As we can see at the H4 chart, the GBP/USD pair has finished the ascending impulse towards the post-correctional extension area between the retracements of 138.2% and 161.8%. The next upside target may be the retracement of 261.8% at 1.4063.
At the H1 chart, the previous ascending impulse has been corrected by 23.6%. The next targets of this correction may be the retracements of 38.2% and 50.0% at 1.3415 and 1.3383 respectively. The main support level of the current trend is at 1.3270. After completing the correction, the pair may resume growing towards the post-correctional extension area between the retracements of 138.2% and 161.8% at 1.3705 and 1.3760 respectively.
EUR JPY, “Euro vs. Japanese Yen”
As we can see at the H4 chart, the pair has got close to the predicted upside target at the retracement of 261.8% at 134.30. After reaching this level, the price may be corrected to the downside towards the retracements of 23.6%, 38.2%, 50.0%, and 61.8% at 133.11, 132.44, 131.83, and 131.23 respectively.
At the H1 chart, the pair is forming the divergence, which confirms the H4 chart scenario.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
Macroeconomic overview: Bank of England Governor Mark Carney said on Monday that Brexit is likely to hurt Britain’s growth prospects in the short term and push up inflation as the country adjusts to life outside the European Union.
In a speech that immediately drew criticism from some Brexit supporters who have previously criticised his stance on the EU, Carney warned that Britain would face a cost for reworking its trade relationships.
In the short term, the weakening of trade ties with its EU partners would not be offset by new agreements with other countries, he said, as he repeated his argument from last week that interest rates would probably need to rise soon.
The BoE surprised financial markets last week when it said most of its policymakers thought it was likely that interest rates would need to rise in the coming months, if the economy and price pressures keep growing.
In his speech on Monday, Carney reiterated that message that record low interest rates could rise in coming months, but added that “any prospective increases in Bank Rate would be expected to be at a gradual pace and to a limited extent”.
Sterling retreated on Monday from its highest level since the Brexit vote, after Carney said any coming interest rate rises would be limited and gradual.
We expect the BoE will hike interest rates at November meeting.
Investors are now preparing for potentially more hawkish statements from the Federal Reserve after its two-day policy meeting ends on Wednesday. The Fed is widely expected to announce this week that it will start paring its balance sheet, with the reductions seen likely to start this year.
It is expected to keep rates on hold, but investors will be watching for fresh hints on the chances of another rate rise this year and how many could be expected in 2018.
Technical analysis: Gains consolidate after last week’s rally to 1.3618, the highest for cable since June 2016. The next target for GBP/USD bulls will be 1.3673 (61.8% fibo of 1.5022-1.1491 fall in 2016). A slight corrective move cannot be excluded first.
Short-term signal: Buy at 1.3300
Long-term outlook: Bullish
USD/CAD jumps as BoC watching impact of stronger CAD
Macroeconomic overview: Bank of Canada Deputy Governor Timothy Lane said the bank will pay close attention to how the economy responds to both higher interest rates and a stronger Canadian dollar, and remains data-dependent as it looks ahead to further decisions on interest rates.
Lane also said that Canadian households are far more indebted now than they have been in the past when interest rates were closer to neutral, but said a stronger Canadian economy should help boost incomes to help consumer cope with debt costs. He also said low rates helped drive Canada’s housing boom, but neither low rates nor double-digit home price appreciation will last.
Lane outlined what went into the bank’s unexpected decision to raise rates two meetings in a row, saying the resource economy was rebounding even as the rest of the economy was continuing to grow strongly.
The Canadian dollar weakened sharply against the U.S. currency after Lane’s speech.
Canada’s manufacturing sales and wholesale trade data for July are due on Tuesday and Thursday, respectively. The August inflation report and retail sales data for July are due on Friday.
Technical analysis: The USD/CAD broke above and closed above 14-day exponential moving average. 7-day ema is positively aligned, which may signal that the corrective move is likely to last a couple of days. An important resistance level is 76.4% fibo of May 2015-January 2016 rise at 1.2574.
Short-term signal: Yesterday’s rise stopped our short position, but we do not change our medium-term view on this pair. We are looking to sell USD/CAD again at 1.2570.
By Dmitriy Gurkovskiy, senior analyst at RoboForex
The GBP/USD is back to the highs it reached in June 2016. It was achieved with the help of the macroeconomic statistics, which turned out to be better than before. However, in these circumstances the Pound could have rising slower, with an eye to the Brexit and the debates surrounding it. The major contribution to the quick growth was made by the Bank of England, which said it might increase the key rate in the months to come.
During the September meeting, the Bank of England made a decision to keep the key rate unchanged at 0.25% along with the QE program at 435B Pounds. This time the regulator, which is usually very careful and conservative, was more energetic. In the comments, it announced that there might be reasons to increase the key rate in the next several months.
Most likely, it’s all about the inflation. The inflationary pressure on the country’s economy is increasing and it’s much easier to force the CPI into the required range by means of changing the rate. As a rule, the Bank of England has no problems to “accelerate” the CPI as it finds fit, but later the indicator has to be kept within bounds. This is the way the British regulator has been operating for the last 8 years: controlling the inflation by means of monetary tools. And one should admit, it runs smoothly.
For the Pound, the rate increase in the nearest future will stabilize the country’s economy and eliminate real dangers from both the Brexit and events outside the United Kingdom. Using the rate increase as a basis, the British currency may continue rising, especially if the statistics continues to confirm the economic stability.
Also, this week the currency market is waiting for the results of the September meeting of the US Federal Reserve. So far, the USD is very vulnerable (including the GBP pair), but market trends may change depending on the Fed’s comments and decisions.
It’s better to analyze the technical picture of the British Pound using the GBP/USD pair charts. If one takes a look at the weekly timeframe, it can be seen that the instrument has been moving inside the uptrend for about a year.
More details can be seen at the daily timeframe. The chart not just shows the ascending movement, but one can see that this movement “boosted” after the price broke the resistance level of the short-term ascending channel. Later, the instrument may start a short-term correction to the broken resistance level, which now provides support. However, the future outlook remains “bullish”. The main upside target is close to the upside border of the mid-term channel at 1.4000.
Author: Dmitriy Gurkovskiy, senior analyst at RoboForex
Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The International Energy Agency upgraded their forecast for oil demand in 2017 by 1.6m barrels a day in their Oil Market Report. The reason for this revision was strong demand from OECD countries.
From a fundamental point of view, if demand for oil remains stable for the rest of the year, it will be another contributing factor to high oil prices. In terms of technical analysis, the Brent oil price is currently in an upwards trend on the 4-hour timeframe:
While we can see here that the price is currently located at the higher part of the upwards trend, and is approaching the S1 resistance (55.50 USD), there are, as of yet, no reversal signals, and the price will most likely continue to grow. The next resistance (S2) is located at 57.40 USD. The S1 and S2 levels were formed at the beginning of the year, forming a price range from 55.50 USD to 57.40 USD. In my opinion, this exact range will now act as a resistance zone to the price of Brent oil.
At the time of writing this review, Brent oil is trading at 55.35 USD a barrel.
Investors across the world tended towards riskier assets last week. This tendency could extend into the beginning of this week, which would be good for stock indices as well as the euro. It’s worth noting that the losses incurred on assets due to North Korea’s missile launch over Japan were quickly recovered, and the devastation caused by Hurricane Harvey was not as bad as expected. Volatility remains high on currency markets. Last week, the euro/dollar currency pair traded within a wide range from 1.187 to 1.2.
This week’s main event is the US Federal Reserve’s meeting. Inflation in the US hit 1.9% in August, which could push the Fed to speed up their tightening of monetary policy. In any case, judging by futures, expectations of a rate hike have been pushed forward from the middle of next year to its beginning. The probability of a rate hike at the Fed’s December meeting (12th – 13th) has risen from 25% to 45%. I’m curious to see whether Fed Governor Janet Yellen agrees with markets and whether she’ll give more details about plans to reduce the Fed’s balance sheet. In any case, close attention will be paid to the wording of the final communiqué. This will set the tone for the dynamics on currency pairs until the end of September. The EURUSD pair could either head to new heights at around 1.21, or it could fall to around 1.18 – 1.185.
From the data releases planned this week, the most important ones as far as I can see are the US housing market report, and the PMI and consumer confidence index from the Eurozone. We should also keep an eye on the meeting of the Bank of Japan, which takes place on the 20th of September, as well as Bank of England Governor Mark Carney’s speech on Monday, the 18th of September. Since the beginning of September, the pound has grown by about 9% in anticipation of a rate hike in the near future, so Carney could use today’s speech to stage a verbal intervention.
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This article was syndicated by Elliott Wave International and was originally published under the headline What Does “Desperate Complacency” Look Like? See For Yourself…. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
EUR/USD: Investors shrugged off weaker U.S. retail sales and industrial output data
Macroeconomic overview: U.S. retail sales unexpectedly fell in August and industrial output recorded its biggest drop since 2009 as Hurricane Harvey disrupted activity, suggesting the storm could dent economic growth in the third quarter.
Harvey, which lashed Texas in the last week of August, also has impacted the labor market. Hurricane Irma, which struck Florida last weekend, also is likely to hurt the economy, though analysts expect a rebound in the fourth quarter.
The Commerce Department said retail sales dropped 0.2% last month, the biggest decline in six months as motor vehicle sales tumbled 1.6%. Sales of building materials, electronics and appliances as well as clothing also fell. While noting that it could not isolate the impact of Harvey on retail sales, the department said it received indications from companies that the hurricane had “both positive and negative effects on their sales data while others indicated they were not impacted at all.” Though Harvey likely depressed retail sales last month, data for July and June were revised down, suggesting a moderation in consumer spending after brisk growth in the second quarter.
The market had forecast retail sales nudging up 0.1% in August. While last month’s drop in motor vehicle sales was the largest in seven months, the replacement of flood-damaged vehicles, especially in the Houston area, is expected to deliver a boost.
Overall retail sales increased 3.2% in August on a year-on-year basis. Excluding automobiles, gasoline, building materials and food services, retail sales fell 0.2% last month after an unrevised 0.6% increase in July.
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 3.3% annualized rate in the second quarter. That boosted GDP growth to a 3.0% rate in the April-June period.
In a separate report on Friday, the Federal Reserve said industrial production declined 0.9% in August. That was the biggest drop since May 2009 and followed six straight monthly gains. The Fed attributed about 0.75 percentage point of the decline to storm effects that “temporarily curtailed drilling, servicing, and extraction activity for oil and natural gas.” We expect industrial output to decline further in September, with Irma likely weighing on utilities.
Other data from the New York Fed on Friday showed its index of factory activity in New York state remained at lofty levels in September amid strong orders growth, indicating that manufacturing remains on solid ground apart from the storm-related distortions.
The weak retail sales and industrial output reports prompted the Atlanta Fed to slash its third-quarter GDP estimate to a 2.2% rate from a 3.0% pace.
The data, however, did little to change expectations that the Fed will announce a plan to start shrinking its USD 4.2 trillion portfolio of Treasury bonds and mortgage-backed securities at its September 19-20 policy meeting. The U.S. central bank is expected to raise interest rates again only in December.
Despite sluggish wage growth, even as the labor market nears full employment, the fundamentals for consumer spending are solid. In addition to the strong stock market, house prices have continued to rise.
Technical analysis: Investors shrugged off weaker U.S. macroeconomic data on Friday and the USD trimmed losses during U.S. session. Long upper shadow on Friday’s candlestick may be worrying for the EUR/USD bulls. On the other hand, the pair remains still above short-term moving averages, which keeps bullish structure intact.
Short-term signal: Long for 1.2250
Long-term outlook: Bullish
USD/CAD: Loonie fell slightly as another BoC hike has been nearly fully discounted
Macroeconomic overview: The Canadian dollar lost ground on Friday against a weaker U.S. dollar, as the boost from last week’s interest rate hike by the Bank of Canada showed some signs of fading.
Data from the overnight index swaps market showed that another hike has been nearly fully discounted by December.
Speculators have mostly held onto bullish bets on the loonie, data from the U.S. Commodity Futures Trading Commission showed. Canadian dollar net long positions dipped to 50,499 contracts as of September 12 from 53,644 contracts a week earlier. The bullish positioning indicates that investors have bought into the Bank of Canada’s hawkish message.
Canadian household debt as a share of income hit a record in the second quarter as consumers spent more on durable goods, pointing to the challenges that could lie ahead for the economy as interest rates rise. The ratio of debt to disposable income rose to 167.8% from a downwardly revised 166.6% in the first quarter, Statistics Canada said on Friday. The Bank of Canada has been concerned that highly indebted Canadians have less flexibility to deal with sudden changes in their income.
Separate data showed Canadian home resales bounced back in August after four straight monthly declines, suggesting the cooling market may be stabilizing.
Technical analysis: The volatility of the USD/CAD has lowered in recent days. The pair remains below 7-day exponential moving average. The bears target is 1.1920 low on May 14, 2015.
Short-term signal: Stay short for 1.1930
Long-term outlook: Bearish
TRADING STRATEGIES SUMMARY:
FOREX – MAJOR PAIRS:
FOREX – MAJOR CROSSES:
PRECIOUS METALS:
How to read these tables?
1.Support/Resistance – three closest important support/resistance levels 2. Position/Trading Idea: BUY/SELL – It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level. LONG/SHORT – It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level. 3. Stop-Loss/Profit Locked In – Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position. 4. Risk Factor – green “*” means high level of confidence (low level of uncertainty), grey “**” means medium level of confidence, red “***” means low level of confidence (high level of uncertainty) 5. Position Size (forex)– position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management! Position size (precious metals) – position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). 6. Profit/Loss on recently closed position(forex) – is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account. Profit/Loss on recently closed position (precious metals) – is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
One of the main arguments between fundamental and technical traders is the use and relevance of the economic calendar. Fundamental traders consider it key to much of their trading activities, as it’s a tool for reporting fundamental information.
Technical traders have a different interest in economic calendars. Because they don’t trade on fundamental data, the actual data itself is relatively unimportant, but that doesn’t mean that the announcement is unimportant. The metrics that are valued by technical traders, like volume, volatility, price actions, sentiment, overbuying and the like, are significantly impacted by an announcement.
At its core, the importance of an announcement is the same. For fundamental traders it is the actual information and its impact on the fundamentals. For technical traders, it is how the announcement will impact traders. Which means that in a backwards way, the information itself is of some significance to technical traders.
Because of the varying methodologies, the use of an economic calendar is different. For a fundamental trader, news is everything, and the relevant announcements in the calendar must be a strong part of the trading process. Setting reminders and knowing the details of the announcements are two important aspects of this.
Reminders
At the beginning of the week, fundamental traders will look at the calendar for upcoming important announcements. But it is the reminder that is critical. Some brokers will have reminders built into the software, which is a help, but it is also important to have a method of reminding yourself in good time. This is easily achievable, since modern living (i.e. your mobile phone) has furnished us with millions of ways to remind ourselves of events (whether we want to be reminded or not). Set an alarm or an event or a reminder or a note or whatever, as long as it sends a push message to your phone it will do the job.
Keep on top of the announcements
If you need the information as soon as it is reported, you need a tool that gives you the details in real time. There are a few methods to do this, but listening to the news first hand is often the best way. Sometimes this capability can come free with the platform, depending on the brokerage. If you are a more expert trader, you would likely use a Bloomberg terminal or real-time Reuters data (Eikon), and be covered for this sort of activity.
Technical traders will also benefit from these methods and should at least use the first method. The second method is not as critical, depending on the specific strategy used. For a technical trader that scalps during high volatility like announcements, the expectation of the market and direction of the market is critical.
The challenge for traders is how to incorporate announcements into your trading. Many avoid trading during announcements, with widened spreads and volatility making it a dangerous place to trade. Others, need volatility and make their best trades at announcement time.
For those who do trade irrespective of announcements, implementing the method of watching the calendar is critical. It differs significantly from trading during a period of no announcements, since the information related by the announcement is occurring and changing the market. The easiest way to deal with this is to have a decision tree for each announcement, with entry and exit points in the tree. In an ideal world, this would allow you to open pending positions in the market. Yet this too has its dangers and drawbacks. In a heavily volatile market, stop losses can be triggered just before a massive reversal and slippage can mean that the losses can’t be controlled.
Whatever your method of incorporating the calendar into your trading, in order to maximize its effectiveness it needs to be incorporated comfortably into your trading style. That way it can be used properly at times when the market is calling for a quick decision.
About the Author:
Adinah Brown is a professional writer who has worked in a wide range of industry settings, including corporate industry, government and non-government organizations. Within many of these positions, Adinah has provided skilled marketing and advertising services and is currently the Content Manager at Leverate.
The EUR/USD pair is trading to the downside to reach 1.1912. After that, the instrument may towards 1949, thus forming another consolidation range. If later the instrument breaks this range to the upside, the market may grow to reach 1.1987; if to the downside – continue falling inside the downtrend with the target at 1.1829.
GBP USD, “Great Britain Pound vs US Dollar”
The GBP/USD pair has completed the ascending wave and right now is consolidating at the top of it. Possibly, the price may be corrected towards 1.3225. Later, in our opinion, the market may form another ascending structure with the target at 1.3673.
USD CHF, “US Dollar vs Swiss Franc”
The USD/CHF pair has completed the descending correction. We think, today the price may grow towards 0.9635 and then fall to reach 0.9600, thus firming another consolidation range. If later the instrument breaks this range to the upside, the market may continue growing to reach 0.9800; if to the downside – continue the correction with the target at 0.9500.
USD JPY, “US Dollar vs Japanese Yen”
Being under pressure, the USD/JPY pair is growing. Possibly, the price may reach 111.80. After that, the instrument may fall towards 109.40 and then grow to reach 110.47. If later the instrument breaks this trading range to the downside, the market may fall towards 107.00; if to the upside – continue the current correction with the target at 112.20.
AUD USD, “Australian Dollar vs US Dollar”
The AUD/USD pair is still falling. We think, today the price may form the fifth descending structure towards 0.7928. After that, the instrument may grow to reach 0.8020.
USD RUB, “US Dollar vs Russian Ruble”
The USD/RUB pair is falling towards 57.30. Later, in our opinion, the market may grow to reach 57.60. If later the instrument breaks this trading range to the downside, the market may reach 56.50; if to the upside – continue moving upwards with the target at 58.50.
XAU USD, “Gold vs US Dollar”
Being under pressure, Gold is falling. Possibly, the price may reach 1305 and then grow to return to 1331. If later the instrument breaks this channel to the downside, the market may fall towards 1250; if to the upside – resume moving upwards with the target at 1344.
BRENT
Brent is still consolidating at the top of the third ascending wave. Possibly, the price may form another ascending structure towards 56.25. Later, in our opinion, the market may be corrected with the target at 52.50, at least.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
On Friday the 15th of September, the euro/dollar rate closed slightly up. The US dollar index continued its slide on the back of weak retail sales data for August coming out of the US. Month on month, retail sales fell by 0.2% in August, while the readings for June and July were revised downwards. In addition to this, industrial production in August fell by 0.9% as a result of the destruction of Hurricane Harvey. Weaker US data increases the risk of lower GDP growth in the third quarter. After the release of statistics on Friday, the Atlanta Fed significantly revised its GDP forecast for the third quarter; from 3.0% to 2.2%, while the New York Fed revised its forecast from 2.06% to 1.34%.
Day’s news (GMT+3):
04:30 Australia: new motor vehicle sales (Aug).
12:00 Eurozone: CPI (Aug), CPI core (Aug).
17:00 USA: NAHB housing market index (Sep).
18:00 UK: Bank of England governor Mark Carney’s speech.
This week could turn out to be important for all currency pair involving the US dollar. This Tuesday marks the beginning of a two-say sit-down for the US Federal Reserve on monetary policy, the results of which will be published on Wednesday at 21:00 (GMT+3). In my opinion, if the Fed decides to tighten its monetary policy, for example, by announcing a hike in the key rate, despite the probability of doing so being next to nothing, the US dollar could begin to decline again. The greenback could receive some psychological support if the Fed decides to maintain interest rates at their current level of 1.00% – 1.25% and give an indication that they will raise interest rates at a slower rate than had previously been proposed. The US economy is currently going through a rough patch and a tightening of monetary policy would have a negative influence on the dollar.
EUR/USD
The EURUSD pair is continuing to move in an upwards trend on the 4-hour timeframe.
After some correctional movements, which took place in the second half of last week, the price is trying to restore the upwards trend, but there are currently no buy signals.
On the hourly timeframe, the EURUSD pair is moving within a potential range of 1.1835 to 1.2088. The price is likely to keep trading within this range until the Fed’s two-day meeting comes to an end on Wednesday.
At the time of writing, the EURUSD is trading at 1.1943.
GBP/USD
On the 4-hour timeframe, the GBPUSD pair is moving in an upwards trend:
After the BoE’s meeting last Thursday, the pound received some support. The Bank of England upgraded its economic growth forecast for the UK in the third quarter of 2017. The GBPUSD pair is currently approaching the resistance line. At the time of writing, the GBPUSD pair is trading at 1.3595.
USD/JPY
There’s the potential for the formation of a range between 108.00 and 114.50 on the 4-hour timeframe:
If the Fed decides against tightening its monetary policy on Wednesday, I expect the USDJPY pair to go up. I’ll be looking for an entry point on the hourly timeframe. Considering that a range is expected to form here, the volume of my potential trade will be significantly limited (I simply prefer trend trading).
I’d like to remind everyone that the Fed’s two-day meeting starts tomorrow. It could be a very volatile week. I’m not going to speculate on the Fed’s decision. I think it better to simply wait to open trades on the dollar until after Wednesday.
