Friday's FX Analysis: EUR/USD, GBP/USD, AUD/USD
SGT Markets | Feb 17, 2017 05:00AM ET
EUR/USD
Again good data from U.S. economy.
German GDP worse than expectations adds to worries over elections in the Netherlands, Germany and possibly Italy, as well as the ongoing row over Greece's bailout add to concerns over political risk in the euro area. On the other hand, a "phenomenal" tax plan can be presented by President Trump during next speeches.
As we wrote in the previous commentaries, the first strong support at 1.0555 successfully tested. Now we are in a consolidation phase, median price 1.060 as target. Everything above 1.067 area will be overbought.
Fed Chair Yellen reiterated her warning about delaying policy tightening. Trump agreed to hold an economic dialogue with Japan and to honour the “one China” policy. Eyes on the “phenomenal” tax plan for the U.S. due to be disclosed this week.
Our special Fibo Retracement is confirming the following S/R levels against the monthly and weekly trendlines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Neutral
1st Resistance: 1.0679
2nd Resistance: 1.0782
1st Support: 1.0555
2nd Support: 1.0500
EUR/h3
Recent Facts:
1st of December, French and German Manufacturing PMI (it measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector; below indicates contraction)
French Manufacturing PMI better than expected, German Manufacturing PMI slightly worse than expected.
4th of December, Italy Constitutional Referendum
Prime Minister quits as vote defeat deepens Europe’s turmoil.
8th of December, Interest Rate Decision + ECB Press Conference
Interest Rate Unchanged but the European Central Bank wants to extend its asset purchase program for additional nine months.
13th of December, Eurozone CPI + German ZEW Economic Sentiment
Eurozone CPI pared the Expectations, German ZEW contrasted.
15th of December, German Manufacturing (Preliminary release)
Better than expected.
2nd of January, Eurozone Manufacturing PMI
Better than expected.
3rd of January, German Unemployment + German CPI
Better than expected.
4th of January, Spanish Unemployment + Eurozone Services PMI + Eurozone CPI
Higher than expected.
19th of January, ECB Interest Rates + Press Conference
Rates unchanged.
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24th of January, German Manufacturing PMI + Services PMI
Manufacturing PMI better than expected, Services PMI worse than expected.
31st of January, German Unemployment Change
Better than expected.
31st of January, Eurozone’s CPI and GDP preliminary release
Better than expected.
1st of February, Eurozone Manufacturing PMI
As expected.
9th of February, German Trade Balance
Worse than expected.
10th of February, French Industrial Production + French Non-Farm Payrolls
French Industrial Production worse than expected, French Non-Farm Payrolls better than expected.
14th of February: German GDP (Preliminary release) + German ZEW Economic Sentiment + Eurozone GDP (Preliminary release)
German GDP worse than expected, German ZEW worse than expected, Eurozone GDP worse than expected.
15th of February, Eurozone Trade Balance
Better than expected.
USD/h3
Recent Facts:
2nd of December: Nonfarm Payrolls + Unemployment Rate
Better than expected.
14th of December, Fed Interest rate decision + FOMC Meeting
USD Interest Rate hike happened as expected.
15th of December, Core CPI + Philadelphia Fed Manufacturing Index
Core CPI slightly worse than expected, Philadelphia Fed Manufacturing Index better than expected.
22nd of December, Core Durable Goods Orders + GDP
Better than expected.
28th of December, Pending Home Sales
Worse than expected.
4th of January, FOMC Meeting Minutes
The forecast of as many as three rate hikes in 2017 is highly variable on President-elect Donald Trump getting an aggressive tax cut and spending plan through Congress.
6th of January, Nonfarm Payrolls + Unemployment Rate
Worse than expected (over the last 6 months, 4 were below the expectations).
13th of January, Producer Price Index + Retail Sales
Producer Price Index higher than expected, Retail Sales slightly worse than expected.
24th of January, Manufacturing PMI + Existing Home Sales
Manufacturing PMI better than expected, Existing Home Sales worse than expected.
27th of January, GDP + Durable Good Orders
GDP Significantly worse than expected, Durable Good Orders as expected.
1st of February, ADP Nonfarm Unemployment Change + U.S. Institute for Supply Management Manufacturing
Better than expected (ISM Manufacturing at its highest level since November 2014).
3rd of February, Nonfarm Payrolls + Unemployment Rate
Nonfarm Payrolls better than expected, Unemployment Rate worse than expected.
14th of February, Producer Price Index (PPI)
Better than expected.
15th of February, Core CPI (Consumer Price Index) + Retail Sales
Better than expected.
16th of February, Building Permits + Initial Jobless Claims + Philadelphia Fed Manufacturing Index
Better than expected.
GBP/USD
Eyes on today Retail Sales. Job Market looked to be able to persist over expected levels even though mostly is allocated to Services. Inflation data worse than expected.
Eyes on 1.24 area, strong support. We are bearish both because of the awakening strength of the USD and because we see technical obstacles for a relevant rally. We are in the middle of a ranging price box. Upper border: 1.2670; Lower border: 1.2295.
Again good data from U.S. economy and Fed Chair Yellen reiterated her warning about delaying policy tightening.
During last BoE Interest Rate Decision and Meeting Minutes Carney stated that stronger economic projections do not mean Brexit is without consequence and that there was scope for further easing of the monetary policy if spending growth slows more abruptly than expected.
EU Banking System set as condition for any cooperation with the financial institutions in the UK that of having them fully aligned with European policies.
Our special Fibo Retracement is confirming the following S/R levels against the monthly and weekly trendlines obtained by connecting the relevant highs and lows back to 2001:
Weekly Trend: Bearish
1st Resistance: 1.2530
2nd Resistance: 1.2670
1st Support: 1.2410
2nd Support: 1.2295
GBP/h3
Recent Facts:
4th of August, Bank of England Interest Rates decision (expected a cut)
Bank of England lowers Interest Rates as expected (record low of 0.25%) and increases purchase program.
3rd of November, Services PMI + BoE Monetary Policy votes + Interest Rates Decision
Services PMI better than expected, Interest Rates unchanged and no clues about future change.
8th of November, ELECTION OF THE 45th PRESIDENT OF THE UNITED STATES
Donald Trump elected President.
9th of November, Trade Balance
Worse than expected.
15th of November, CPI
Worse than expected.
16th of November, Job Market
Claimant Count Change (which measures the change in the number of unemployed people in the UK during the reported month) worse than expected.
17th of November, Retail Sales
Better than expected.
1st of December, Manufacturing PMI (it measures the activity level of purchasing managers in the manufacturing sector)
Worse than expected.
7th of December, Manufacturing Production
Worse than expected.
9th of December, Consumer Inflation Expectations + Trade Balance (EU and non-EU)
Consumer Inflation Expectations Higher then expected, Trade Balance Better than expected.
13th of December, CPI (UK Price Inflation)
Higher than expected.
14th of December, Job Market
Better than expected.
3rd of January, Manufacturing PMI
Better than expected (setting a new high since August 2014).
4th of January, Construction PMI
Better than expected.
11th of January, Manufacturing Production
Better than expected.
17th of January, UK Prime Minister May speaks
May confirmed that the UK will leave Europe's single market, but will seek a deal that gives the greatest possible access, Both the divorce and the new trading environment with the EU can be agreed within the 2 year window set under Article 50.
18th of January, Job Market
Better than expected.
20th of January, Retail Sales
Worse than expected.
26th of January, GDP (Preliminary release)
Better than expected.
1st of February, UK Manufacturing PMI
As expected.
2nd of February, Construction PMI
Worse than expected.
3rd of February, Services PMI
Worse than expected.
10th of February, Manufacturing Production
Better than expected.
14th of February, Consumer Price Index (CPI)
Worse than expected.
15th of February, Job Market
Better than expected.
Eyes on today release: Retail Sales
h3USD/h3
Recent Facts:
See above.
AUD/USD
Employment data released by the Australian Bureau of Statistics are above the expectations. U.S. data (building permits + Philadelphia fed manufacturing + initial jobless claims) better than expected.
As we wrote in the previous commentaries there was still room for an overshoot on 0.77 area in order to exhaust the overbought impulse. This happened and now AUD/USD faces a strong resistance in 0.7735 area so we start to be in overbought.
Now there is the oil price test.
Our special Fibo Retracements are confirming the following S/R levels against the monthly and weekly trendlines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Overbought
1st Resistance: 0.7735
2nd Resistance: 0.7828
1st Support: 0.7597
2nd Support: 0.7525
AUD/h3
Recent Facts:
2nd of August, Interest Rates decision cut to from 1.75% to 1.50% as expected
4th of August, Retail Sales (Jun)
Worse than expected.
11th of August, Reserve Bank of New Zealand's rate statement
Interest rates cut (to 2%) as expected.
18th of August, Employment Change
Better than expected. Highest since the beginning of this year.
15th of September, Employment Change
Worse than expected.
18th of October, Reserve Bank of Australia Meeting Minutes
RBA's Governor Philip Lowe said that Inflation Expectations declined, but not that much and that current level of AUD and rates is suitable for economy.
In the meantime New Zealand Consumer Price Index came in at 0.2%, above expectations (0%) in 3Q.
20th of October, Job Market Data
Worse than expected.
26th of October, Inflation Data (CPI)
Higher than expected.
1st of November, RBA Interest Rates Statement
RBA’s Governor Lowe signals tolerance for weak inflation and bets seem off for future rate cuts.
3rd of November, RBA Monetary Policy Statement + Retail Sales
RBA said it is focused on the medium-term inflation target.
Retail Sales better than expected.
8th of November, ELECTION OF THE 45th PRESIDENT OF THE UNITED STATES
Donald Trump elected President.
9th of November, Reserve Bank of New Zealand Interest Rate Decision + Monetary Policy Statement
Interest Rates cut to 1.75% from 2.00% as expected.
17th of November, Employment Change
Slightly worse than expected.
23rd of November, Australia Construction Work Done
Worse than expected (for the 5th Quarter in a row).
30th of November, Building Approvals + Australia Private Sector Credit
Building Approvals worse than expected, Private Sector Credit better than expected.
2nd of December, Retail Sales
Better than expected (for the 3rd Month in a row).
6th of December, Interest Rate Decision + RBA Statement
The Reserve Bank of Australia held its benchmark cash rate at a record low 1.50% As expected, while noting a stronger Aussie could complicate efforts to rebalance the economy.
7th of December, Gross Domestic Product (GDP)
Worse than expected.
15th of December, Employment Change
Better than expected.
19th of December, Mid-Year Economic and Fiscal Outlook
Scott Morrison announced lower than an original prediction of A$37.1 billion, investors see it as promising to stave off a downgrade of its AAA (triple A) rating from S&P Global.
9th of January, Retail Sales
Worse than expected.
19th of January, Employment Change
Better than expected.
25th of January, CPI (Consumer Price Index measures the change in the price of goods and services from the perspective of the consumer)
Lower than expected.
1st of February, AIG Manufacturing Index
Worse than expected.
2nd of February, Building Approvals + Trade Balance
Better than expected.
7th of February, RBA Interest Rates Decision + RBA Rate Statement
RBA held steady as expected at a record low 1.50%, while noting better economic conditions with China.
8th of February, New Zealand Interest Rate Decision + RBNZ Monetary Policy Statement
Interest Rates unchanged and RBNZ’s agenda contains no changes for 2017.
16th of February, Employment Change
Better than expected.
USD/h3
Recent Facts:
See above.
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