Note that this is my current view, but if market conditions change my view can change too. Generally I will trade in alignment with what I have noted here, though I will wait for a set-up before I enter. I base my view on technical and fundamental information. This is my beliefs and you are welcome to have opposite ones. Having a plan is more important than the actual direction for me.
- Buy DXY.– MT is bull normal. In the US, manufacturing might have been weakening of late but it remains in expansion territory, while consumer sentiment and inflation are still showing no real sign of the economy being in any kind of trouble. The FOMC came and went presenting division amongst the Fed with two members opposing the cut and one calling for a larger one. Eurozone economic data showed further deterioration, and the Dollar Index managed to end the week trading above 99 – but still below the Sept 3 high for now. ISM Manufacturing PMI and NFP employment figures along with wage growth are the main data points to watch in the coming week.
- Wait GBP/USD. – MT is sideways normal. With a no-deal Brexit becoming less and less likely the Pound had found the strength to push to the edge of the 1.25 – 1.27 resistance zone but it has now fallen back below 1.24 turning our short term bias to neutral/bearish. Weaker inflation and disappointing retails sales figures are showing that the protracted political drama is having a real impact on the economy. Aside from developments on a possible Brexit deal, in the coming week PMI figures for September will be released and with manufacturing and construction already in contraction it will be interesting to see if the service sector which employs about 80% of the UK workforce is still holding up.
- Buy USD/JPY. – MT is sideways normal. The shift in sentiment initially spurred by the easing in geopolitical tensions showed potential signs of fragility finding resistance around 108.50. At the start of this past week the pair pulled back further finding support at 107. Our bullish bias remains in place whilst the pair trades above 107. Of note this week on the data front the Bank of Japan releases the quarterly Tankan Survey of business activity where big manufacturers’ confidence is tipped to have hit a six and a half year low.
- Sell AUD/USD. – MT is sideways normal. The fundamentals still remain mostly negative for Australia with the only bright spot being the domestic real estate market for established dwellings. After a triple test of 0.67 the Aussie had managed to climb back to potential resistance levels near 0.69 on the back of easing geopolitical tensions. However, disappointing Chinese data coupled with an uptick in unemployment and the indication from the RBA that a further rate cut is likely to come in October all contributed to making the pair fall back below 0.68 and we could see more declines from here. Over the past week the pair has had very little net movement ahead of the coming RBA meeting. Other data points of note due for release are Building approvals and Retails Sales but the Rate Decision on Tuesday is the centrepiece.
- Sell EUR/USD. – MT is bear normal. The ECB did not disappoint earlier this month and took fairly decisive action to which the market eventually responded positively pushing up the Euro strongly on the day of the announcement. However, fundamentals remain weak for the Eurozone and over the past week the pair has fallen back again breaching at least temporarily the September 3 low. Notably the German Flash Manufacturing PMI for September plunged to its lowest level since the GFC. Despite the ECB’s efforts it is really now up to the politicians to intervene with fiscal stimulus measures.
- Sell NZD/USD. – MT is bear normal. The economic outlook for New Zealand remains weak and the corrective bounce which occurred on the back of easing geopolitical tensions has been sold off aggressively from resistance at 0.645. The RBNZ as expected left the overnight cash rate on hold in September after a surprise 0.50% cut in August, however a less dovish stance on the part of Governor Orr seems to have helped the Kiwi post a gain for the week. To pay particular attention to in the coming week we have the NZIER Quarterly Survey of Business Opinion.
- Wait USD/CHF. – MT is sideways normal. The previous week the Swissie had managed to put in a close above resistance at 0.995 which we considered as a bullish development however, prices consequently fell back into the range finding support at 0.985. Whilst above 0.985 we maintain a bullish bias and trading above 0.995 would further confirm it.
- Wait USD/CAD. – MT is sideways normal. The Loonie had again very little net movement over the week and remains in a fairly narrow trading range. A couple of Canadian data releases, GDP and Trade Balance, in the coming week should provide a bit of volatility but not necessarily a directional cue. While we are generally bullish USD, we don’t have any strong view here at the moment.
- Sell EUR/GBP. – MT is bear normal. After reversing from long term resistance at 0.93, the pair has continued to move lower on a weekly basis. Over the past week though support was found at 0.88 and the current shallow pullback to 0.89 could provide an opportunity to re-enter or add to a short position. The outlook for the Euro remains bearish, however Brexit headlines will be an influence for the short-term movements in the pair. Also to note this week are the UK PMIs, the service sector in particular.
- Wait EUR/CHF. – MT is bull normal.
- Wait AUD/JPY. – MT is sideways normal.
- Wait NZD/JPY. – MT is sideways normal.
- Wait GBP/JPY. – MT is sideways normal.
- Wait EUR/JPY. – MT is sideways normal.
- Wait CAD/JPY. – MT is sideways normal.
- Wait CHF/JPY. – MT is bull normal.
- Buy GBP/NZD. – MT is bull normal.
- Wait EUR/NZD. – MT is sideways normal.
- Wait AUD/NZD. – MT is sideways normal.
- Wait EUR/AUD. – MT is sideways normal.
- Buy GBP/AUD. – MT is bull normal.
- Wait AUD/CAD. – MT is sideways normal.
- Wait GBP/CAD. – MT is sideways normal.
- Sell EUR/CAD. – MT is bear normal.
- Sell NZD/CAD. – MT is bear normal.
- Wait GBP/CHF. – MT is sideways normal.
- Wait CAD/CHF. – MT is sideways normal.
- Wait NZD/CHF. – MT is sideways normal.
- Wait AUD/CHF. – MT is sideways normal.
- Wait Gold. – MT is sideways normal.
- Wait Oil. – MT is sideways normal.
- Wait S&P 500. – MT is sideways normal.
- Buy DAX. – MT is bull normal.
- Wait Nikkei. – MT is bull normal.
- Wait T-Notes. – MT is sideways normal.
(MT = Market Type: Click for more information on market types.)