Forex Crunch GBP/USD Outlook – September 27 October 1

Forex Crunch GBP/USD Outlook – September 27 October 1

GBP/USD Outlook – September 27 October 1

Posted: 26 Sep 2010 02:00 AM PDT


Final GDP, manufacturing PMI and lots of speeches are part of a busy week for cable traders. Here’s an outlook for the British events and an updated technical analysis for GBP/USD.

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

British Pound Forecast September October

The British Pound enjoyed the greenback’s weakness and advanced higher, although it didn’t outshine other currencies, and didn’t test new levels. How will trade now? Let’s start:

  1. Final GDP: Tuesday, 8:30. The initial release of British GDP for Q2 was a great surprise and sent cable higher. The second release was even better, but failed to lift the currency. The 1.2% growth rate will probably be confirmed now. The Pound will rock on any result.
  2. Current Account: Tuesday, 8:30.Despite being released after the related monthly trade balance figures (the goods part out of the whole account), this quarterly release always has a strong impact on currencies. Q1 saw a big deficit of 9.6 billion, double the early expectations. Q2 is expected to be similar. Note that in Q4, Britain enjoyed a surplus.
  3. CBI Realized Sales: Tuesday, 10:00. The Confederation of British Industry surveys a selected group of wholesalers and retailers about future sales. In the past two months, the score has been positive, meaning expectations for a higher volume. From 35 last month, the score is expected to slide down to 27 this month.
  4. Adam Posen talks: Tuesday, 13:00. Posen is an external member of the MPC, and has voted to leave the policy unchanged, as most members did. In a speech in Hull, Posen might shed some light about inflation and the state of the economy.
  5. Net Lending to Individuals: Wednesday, 8:30. When people borrow money, this boosts the economy and shows confidence. The net lending unexpectedly squeezed last month to 0.3 billion, meaning a slowdown in the economy. A rise to 0.4 billion is predicted now.
  6. GfK Consumer Confidence: Wednesday, 23:00. This survey of 2000 consumers refuses to get out of the negative zone for many months, meaning pessimism, although last month’s jump from -22 to -18 was better to expected. A slide back down to -19 will probably be seen now.
  7. Nationwide HPI: Thursday, 6:00. According to the Nationwide Building Society, prices of homes fell in the past two months, falling short of expectations. After a drop of 0.9% last month, a more modest fall is expected now – 0.2%. Prices of homes are an important gauge of the economy.
  8. Paul Tucker talks: Thursday, 7:00. The deputy governor of the BoE will travel to Brussels and will speak in a conference. He might refer more to European issues than British ones, but he tends to releases headlines that move currencies.
  9. BOE Credit Conditions Survey: Thursday, 8:30. This quarterly report deals with situation of credit. It became very important after the outbreak of the financial crisis, as credit freezes paralyzed the markets. This report, for Q3 will probably be good, and help the Pound.
  10. Paul Fisher talks: Thursday, 9:05. The third MPC member will speak about loans and banks in a conference in London. Any comments about easing steps (quantitative easing) will rock the currency.
  11. Manufacturing PMI: Friday, 8:30. This indicator always rocks the Pound, no matter the outcome. Last month’s score, 54.3 fell short of expectations (57.1) and hurt the Pound. Another drop is expected this month, to 53.9. Note that as long as the figure is above 50 points, it means that purchasing managers see economic expansion. A drop under 50 will inflict damage.

Let’s review the events. All times are GMT.

GBP/USD Technical Analysis

At the beginning of the week, the Pound fell to test the 1.55 support line before rising. After a struggle with 1.5650 and with 1.5720 (mentioned in last week’s outlook) the Pound made a late breakout, but bounced off the 1.5833 line.

GBP/USD is now capped by 15833 that supported the pair before it dropped at the beginning of the year and later worked as resistance. It also supported the pair in August. Above, August's peak at 1.60 serves as the next strong resistance.

Higher, 1.6080 works as the next resistance line, after working as support in January. Above, 1.6270 supported the pair back in 2009 and later worked as resistance. The last resistance line for now is 1.6450, a swing high in January.

Looking down, 1.5720, which accompanies the pair for a long time, now turns into a support line. Below, 1.5650 also switches its role back to support.

1.55 worked in both directions during August and September and serves as the next support line. Below, 1.5350 proved was a strong support line recently, and also many months ago. It’s the next line of support.

Below, 1.5230 resisted the Pound's rise in July, and now works as support. It's followed by 1.5220, which supported the pair in July as well.

I am neutral on GBP/USD.

Despite the weakness of the British economy (unemployment for example), the dollar’s weakness prevents significant falls. A rise above 1.60 will be a bullish sign.

Further reading:

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NZD/USD Outlook – September 27 October 1

Posted: 25 Sep 2010 09:00 PM PDT


The important business confidence survey is the highlight of economic indicators that expect the kiwi. Here’s an outlook for events in New Zealand, and an updated technical analysis for NZD/USD.

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

NZD USD Forecast September October

The kiwi didn’t enjoy the greenback’s weakness in the past week and continued trading around the same range as it did beforehand. Let’s see what will affect it now:

  1. Trade Balance:  Tuesday, 21:45. After 6 months of surplus in the trade balance, New Zealand saw a deficit last month – 186 million, a third straight disappointment. This time, the deficit is expected to squeeze to 74 million.
  2. Building Consents: Wednesday, 21:45. This important gauge of the economy used to be very volatile, with strong jumps up and down. In the past two months, it has been relatively stable, with 3.5% and 3.1% rises. Another small rise is expected this time, showing that the housing sector is moving forward.
  3. NBNZ Business Confidence: Thursday, 2:00. This wide official survey of 1500 businesses scored around 40 points for several months. This change in the past two months with significant drops. The score of 16.7 points last month is still in the positive zone, meaning optimism. A drop to a negative number will hurt the kiwi now.

Let’s review the events. All times are GMT.

NZD/USD Technical Analysis

The kiwi traded between 0.7250 and 0.7350 throughout most of the week. A break above 0.74 (mentioned last week) most very short lived, and the pair closed at 0.7330.

Above 0.7350, the next line of resistance is 0.74, which capped the pair in July and also last week. The next resistance line is close: 0.7440 capped the pair at the beginning of the year quite stubbornly, and serves as strong resistance.

The next resistance line is 0.7523, the swing high back in November. It's followed by 0.7634, another swing high back in October. These lines are still far.

Looking down below 0.7250, the next support line is at 0.7190, a line that worked as resistance in August. Lower, 0.7150 capped the pair in August and is now support as well.

Lower, 0.7095 is a minor line of support on the way down. It’s followed by the round number of 0.70 which worked in both directions many times. The last support line for now is 0.69, which capped the pair when it was trading lower.

I am neutral on NZD/USD.

The weak fundamentals of New Zealand are offset by the general greenback sell off. This trend is likely to continue in the upcoming week, with more range trading expected.

Further reading:

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USD/JPY Outlook – September 27 October 1

Posted: 25 Sep 2010 04:00 PM PDT


After a week of holidays, the Japanese calendar is full again. Here’s an outlook for the Japanese events, and an updated technical analysis for USD/JPY.

USD/JPY  daily graph with support and resistance lines marked. Click to enlarge:

usd jpy forecast September October

Echoes of the big intervention in the yen are still felt, with mini follow up interventions, or rumors of such. This will probably continue this week, but also the indicators will have an effect.

  1. Trade Balance:  Sunday, 23:50. Japan’s export oriented economy usually has a surplus. This surplus unexpectedly jumped from 500 billion to 600 trillion yen, and is now expected to drop back down. This release will provide a strong start for the yen.
  2. Masaaki Shirakawa talks: Monday, 5:30. The head of the BOJ is the limelight after the big intervention to weaken the yen and its aftermath. In a conference in Osaka, he’ll have a chance to relate the currency, and move it.
  3. Tankan Manufacturing Index: Tuesday, 23:50. This is one of the country’s most important indicators. The official BOJ survey asks 1200 manufacturers about the current economic current conditions in the current quarter. In Q2, the index surprised by finally rising above 0. The score of 1 point means small optimism about improving conditions. It’s now expected to rise to 7 points, weighing on USD/JPY.
  4. Industrial Production: Wednesday, 23:50. The preliminary release of industrial output is expected to show a 1.2% rise after weak results last month. The actual result tends to fall short of expectations, so the yen might weaken on this release.
  5. Retail Sales: Wednesday, 23:50. The rate of growth in retail sales has been rather healthy in recent months, usually exceeding expectations. Last month’s 3.9% rise was a surprise, and it’s expected to be followed by a stronger figure now – 4.6%. It’s slightly overshadowed by the industrial production release.
  6. Tokyo Core CPI: Thursday, 1:30. Inflation for the capital tends to be the most accurate and most influential inflation figure, with a stronger impact than the national number. Japan’s deflation is getting better, with the annual drop in prices becoming lower – from 2% gradually to 1.1%. An annual drop of 1% in prices is expected now.
  7. Unemployment Rate: Thursday, 1:30. Despite being a late figure, the unemployment rate is quoted by many, and moves the yen. The unemployment rate in July is expected to be better than in June – 5.1% instead of 5.2%.
  8. Household Spending: Thursday, 1:30. This important consumer indicator is recovering, with two straight months of growth. The strong 1.1% growth last month is likely to be followed by a 1.4% rise this time.

Let’s review the events. All times are GMT.

USD/JPY Technical Analysis

USD/JPY gradually dropped at the beginning of the week until another intervention sent it back up towards 85.50. This didn’t help, as it closed lower – 84.22.

The pair is now bound between, the past week’s low of 84.11 (a new line that didn’t appear on last week’s outlook) and 84.88, which was a support line in August.

Higher, 85.50 capped the pair now and worked as support beforehand. It’s still of importance. Just above this line, the 85.90 line is the peak that USD/JPY reached after the intervention, and serves as the next resistance line.

86.35 was a support line in July and later became a resistance line. It’s closely followed by 86.88, which provided support earlier. The last line for now is 88.10, which was a support line in March and later worked as resistance.

Looking down below 84.11, the next support line is 83.34, which supported the pair before the intervention. It’s followed by 82.87, the year-to-date low (also a 15 year low).

I remain bullish on USD/JPY.

It seems that the BOJ will continue intervening in the markets, and will cushion any drop in USD/JPY. Now that the holidays are over, the BOJ can act more aggressively.

Further reading:

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AUD/USD Outlook – September 27 October 1

Posted: 25 Sep 2010 11:00 AM PDT


A big variety of indicators expects Aussie traders in the upcoming week, with building approvals being the highlight. Here’s an outlook for the Australian events, and an updated technical analysis for AUD/USD.

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

aud usd forecast september october

Australia enjoyed the US dollar’s weakness and rose to fresh highs, with parity in sight. Will this trend continue? Let’s start:

  1. HIA New Home Sales: Tuesday. The Housing Industry Association hast shown three straight months of sharp falls in home sales, partly the result of home sales. The biggest drop was last month – 7%. This fall will probably be followed by a rise this time.
  2. CB Leading Index: Wednesday, 00:00. This composite index is based on 7 economic indicators, most of them already released. Nevertheless, the publication tends to to have an impact on the Aussie. Last month saw a very modest rise of 0.1% in the index. A similar rise is expected now.
  3. Building Approvals: Thursday, 1:30. After three months of drops, this major figure finally rose last month, by 2.3%. This time, it’s expected to remain unchanged. Building approvals are usually slightly overshadowed by retail sales. This time, the separate release makes it more important.
  4. Private Sector Credit: Thursday, 1:30. Higher credit drives means more economic activity. Credit hardly grew last month – only 0.1%. The RBA will probably show a stronger rise this time – 0.3%.
  5. RBA Financial Stability Review: Thursday, 1:30. At the same time, the RBA will release a thorough report about the financial stability. Unless there are any surprises, Australia financial stability will remain solid.
  6. AIG Manufacturing Index: Thursday, 23:30. The Australian Industry Group publishes a PMI-like index, filling the gap for the government. After a few months of high scores, the index fell to 51.7 points last month, close to the critical 50 point mark, but still in the positive zone, meaning economic expansion. A rise is predicted this time.
  7. MI Inflation Gauge: Friday.  The Melbourne Institute publishes a month over month inflation indicator. The government releases CPI only once per quarter, so this release fills the gap. Inflation has been rather tame recently, according to MI, rising between 0.1% to 0.3% on a monthly basis.
  8. Chinese Manufacturing PMI: Friday, 1:00. Australia’s biggest trade partner has slowed down in recent months, with PMI sliding from the area of 55 to 51.7 this time. A rise to 52.9 is expected this time. This survey of 700 purchasing managers always rocks the Aussie.
  9. Commodity Prices: Friday, 6:30. Australia’s commodity-oriented economy depends on the price of commodities. This year-over-year figure has shown a 52.7% rise. A smaller one is expected now.

Let’s review the events. All times are GMT.

AUD/USD Technical Analysis

The Aussie struggled with the 0.9465 line at the beginning of the week (appeared in last week’s outlook) before making the break. Since then, it traded between 0.9465 to 0.96, closing at 0.9590.

Below 0.9465, the next significant line of support is 0.9366, which was a stubborn peak in April. Below, the veteran 0.9327 line that is of significance for almost a year, is the next line of support.

Lower, 0.9220 capped the pair in August and now serves as the next support line. It’s followed by 0.9080, which worked as resistance in July.

Looking up, 0.96, the past week’s high, provides immediate resistance. It’s followed by 0.9670, a line that capped the Aussie during May and June 2008.

Even higher, 0.98 provided resistance after the Aussie fell from the peak in July 2008. The last line is the all-time high of 0.9849.

I remain bullish on AUD/USD.

The Aussie enjoys the greenback’s strength, and also has reasons of its own to rise. The Australian economy is doing well, as seen in the recent employment figures. There’s still room for more gains.

Further reading:

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EUR/USD Outlook – September 27 October 1

Posted: 25 Sep 2010 06:00 AM PDT


Employment, inflation and many other releases will shape the direction of the strengthening Euro in the upcoming week. Here’s an outlook for the European events, and an updated technical analysis for EUR/USD.

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

eur usd forecast September October

The Euro enjoyed a superb week, rising gradually and eventually breaking a significant barrier. The debt issues were put aside. Will this optimism continue this week? Let’s start:

  1. Jean-Claude Trichet talks: Monday at 7:00 and at 13:00. The president of the ECB will first speak in a conference in Frankfurt about regulation, and will later talk in front of a committee of the European parliament – a more important event. Any reference to the economic situation, debt issues and especially the interest rate will rock the Euro during a long time, as the second appearance will probably be quite long.
  2. M3 Money Supply: Monday, 8:00. After a few months of squeeze in the amount of money in circulation, the Euro zone enjoyed a surprising growth two months ago, another sign that inflation isn’t as tame beforehand. After a 0.2% in the past two months, a 0.4% rise is expected now, and will boost the Euro.
  3. German GfK Consumer Climate: Tuesday, 6:00. After many months with a score under 4 points, this survey of 2000 German consumers jumped to 4.1 points last month, meaning that consumers are more confident to spend. A rise to 4.3 points is expected now.
  4. German Prelim CPI: Tuesday. The different German states will release an initial estimation for the consumer price index. After a few months of rises, Europe’s largest economy is expected to show a dip of 0.2% in prices, probably a one time event. Any rise will boost the Euro.
  5. French Consumer Spending: Tuesday, 6:45. Europe’s second largest economy didn’t release this important indicator last month, so we’ll have two releases now. The figure for July is expected to show a rise of 0.5%, while a drop is expected for August. If both figures offset each other, no significant effect will be seen.
  6. German Unemployment Change: Thursday, 7:55. The locomotive of the Euro-zone enjoyed six straight months of drop in the number of unemployed people. A seventh month is expected to follow, with a drop of 20K, similar to last month’s 17K drop.
  7. CPI Flash Estimate: Thursday, 9:00.  European prices have been on the rise and the zone is no longer in deflationary conditions, yet still lower than Britian – there’s no need for a rate hike. This time, the annualized number is expected to rise from 1.6% to 1.8% – something that can boost the Euro, raising the chance of a rate hike., which still seems far at the moment.
  8. German Retail Sales: Friday, 6:00. The volume of sales has been quite volatile in recent months – with a jump of 3% followed by two months of drops. Last month’s 0.1% rise will probably be followed by a 0.5% rise this time.
  9. Final Manufacturing PMI: Friday, 8:00. Purchasing managers became less optimistic, according to the initial release of this 600 strong survey. The score of 55.1 points will probably be confirmed now.
  10. Unemployment Rate: Friday, 9:00. Employment is a weak spot in Europe and the release will probably be a reminder that the Euro-zone is still recovering slowly and unevenly. Since the beginning of the year, unemployment rate was at around 10%. It’s expected to remain at this level for another month, weakening the Euro.

Let’s review the events. All times are GMT.

EUR/USD Technical Analysis

The Euro began the week still struggling with the 1.3110 level. When the breakout came, the move was strong and the pair shot up. Later in the week, the range was between the 1.3267 and 1.3430 lines (all mentioned last week), with another breakout coming on Friday that sent the pair to an impressive close at 1.3487.

EUR/USD now ranges between 1.3430, which was a strong resistance line in February, and 1.3530 which was a line of support in the past, and now serves as minor resistance.

Looking down, the past week’s support line of 1.3267, which was also a support line in the past, provides the next significant support line. Below, 1.3110 worked recently as resistance and now serves as a line of support.

Lower, 1.2920 capped the pair twice during September and now is a strong support line now. 1.2730 worked in both directions in August and in September and is the last support line for now. There are more lines below, mentioned in previous weeks, but they’re too far now.

Looking up above 1.3530, the next line is 1.37. This area capped the pair back in February and March, and now also works as a significant resistance line. Higher, 1.3850 capped two attempts to break higher at the beginning of the year, and is another strong resistance line.

Even higher, the round number of 1.40 serves as the next minor line of resistance, after working in both directions in 2009. Higher, 1.42 was a support line in December.

I am bullish on EUR/USD.

The markets now focus on good European figures and disregards the debt issues. The Euro broke significant resistance levels and the influx of figures can push the Euro higher, at least during this week.

This pair receives great reviews on the web. Here are my picks:

  • James Chen sees more bullishness and marks the next levels.
  • Andriy posts technical levels for the EUR/USD and other pairs on a weekly basis.
  • Mohammed Isah discusses the resumption of the bullish momentum.
  • Sophia Todorova, on Casey’s site,  sees bullishness in EUR/CAD as well.
  • TheGeekKnows writes a review of the past week looks forward.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It's free..
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