GBP/USD Gains, Oil Inventories Decline
Swissquote Bank Ltd | May 22, 2015 08:22AM ET
Forex News and Events
GBP/USD is gaining momentum as United Kingdom proved to have better managed winter months than the US. Retail sales came in way above expectation (1.2%m/m versus 0.2% consensus) on the back of strong March data – industrial production grew 0.7%y/y versus 0.1% consensus and manufacturing production grew 1.1%y/y versus 1% expected. The picture is not all bright however as headwinds arising from upcoming fiscal tightening may jeopardize economic expansion for the years ahead. Moreover, inflation slipped below zero for the first time in 50 years, delaying a potential rate hike from The Bank of England in 2016
On the other hand, in the light of recent data from the US, it appears that the “temporary factors” have lasted longer than anticipated and are now undermining American’s mood (May Philadelphia Fed survey came in at 6.7 versus 8 exp, 7.5 prior read). All in all, we remain GBP/USD bulls and we expect the sterling to stay in its hourly uptrend channel. However, downside risk remains as traders keep a positive dollar bias while waiting for the US economy to take off. Today, the pair is consolidating around 1.5670 ahead of US CPI figures.
Crude Oil Inventories decline (by Yann Quelenn)
Oil has jumped yesterday by more than 2% due to a decrease in the weekly US crude oil inventory data – the highest decline in the last four years. The total US commercial inventory remained at 482.2 million barrels declining by 2.7 million barrels. However, US Crude Inventories are still above last year’s level. As a result, West Texas Intermediate is now trading around $60 a barrel and reached briefly the $66 level. Iraq fighting provided traction to oil as worries about oil infrastructures are at stake.
The surge in oil prices is likely to have important consequences on the US economy. Let’s recall that Fed’s inflation target is at 2%. A stronger barrel will therefore help the US central bank to reach its objective. It is worth saying that US needs a stronger oil price to push up growth despite side effects on consumer spending. We also anticipate that a temporary surge will prevent the Federal Reserve to increase its cash rate as it would have a downside effect on oil price and therefore on growth. It would push inflation lower despite policymakers ‘ expectations to see inflation drifting back toward 2%.
Please note due to the upcoming holiday, the research reports will not be published on Monday, May 25 2015. All reports will resume on May 26
Gold - Selling pressures have decreased
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Today's Key IssuesCountry / GMT Bloomberg May Sweden Economic Survey SEK / 09:00 Mar Retail Sales MoM, exp 0.20%, last -0.20% EUR / 09:00 Mar Retail Sales YoY, exp 0.40%, last 0.10% EUR / 09:00 Bloomberg May Norway Economic Survey NOK / 09:05 Bloomberg May Denmark Economic Survey DKK / 09:10 May Real Sector Confidence SA, last 102.7 TRY / 11:30 May Real Sector Confidence NSA, last 107.9 TRY / 11:30 May Capacity Utilization, last 74.10% TRY / 11:30 May IBGE Inflation IPCA-15 MoM, exp 0.59%, last 1.07% BRL / 12:00 May IBGE Inflation IPCA-15 YoY, exp 8.23%, last 8.22% BRL / 12:00 Apr CPI MoM, exp 0.10%, last 0.20% USD / 12:30 Apr CPI NSA MoM, exp 0.10%, last 0.70% CAD / 12:30 Apr CPI Ex Food and Energy MoM, exp 0.20%, last 0.20% USD / 12:30 Apr CPI YoY, exp 1.00%, last 1.20% CAD / 12:30 Apr CPI YoY, exp -0.20%, last -0.10% USD / 12:30 Apr Consumer Price Index, exp 126.5, last 126.3 CAD / 12:30 Apr CPI Ex Food and Energy YoY, exp 1.70%, last 1.80% USD / 12:30 Apr CPI Core MoM, exp 0.20%, last 0.60% CAD / 12:30 Apr CPI Index NSA, exp 236.58, last 236.119 USD / 12:30 Apr CPI Core YoY, exp 2.40%, last 2.40% CAD / 12:30 Apr CPI Core Index SA, exp 241.13, last 240.793 USD / 12:30 Apr CPI SA MoM, exp 0.00%, last 0.40% CAD / 12:30 Apr CPI Core SA MoM, exp 0.10%, last 0.40% CAD / 12:30 Apr Real Avg Weekly Earnings YoY, last 2.20%, rev 2.10% USD / 12:30 Mar Retail Sales MoM, exp 0.30%, last 1.70% CAD / 12:30 Mar Retail Sales Ex Auto MoM, exp 0.40%, last 2.00% CAD / 12:30 Apr Formal Job Creation Total, exp 48000, last 19282 BRL / 18:30 Australia’s Private Capital Expenditure Bloomberg Survey AUD / 22:00
The Risk Today
Yann Quelenn
EUR/USD remains in a range between 1.1066 (05/05/2015 low) and 1.1217 (19/05/2015 high). Stronger resistance lies at 1.1459 (15/05/2015 high). In the longer term, the symmetrical triangle from 2010-2014 favors further weakness towards parity. As a result, we view the recent sideways moves as a pause in an underlying declining trend. Key supports can be found at 1.0504 (21/03/2003 low) and 1.0000 (psychological support). Break to the upside would suggest a test of resistance at 1.1534 (03/02/2015 reaction high).
GBP/USD is now pausing below the hourly support at 1.5700 (21/05/2015 high. Supports can be found at 1.5530 (rising trendline) and 1.5447 (19/05/2015 low). Key resistance lies at 1.5815 (14/05/2015 high). In the longer term, the technical structure looks like a recovery bottom whose maximum upside potential is given by the strong resistance at 1.6189 (Fino 61% entrancement). The current upwards consolidation suggests a medium-term persistent buying interest as long as support as 1.5380 holds.
USD/JPY is holding below the resistance at 122.03 (13/03/2015 high) and remains above the support at 118.33 (20/02/2015 low). The pair is still bullish as we stay above the 200-dma. Hourly resistance is given by 121.48 (20/05/2015 high). A long-term bullish bias is favored as long as the strong support at 115.57 (16/12/2014 low) holds. A gradual rise towards the major resistance at 124.14 (22/06/2007 high) is favored. A key support can be found at 118.18 (16/02/2015 low), whereas a key resistance stands at 121.85 (see also the long-term declining channel).
USD/CHF remains in a range and is now monitoring the support at 0.9300 (19/05/2015 low). In the mid-term, the pair remains bearish on a declining channel. Supports lies at 0.9072 (07/05/2015 low) and around 0.8900 (declining trendline). Resistance can be given at 0.9414(05/05/2015 high). In the long-term, there is no sign to suggest the end of the current downtrend. After failure to break above 0.9448 and reinstate bullish trend. As a result, the current weakness is seen as a counter-trend move. Key support can be found 0.8986 (30/01/2015 low).
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