log for EUR/USD and learns a few lessons.
- Kathy Lien, in a TV interview, doesn’t think that the Euro is undervalued.
- James Chen provides an interesting monthly outlook for EUR/USD.
- TheGeekKnows reviews the week and looks forward.
Further reading on Forex Crunch: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| GBP/USD Outlook – June 14-18 Posted: 13 Jun 2010 01:00 AM PDT 
A very busy week expects cable traders: inflation, employment and retail sales are the highlights. Here’s an outlook for the major events in Britain and an updated technical analysis for GBP/USD. GBP/USD graph with support and resistance lines on it. Click to enlarge: 
The bigger deficit in the trade balance was one of the weights on the Pound, and Friday’s Manufacturing was another blow, as the rate decision didn’t supply any news. This week has a major indicator every day. Let’s start: - Nationwide Consumer Confidence: Publication time unknown at the moment, delayed from last week. After steadily climbing to 81, this indicator dropped and now stands on 74 points. This is the first survey for the new government and also the first one after the escalation of the European troubles. Economists expected a rise to 78 points, but given the worries, a drop under 70 won't be very surprising.
- BOE Quarterly Bulletin: Published on Sunday at 23:00 GMT (midnight UK). The Bank of England releases its opinions on the current economic developments and thoughts about the future. Any concerns about the government deficit that will be cited by the media could hurt the Pound.
- Adam Posen talks: Starts speaking on Monday at 21:00 GMT. This influential member of the MPC will speak about inflation in a conference in New York, about 12 hours before the release of inflation data. It will be interesting to hear what he thinks about inflation – does he disregard it, or is he worried and wants a rate hike?
- RICS House Price Balance: Published on Monday at 23:00 GMT. The Royal Institution of Chartered Surveyors publishes the balance between areas that see a rise in house prices and the ones that see a drop. The positive balance has squeezed in recent months, but recovered to 17% last time. A small drop to 16% is expected this time.
- CPI: Published on Tuesday at 8:30 GMT. Inflation is becoming a problem in Britain. The government’s 1-3% target wasn’t met in the past 4 months. Mervyn King dismissed it, and blamed the rise on fuel prices, but the new Prime Minister, David Cameron, is worried and called the central bank to tackle it – raise the interest rate. Any result will rock the Pound. CPI is expected to edge down from 3.7% to 3.5%, Core CPI is predicted to tick down from 3.1% to 3% and the forecast for the RPI (Retail Price Index), is a drop from 5.3% to 5%.
- Inflation Report Hearings: Begins on Tuesday at 9:00 GMT. Just 30 minutes after the fresh inflation data is released, Mervyn King and a few of his associates will appear before the new Treasury Committee in parliament and will testify about inflation, the economic situation and the budget which the Cameron wants to cut. During the many hours of debate, the quotes that they’ll release will rock the currency.
- Employment data: Published on Wednesday at 8:30 GMT. The number of unemployed people, as seen in the Claimant Count Change, dropped significantly in the past three months, exceeding expectations time after time. Another drop of 25,300 is expected now, similar to last month’s number. While this is good for the Pound, the complementary figure, unemployment rate, which is a lagging figure, rose to 8% and isn’t expected to move from there – this figure is quoted by the media and has a strong impact on politicians. Also note the Average Earnings Index, which combine inflation and employment – they’re expected to be Pound-positive, rising by 4.4%, the biggest rise in many years.
- Mervyn King talks: Starts speaking on Wednesday at 21:45 GMT. Just a few hours after the appearance in parliament, King will have another opportunity to speak his mind, attending an event at the Mansion House in London. This can supply volatility for the Pound, in a usually quiet hour in the markets.
- Retail Sales: Published on Thursday at 8:30 GMT. This major consumer related figure rose at low rates in the past two months, similar to the weak growth of the economy. Yet again, consumers are expected to show more caution this time, with a minor rise of 0.1%. A drop will hurt the Pound.
- CBI Industrial Order Expectations: Published on Thursday at 10:00 GMT. The Confederation of British Industry paints a more pessimistic picture of the economy. This figure has been negative, meaning lower order volume expected for the past two years, but at least there’s been some improvement. A rise from -18 to -15 is expected now.
- Public Sector Net Borrowing: Published on Friday at 8:30 GMT. The public sector has been lending quite high in recent months, causing worries at home and overseas. From 10 billion pounds last month, this number is expected to leap up to 18 billion this time.
- Mortgage Approvals: Published on Friday at 8:30 GMT. The is the official and initial release approvals of this important housing sector figure. 50,000 approvals were reported last month, and this is expected to be followed by a small drop to 49,000. All in all, this figure has been rather steady.
GBP/USD Technical Analysis The Pound began the week with a dip below 1.44, but then gradually climbed and made another failed attempt to break above 1.4780. This bounce was painful, and the pair was supported only at 1.45, a new line (didn’t appear last week). The current range for the pair is between 1.45 and 1.4610, which provides minor resistance. Higher, the 1.4780 continues to provide very strong resistance. It worked as a distinctive support line a few months ago. Higher, 1.5050 is the next line of resistance, working as a resistance line in May, and it’s followed by 1.5130, which served as a strong support line when the pair was trading higher. Below 1.45, the next minor line of support is at 1.44, which was a support line in the past as well. Lower, 1.4230, which was the year-to-date low, already provides strong support. Further down the road, 1.4130 is the next line of support, and it’s followed by 1.38 and the multi-decade low of 1.35, but these are still far at the moment. I remain neutral on GBP/USD. The weak growth with the new government’s austerity measures definitely hurt the Pound, but the rising inflation could turn into an early rate hike. A lot depends on the CPI. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| USD/CAD Outlook – June 14-18 Posted: 13 Jun 2010 12:00 AM PDT 
Many economic figures are released in Canada in the upcoming week, but the highlights will be two appearances by Mark Carney, head of the BOC. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD, now at lower levels. USD/CAD graph with support and resistance lines on it. Click to enlarge: 
The Canadian dollar took advantage of the relative calm in the markets, and made a gain of over 300 pips against the greenback. The Canadian fundamentals will probably outperform the American ones once again this week. Let’s start: - New Motor Vehicle Sales: Published on Monday at 12:30 GMT. The automobile industry is a significant part of the Canadian economy, so this release early in the week will probably move the loonie. Last month’s 4.2% drop was very disappointing, and a correction will probably be seen this time.
- Manufacturing Sales: Published on Tuesday at 12:30 GMT. Total sales made by manufacturers rose in the past 7 months. After a neat rise of 1.2% last month, a smaller rise is predicted this time in factory sales.
- Labor Productivity: Published on Tuesday at 12:30 GMT. Workers made a big leap in productivity last month – 1.4%, but this wasn’t good for the loonie – as this means that more work is done for the same cost – less inflationary pressures. A small drop in productivity is predicted this time.
- Mark Carney talks: The head of the BOC will make a first appearance on Wednesday at 15:50 GMT at Charlottetown, and will make a second public appearance on Friday at 10:30 GMT at St. John’s. The head of the central bank will have an opportunity to shed his views about the improving economy, the European worries and further rate hikes. He usually moves the loonie when he talks.
- Wholesale Sales: Published on Thursday at 12:30 GMT. Complementing Tuesday’s figure, nice growth has also been seen in the wholesalers level, but this figure has been less stable, jumping up and down in recent months. A small rise is expected this time as well. Note that the figure relates to April.
- Leading Index: Published on Friday at 12:30 GMT. This indicator is built from 9 economic indicators – some of them already released. Nevertheless, the release of this index always moves the loonie. In the past two months, the leading index rose nicely, exceeding expectations. After a 0.9% rise last month, a rise at a lower rate is expected this time.
- Foreign Securities Purchases: Published on Friday at 12:30 GMT. This indicator shows the flow of foreign money in or out of the economy – thus being a measure of confidence. After a few months of strong flows, last month saw a big disappointment, as the figure was negative – 620 million. A correction is expected this time.
USD/CAD Technical Analysis USD/CAD gradually fell during the week. After struggling with the 1.0550 line, it dropped strongly and fell below the 1.04 line to close at 1.0320. The pair is now in a tight range between 12.03 and 1.04. Note that most of the lines haven’t changed since last week’s outlook. Looking up above 1.04, 1.0550 now works as a minor line of support, and it’s followed by a much stronger line of resistance – 1.0750. This line was the high end of a trading range and was recently tested as well. Above, 1.0850 is the next line, and it was also tested recently. A break above it will leave the pair with much room to explore until 1.1130. Looking down below 1.03, the next line of support is close – 1.02. This was the lowest level in 2009, and also worked as a resistance line when the pair traded around parity. And parity, is the next line, being a very strong one. I remain bearish on USD/CAD. The higher interest rate, great employment situation and growing economy should pave the road for another good week for the loonie, but this also depends on no terrible news from Europe. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| AUD/USD Outlook – June 14-18 Posted: 12 Jun 2010 09:27 AM PDT 
After a busy week, the Aussie closed the week significantly higher. The upcoming week consists of the meeting minutes from the last rate decision and few other events. Here’s an outlook for the Australian events and an updated technical analysis for AUD/USD. AUD/USD graph with support and resistance lines on it. Click to enlarge: 
Australia continues to enjoy a steaming job market, as seen once again this week, with the surprising drop in the unemployment rate. Will this push the RBA to another rate hike? Let’s start: - Monetary Policy Meeting Minutes: Published on Tuesday at 1:30 GMT. In their last rate decision, Glenn Stevens and his colleagues from the RBA decided to pause, and left the interest rate unchanged at 4.5%. This move was expected, but the questions regarding the next moves remained unchanged. The protocols will enable us to see where the wind is blowing.
- Ric Battellino talks: The RBA Deputy Governor will begin talking on Tuesday at 3:20 at a conference in Sydney. Despite the rate hikes, the economy is still showing strong growth. Battellino might speak his mind about the situation, and possibly hint about further moves by the RBA.
- MI Leading Index: Published on Wednesday at 00:30 GMT. The Melbourne Institute bases this index on 9 indicators. While some of the indicators have already been published, the release by this private establishment still tends to rock the Aussie. Last month saw a jump of 0.9%, significantly higher than previous months. We’ll probably see another strong rise this time.
- Housing Starts: Published on Wednesday at 1:30 GMT. This is a lagging indicator, released a long time after related housing figures have already been released (building approvals, home loans), but it still tends to have an impact, as it’s a quarterly release. Q3 and Q4 of 2009 were very strong, with big jumps in housing starts. The rise of 15.1% seen last month won’t return this time, but housing starts are still expected to grow.
AUD/USD Technical Analysis The Aussie continued the drop that followed the Non-Farm Payrolls and tested the critical 0.8066 line once again. After another bounce, the road up was paved – it surged above 0.8240, struggled temporarily around 0.8360 and finally closed just under 0.85. The Aussie is now bound between 0.8360, a new line that didn’t appear on last week’s outlook, and 0.8567, which is a very strong line of resistance. 0.8567 is a pivotal line that worked as both support and resistance, during the past year. Further up, 0.8735, which was the low line in December, is the next minor line of resistance. It’s followed by the round number of 0.88, which was support line several times in the past. Even higher, 0.90 is the next round number that provided support, and it’s followed by 0.9135, the lower border of a high range that AUD/USD was in April. Looking down below 0.8360, the next line is 0.8240, which worked as a line of resistance about a year ago, and it’s followed by 0.8066, which was tested just this week, and was a triple bottom. Below the year-to-date low of 0.8066, there are important lines at 0.77 and 0.7450, but they are quite far at the moment. I continue being bullish on the Aussie. As I wrote last week, the Australian fundamentals won over the European worries, and the Aussie enjoyed a 300+ pip rally. This trend should continue, with 0.8567 being a critical line of resistance. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| NZD/USD Outlook – June 14-18 Posted: 12 Jun 2010 08:27 AM PDT 
The kiwi enjoyed the rate hike in the past week to make gains against the dollar. Here’s an outlook for the single event that is due in New Zealand, and an updated technical analysis for NZD/USD. NZD/USD graph with support and resistance lines on it. Click to enlarge: 
Alan Bollard was the third central banker in the West to raise the interest rate, lifting it from 2.50% to 2.75%. While this cycle won’t result in the 8.25% rate seen before the crisis, he is expected to raise the rates up to 5%. - Retail Sales: Published on Sunday at 22:45 GMT. This important consumer related figure recovered last month and saw a rise of 0.5% in volume. This came after a very disappointing drop beforehand. Another small rise is expected this time. It’s also important to note the core retail sales, that rose by 1.1% and are expected to remain almost unchanged this time.
NZD/USD Technical Analysis Following the move from Friday, NZD/USD fell below 0.6685 and stayed between 0.6560 and 0.6685 during most of the week. But then it made a big leap, pierced above 0.68 as well and bounced only at 0.6910. The kiwi is currently bound between the support line of 0.68, and the new resistance line of 0.6910. Note that some lines were modified since last week’s outlook. Looking down, 0.6685 is the next line of support, serving as resistance in the past week, and providing support in the past. Lower, 0.6560 is the year-to-date low and provides strong support. Further support is seen at 0.64 and 0.62, but these lines are quite far at the moment. Looking up above 0.6910, more resistance is found at 0.70, a round number that already worked in both directions. This is a major barrier. Minor resistance appears at 0.7050, and it’s followed by 0.72, which was a strong line a few months ago. If the kiwi pushes even higher, more resistance is found at 0.7320. I remain bullish on the kiwi. After the tightening cycle began with last week’s rate hike, the kiwi will enjoy more interest in carry trades. Also note that the economy is doing quite well, and isn’t really dependent on Europe. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
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