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[KeyToMarketsUK]

EURAUD: Bullish patterns visible on the daily and weekly charts.

EURAUD has been facing resistance at 200EMA on the monthly chart.
Long term descending trend line in focus.
Bullish patterns visible on the daily and weekly charts.

TECHNICAL ANALYSIS​

EURAUD continues to trade higher this week, but facing resistance at the three-month and longer term descending trend line.In the 1H of 2017, EURAUD rose more than 10%.

As shown on the below weekly chart, the price action appears an inverse H&S pattern. A breakout above the 3-month descending trend line opens to the way to long term descending trend line. It is worth to watch EURAUD in the near and medium term perspective. If propel above the long term trend line opens to 1.5330 and 1.5400 initially, later 1.5640 and 1.5700 possible.

Medium term potential support finds between 1.4440 and 1.4330. At higher time frames (weekly &monthly) the oscillator remains bullish.

If we turn to the daily chart, the price pattern appears same as the weekly. In addition to that, symmetrical triangle also spotted. On Thursday session, the 3month descending trend line rejected the cross.

It has a resistance zone seems between 1.5020 and 1.5075. If propel above 1.5100 opens to 1.5200 and 1.5230 in the near term. Further extension possible if the longer term descending trend line breaches. In this case, 1.5330 is the immediate target. Near term, support finds at 1.4890, 1.4820 and 1.4730. A move below 1.4700 needed to re-test 1.4630 a parallel support.

The RSI appears bearish.

View: We are sidelines waiting for new setup either to buy the dip or buying the breakout.

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[KeyToMarketsUK]

For the time being the upside risk is higher in EUR crosses than EURUSD.

• EURUSD rose further and printed a fresh 32-month high, gain 16% year-to date.
• EUR net longs are extended and Dollar net short positions increased.
• Potential resistance seems between 1.2000-1.2040.

TECHNICAL VIEWS​

Lack of fresh monetary policy related comments by Draghi pushed the euro higher against USD and against crosses as well. With the same reason in Yellen’s speech, USD lost the ground on the late Friday session.

EURUSD retraced to 1.1900 before the spike to 1.1940 and visited the 100.00fe on the four-hour chart. Hereon resistances seems at a big round number 1.2000 and 1.2040. Supports moved to 1.1830, 1.1770 and 1.1660.

It has been moving higher for six straight months. Since 2008, there were two occasions it has moved higher for five straight months and 1 time recorded for six straight monthly gains.

Last week we recommended bullish trades on EURAUD, EURCAD, and EURNZD. For the time being the upside risk is higher in EUR crosses than EURUSD.

This week market participants focus on EZ CPI. This will be the key driver to EURUSD price action in the near term. We are moving towards to September ECB meeting with a beaten down DXY and the EUR at over bought levels.

EURUSD has potential resistance zone remains between 1.2000-1.2040 July 2012 low. Fails to breach this will shift the focus to 1.1850-1.1830 and 1.1770.

We are a buyer in a dip aiming at 1.2110, 1.2300 and 1.2400.

FX positioning: Scotia Bank reported the FX Sentiment report on last Friday, “EUR’s net long position was up $1.3bn w/w to $12.9bn, recovering a portion of last week’s decline.EUR gross longs are just shy of the record high from two weeks ago”. The data cover up to Tuesday, August 22.

View: In the near term we are not too bullish.

EURCHF is trading on a verge of breakout through “Descending wedge” on the four-hour chart and a ‘Symmetrical triangle” on the daily chart. It’s worth to watch the cross as it has a potential to extend the rally to 1.1800.
View: We are a buyer in a dip.

EURJPY has been facing potential resistance at 200WMA for seven consecutive weeks. If we turn to the monthly chart, 50MA is the key resistance level. It has a parallel resistance zone seems between 130.60 and 130.80 above this 131.40 exists. If propel above the early August high, opens to 134/134.20 levels.
Support moves to 130.00, 129.50 and 129.00.
View: We are not bullish.

 

[KeyToMarketsUK]

BRENT: Resistance gradually moving down.

• Brent oil daily price pattern remains in an ascending wedge.
• Multiple tops placed at 52.75.
• Hurricane “Harvey” supporting the oil prices.

Brent oil price has been running a five-week long consolidation phase between 53.20 and 51.10.

FUNDAMENTAL NEWS​

CFTC Energy Weekly data reported a bullish sentiment hit a four-week low.

Hedge funds and money managers cut their bullish bets on WTI for a 3rd consecutive week, data showed on Friday reported by Reuters.

Venezuelan oil minister Del Pino plans to visit Russia, to discuss the global crude oil reduction agreement with Russian energy minister Novak and will visit Saudi Arabia before the OPEC meeting on 22 September to discuss possible adjustments to the cut-off agreement, Russia’s TASS news agency reported.

TECHNICAL VIEW​

In terms of technical’s nothing has changed since five-weeks. The near term and medium term price action are likely being a sideways within a tight trading range between 53.50 and 51$.

The daily RSI is sloping down and spotted with a lower top. On the hourly chart, multiple tops spotted at 52.75 above this 53 exist. As shown on the below chart resistance gradually moving down to 52.30 vs 52.75.

On the daily chart, the price action remains in a lower high pattern, expressing a bearish view on the long term perspective. A foot step above 54.60 needed to forecast an extension in the near and medium term. Alternatively, a move below 50.90 needed to re-test the 50.60, 50 and even 49.70.

We repeatedly said, “Set of resistance zones are likely to play a significant role in the near and medium term. Initial zone seems at 53.50 and 53.70 above this 54.30 and 54.60 exists”.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

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[KeyToMarketsUK]

JPY crosses technical overview

CHF and JPY crosses retraced on Tuesday Asia session and rebound on North America session. Some of the JPY crosses experience sharp turnarounds later Asia session.
• AUDJPY re-tested the fib level and rebound strongly.
• USDJPY and NZDJPY erased the falling trend line.

AUDJPY TECHNICAL VIEW​

AUDJPY drifts as low as 85.69 nearly 1.50% down on Asia trade yesterday and re-tested the 100EMA again.

It has a parallel support finds between 85.65 and 85.45 it’s 50.0 fib levels. A breakdown below the 50.0 fib opens to 85 and 84.50 (earlier breakout level) coincides with 61.8%.

Alternatively, resistance seems at 87.60 and 88.00. Foot prints above 88.20 will refresh the extension towards 88.60 and 89.

The Near term trading range remains between 88.20 and 85.40. We are watching for 85 and 84.50 levels. Fails to breach the supply zone seems between 87.60-88.20 retrace initially to 86.

In the medium term perspective, the price action printed a top at 89.45 (50.0% 105.40-73.30 fall). Trading range remains between 90.00 and 83.70.

Data to watch:
Today on Asia trade, Aussie buildings approval

USDJPY TECHNICAL VIEW​

• USDJPY retraced and rebound.
• On a verge of a trend line breakout.
• Probably made a double bottom.

We have previously advised, “Until the price close above 108.00, we believe the price action trying to form a base between 108.60 and 108.10 levels”. The price action made a low at 108.25 and changes the direction again.

Our near term view remains unchanged. Buying expected between 108.60 and 108.00. We are watching at 110.00 and 111.00. We repeatedly advise this trade and the price action reacted in line.

Yesterday's sell-off finally turn around and rebound to 20DMA, 109.90. It has a near term resistance seems between 109.90 and 110.00 above this opens to 111.00.

Near term potential support zone remains between 108.10 and 107.50. A move below 107.50 needed to retrace further to 106.50 (61.8% 98.93-118.65 rally) and 105.50. Intraday supports moved to 109.20 and 108.60.

Data to watch:
Wed, Jul 30
August ADP employment report:
Nomura: We expect ADP to report an increase of 200k in private payrolls for August.
2nd estimate Q2 GDP:
Nomura: In the second estimate of Q2 GDP, we expect the BEA to raise its estimate by 0.3pp from 2.9% q-o-q saar.
US nonfarm payroll is the central theme this week.
Barclays: August non-farm payrolls to rise 200k and the unemployment rate to decline to 4.2%.
Nomura: We expect another strong employment report next Friday with a forecasted 205k increase in nonfarm payroll employment, which would mark the third consecutive month of +200k growth.

NZDJPY TECHNICAL VIEW​

• Retraced near 70.0% (Mid April-July rally).
• Interesting trend line in focus.
• Positive divergence visible.

NZDJPY fell as low as 1.30%, 78.27 but rebound strongly and closed with 0.45% gains. It was a wild journey to JPY crosses especially to AUDJPY and NZDJPY.

It has erased the descending trend line (below chart) resistances seem at 79.80, 80.20 and 80.60. The daily RSI making a higher low and break out visible on the daily chart. The daily oscillator remains bullish.

Potential support finds between 77.80 and 77.60. A move below 77.60 opens to 76.50, 76 and 75.60 it’s 61.8% fib (70-83.90 rally)

The near term bullish sign back to the table only after settles above 80.60. In this case 81, 81.50 and 82/82.20 possible.

View: We are waiting for 76 and 75.60 levels to open a buy trade in the medium term perspective.

What’s on today?
RBNZ Governor Wheeler due to deliver a speech titled “Reflections on the stewardship of the Reserve Bank”.

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​

 

[KeyToMarketsUK]

Breakouts and breakdowns.

Strong US data shifts the FX near term trends in major and USD pairs as well. USD buying witness across the board on Wednesday session.

Market participants focus on August NFP data due on Friday.

Barclays: August non-farm payrolls to rise 200k and the unemployment rate to decline to 4.2%.

Nomura: we expect another strong employment report next Friday with a forecasted 205k increase in nonfarm payroll employment, which would mark the third consecutive month of +200k growth.

FX insights: ​

USDCHF and USDJPY gave bullish breakouts on the hourly and four-hour chart. We repeatedly advise USDJPY buying between 108.60 and 108.10.

USDCHF and USDCAD gave a breakout through the inverse H&S pattern (H1) in yesterday’s London session.

USDCAD erased the twelve-week descending trend line.

USDMXN printed the first higher low on the daily chart.

USDTRY sits above interesting trend lines.

USDZAR trading near parallel support levels.

After the North Korea missile saga in early Monday Asia session, EURUSD printed a near term top at 1.2070 in Europe session and changed the direction. At lower time frames it has given a bearish H&S pattern. We advised a sell trade on our Tuesday’s article.

GBPUSD rejected thrice at 50DMA and trading between interesting trend lines on the four-hour chart. A foot print above 1.2980 opens to 1.3030 and 1.3080. Safe buying available only above 1.3030. The daily oscillator remains bullish. Earlier we have advised a bullish trade at 1.2800 with a target at 1.2940/1.2960. The cable made a high at 1.2978.

GBPAUD and GBPCAD currently trading on a verge of a breakout through the descending trend line on the daily chart. GBPAUD already gave a range breakout of 190 pips.

GBPNZD spotted with an inverse H&S pattern on the H4 chart. The pattern target aiming at 1.8040, 1.8100 and 1.8140, On the daily chart a clear breakout visible through a symmetrical triangle. A strong close above 1.8000 major trend reversal is highly likely. In this case 1.8150 and 1.8350 possible.

The Aussie dollar printed a lower top on the daily chart and closed below 20DMA. A move below 0.7830-0.7800 to confirm the retracement to 0.7750/0.7740. Any rally needs to sell until close above 0.8000.

The Kiwi dollar consolidating with a bearish theme at 50.0% fib (0.6817-0.7557 rally). Sell on the rally favors the trend.

CHFJPY again rejected at the parallel resistance and 50DMA. On the daily chart, the price action appears a bearish H&S pattern. Until close above 115.50 sell the rally favors the trend. Near term, support finds at 112.50 and 112.30. A move below this opens to 110 and 108.50 levels.

In the commodity space, Brent oil fell below the eleven-week ascending trend line. WTI settles below all the moving average on the daily chart but Brent remains above 50&100 [email protected].

Natural gas has been trading in a large symmetrical triangle spotted on the daily chart. A near term trend reversal expected if settle above 3.1120 aims at 3.2000 and 3.3500.

Silver failed at the 2-year descending trend line. Potential resistance seems between 17.50 and 17.75.
Gold rejected at 80.0% (1375-1122 fall). If propel above 1315 likely to re-visit 1326 again.

Chart for the medium term: GBPNZD

 

[KeyToMarketsUK]

USDCAD technical view ahead of NFP.

• CAD boosted with Q2 GDP growth.
• Medium-term potential support zone remains between 1.2360 and 1.2320 levels.
• The strong GDP data supports another BoC rate hike in September.

Canada GDP grew 0.3% (forecast 0.1%) in June 2017, rising for the eighth month in a row reported by Statistics Canada on Thursday session. Since June 2016, Canada GDP has grown every month.

June 2017 GDP summary:

• June 2017 GDP growth led by Construction sector, grew 2.0% posting its largest gain since July 2013.
• The retail trade sector grew for the sixth month in a row, up 0.8%.
• The transportation and warehousing sector (+0.6%) expanded in June, up for the fourth month in a row.
• Accommodation and food services rose 0.8% in June, led by 1.4% growth in accommodation services.
• Manufacturing edged up 0.2% in June.
• The wholesale trade sector declined 0.4% in June following six consecutive months of growth.
• Mining and quarrying edged down 0.2% in June following three months of increases.
• The CAD rallied across the board, grew more than a percent against GBP,USD and NZD, against EUR and JPY rose 0.90% and against CHF rose 0.60%.

Key points:

• USDCAD resistance moved down to 1.2660 from 1.2780.
• NZ election likely to raise the down side risk to NZDCAD.
• CADJPY spotted with a weekly bullish pattern.

TECHNICAL VIEW​

USDCAD rose 2.3% in the first half of the month and completely wiped out the gains in the second half. It has a support zone remains between 1.2440 and 1.2400 below this 1.2350 exists in the near term.

Medium-term potential support zone remains between 1.2360 and 1.2320 levels.

The daily and weekly RSI making a higher low and the oscillators remain bullish. We can draw a conclusion with the combination of daily and weekly RSI/RVI that, the selling likely to be arrested between 1.2400-1.2350. The resistance moved down to 1.2660 from 1.2780.

FX markets focus on today’s US August NFP. Ahead of the major event, USDCAD sits tad above 200WMA.

Intraday trading resistance seems at 1.2550/1.2560, 1.2600 and 1.2690.
Intraday trading supports moved to 1.2440, 1.2400 and 1.2350.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

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[KeyToMarketsUK]

EURUSD: he recent EUR strength will shift the focus to ECB staff forecast.

We are not expecting a new information in this week’s ECB meeting scheduled on Sep 07. The recent EUR strength will shift the focus to ECB staff forecast.

We believe the ECB policy remains unchanged, inflation and ECB’s growth forecast will be quiet.

Past week the EUR lost some ground after hitting 1.2070. We recommended two sell trades last week, retraced beyond our targets.

Ahead of ECB policy meeting focus shifts to 20DMA finds at 1.1820. A move below 20DMA needed to retrace further to 1.1750 and 1.1730. Resistance seems at 1.1910 and 1.2000.

Resistance seems at 1.1910 and 1.2000. If propel above 1.1930 likely to re-test again at 1.1980/1.2000.

We are a buyer (medium term) in a dip aiming at 1.2110, 1.2300 and 1.2400.

It has tumbled nearly 70 pips after the ECB said to see chance QE plan not fully ready until December.

“The debt king” Gross: the European Central Bank to be ready to adjust the QE plan in December the news “some surprising.” Reported by Wallstreet Cn.

Analysts forecast on the ECB’s monetary policy:

Nomura: We expect the ECB to announce at the meeting on 26 October that a tapering campaign will commence in early 2018.

Nomura analysts also reported, “The key macro focus at this meeting will, therefore, be the update of the ECB staff forecasts. We expect modest upward revisions to the GDP growth projections for 2017 and 2018”.

Barclays: We do not expect the ECB to commit this autumn to tapering QE to zero in 2018. Instead, prudent risk management should allow the ECB to keep its options open.

ABN AMRO: We think that the ECB will tailor its communication and exit strategy in a way that limits further euro strength.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.​

 

[KeyToMarketsUK]

Divergence observed between BRENT and WTI

• Last month price action consolidated in a tight range but traded mostly above 52$.
• The price action divergence observed between BRENT and WTI.
• Hedge funds and money managers cut their bullish bets on U.S.

FUNDAMENTAL NEWS​

Markets participants are nervous over the North Korea military action. We believe investors stay away from Brent oil and moved to Gold. The Gold offers safe heaven status, attracted funds during risk on mood.
Things should pick up rapidly by next week. We believe momentum back as traders focus on September 22nd meeting.

Kuwait’s OPEC governor, Haitham al-Ghais told Al-Rai newspaper Sunday, “OPEC invites Nigeria and Libya to committee meeting on September 22”.

Platts reported, “The two countries have been asked to attend the meeting in Vienna to identify the latest developments in their oil sectors”.

Baker Hughes said, “U.S. energy firms did not add any oil rigs this week as Hurricane Harvey barrelled into the nation’s energy heartland, forcing drillers to halt production and refiners to shut plants” reported by Reuters.

Positioning: The speculator group cut its combined futures and options position in New York and London by 105,377 contracts to 165,896 in the week to August 29, the U.S. Commodity Futures Trading Commission (CFTC) said. That was the lowest level since late June, data showed. Source: Reuters

TECHNICAL VIEWS​

Brent oil has been running a six-week long consolidation phase between 53.20 and 51.10. In the same period, gold prices are edge higher. The supports are moving gradually higher to 50.60 from 50.00.
The Brent oil trading above all the daily MAs but in WTI except 50DMA it has lost all the MAs in the daily chart. The spread between these two is 4.93$ (Monday’s closing price).

Since eight months, Brent oil price has been trading with lower highs and lower lows patterns. But as shown on the below chart, the price action gave a minor breakout through the four-month descending trend line in the end of July. Mid-August the price retraced and re-tested the breakout trend line, a sign of near term bullish.

Potential resistance seems between 52.75,53/53.20 above this 53.80 exists.
Supports moved to 51.90, 51.10 and 50.00 Additional support finds at 49.50.

View: We believe the ongoing consolidation phase will continue for another week.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

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[KeyToMarketsUK]

AUDUSD update 2: Aussie bulls are gearing up with a higher low pattern.

RBA leaves the cash rate on hold at 1.5% a record low. The bank has been on hold for straight 13th months.

Summary :

• The outlook for non-mining investment has improved recently and reported business conditions are at a high level.
• Residential construction activity remains at a high level, but little further growth is expected.
• Retail sales have picked up recently, although slow growth in real wages and high levels of household debt are likely to constrain future growth in spending.
• Employment growth has been stronger over recent months and has increased in all states.
• Wage growth remains low and likely to continue for a while.
• The higher exchange rate is expected to contribute to the subdued price pressures in the economy.
• Conditions in the housing market continue to vary considerably around the country.

Upcoming events

Wed, Sep 06
GDP on QoQ basis:

Barclays: Downward revisions are likely in Q1 GDP, which might support Q2 GDP growth figures at the margin.

Thu, Sep 07
Retail sales and Trade Balance

Barclays: Modest improvements likely to continue in retail sales in July, on the back of ongoing growth in employment. The trade balance will likely come in slightly weaker as imports to China moderated in July.

Speeches:

• Panel participation by Guy Debelle, Deputy Governor, at the 2017 FINSIA Regulators Panel, Sydney 8 September 2017, 1.00 pm AEST.
• Brief Remarks by Philip Lowe, Governor, at the Bank of China Sydney Branch’s 75th Anniversary Celebration Dinner 8 September 2017, 6.30 pm AEST.

TECHNICAL VIEW​

AUDUSD rose nearly 0.7%, squeeze above 200WMAs but closed tad below 0.80 mark. It has been facing resistance at 200WMAs for seven straight weeks. The near-term trading range remains between 0.8080 and 0.7800 levels.

Ahead of the GDP data today in Asia session, Aussie bulls are gearing up with a higher low pattern. Supports are moving gradually higher to 0.7860 from 0.7800. Before RBA policy meeting we repeated the same.

Additional support finds at 0.7780 it’s 38.2% (May-July rally) below an earlier breakout level 0.7740. A move below 0.7740 needed to retrace further to 0.7690 it’s 50.0% fib.

Potential resistance zone remains between 0.8060 and 0.8075. Aussie bulls can feel comfortable only after crossing these hurdles decisively! In this case, 0.8150 expected.

Alternatively, a rejection at a resistance zone between 0.8060-0.8080 could open to 0.7940 and 0.7900 initially.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.​

 

[KeyToMarketsUK]

EUR likely to peak typically.

CENTRAL BANK INSIGHTS​

Ahead of today’s ECB policy meeting and press Draghi’s Press Conference, the common currency remains in a consolidation phase.

As of now this week, the RBA and BoC delivered Monetary Policy Decisions. RBA remains in line with analysts’ expectations whereas BOC retained its hawkish bias.

Now it’s ECB turn, widely expected the key ECB interest rates to remain at their present levels, but investors focus to quarterly staff projection on inflation forecast and forward guidance of QE and interest rates.

FX markets are preparing for the sixth ECB policy meeting today. As per the previous five meetings price action (below) we believe EURUSD likely to re-test 1.20 again.

We are not expecting a new information in today’s ECB meeting. The recent EUR strength will shift the focus to ECB staff forecast. We believe the inflation and ECB’s growth forecast will be quiet. EUR appreciation will be one of the key things to watch in Draghi’s Press Conference.

The weekly FX positioning data reveal Euro longs were trimmed modestly.

According to Nicholas, a strategist at Deutsche Bank reported, Euro longs pared in advance of ECB meeting.


Analysts forecast on the ECB’s monetary policy:

Morgan Stanley: The ECB is unlikely to announce QE tapering at this week’s meeting. We think that it’ll likely do so at the following one in late October.

In a research note, Morgan Stanley said, “We expect the inflation projections to come down, but to still show an upward trend in core”.

Nomura: We expect the ECB to announce at the meeting on 26 October that a tapering campaign will commence in early 2018.

Nomura analysts also reported, “The key macro focus of this meeting will, therefore, be the update of the ECB staff forecasts. We expect modest upward revisions to the GDP growth projections for 2017 and 2018”.

Barclays: We do not expect the ECB to commit this autumn to tapering QE to zero in 2018. Instead, prudent risk management should allow the ECB to keep its options open.

ABN AMRO: We think that the ECB will tailor its communication and exit strategy in a way that limits further euro strength.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.​

 

[KeyToMarketsUK]

USDCAD: Retraced 50.0%. 1.2060 is the key.

The Bank of Canada again hike the interest rates at its September meeting. The FX market is pricing another hike in December.

Summary:

• The Bank of Canada is raising its target for the overnight rate to 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
• The Bank continues to expect a moderation in the pace of economic growth in the second half of 2017.
• The level of GDP is now higher than the Bank had expected.

CAD lifted by surprise Bank of Canada rate hike and strong domestic growth. Relative yield spreads and the recent surge in oil prices should continue to support the CAD.

TECHNICAL VIEW​

USDCAD has been moving South for five straight months retraced nearly 50.0% (0.9490-1.4689 rally). As of now, it has made a low at 1.2070, set of supports available on the monthly chart.

200MA finds at 1.2010 and 100EMA finds at 1.1970

On the weekly chart, swing low finds at 1.1920 May 2015 below this parallel swing high finds at 1.1875.

In a nutshell, support zone remains between 1.2060 and 1.1875. Additional support finds at 1.1760 it’s 61.8% (1.6191-0.9050 fall) and 1.1700.

According to Brent Donnelly, Spot FX Trader at HSBC, “Going to soon test the 1.2062 level. That level is where USDCAD was trading in the seconds before the shock rate cut in January 2015. so I think it’s an important chart point”.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

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​

 

[KeyToMarketsUK]

We are watching EURCHF (bullish) and USDCHF (neutral).

Last week’s Central banks' policy review:

The RBA, BoC, and ECB delivered Monetary Policy Decisions. RBA remains in line with analysts’ expectations whereas BOC retained its hawkish bias.

ECB policy meeting has done as well. Governing Council (GC) of the ECB decided that the interest rate remain unchanged. The GC also announced that the changes in the QE will likely be announced at the October meeting (Oct26).

Central Banks announcements this week Sep 10-16:

The brand new week wraps with SNB and BoE rate statements.

Thu, Sep 14

• SNB rate statement (0.8030BST)
• BoE rate announcement (12.00BST)

SNB rate statement:

We are watching EURCHF (bullish) and USDCHF (neutral).

Preview:

The SNB conducts an in-depth monetary policy assessment in March, June, September, and December. In June and December, the SNB provides more information on the monetary policy decision at a news conference.

We expect the Swiss National Bank will hold the interest rates at –0.75% and the target range for the three-month Libor is unchanged at between –1.25% and –0.25%.

In the June monetary policy report, SNB maintained the dovish theme on the Swiss Franc. “The Swiss franc is still significantly overvalued”.

We expect the Swiss National Bank repeat the “Overvalued” theme in the September meeting aswell.

EURCHF:

EURCHF has been trading in a narrow range remains between 1.1530 and 1.1250. Since mid-June (post SNB meeting) the CHF has depreciated more than 6% against the EUR.

Recent price action printed a lower high pattern at 1.1480 above this 1.1540 Aug 04 high. Last week’s closing was 1.1360 sitting tad above minor support 1.1330 below this 1.1260/1.1250 exists earlier support base.

Weekly potential support finds between 1.1250 and 1.1195. We are a buyer in a dip.

Fib reactions:

[email protected]

[email protected]

[email protected]

The RSI has been sloping down and the oscillator represents a mixed view.

View: We believe “dip buying” is an opportunity to take a long position with sl below 1.10 targets at 1.18 and 1.20.

USDCHF:

At all time frames, USDCHF remains in a bearish trend. It has near term supports finds at 0.9400, 0.9360 and 0.9240. The correction turns deeper if 0.9240 taken out. In this case, 0.9070 and 0.9000 expected.

On the four-hour chart, the RSI appears with a higher low, we are watching 0.9400 and 0.9360/0.9330 this week. A move below 0.9400 needed to retrace further to re-test the support zone 0.9360-0.9330 levels. Aty this point We believe the price action will change the direction, could be rebound to 0.9440 and 0.9550.

Resistance seems at 0.9490/0.9500, 0.9580/0.9600 and 0.9700. The near-term price action capped between 0.9580/0.9600. Bulls can feel comfortable only after crossing these hurdles decisively! In this case, 0.9700 and 0.9770/0.9800 expected.

View: Neutral.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.​

 

[KeyToMarketsUK]

How will the GBP react to CPI and BoE rate decision?

We are watching GBPUSD (neutral), GBPNZD (bullish) and EURGBP (neutral)

Upcoming data:

Tue, Sep 12 CPI

Consumer price inflation is likely to move higher once again.

Barclays: August CPIH inflation (Tuesday) is likely to remain unchanged at 2.6% y/y (consensus: 2.7% y/y; previous: 2.6% y/y)

Thu, Sep 14 BoE rate announcement (12.00BST)

The MPC’s decisions on interest rates are announced on Thursday (Sep 14) at 12 noon.

Preview: We expect the Bank of England to leave monetary policy unchanged at 0.25%.

At its meeting ending on 2 August 2017, the MPC voted by a majority of 6-2 to maintain Bank Rate at 0.25%. But in June meeting (14 June 2017), the MPC voted by a majority of 5-3 to maintain Bank Rate at 0.25%.

According to Brian Hilliard at Societe Generale, “Market speculation of rate increases has receded. The committee will move back to full strength with the arrival of Sir David Ramsden as the new Deputy Governor, Markets and Banking. We expect him to vote for unchanged policy, taking the vote to 7-2”.

Barclays: We expect the Bank of England to keep its policy settings unchanged this week (Thursday) while seeking to support the currency with more hawkish rhetoric.

GBPUSD TECHNICAL VIEW​

The cable has been moving higher for three straight weeks. From August low’s GBP appreciated more than 3.5%, trading on a verge of a breakout. Earlier we forecast a bullish reaction twice at 1.2800 and again at 1.2980.

It has a parallel resistance seems at 1.3220 and 1.3270 above this further head room could expect to 1.3370, 1.3440 and 1.3500. The recent short-term rebound likely to face resistance at the descending trendline as shown in the below chart.

Ahead of the CPI and BoE policy announcement the cable has a potential resistance at 1.35/1.3530 if settles above 1.3350.

Alternatively, fails at 1.3270/1.3370, retracement expected for 1.30 and 1.2950.

GBPNZD update 2: We still believe the upside risk remains.​

We have previously advised buying at 1.7940 levels a week ago. From our buying level, it has moved 300 pips till date. We still believe the upside risk remains in the medium term perspective. Last week’s retracement re-tested the earlier breakout, will aim at 1.85/1.86 levels. Until the cross holds the 1.7650 bullish view remains.

Supports moved to 1.8100, 1.8000 and 1.7900.

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[KeyToMarketsUK]

Brent: Support elevate to 53

• Rejected at 78.6%
• Range expected between 55-50$.
• Pattern divergence spotted between BRENT and WTI

Brent oil re-tested the earlier resistance zone/38.2% and rebounded on Monday session. Impact of Hurricane Irma and Harvey are likely to support the oil prices in the near term.

Pattern divergence: The price pattern has given an upside breakout through the five and eight months descending trend line. But rejected at 78.6% (Jan-June fall). If we turn to WTI daily chart, the breakouts are not available. The price has rejected at 200DMA

​

The spread between WTI and Brent climbed to 5.85$ vs 4.93$ last week. This week, investors focus on Monthly reports from the IEA and OPEC.

S&P Platts reported, “Distribution analysis shows that Brent’s monthly fluctuation rate is trading within one of the lowest volatility intervals in the last two years, indicating that a mean reverting movement will likely happen in the coming weeks. Analyst Vito Turitto reports”.

Resistance seems at 54.40, 55 and 55.90/56. Additional resistance seems at 56.50 (earlier swing high)

Alternatively, a move below 52.80 needed to re-test the earlier support base 52.20-52. The selling pressure accelerates below 52, could open to 51.10/51, 50.50 and 50.

View: Focus on WTI H4 chart to forecast further extension. We’ll be keeping an eye.

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[KeyToMarketsUK]

USDJPY: US CPI, Retail sales and next week’s FOMC statement are the key risk events.

• USD dominance continues against AUD,EUR,JPY,CHF,TRY and ZAR so far this week.
• Gold, Silver, Platinum, Palladium and Copper pullback.
• Oil prices extended the rally.

USDJPY rebounds on the third straight day, closed with 0.3% gains on Wednesday.

Data Review:

PPI advanced 0.2 percent in August forecast 0.3.

Upcoming data:

Thu, Sep 14

CPI

Barclays: We forecast headline CPI at 0.4% m/m (a soft 0.4%) and 1.9% y/y. For core CPI we forecast 0.1% m/m; this is a strong 0.1% monthly rise, representing an incremental improvement from very soft prints of recent months but suggesting core CPI is still struggling to gather significant momentum. On an annual basis, we expect core CPI to rise 1.6% y/y.

Fri, Sep15

Retail sales

Barclays: We forecast retail sales to have increased 0.2% m/m in August. For sales excluding motor vehicles we forecasts a strong 0.7% rise. Excluding volatile items such as autos, gasoline stations, food services and building materials, we expect retail sales to be up 0.6% m/m.

CPI, Retail sales and next week’s FOMC statement are the key risk events to USDJPY. Especially today’s CPI will draft the next week’s price action.

TECHNICAL VIEW​

JPY cross buying demand led the USDJPY to rebound more than 3% this week. The price action remains below resistance zone 110.70-111. An upbeat CPI data could stretch the pattern to 111.40/111.70 and 112/112.30 before next week’s FOMC if 111.00 taken out.

A weekly close above 111.25 could push the trading range to 111.70/112.15 initially and later 114.30/115.

Support moves to 110.00, 109.40 and 108.60.

Daily range: 111.70-109.80

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[KeyToMarketsUK]

BoE Tightening cycle is the key. GBP FX snapshot

GBP soars across the board following a hawkish tone by the Bank of England. The Monetary policy summary statement revealed, “All MPC members continue to judge that, monetary policy could need to be tightened by a somewhat greater extent over the forecast period than current market expectations”.

The MPC members also judge that, “some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target”. We are not discounting the fact “MPC voted by a majority of 7-2 to maintain Bank Rate at 0.25%” but it is not a surprise to the market. Two members considered it appropriate to increase Bank Rate by 25 basis points.

The rate hike odds are growing to November meeting. Markets are now pricing close to 50-50 probability that rates will rise in November. The low unemployment and high inflation painted the “Hawkish” tone. Pound climbs to one year high against USD and UK yields advanced.

• Bank of England says “The unemployment rate has continued to decline, to 4.3%, its lowest in over 40 years and a little lower than forecast in August”.
• The board also said, “Underlying pay growth has shown some signs of recovery, albeit remaining modest”.
• Twelve-month CPI inflation was now likely to rise to above 3% in October. In August it had risen to 2.9% .

Following positive CPI data (Tue) GBP well supported again by the BoE hawkish tone. But we believe political risk remains a concern to GBP, might cap the cable some time near around 1.3500 levels.

Whom to follow?
If the BoE follows the Fed rate hike path cycle “gradual” the available headroom to GBP is limited. Alternatively, if it follows the Bank of Canada footsteps, the cable story will be different. In this case, we believe “extension to 1.3800” (61.8% Brexit high -Oct low) is possible. Against EUR, 0.8750-0.8700 is highly likely.
BoE says, “all members agreed that any prospective increases in Bank Rate would be expected to be at a gradual pace and to a limited extend”.

EURGBP continues the corrective decline phase, re-tested the 100DMA. It has erased the four-month bullish channel. Readers can remind we repeatedly recommended buying GBP against AUD, EUR, JPY, and NZD. Among these our favourite trade is GBPNZD rose more than 600 pips from our buying level. We shifted our focus to GBPJPY, expecting a symmetrical triangle breakout at 148.50.

NOTE: At the time of preparing this article (10.10AM NZ time) N. Korea fires missile eastward from Pyongyang, reported by Yonhap news. JPY rapid raise of 0.4% across the board.

Technical levels to watch:
GBPJPY: Resistance 148.50-149.60 (100 MA monthly)

GBPUSD: Resistance 1.3500-1.3530. Strong support remains at 1.28-.2775.

GBPNZD: Resistance 1.8760 (100EMA weekly)

EURGBP: Support 0.87500-0.8700

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[KeyToMarketsUK]

JPY crosses witness multiple bullish patterns.

Our main focus over the week ahead will be the RBA Monetary Policy Meeting minutes, US FOMC minutes and BOJ Policy rate,
• Minutes of September 2017 Monetary Policy Meeting of the Reserve Bank Board, 19 September 2017, 11.30 am AEST.
• FOMC meeting and quarterly Summary of Economic Projections, September 21.
• Bank of Japan Statement on Monetary Policy, September 21.

Over weekend new from Japan gain some traction. Japanese Prime Minister Abe mulling snap election as early as October.
The Nikkei reported, “Abe is apparently weighing a dissolution of the lower house as early as the end of this month, with a general election to follow in October”.

North Korea fired another missile launch on last Friday. JPY crosses refresh buying on a dip and witness multiple bullish patterns. The following are the JPY/ Asia FX snapshots.

USDJPY
• Last week price action was the strongest in 2017.
• Facing resistance at 50MA (monthly).
• Rebound nearly 38.0% (118.65-107.30 fall).

Before rebounds to 111.30 last week, USDJPY has taken all the stops placed below 108.00, low made at 107.30 on Sep 08. Our buying stopped at 107.50.
As shown on the below chart USDJPY trading on a verge of a trendline (blue) and a neckline breakout (black)

On the four-hour chart, the price pattern spotted with an inverse H&S pattern. A neckline breakout needed to aim at 111.80 and 113.25.
Support zone finds between 109.85 and 109.50 its 20DMA.
A move below 109.50 needed to retest 109, 108.60 and 108.00 levels initially and 107-106.50 expected later. Alternatively, resistance seems at 111.35 its 50MA (monthly) above this resistance zone (earlier support zone) seems between 111.60-111.70 and 112.15 exists.
A weekly close above 111.35 could push the trading range to 111.70/112.15 initially and later 114.30/115.
Weekly Range: 114-106.50

AUDJPY
AUDJPY closed above 200MA(weekly) for the first time after two-years. On the weekly chart it has spotted with an inverse H&S pattern, but the neckline breakout not yet visible.
Near-term potential resistance zone seems between 89.40 July high and 50.0% fib (105.40-73.30) -90.00 April 2011 high. If propel above 90.0, we forecast a bullish reaction to 90.70, 91.30 and 93.00.
Support moves to 87.90, 87.50 and 86.50. The daily RSI appears a lower high pattern. A higher high price action might face tough resistance at 90.00. Fails to breach the resistance zone might drag towards 88-87.50.

Weekly Range: 91.30-85.00

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[KeyToMarketsUK]

EURUSD: Support base rose to 1.1820 from 1.1660.

Last week’s price action appears downside risk and lack of economic events kept the EURUSD tad below 1.20. Undoubtedly GBP was the star last week. After last week’s US CPI data eyeballs are watching closely to FOMC meeting.

Data Review:

• Germany CPI rose by 0.1% in August 2017.
• Germany WPI rose by 0.3% from July 2017 to August 2017.
• July 2017 Industrial production up by 0.1% in EA, down by 0.3% in EU.
• EA international trade in goods surplus €23.2 bn.
• August 2017 EA annual inflation up to 1.5% and up to 1.7% in the EU.

Upcoming data:
Tue, September 19
EA July Current account, forecast 22.3B vs 21.2B.


Wed, September 20
August Germany PPI forecast 0.1% vs 0.2%.


Thu, September 21
ECB publishes Economic Bulletin.

Fri, September 22
ECB President Draghi speaks at Trinity College in Dublin, Ireland.
EA, France and Germany Flash PMIs
Barclays: We expect euro area flash composite PMIs to edge down from its multi-year high to 55.6. We look for France composite PMI to decline by 0.3 to 54.9, while German composite PMIs should tick up, consistent with very strong forward-looking components in the past month.

This Sunday, 24 September 2017 we have German election.

Our main focus over the week ahead will be the FOMC meeting and quarterly Summary of Economic Projections, September 21. Press conference at 2.30PM EST.

TECHNICAL VIEW​

Last two week’s price action maintaining a consolidation phase between 1.1820 and 1.2100. The overall trend remains bullish and the EUR strength likely to continue to the October meeting.

The recent pullbacks are shallow. The higher low pattern remains (H4 chart), a break below, then this could confirm the near-term retracement to earlier support base 1.1680-1.1660..

A footprint above 1.20 needed to visit the near term supply zone 1.2070 and 1.2130.

Support base rose to 1.1820 from 1.1660.

View: We believe the EUR dip to be bought to the October meeting. Further headroom available until holds 1.1660.

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[KeyToMarketsUK]

NZDUSD: General election risk

The kiwi dollar is largely muted after the June 2017 quarter current account data. In June 2017 quarter, NZ’s current account deficit narrowed to 1.6$ billion.
Stats NZ said, New Zealand’s goods and services balance was a surplus (we exported more than we imported), but the deficit in the primary and secondary income balance means the overall current account balance is a deficit.

The primary risk to NZD is general election will be held on Saturday 23 September 2017.
NZDUSD re-tested 200MA and rebounds 50.0% (0.7557-0.7143 correction). It has potential resistance seems between 0.7345-0.7400. If propel above 0.7425 the relief rally will extend to 0.7470/0.7480 in the near term and 0.7550 in the medium term.

If fails between 50.0%-61.8% (0.7557-0.7143 fall) we could confirm the formation of the right shoulder. In this case, 0.7250, 0.7200 and 0.7150 expected in the near term and 0.7000 in the medium term.

The daily RSI and oscillator appear bullish. Today in Asia trade (9.40am, AEST) NZDUSD rose 0.06%, trading on a verge of a bullish ascending triangle spotted on the daily chart.

On the NZD crosses, we repeatedly forecast GBPNZD bullish reaction. We still believe more headroom available.

Weekly range: 0.7420- 0.7130
Monthly range: 0.7500-0.7000

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​

 

[KeyToMarketsUK]

Summary of banks BOJ preview. JPY crosses technical overview.

USDJPY elevated to 112.50 breaks above resistance zone seems between 112.00-112.30. The hawkish Fed lifted our USDJPY bullish view somewhat.

The central banks’ divergence is the key factor to our bullish view. Fed confirms the Balance sheet contraction, but BOJ remains in the opposite direction.

Higher interest rates and rate cut expectations in US are the additional factors to elevate the cross higher in the medium-term perspective.

Recent election announcement may be supporting the USDJPY and yen crosses bullish bias in the near term.

What’s on today?

Bank of Japan Statement on Monetary Policy, September 21.
Bank of Japan will hold first Monetary Policy Meeting (Sep 19-21) after replacing two members.

Goushi Kataoka, a 44-year-old former economist at Mitsubishi UFJ Research and Consulting and an advocate of massive money printing.

Hitoshi Suzuki, a 63-year-old former deputy president of Bank of Tokyo-Mitsubishi UFJ, who is well-versed with financial markets.

Barclays: We expect current policy to remain intact, but will be looking for evidence of a change in the tone of policy dialogue, possibly reflecting a more dovish bias.

Merrill Lynch: We believe the BoJ will maintain the status quo at its Monetary Policy Meeting on 20-21 September.

Deutsche Bank: We do not anticipate any big policy changes at this week’s MPM, but our economists have suggested that the removal of the ¥80trn figure or a switch to a ¥60-80trn range would be realistic and desirable.

TECHNICAL VIEW​

As we forecast in our Monday’s daily article, it has given an upside breakout through the neckline and trend line as well.

Forecast: “A neckline breakout needed to aim at 111.80 and 113.25”. Now we are waiting for 113.25.

Resistance seems between 111.80 and 112.40 above this 113.00/113.20 possible.

Supports move to 111.00, 110.60, 109.80. Additional support finds at 109.50 it’s higher low.

Our last week’s another forecast, “A weekly close above 111.35 could push the trading range to 111.70/112.15 initially and later 114.30/115.” We are watching May-July range.

JPY crosses:

AUDJPY and CADJPY gave an inverse H&S pattern (weekly) breakout. We remain bullish on JPY crosses especially against AUD, CAD, EUR and GBP to the Japan election. Earlier we gave a bullish setup on AUDJPY,CADJPY and GBPJPY.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.​