FX Analysis: EUR/USD, GBP/USD, AUD/USD.
SGT Markets | Apr 26, 2017 03:28AM ET
EUR/USD
Centrist Emmanuel Macron, a pro-EU ex-banker and former economy minister, emerged as the leader of the first round of voting and qualified for a May 7 runoff alongside the second-place finisher, far-right leader Marine Le Pen. The “best” scenario for EURO would be: Macron wins with a comfortable margin. The “worst” scenario would be: Le Pen wins (this could happen).
On the other hand, the dollar is still in clear oversold area. The Federal Reserve is still expected to raise interest rates again this year with the rate hike likely to occur in September rather than June. We know that President Trump is comfortable with a weaker currency, but as a matter of fact, talking about growth, job creation and domestic demand, U.S. economy is the most resilient compared to that of EU and UK.
Fed Chair Janet Yellen said that the Federal Reserve's plans to raise U.S. interest rates gradually are aimed at sustaining full employment and near-2-percent inflation without letting the economy overheat.
We expect a consolidation around 1.095, with possible retests of 1.085 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: 1.0950
2nd Resistance: 1.1112
1st Support: 1.0856
2nd Support: 1.0782
EUR
Recent Facts:
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.
21st of February, German Manufacturing PMI
Better than expected.
23rd of February, German GDP
Worse than expected.
1st of March, German Manufacturing + German Unemployment Change
German Manufacturing worse than expected, German Unemployment Change better than expected.
2nd of March, Eurozone Inflation data
In line with expectations.
3rd of March, German Services PMI + Eurozone Retail Sales
Worse than expected.
7th of March, Germany Factory Orders
Worse than expected.
8th of March, German Industrial Production
Better than expected.
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9th of March, ECB Interest Rate decision + ECB Press Conference
Interest Rates unchanged, ECB President Dovish (can be cut again in the future if necessary).
14th of March, German CPI + German ZEW Economic Sentiment
German CPI as expected, German ZEW worse than expected.
24th of March, German Manufacturing PMI
Significantly better than expected.
30th of March, German CPI
Lower than expected.
31st of March, German Unemployment Change + Eurozone CPI
German Unemployment Change better than expected (for the sixth time in a row), Eurozone CPI worse than expected.
3rd of April, German Manufacturing PMI
As expected.
11th of April, German ZEW Economic Sentiment
Better than expected.
21st of April, French Manufacturing PMI + German Manufacturing PMI
Better than expected.
23rd of April, French Elections (first round)
Centrist Emmanuel Macron, a pro-EU ex-banker and former economy minister, emerged as the leader of the first round of voting and qualified for a May 7 runoff alongside the second-place finisher, far-right leader Marine Le Pen.
24th of April, German Ifo Business Climate
Better than expected.
USD
Recent Facts:
2nd of December: Nonfarm Payrolls + Unemployment Rate
Better 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.
21st of February, Manufacturing PMI + Services PMI
Worse than expected.
27th of February, Core Durable Good Orders + Pending Home Sales
Worse than expected.
28th of February, GDP (Preliminary release)
Worse than expected.
3rd of March, ISM Non-manufacturing PMI + Fed Chair Yellen Speech
ISM Non-manufacturing PMI better than expected, Yellen noted that a rate increase at next meeting "would likely be appropriate" insisting on the condition that data on employment and inflation have to move in line with expectations.
8th of March, ADP Nonfarm Employment Change
Better than expected.
10th of March, Nonfarm Payrolls + Unemployment Rate
Better than expected.
14th of March, Producer Price Index
Higher than expected.
15th of March, Core CPI + Retail Sales
As expected.
15th of March, FOMC Economic Projections + FOMC Statement + Fed Interest Rate Decision + FOMC Press Conference
The Federal Reserve increased interest rates by 0.25% to a 0.75-1% range. Dovish speech of Chairwoman Yellen.
16th of March, Building Permits + Philadelphia Fed Manufacturing Index
Building Permits worse than expected, Philadelphia Fed Manufacturing better than expected.
24th of March, Core Durable Goods Orders
Worse than expected.
24th of March, Manufacturing PMI + Services PMI (preliminary release)
Worse than expected (4th time in a row).
28th of March, Conference Board Consumer Confidence
Better than expected (the highest since December 2000).
30th of March, GDP
Better than expected.
5th of April, ADP Nonfarm Employment Change + ISM Non-Manufacturing Employment + ISM Non-Manufacturing PMI
ADP Nonfarm Employment Change better than expected.
ISM Non-Manufacturing Employment + ISM Non-Manufacturing PMI worse than expected.
7th of April, Nonfarm Payrolls + Unemployment Rate
Nonfarm Payrolls worse than expected, Unemployment Rate better than expected.
14th of April, Core CPI + Retail Sales
Core CPI (Inflation) lower than expected.
Retail Sales worse than expected.
20th of April, Philadelphia Fed Manufacturing Index
Worse than expected.
25th of April, New Home Sales + CB Consumer Confidence
New Home Sales better than expected, CB Consumer Confidence worse than expected.
GBP/USD
Even though retail sales fell sharply in March, data in general has been relatively healthy, allowing GBP to recover from its lows following the report. That said, the softness in retail sales and trade points to a weaker first-quarter GDP report.
Some unresolved tension with Scotland and Northern Ireland, which voted against leaving the EU. May provided no clear plan about the comprehensive “free-trade” partnership with EU members she wants to achieve.
Sterling jumped as Theresa May called for early general elections on June 8. She said Britain needed a strong and stable leadership going into Brexit talks and beyond.
UK Job Market with stable Unemployment Rate but toughly increasing Job Claimants.
UK Inflation Data on the upbeat while last Manufacturing Production data and Trade Balance were below expectations.
Now market is ranging between 1.253 and 1.283 levels, in general overbought setup waiting for the news and events scheduled next days which we think will push price down to 1.26 back again.
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: Overbought
1st Resistance: 1.2830
2nd Resistance: 1.2978
1st Support: 1.2530
2nd Support: 1.2380
GBP
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.
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.
17th of February, Retail Sales
Worse than expected.
1st of March, Manufacturing PMI
Worse than expected.
2nd of March, Construction PMI
Better than expected.
3rd of March, Services PMI
Worse than expected.
10th of March, Manufacturing Production + Trade Balance
UK Manufacturing Production worse than expected, Trade Balance better than expected.
15th of March, Job Market
Better than expected.
16th of March, Interest Rates Decision + BoE Meeting Minutes
A Bank of England policymaker unexpectedly voted to raise interest rates.
21st of March, CPI
CPI higher than expected.
23rd of March, Retail Sales
Better than expected.
31st of March, GDP YoY
Worse than expected.
3rd of April, Manufacturing PMI
Worse than expected.
5th of April, Services PMI
Better than expected.
7th of April, Manufacturing Production
Worse than expected.
11th of April, UK CPI
Higher than expected.
12th of April, UK Job Market
Worse than expected.
21st of April, UK Retail Sales
Worse than expected.
USD
Recent Facts:
See above.
AUD/USD
Australian consumer prices lower than expected.
AUD struggled on the back of dovish RBA minutes and lower copper prices. Because of volatility, the central bank wanted to look past the healthier jobs report.
New Zealand Consumer Price Index revealed a higher than expected inflation. China Industrial Production, far above expectations, drove YoY GDP to +6.9% (better than +6.8% Expectations).
Australia Employment Change growing higher than expected.
Last reading of China Inflation data is lower than expected with Chinese factory activity growing at fastest pace in nearly 5 years.
As we wrote in the previous commentaries, 0.757 area is an important resistance. A definitive break of it would lead price up to 0.77 area. Failure to break it would lead price down to 0.746 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: Neutral
1st Resistance: 0.7570
2nd Resistance: 0.7735
1st Support: 0.7472
2nd Support: 0.7408
AUD
Recent Facts:
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.
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.
28th of February, New Home Sales, Current Account, Private Sector Credit.
1st of March, Australia GDP
Better than expected.
16th of March, Employment Change + Unemployment Rate
Worse than expected.
2nd of April, Retail Sales
Worse than expected.
4th of April, RBA Interest Rate Decision
Interest Rates unchanged, as expected. Dovish tone in Philip Dowe’s Speech.
9th of April, Home Loans
Worse than expected.
13th of April, Australia Employment Change
Better than expected.
18th of April, RBA Meeting Minutes
Dovish.
26th of April, Australia CPI
Lower than expected.
USD
Recent Facts:
See above.
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