FX Analysis: December 5, 2017
SGT Markets | Jan 05, 2018 05:24AM ET
EUR/USD
Eyes on today Eurozone CPI (Preliminary release) and U.S. Nonfarm Payrolls.
U.S. ISM Manufacturing better than expected.
U.S. Federal Reserve policymakers showed worry over the fate of currently low inflation and saw recent tax changes as providing a boost to consumer spending.
Even recent extremely bullish data on consumer confidence did absolutely nothing for yields and the dollar. It certainly looks like even the biggest tax overhaul in decades can’t seem to convince investors to buy into the greenback.
German Unemployment beat analysts’ expectations. Also last German Manufacturing data and Ifo data came again higher than expected.
The European Central Bank recently revised up its forecast for growth and inflation, but added that underlying inflation remains subdued.
We are Overbought from Neutral as we still expect another correction down from 1.199 area (fake breakout). Possible target: 1.185. 1.208 is the ultimate Resistance area.
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: Overbought
1st Resistance: 1.1990
2nd Resistance: 1.2080
1st Support: 1.1856
2nd Support: 1.1756
EUR
Recent Facts:
31st of August, German Unemployment + CPI (Preliminary release)
German Unemployment Worse than Expected, CPI Better than Expected
1st of September, Manufacturing PMI
Worse than Expected
7th of September, ECB Press Conference
Draghi said that growth projections were made considering EUR/USD at1.18 level (the current or higher levels are considered due to excessive volatility and this is considered to be slowing down CPI measures) and in October some clearer actions will be taken in order to push inflation upwards (possibly by monitoring EUR/USD and reducing overshooting in EUR currency levels).
13th of September, Eurozone Employment Change
Better than Expected
15th of September, Eurozone Wages, Trade Balance
Better than Expected
18th of September: Eurozone CPI
As Expected
19th of September: German ZEW Economic Sentiment, German ZEW current conditions
Better than Expected
22nd of September, German Manufacturing PMI
Better than Expected (at its highest since May 2011)
Get The News You Want
28th of September, Eurozone Inflation data
Worse than Expected
29th of September, German Unemployment Change
Better than Expected
25th of October, French and German Manufacturing PMI
Better than Expected
26th of October, ECB Interest Rate Decision and Press Conference
Dovish: ECB will extend those purchases to the end of September 2018, or beyond, if necessary
31st of October, Eurozone CPI
Worse than Expected
2nd of November, German Manufacturing + German Unemployment
Better than Expected
14th of November, German GDP
Better than Expected
23rd of November, German Manufacturing PMI
Better than Expected
30th of November, Eurozone CPI (Preliminary release)
Lower than Expected
14th of December, German Manufacturing PMI
Better than Expected
3rd of January, German Unemployment
Better than Expected
Eyes on today release: CPI (Preliminary release)
USD
Recent Facts:
28th of July, U.S. GDP (Preliminary release)
As Expected
1st of August, ISM Manufacturing PMI
Slightly Worse than Expected
2nd of August, ADP Nonfarm Employment Change
Worse than Expected
3rd of August, ISM Non-Manufacturing PMI
Worse than Expected (at the lowest since October 2016)
4th of August, Nonfarm Payrolls + Unemployment Rate
Job Market Better than Expected
8th of August, Job Openings
Better than Expected
10th of August, PPI
Worse than Expected
11th of August, U.S. CPI
Worse than Expected
15th of August, U.S. Core Retail Sales
Better than Expected
23rd of August, Manufacturing PMI and New Home Sales
Worse than Expected
29th of August, CB Consumer Confidence
Better than Expected
30th of August, ADP Nonfarm Employment Change + GDP
ADP Nonfarm Employment Change Better than Expected, GDP relevantly better than expected
1st of September, U.S. Nonfarm Payrolls + Unemployment rate
Worse than Expected
1st of September, ISM Manufacturing
Better than Expected
6th of September, ISM Non-Manufacturing PMI
Worse than Expected
13th of September, PPI
Worse than Expected
15th of September, Retail Sales
Worse than Expected
15th of September, Manufacturing Production + Industrial Production
Worse than Expected
19th of September, Building Permits
Better than Expected
20th of September, FOMC Statement + FOMC Press Conference
Fed confirmed inflation view, labour market growth and scheduled rate hikes
26th of September, Fed Chair Yellen speech
Federal Reserve to continue gradual interest rate hikes despite uncertainty about the path of inflation. It "would be imprudent to keep monetary policy on hold until inflation is back to 2%," she said.
28th of September, U.S. GDP + U.S. job market
Better than Expected
2nd of October, ISM Manufacturing PMI
Better than Expected
4th of October, ISM Non-Manufacturing PMI + ADP Nonfarm Employment Change
Better than Expected
6th of October, Nonfarm Payrolls + Unemployment Rate
Worse than Expected
12th of October, Core PPI
Higher than Expected
13th of October, Core CPI + Retail Sales
Lower than Expected
27th of October, GDP (Preliminary release)
GDP Higher than Expected
1st of November, FOMC Statement
Slightly Hawkish
3rd of November, Nonfarm Payrolls + Unemployment Rate
U.S. Job Creation Surges But Misses Consensus; U.S. Wage Inflation flat
14th of November, PPI
Higher than Expected
30th of November, U.S. GDP (Preliminary release)
GDP Higher than Expected
8th of December, Nonfarm Payrolls + Unemployment Rate
Better than Expected
13th of December, U.S. Interest Rates
Fed raised Interest Rates but expressed a dovish view about next moves for accompanying a not-so-convincing U.S. economic expansion.
14th of December, Core Retail Sales
Better than Expected
21st of December, GDP
Worse than Expected
22nd of December, Core Durable Good Orders
Worse than Expected
3rd of January, ISM Manufacturing data
ISM Manufacturing Better than Expected
Eyes on today release: Nonfarm Payrolls, Unemployment Rate
GBP/USD
Eyes on today U.S. Nonfarm Payrolls.
UK Services PMI better than expected, while both UK Construction PMI and Manufacturing PMI disappointed analysts’ expectations.
Cable is inside a bullish pattern, next to exhaustion. On the other hand, U.S. Federal Reserve policymakers showed worry over the fate of currently low inflation and saw recent tax changes as providing a boost to consumer spending.
Last month, May said U.K. financial services should be optimistic about Britain’s trade talks, as evidence that other EU leaders are open to Britain carving out a custom-made trading relationship with the bloc that covers services.
Yet Michel Barnier, French politician serving as European Chief Negotiator for the UK Brexit, recently insisted the U.K. will not be offered anything more than a Canada-style deal, which keeps tariffs to a minimum on goods but does not include trade in services. He says this is a result of May’s red lines, including her decision to leave the single market in order to regain control over immigration from the EU.
1.346 area represents a strong Resistance area. Now, either a confirmtional breakout of 1.346 with target in 1.36 area, or (which we see more likely) a retest in 1.336 Demand area.
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: Neutral
1st Resistance: 1.3460
2nd Resistance: 1.3610
1st Support: 1.3362
2nd Support: 1.3285
GBP
Recent Facts:
15th of June, Retail Sales
Retail Sales Worse than Expected,
20th of June, BoE Gov Carney Speech
Carney ruled out imminent rate hikes, warning of weak wage growth and a likely hit to incomes as Britain prepares to leave the European Union.
30th of June, GDP
UK GDP as Expected, with improving Current Account
3rd of July, UK Manufacturing PMI
Worse than Expected
4th of July, Construction PMI
Slightly Worse than Expected
5th of July, Services PMI
Slightly Worse than Expected
7th of July, Manufacturing Production
Worse than Expected
12th of July, UK Job Market
Better than Expected
18th of July, CPI
Worse than Expected
20th of July, UK Retail Sales
Better than Expected
26th of July, UK GDP release (Preliminary)
As Expected
1st of August, Manufacturing PMI
Better than Expected
2nd of August, Construction PMI
Worse than Expected (at the lowest since October 2016)
3rd of August, Services PMI
Better than Expected
10th of August, Manufacturing Production
As Expected
15th of August, UK CPI
Worse than Expected
16th of August, UK Job Market
Better than Expected
17th of August, Retail Sales
Better than Expected
24th of August, GDP (Preliminary release)
UK GDP (Preliminary release) as expected but Business Investment (Preliminary release) Worse than Expected
1st of September, Manufacturing PMI
Better than Expected
4th of September, Construction PMI
Worse than Expected
5th of September, Services PMI
Worse than Expected
8th of September, Trade Balance and Manufacturing Production
Better than Expected
12th of September, CPI
Higher than Expected
13th of September, Job Market
Better than Expected
14th of September, BoE Meeting Minutes
The BoE’s monetary policy committee voted 7-to-2 to leave interest rates at their current record low of 0.25% following its policy meeting but the bank said in its rate statement that the economy is looking slightly, so an interest rate hike move is likely “over the coming months” if the economy performs broadly in line with officials’ expectations
18th of September, Governor Carney Speech at IMF headquarter
De-integration effects of Brexit are likely to be inflationary but any rate hikes are expected to be gradual and limited
20th of September, Retail Sales
Better than Expected
29th of September, UK GDP
Worse than Expected
2nd of October, Manufacturing PMI
Worse than Expected
3rd of October, Construction PMI
Worse than Expected
4th of October, Services PMI
Better than Expected
10th of October, Manufacturing Production
Better than Expected
17th of October, UK CPI
Slightly Worse than Expected
18th of October, Job Market data
Wages Higher than Expected, Claimant Count Worse than Expected
19th of October, UK Retail Sales
Worse than Expected
25th of October, UK GDP (Preliminary release)
Better than Expected
1st of November, UK Manufacturing PMI
Better than Expected
2nd of November, Interest Rate Decision
Dovish Bank of England raised interest rates but said that any further hikes would be at a gradual pace and to a limited extent
10th of November, Manufacturing Production
Better than Expected
14th of November, UK CPI
Higher than Expected
15th of November, Job market
Better than Expected
16th of November, Retail Sales
Better than Expected
1st of December, UK Manufacturing PMI
Better than Expected
5th of December, UK Services PMI
Worse than Expected
8th of December, Manufacturing Production
Better than Expected
12th of December, UK CPI data
Higher than Expected
14th of December, UK Retail Sales
Better than Expected
22nd of December, GDP
Better than Expected
2nd of January, UK Manufacturing PMI
Worse than Expected
3rd of January, UK Construction PMI
Worse than Expected
4th of January, UK Services PMI
Better than Expected
USD
Recent Facts:
See above.
AUD/USD
The dollar gained something on a brilliant ISM release. Eyes on today U.S. Nonfarm Payrolls.
Oil appears to be traded at a premium compared to economic fundamentals because of concerns over development in Iran as the anti-government protests in Iran that began last week rattled Tehran's clerical leadership and left 21 people dead so far
Last Australia's central bank (RBA) meeting showed policy makers again balanced subdued inflation against record high household debt while leaving interest rates at 1.50 percent for almost 1-1/2 years.
Australia GDP worse than expected is deteriorating the hopes of a future hawkish RBA behaviour, though Retail Sales were higher than expected.
We expect this bullish correction to come to a stop around 0.784 area, in a new downtrend pressure impulse down to 0.77 Demand area.
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: 0.7828
2nd Resistance: 0.7616
1st Support: 0.7735
2nd Support: 0.7680
AUD
Recent Facts:
4th of May, Australia New Home Sales + Trade Balance
Worse than Expected
9th of May, Australia Retail Sales
Worse than Expected
18th of May, Australia Employment Change
Better than Expected
24th of May, Australia Construction Work Done
Worse than Expected
24th of May, Moody’s Credit Rating on China
Moody's Investors Service downgraded China's credit rating to A1 from Aa3, changing its outlook to stable from negative
25th of May, OPEC Meeting
OPEC decided to extend production cuts by nine months to March 2018
30th of May, Building Approvals + Private House Approvals
Better than Expected
1st of June, Australia Retail Sales
Better than Expected
6th of June, Reserve Bank Of Australia Interest Rate Decision and Statement
In the last meeting, the Reserve Bank of Australia held Interest Rates at 1.5% as expected, reporting that the current account’s deficit widened
7th of June, Australia GDP
Better than Expected
15th of June, Australia Employment Change
Better than Expected (3rd month in a row)
29th of June, HIA New Home Sales
Better than Expected
4th of July, Retail Sales
Better than Expected
4th of July, Reserve Bank of Australia Interest Rate Decision
RBA holds Rates at 1.5%
6th of July, Australia Trade Balance
Better than Expected
11th of July, Home Loans + NAB Business Confidence
Home Loans Worse than Expected, NAB Business Confidence Better than Expected
12th of July, Westpac Consumer Sentiment
Better than Expected
20th of July, Employment Change + Unemployment Rate
Employment Change Worse than Expected, Unemployment Rate as Expected
25th of July, CPI + RBA Governor Lowe Speech
Worse than Expected
3rd of August, Trade Balance
Worse than Expected
4th of August, Australia Retail Sales
Better than Expected
9th of August, Westpac Consumer Sentiment + Home Loans
Worse than Expected
17th of August, Employment Change
Better than Expected but Full Employment Change negative
30th of August, Australia Building Approvals + Construction Work Done
Better than Expected
1st of September, AIG Manufacturing Index
Better than Expected
6th of September, Australia GDP
Worse than Expected
7th of September, Trade Balance + Retail Sales
Worse than Expected
14th of September, Employment Change
Better than Expected
19th of September, House Price Index
Higher than Expected
5th of October, Retail Sales
Worse than Expected
19th of October, Employment Change
Better than Expected
25th of October, CPI
Lower than Expected
1st of November, AIG Manufacturing Index
Worse than Expected
3rd of November, Australia Retail Sales
Worse than Expected
16th of November, Australia Employment Change
Worse than Expected
5th of December, Retail Sales
Better than Expected
5th of December, RBA Interest Rate decision and Statement
Economy is growing
6th of December, GDP
Worse than Expected
14th of December, Employment data
Better than Expected
USD
Recent Facts:
See above.
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