FX Analysis: EUR/USD, GBP/USD, AUD/USD
SGT Markets | Jul 05, 2017 05:45AM ET
EUR/USD
Eyes on today French and German Services PMI. Also Eurozone Retail Sales. Eyes on Fed’s FOMC Meeting later today.
Germany Manufacturing PMI confirmed above expectations.
On the other hand, U.S. ISM Manufacturing PMI at the highest since January 2015.
Germany Unemployment Change better than expected and Eurozone confirmed to be keeping a fast pace. Germany Consumer Price Index again above expectations (for the second time in a row).
On the other hand, U.S. GDP data better than expected.
Draghi said the ECB sees growth that is above trend and well distributed across the euro area, but reiterated that “a considerable degree” of stimulus is still needed in the euro zone (stronger growth outlook but a weaker inflation picture across the projection horizon), and that the ECB must be “prudent” in how it unwinds it. Bloomberg reported that ECB sources said market misinterpreted Draghi's remarks: the speech "was intended to strike a balance between recognizing the currency bloc's economic strength and warning that monetary support is still needed" Bloomberg said.
EUR/USD boosted up also by dovish Fed’s hints. Yellen said that, even though jobless rate low, inflation has continued to run below Fed’s objectives. Fed is looking carefully at inflation expectations but they are not getting a consistent story on inflation.
Italian municipal elections marks a change with right-wing (no-euro) parties placing more mayors than expected.
Our 1.1390 area worked effectively as Resistance and, as we wrote previously, will converge down to 1.1194 Support area (but eyes on 1.129 area, first Support).
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: Bearish
1st Resistance: 1.1390
2nd Resistance: 1.1480
1st Support: 1.1291
2nd Support: 1.1194
EUR
Recent Facts:
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.
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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.
27th of April, ECB Interest Rate decision + ECB Press Conference
Unchanged, eyes on next Inflation data.
28th of April, CPI (Preliminary)
Higher than expected.
2nd of May, German Manufacturing PMI
As expected.
3rd of May, German Unemployment Change + Eurozone GDP (Preliminary)
German Unemployment Change better than expected (for the 5th time in a row).
Eurozone GDP (Preliminary) as expected.
7th of May, French Elections
Centrist pro-EU Macron Won French Elections.
12th of May, German GDP (Preliminary release)
As expected.
16th of May, Eurozone GDP (Preliminary release) + Trade Balance + ZEW Economic Sentiment
Better than expected.
17th of May, Eurozone CPI
As expected.
23rd of May, German Manufacturing PMI
Better than expected.
30th of May, German CPI (Preliminary release)
Worse than expected.
31st of May, German Unemployment Change + Eurozone CPI (Preliminary)
German Unemployment Change better than expected (for the 8th time in a row), Eurozone CPI worse than expected.
1st of June, German Manufacturing PMI
Slightly better than expected.
8th of June, GDP, Interest Rate Decision + ECB Press Conference
GDP better than expected, ECB moving closer to an exit from its stimulus program.
13th of June, French Non-Farm Payrolls
Better than expected.
13th of June, German Zew Economic Sentiment
Worse than expected.
23rd of June
German Manufacturing PMI better than expected.
German Services PMI worse than expected.
Eurozone Manufacturing PMI better than expected.
Eurozone Services PMI worse than expected.
26th of June, German Ifo Business Climate
Better than expected.
29th of June, German CPI
Better than expected.
30th of June, German Unemployment Change + Eurozone CPI
German Unemployment Change better than expected, Eurozone CPI higher than expected.
3rd of July, German Manufacturing PMI
Better than expected.
Eyes on today release: French Services PMI + German Services PMI + Eurozone Retail Sales.
USD
Recent Facts:
5th of May, Nonfarm Payrolls + Unemployment Rate
Better than expected.
11th of May, U.S. Producer Price Index (PPI)
Higher than expected.
12th of May, U.S. Retail Sales + Core CPI (Inflation data)
Worse than expected.
18th of May, Initial Jobless Claims + Philadelphia Fed Manufacturing Index
Better than expected.
23rd of May, Manufacturing PMI + New Home Sales
Worse than expected.
24th of May, FOMC Meeting Minutes
U.S. central bank kept its benchmark rate unchanged, highlighting a slowdown in economic activity (more proof that weakness in the first-quarter was temporary is needed for future rate hikes).
26th of May, Core Durable Good Orders + U.S. GDP (Preliminary release)
Core Durable Goods Orders worse than expected, GDP (Preliminary) better than expected.
31st of May, Chicago PMI + Pending Home Sales
Worse than expected.
1st of June, ADP Nonfarm Employment Change + ISM Manufacturing PMI
Better than expected.
2nd of June, Nonfarm Payrolls + Unemployment Rate
Nonfarm Payrolls worse than expected, Unemployment Rate better than expected.
13th of June, Producer Price Index
Core PPI (ex food and energy) better than expected.
14th of June, CPI + Retail Sales
Worse than expected.
14th of June, FOMC Interest Rates Decision + Statement
Interest Rate hike as expected (to 1.25%).
23rd of June, Manufacturing PMI
Worse than expected.
26th of June, Durable Goods Orders
Worse than expected.
28th of June, Pending Home Sales
Worse than expected.
29th of June, U.S. GDP + U.S. Job Market
GDP better than expected, Job claims slightly worse than expected.
3rd of July, ISM Manufacturing PMI
Better than expected.
GBP/USD
Eyes on today UK Services PMI and eyes on Fed’s FOMC Meeting later today.
UK Construction PMI slightly worse than expected, UK Manufacturing PMI was worse than expected too. Also last data regarding UK manufacturing and industrial production worse than expected along with UK GDP, Preliminary release. Same for UK Retail Sales. The only recent data on upbeat was UK CPI (Inflation).
GBP/USD boosted up by Carney statement regarding removal of monetary as spare capacity in the economy erodes and by recent dovish Fed’s messages. The agreement between Conservative Party and Democratic Unionist Party is occupying only the background of the global Sentiment on pound.
As we wrote in the previous commentaries, failing to break 1.298 (as we projected, being clearly in overbought) will create the setup for a Bearish wave down to 1.28 Support.
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: 1.2978
2nd Resistance: 1.3185
1st Support: 1.2830
2nd Support: 1.2705
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.
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.
11th of May, UK Manufacturing Production + Trade Balance + BoE Interest Rate Decision
Manufacturing Production + Trade Balance worse than expected.
The Bank of England made no changes to monetary policy but warned that living standards will fall this year as the headwinds from Brexit mount.
16th of May, UK CPI (Inflation data)
Higher than expected.
17th of May, UK Job Market
Worse than expected.
18th of May, Retail Sales
Better than expected.
25th of May, GDP (Preliminary)
Worse than expected.
1st of June, UK Manufacturing PMI
Slightly better than expected.
2nd of June, Construction PMI
Better than expected (Highest level since February 2016).
5th of June, UK Services PMI
Worse than expected.
8th of June, UK General Elections
British Prime Minister Theresa May's Conservative Party lost its parliamentary majority in a general election, throwing the country's politics into turmoil and potentially disrupting Brexit negotiations.
9th of June, industrial production + manufacturing production
Worse than expected.
13th of June, UK CPI
Higher than expected.
14th of June, UK Job Market
Claimant Count Change better than expected, Average Earnings Index worse than expected.
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.
Eyes on today release: Services PMI
USD
Recent Facts:
See above.
AUD/USD
Eyes on Fed’s FOMC Meeting and eyes on next data about Australia Trade Balance.
Australia reported Retail Sales for May with a gain of 0.6% month-on-month, beating the expected 0.2% rise but AUD fell after the latest RBA review of interest rates held steady at a record low.
The Australian dollar hit a three-month high after House Market (New Home Sales) improved and Chinese factory activity exceeded market expectations. It took also advantage from firmness in oil prices.
In the previous meeting, the Reserve Bank of Australia held Interest Rates at 1.5% as expected but reporting that the current account widened to a deficit of A$3.1 billion, compared with a surplus of A$100 million seen for the first quarter.
We expected a downside correction against important Resistance 0.768. Now first stop is our relevant Support in area 0.757.
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: Bearish
1st Resistance: 0.7680
2nd Resistance: 0.7735
1st Support: 0.7570
2nd Support: 0.7480
AUD
Recent Facts:
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.
2nd of May, RBA Interest Rate Statement
RBA holds Rates at 1.5%.
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%.
Eyes on next release: Australia Trade Balance.
USD
Recent Facts:
See above.
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