3 July: Forecast: FX: US$/Majors: FXCharts

  • Economics/ Politics/Central Banks:
  • US personal income rose 0.4% in May, above expectation of 0.3%. Personal spending rose 0.1%, in line with consensus. Headline PCE slowed to 1.4% yy, below expectation of 1.5% yy.
  • The Fed’s Bullard was rather dovish on Friday, saying that the recent “data has not been that great considering that we got going on this three hike process in December, March and June”, adding that “you’d like to make a move like that on the back of pretty strong data for the US. economy but the consumption number was not that great.”
  • Currencies:
  • Currencies were mostly choppy and closed the week near their Friday opening levels.
  • The US$ posted its biggest quarterly decline against the other major currencies in nearly seven years after the central banks took a hawkish turn on their longer term economic outlook.
  • As per the daily/weekly charts below, the dollar is up against pivotal support/resistance against almost all the other majors and we could be in for some large directional moves in the weeks ahead.
  • Yen weakness remains intact.
  • The commodity currencies were again underpinned by the weak US$ and also by a recovery in the base metals. Iron ore and Copper both finished higher
  • The DXY finished at 95.63, just above the day’s low of 95.47; this being also a 10 month low.
EURUSD: 1.1420
  • Intraday momentum indicators (1 hour/4 hour): Turning lower
  • Daily momentum indicators: Turning higher
  • Upcoming market moving events: Global Manufacturing PMIs
24 Hour Outlook: Prefer to buy dips Medium Term: Mildly Bullish
Preferred 24-hour Strategy:  The Euro has so far been unable to overcome the major descending trend resistance seen at 1.1450 (weekly chart, below), but a break of which would target the May 2016 high of 1.1616. 1.1450 may well hold again on Monday given the overbought nature of the 4 hour charts, which are now turning lower, but buying dips still seems to be the theme. Keep SL at 1.1385. Back below there could see a slide back to 1.1300, but buying dips still seems to be the plan. Alternatively, selling at current levels with a tight SL placed above 1.1450 may work as a short term plan.
Resistance Support
1.1616 May 2016 high 1.1391 Session low
1.1540 Minor 1.1367 (23.6% of 1.1117/1.1445)
1.1500 Minor 1.1320 (38.2% of 1.1117/1.1445)
1.1480 Minor 1.1285 (50% of 1.1117/1.1445)
1.1445 Descending trend resistance/29 June high/Friday high 1.1242 (61.8% of 1.1117/1.1445)

Economic data highlights will include:

M:  EU Markit Mfg PMIs, EU Unemployment, US ISM/Markit Mfg PMIs/Prices Paid, Construction Spending

T: US Independence Day Holiday, EU PPI, API Weekly Crude Oil Stock Inventory

W: ECB Non – Monetary Policy Meeting, EU Services/Composite PMIs, Retail Sales, US Factory Orders, ISM NY Index, FOMC Minutes, Monetary Policy Report

T: German Factory Orders, ECB Monetary Policy  Meeting Accounts, US ADP Jobs data, Trade Balance, Jobless Claims

F US Unemployment//NFP/Average Hourly Earnings data


USDJPY: 112.41
    • Intraday momentum indicators (1 hour/4 hour): Mixed/Turning higher
    • Daily momentum indicators: Turning higher
    • Upcoming market moving events: Tankan, Nikkei Mfg PMI
    24 Hour Outlook: Prefer to buy dips Medium Term: Prefer to buy dips
    Preferred 24-hour Strategy: US$Jpy fell to 111.72 in Asia on Friday, testing the 100 DMA, but then recovered to finish the day just below the session highs of 112.59.  Further gains now look possible with the chance of a run back to 112.80/90, which should see good sellers, although a break of 113.00 could then see a move back towards 113.35 and possibly higher. Back below 112.00 would allow another run back to the 100 DMA,   below which will allow a run back towards the 200 DMA at 111.15 although this looks unlikely for a while. The outlook remains mixed although buying dips remains the medium term plan, with a SL, today placed under 111.70.
    Resistance Support
    113.35 Minor 112.10 100 HMA
    113.05 (76.4% of 114.36/108.80) 111.80 100 DMA
    112.92 29 June high 111.72 200 HMA/Friday low
    111.80 Minor 111.35 (38.2% of 108.80/112.92)
    112.59 Friday high 111.15 200 DMA

    Economic data highlights will include:

    M:  Tankan, Nikkei Mfg PMI, Total Vehicle Sales, Consumer Confidence Index

    T:  Markit Services PMI

    W:

    T:

    F: Coincident Index, Leading Economic Index.



GBPUSD: 1.3028
  • Intraday momentum indicators (1 hour/4 hour): Mixed/Turning lower
  • Daily momentum indicators: Turning higher
  • Upcoming market moving events: UK Mfg PMI
24 Hour Outlook: Prefer to buy dips Medium Term: Neutral
Preferred 24-hour Strategy: Cable has closed the week above 1.3000 and looks capable of testing the May high/ descending trend resistance at 1.3050/60, which should be very strong, if we get there. If 1.3060 is taken out look for an acceleration towards 1.3120 and then possibly on towards 1.3300. If 1.3060 holds then we may see another leg lower within the broad triangle formation but this looks less likely. Buying dips towards 1.2900 is again the plan, with a SL now placed under 1.2850.
Resistance Support
1.3120 22 Sept high 1.3000 Pivot
1.3100 Minor 1.2975 Minor
1.3060 Descending trend resistance /(76.4% of 1.3438/1.1822) 1.2944 Friday low
1.3047 18 May high 1.2925 (23.6% of 1.2588/1.3029)
1.3029 Friday high 1.2860 (38.2% of 1.2588/1.3029)

Economic data highlights will include:

M:  UK Mfg PMI

T:  UK Construction PMI, Inflation Report Hearing

W: Markit Services PMI

T: NIESR GDP Estimate

F: Manufacturing/Industrial Production, Trade Balance, Goods Trade Balance


USDCHF: 0.9584
    • Intraday momentum indicators (1 hour/4 hour): Turning higher
    • Daily momentum indicators: Down
    • Upcoming market moving events: Retail Sales, SVME Purchasing Managers Index
    24 Hour Outlook: Prefer to sell rallies Medium Term: Neutral
    Preferred 24-hour Strategy: US$Chf is still heavy at the end of the week but consolidated its losses above the November low on Friday, trading within a tight 50 point range. The short term momentum indicators do look a little more constructive on Monday and we could yet see a squeeze above 0.9600, possibly on towards 0.9650. The daily momentum indicators still point lower though so near term rallies appear to be a selling opportunity and eventually it looks as though the November spike low of 0.9548 could be taken out, and a sustained break would then allow a run towards 0.9500 and lower. Selling rallies is preferred.
    Resistance Support
    0.9700 Minor 0.9552 Friday low
    0.9680 (23.6% of 1.0099/0.9555) 0.9548 9 Nov low
    0.9647 28 June high 0.9521 23 June ’16 low
    0.9615 Minor 0.9500 Minor
    0.9598/97 29 June high/Friday high 0.9470 Minor

    Economic data highlights will include:

    M:  Retail Sales

    T:

    W:

    T:  CPI

    F: Unemployment.



AUDUSD: 0.7686
  • Intraday momentum indicators (1 hour/4 hour): Turning lower
  • Daily momentum indicators: Up
  • Upcoming market moving events: AIG Mfg PMI, TD Inflation, ANZ Job Ads, Building Permits, Caixin China Manufacturing PMI
24 Hour Outlook: Prefer to buy dips Medium Term: Neutral
Preferred 24-hour Strategy: The Aud reached 0.7711 on Friday but faded ahead of the trend resistance at .7730 and closed the week back at 0.7685. The dailies still hint at further gains to come, so buying dips does appear to be the plan and the fundamentals do seem to be building for a run higher. Conditions in China seem to be improving and both Copper and Iron Ore are breaking to the topside which would underpin the Aud. We have some secondary data today which may provide some choppy trade but most traders will want to see the tone of the statement from the RBA tomorrow, although no change to rates is expected.On the topside, a break of 0.7700/10 suggests a run to 0.7730 and then on to 0.7750.  The short term momentum indicators are currently overbought and seem to be pointing a little lower to where support should arrive at 0.7565/70, and below that at  0.7650 and 0.7635, so buying dips towards 0.7650/35, with a SL now placed below 0.0.7620 again seems to be a plan.
Resistance Support
0.7777 8 Nov high 0.7666 Friday low
0.7749 21 Mar high 0.7650 Minor
0.7725 Descending trend resistance 0.7635 Minor
0.7711 Friday high 0.7620 (23.6% of 0.7329/0.7710)
0.7700 Pivot 0.7600 Minor

Economic data highlights will include:

M:  AIG Mfg PMI, TD Inflation, ANZ Job Ads, Building Permits, Caixin China Manufacturing PMI, RBA Coincident Index

T: Retail Sales, RBA Interest Rate Decision/Statement

W: AIG Services PMI

T:  Trade Balance

F: AIG Construction PMI, China Foreign Exchange Reserves

By | July 3, 2017
Source: FXCharts

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