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[its-veso]

GBP/USD Forecast September 9-13 – Pound Jumps despite Brexit chaos, soft PMIs

GBP/USD[1] continues to show strong volatility. The pair gained 1.0% last week, recovering most of the losses of the previous week. This week’s key events are GDP and wage growth. Here is an outlook for the highlights of the upcoming week and an updated technical analysis for GBP/USD.

There was plenty of drama in Parliament last week. The House of Commons and the House of Lords voted to pass a law to prevent a no-deal Brexit, which sets up a showdown with Prime Minister Johnson. The government is in disarray, as Johnson’s attempt to call a snap election for October was rejected by lawmakers.

In the U.K., all three PMI reports slowed in August, but this didn’t slow down the pound. Manufacturing PMI continues to point to contraction, dropping to 47.4. This was the weakest reading since 2012. Construction PMI fell to 45.0, the first contraction in five months. The news was slightly better from services PMI, which fell to 50.6, down from 51.4 in the previous release. This points to stagnation in the services sector.

Over in the U.S., the ISM manufacturing PMI slipped to 41.9 in August, down from 51.2 in July. It marked the first reading in contraction territory (below the 50-level) since August 2016. Unemployment data was a mix. Nonfarm payrolls slowed to 130 thousand in August, down from 164 thousand a month earlier. However, wage growth rose to 0.4% in August, its strongest gain of the year.

GBP/USD daily graph with resistance and support lines on it. Click to enlarge:

GDP: Monday, 8:30. This indicator gauges GDP on a monthly basis. The U.K. economy came in at zero in June, down from 0.3% a month earlier. The July forecast stands at 0.1%.

Manufacturing Production: Monday, 8:30. The manufacturing sector continues to struggle, and the indicator has recorded two declines in the past three months. Investors are braced for another decline in July, with an estimate of -0.3%.

Employment Data: Tuesday, 8:30. Wage growth has become a bright spot for the economy in recent months, with a strong gain of 3.7% in June, up from 3.4% in the previous release. This marked the highest monthly gain since 2010. Another gain of 3.7% is projected in July.

RICS House Price Balance: Thursday, 00:01. Inflation in the housing sector remains weak, as a majority of property surveyors continue to report a decrease in house prices. In July, the indicator came in at -9% weaker than the estimate of -1%. The forecast for August stands at -10%.

CB Leading Index: Friday, 13:30. This index of 7 indicators declined by 0.3% in June. Will we see an improvement in the July release?

GBP/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.2616.

1.2535 has held since mid-July. This is followed by 1.2420.

1.2330 (mentioned last week[2]) has held in resistance since the end of July.

The round number of 1.22 switched to support during the week following sharp gains by GBP/USD.

1.2080 is next.

The symbolic level of 1.20 follows was tested early in the week. 1.1943 is next.

1.1904 was the low point in October 2016.

The round line of 1.1800 is the final line for now.

I remain bearish on GBP/USD

Somewhat surprisingly, the pound posted strong gains last week, despite the political turmoil surrounding Brexit. The government remains deeply divided on how to proceed, and the uncertainty has been heightened by the possibility of a snap election. Investors remain nervous over Brexit, and the pound is likely to face further headwinds unless an agreement is hammered out with Brussels.

Further reading:

Safe trading!

Get the 5 most predictable currency pairs[3]

References

^ GBP/USD (www.forexcrunch.com)

^ eek (www.forexcrunch.com)

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/o1joj7doDpI/

[its-veso]

USD/CAD Forecast September 9-13 – BoC, Job Growth Propel Canadian Dollar Higher

The Bank of Canada held the course on monetary policy, as policymakers maintained the benchmark rate at 1.75% for a seventh successive month. The rate statement was generally positive, which pushed the Canadian currency higher. Policymakers said that the U.S-China trade war was weighing on global growth, but at the same time, domestic economic conditions were strong. The BoC has not given any indication that it will follow the Fed and ease monetary policy. Still, if the economy weakens in the third quarter, the BoC could respond with lower rates in order to stimulate the economy. The week wrapped up on a very positive note, as the economy created a whopping 81.1 thousand jobs in August, crushing the estimate of 18.9 thousand. This reading came after two straight declines and boosted the Canadian dollar on Friday.

Over in the U.S., the ISM manufacturing PMI slipped to 41.9 in August, down from 51.2 in July. It marked the first reading in contraction territory (below the 50-level) since August 2016. Unemployment data was a mix. Nonfarm payrolls slowed to 130 thousand in August, down from 164 thousand a month earlier. However, wage growth rose to 0.4% in August, its strongest gain of the year.

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:

Housing Starts: Tuesday, 12:15. Housing starts sparkled in June, climbing to 246 thousand. However, the indicator softened in July, dropping to 222 thousand. The downward trend is expected to continue in August, with a forecast of 213 thousand.

Building Permits: Tuesday, 12:30. This construction indicator tends to show large swings, which often results in forecasts which are wide of the mark. In June, building permits fell by 3.7%, marking a second straight decline. Investors are expecting a turnaround in July, with an estimate of a 2.1% gain.

NHPI: Thursday, 12:30. This inflation index is a useful indicator of the health of the housing sector. The index has been lethargic in recent months, hovering around zero. The indicator has posted two straight readings of -0.1%. The estimate for July stands at 0.0%.

USD/CAD Technical Analysis

Technical lines from top to bottom:

We start with resistance at 1.3565.

1.3445 has held in resistance since the first week of June. This is followed by 1.3385.

1.3350 has held steady since mid-June and strengthened in resistance this week.

1.3265 switched to resistance role in mid-week, with USD/CAD recording sharp losses and breaking through several lines of support.

1.3175 is an immediate support line.

1.3125 (mentioned last week[1]) has provided support since the end of July.

1.3048 is protecting the round number of 1.3000, which has psychological significance.

1.2916 has held firm since October.

1.2830 is the final support line for now.

I remain bullish on USD/CAD

The Canadian dollar finally enjoyed a winning week, after a long streak of weekly losses. Still, weak global conditions and the ongoing trade war between the U.S. and China could weigh on risk currencies like the Canadian dollar.

Further reading:

Safe trading!

Get the 5 most predictable currency pairs[2]

References

^ last week (www.forexcrunch.com)

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/C1I6YyyTIeU/

[its-veso]

Forex Weekly Outlook September 9-13 – All eyes on Draghi

After a tumultuous week including the big Brexit battle, escalating trade wars, the NFP, and Powell´s speech, the focus shifts to the ECB and its upcoming stimulus. In addition, US inflation and retail sales stand out.  Here the highlights for the next week.

UK GDP: Monday, 8:30. The British economy contracted by 0.2% in the second quarter – in a “payback” quarter that followed stockpiling related to Brexit. The upcoming report is for July and will provide the first look into the third quarter. After stagnating in June, the economy may have squeezed in July.

UK jobs report Tuesday, 8:30. Back in June, wage growth accelerated and hit a high of 3.7% or 3.9% excluding bonuses. The upbeat salary numbers were only partially dampened by the rise in the unemployment rate from a low level of 3.8% to 3.9%. The report for July will likely show a similar number. The Claimant Count Change, or jobless claims, will likely show another increase.

ECB decision: Thursday, the decision at 11:45, press conference at 12:30. The European Central Bank is set to introduce a significant package of monetary stimulus. The Frankfurt-based institution has already hinted at this in its previous meeting in July. A looming German recession, slowing global demand, and subdued inflation has all pushed the bank to pre-announce a move. A rate cut of 10 basis points from the current deposit rate of -0.40% – already deep in negative territory – is a minimal step and priced in by markets. President Mario Draghi and his dovish colleagues may push for a deeper cut of 20bp or even a resumption of the bond-buying scheme (QE). However, hawks such as Bundesbank President Jens Weidmann will likely push back. The euro may rise if the ECB settles for a minor rate cut – especially if it is accompanied by a tiering system that exempts some banks from lower rates. If the bank goes for a more aggressive move, the common currency has room to fall.

US inflation: Thursday, 12:30. One of the main reasons for the Federal Reserve’s rate cut in July was low inflation. Less than a week ahead of the next Fed decision, it will receive fresh inflation figures for August. Headline Consumer Price Index (CPI) rose by 0.3% in July and Core CPI by 0.3% on a monthly basis and 2.2% on an annual one. An acceleration may cast doubt on the Fed’s intentions to raise rates, while a fall back to 2% or lower may trigger speculation for a more dovish message.

US retail sales: Friday, 12:30. The US consumer has been on a roll in July, with headline sales jumping by 0.7% and core sales by 1%. Consumer confidence measures for August have been mixed, indicating a weaker volume of sales in August. The data also feeds into the Fed decision in the following week.

US Consumer Confidence: Friday, 14:00. The final version of the University of Michigan’s consumer sentiment measure for August has fallen below 90 points – the lowest since October 2016. Consumption has held the economy up in recent months, and worrying forward-looking indicators may trigger further action from the Fed. he preliminary data for September will be watched very closely.

*All times are GMT

Follow us on Sticher or iTunes[1][2]

Further reading:

Safe trading!

Get the 5 most predictable currency pairs[3]

References

^ Sticher (www.stitcher.com)

^ iTunes (itunes.apple.com)

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/IpQcrTDAUkk/

[its-veso]

Bitcoin technical analysis: BTC/USD bulls are making a big step towards breakout

Bitcoin price in the session on Friday is trading with gains of some 3.05%.

The price has been on a decent recovery, after bottoming out late August down at $9500.

BTC/USD price action is moving within a narrowing triangular structure, moving closer towards a breakout. 

The bulls must break down supply running from $10,500-11,000 range. 

Spot rate:                  

Relative change:      +0.50%

High:                         10,910.58

Low:                          10,564.61

BTC/USD daily chart

Price action is narrowing within a large triangular structure, subject to a breakout. 

BTC/USD 60-minute chart

Near-term price action has smashed out from a bullish pennant structure, inviting another wave of buying. 

Get the 5 most predictable currency pairs[1]

References

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/AypbA7e6tqg/

[its-veso]

5 quick scenarios for the NFP

Non-Farm Payrolls always move markets and risk is higher ahead of Powell’s speech.

The combination of job gains and wages provided five different scenarios.

The best-moving currency pairs depend on the outcome.

Jerome Powell[1], Chair of the Federal Reserve, will speak after the Non-Farm Payrolls[2] – a speech that makes this NFP[3] a bigger market mover – the last public appearance before the Fed’s “blackout period.”

Expectations and the score sheet

We will use a point system to determine the value of the outcome.

Economists expect an increase of 158,000 positions in August. Any increase between 140K and 200K may be considered within expectations. The scale is asymmetric as average Non-Farm Payrolls have been higher and ADP’s jobs report was upbeat.

140-200K is worth 0 points.

Below 140K is considered below projections, Resulting in a score of -1.

Conversely, an increase of 200K would be above expectations with +1

Wages are expected to rise by 3.2% YoY and an increase of 3.1% or 3.3% would be within expectations.

3.1-3.3% – 0 points.

3.4% or above – +1.

3.0% or below – -1.

Five scenarios

0 points – Everything within expectations – current trend may continue without substantial moves. That means moderate increases for GBP/USD, AUD/USD, and USD/JPY

+1 – Good news, but not over the top – US yields may rise and push USD/JPY higher, EUR/USD may drop.

+2 – Excellent news for workers but the Fed may be more hawkish – Commodity currencies may be under pressure, with potentially significant falls in AUD/USD and gains in USD/CAD. EUR/USD has room to fall as the ECB is set to move next week.

-1 – Disappointing news, but not terrible. The Fed is set to help with rate cuts and help stocks and risk assets – Commodity currencies such as AUD and CAD may gain, while GBP/USD may shoot even higher becoming the big winner.

-2 – Bad news for the US – worse for the rest of the world. The safe-haven Japanese yen is set to be a big winner, and so is gold.

Always remember to trade with lower leverage as the US jobs report tends to trigger high volatility.

References

^ Jerome Powell (www.fxstreet.com)

^ Non-Farm Payrolls (www.fxstreet.com)

^ NFP (www.fxstreet.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/mBK3BwYjY58/

[its-veso]

GBP/USD corrected, now time to rally

GBP/USD has dropped below 1.2300, down after three days.

Speculation about the UK election timing and the US jobs report stand out. 

Friday’s four-hour chart is showing that GBP/USD is ready to rise

Prime minister Boris Johnson has said he would rather “die in the ditch” than delay Brexit. His heated rhetoric has come as the opposition has reportedly been planning to force him to do just that. GBP/USD[1] has dipped on uncertainty surrounding the election date, but more importantly, sterling bulls are taking profits after surging some pips from Tuesday’s multi-year lows.

Timing is everything

The opposition’s bill states that the government must seek an extension to Article 50 – request the EU to postpone the exit to January 31 if parliament has not decided otherwise – by October 19. The bill passed the House of Commons on Wednesday and is set to be approved by the House of Lords later today. By Monday, it will have received the Royal Assent and become law.

Johnson wants to hold elections on October 15 – potentially winning and changing the law – thus allowing for a hard Brexit on October 31. The government confirmed it would table a motion to dissolve parliament and hold elections on Monday – once the opposition bill becomes law. However, under the Fixed Term Parliament Act (FTPA) of 2011, the PM may later change the election date – another route to a no-deal Brexit.

Legislation must pass quickly as parliament will be suspended by the government’s demand sometime next week. A second appeal to cancel parliament’s prorogation has been thrown out by a court in London earlier today.

Opposition parties have little faith in Boris Johnson – and nor does his brother Jo – who quit the government citing the national interest. Both Labour and the Scottish National Party have said that they will disallow the PM to set the election date due to mistrust. UK media reports that Labour leader Jeremy Corbyn is considering October 29 as an election date. However, damp weather which is typical to October tends to depress voting – especially Labour supporters.

While tensions are high and each comment creates a scandal, the bigger picture is positive for the pound. The chances of the UK crashing out of the EU on October 31 are diminishing by the day.

Top-tier US events

While British politicians continue bickering, the focus shifts to the US. The Non-Farm Payrolls[2] report for August is expected to show an increase of 158,000 jobs and wage rises of 0.3% monthly – similar to July’s figures.

Leading indicators[3] provided mixed clues on Thursday, with ADP’s employment report beating expectations while the employment component’s of ISM’s Purchasing Managers’ Index for the services sector was downbeat.

See:

Jerome Powell[4], Chair of the Federal Reserve, will speak after European markets close and may convey a message regarding the Fed’s critical September decision. A slew of his colleagues have spoken earlier this week and varied on their messaging. However, Powell may be vague as in his previous appearance at Jackson Hole, Wyoming.

Markets remain positive as the US and China have both expressed optimism ahead of early October’s high-level talks.

GBP/USD Technical Analysis

The Relative Strength Index on the four-hour chart has dropped below 70 – thus not reflecting overbought conditions anymore – allowing for further gains. Momentum remains positive, and GBP/USD trades significantly above the 50, 100, and 200 Simple Moving Averages – which converge just under 1.2200.

Immediate resistance awaits at 1.2310 – August’s high. The next line is 1.2350, which was the high point on Thursday. 1.2380 and 1.2420 both were support lines in July and now cap cable.

Support awaits at 1.2260, which was a temporary cap on the way up earlier this week. 1.2210 was a swing low this week and held GBP/USD down in early August. Next, we find 1.2155, which was a swing low in late August.

References

^ GBP/USD (www.fxstreet.com)

^ Non-Farm Payrolls (www.fxstreet.com)

^ indicators (www.fxstreet.com)

^ Jerome Powell (www.fxstreet.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/ZC1TDYwK1tw/

[its-veso]

EUR/USD looking perky ahead of critical events

EUR/USD has been holding its ground and ignoring weak German figures. 

US Non-Farm Payrolls and Fed Chair Powell’s speech are set to dominate trading.

Friday’s four-hour chart is cautiously pointing to gains

Is the euro immune to bad news from Germany? That seems to be the notion after EUR/USD[1] ignored the disappointing drop of 0.6% in Germany’s industrial output in July – well below an increase of 0.3% that was expected. The downbeat data joins a plunge of 5.6% in factory orders for July published earlier this week.

The rise in EUR/USD may stem from US dollar weakness. Markets are cheering the US and Chinese optimism about reaching a trade deal. Hu Xijin, the editor in chief of the Chinese media outlet Global Times  – and considered the mouthpiece of the regime – has also expressed hope that an accord can be reached. Previous rounds of talks have been inconclusive.

Non-Farm Payrolls and Powell eyed

The first Friday of the month features the all-important US employment report – the Non-Farm Payrolls. Economists expect an increase of 158,000 jobs in August, similar to July’s 164,000 increase. Wages are projected to rise by 0.3% monthly and marginally decelerate from 3.2% to 3.1% yearly. The labor market figures always move markets and also feed into the upcoming decision of the central bank.

Indicators[2] leading to the publication were mixed. ADP’s Non-Farm Payrolls[3]report for private-sector employment showed an increase of 195K, exceeding expectations. On the other hand, the employment gauge in ISM’s Purchasing Manager’s Index for the services sector reflected a slowdown in hiring – while overall activity in the sector improved.

See:

Jerome Powell, Chair of the Federal Reserve, will have the last word of the week – and will be the last Fed official to speak before the bank enters its “blackout period.” Tension is already mounting ahead of the September 18 decision. After several Fed members provided contrasting views earlier this week, Powell’s speech in Zurich will be closely watched.

He may release clues of the Fed’s intentions – cutting rates by the standard 25 basis points, injecting significant stimulus with a 50bp reduction, or holding back for now. The Fed Chair may also comment on the jobs report.

All in all, US data and Powell’s speech stand out today.

EUR/USD Technical Analysis

EUR/USD is enjoying upside momentum on the four-hour chart and has confirmed its break above the 50 Simple Moving Average. The Relative Strength Index (RSI) is still below 70 – outside oversold conditions. The currency pair is trading above an uptrend support line. The technical picture is positive.

Some resistance awaits at 1.1050, which was a swing low in late August. It is followed by 1.1185, which was a high point on Thursday. Further up, 1.1115 capped EUR/USD in mid-August and 1.1130 provided temporary support later last month.

Support awaits at 1.1020 which was a low point earlier this week. The round number of 1.1000 follows. Next, we find 1.0960, which was a swing low last Friday, and 1.0926 – the 2019 trough.

References

^ EUR/USD (www.fxstreet.com)

^ Indicators (www.fxstreet.com)

^ Non-Farm Payrolls (www.fxstreet.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/UqCLi27W1qw/

[its-veso]

How high can GBP/USD go? Brexit is fading away

GBP/USD has surged some 300 pips from the lows and more may be in store. 

Lower chances of a no-deal Brexit boost the pound.

Further febrile political developments and US data are set to dominate trading.

Thursday’s four-hour chart is showing that GBP/USD is breaking critical resistance.

The pound has been on the run  – perhaps like a “chlorinated chicken” – to the upside after the House of Common approved a bill that will prevent a no-deal Brexit. The legislation will likely be approved by the House of Lords on Friday and become law by Royal Assent on Monday. Opposition parties have remained united and determined – and markets like it. The diminishing prospects of the UK leaving the EU without an accord have already sent GBP/USD[1] 300 pips off the lows.

“Chlorinated chicken” mentioned above is the term that prime minister Boris Johnson used against Labour leader Jeremy Corbyn for the latter’s refusal to back a bill for new elections. Johnson said that the opposition never refuses a chance to replace the government and that Corbyn is afraid of losing. The opposition leader and his peers said that they mistrust the PM – as he can change the election date after the bill has passed, thus forcing a hard Brexit.

The government offered elections on October 15, two days ahead of a summit of EU leaders and 16 days ahead of the Brexit[2] deadline. Labour is internally discussing the date – before or after October 31 – while campaigning is practically underway. Johnson is set to deliver a speech outside London later – seen by many as the launch of his election bid.

While UK politics are lively and colorful, chief EU negotiator Michel Barnier has reportedly told diplomats that “Brexit talks are in a state of paralysis.” The French statesman’s comments followed a six-hour meeting between David Frost, a special envoy for Johnson, with his EU counterparts. His words help convince Tory rebels that the PM was ingenuine in promising a new deal.

US data eyed

On Wednesday, Markit’s Purchasing Managers’ Index for the services sector slipped below expectations with 50.6 points – but held up above 50 – thus representing growth in Britain’s largest sector. Mark Carney, Governor of the Bank of England[3], said that the damage to the economy under the worst-case scenario has improved – a drop of only 5.5% in output against 8% in a previous report. Nevertheless, if the forecast materializes, remains devastating.

The focus shifts to US data. ADP’s Non-Farm Payrolls[4] figures for July serve as a hint toward Friday’s official jobs report. A moderate increase similar to July 156K gain is projected for August. Later, the ISM Non-Manufacturing PMI is a forward-looking indicator for America’s services sector. The ISM Manufacturing PMI plunged to 49.1 – the worst since 2016 and reflecting a contraction in the sector.

Top US and Chinese officials held a phone conversation late on Wednesday and agreed to meet in October. Both sides expressed optimism and sent stocks higher. Nevertheless, it is unclear if yet another round of talks may result in an accord – nor stopping the next tariffs planned by President Donald Trump.

GBP/USD Technical Analysis

The four-hour chart[5] is showing that GBP/USD is battling 1.2310 – August’s high that is critical resistance. If the break is confirmed, the next resistance line is 1.2380 – a support line from mid-July. The next cap is 1.2420 that held it up in late-July. Further above, 1.2480 was another support line and 1.2520 was a double top around the same time.

Support awaits at 1.2275, which was a resistance line in mid-July. Lower, 1.2230 capped GBP/USD in late August. Next, we find 1.2200, which provided support in late August, followed by 1.2150, 1.2110, and 1.2065.

Momentum remains positive while the Relative Strength Index is on the verge of crossing 70 – entering overbought conditions. That may imply a correction before the next move higher. GBP/USD has broken above the 50, 100, and 200 Simple Moving Averages – another bullish sign.

References

^ GBP/USD (www.fxstreet.com)

^ Brexit (www.fxstreet.com)

^ Bank of England (www.fxstreet.com)

^ Non-Farm Payrolls (www.fxstreet.com)

^ chart (www.fxstreet.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/ZUpAFnOTzyQ/

[its-veso]

EUR/USD rally may falter as trade hopes rise

EUR/USD gains have reached standstill amid fresh hopes for a US-Sino trade deal.

Top-tier US economic indicators are set to dominate trading.

Thursday’s four-hour chart is painting a mixed picture.

EUR/USD[1] has staged an impressive recovery – but doubts about its sustainability are creeping in. The relief rally has been heavily dependent on dollar weakness – which may now be coming to its end amid trade optimism.

US trade representative Robert Lighthizer and treasury secretary Steven Mnuchin have spoken with Chinese Vice Premier Liu He on the phone and discussed resuming face-to-face meetings. This news[2] – accompanied by reports that China is set to stimulate its economy – have improved the market mood. And when stocks rise, bonds are sold off, resulting in higher yields. In turn, higher US yields imply lower chances of substantial monetary stimulus from the Federal Reserve and support the greenback.

Fed officials have sent mixed messages in recent days. John Williams, president of the New York branch of the Federal Reserve, has said that the US consumer is alone in carrying the US economy – a point emphasized in the recent growth figures. Williams has signaled that he is willing to cut interest rates by 25 basis points later this month. Some prefer leaving rates unchanged, while others prefer a 50bp reduction.

Fresh data coming out of Germany this morning has also contributed to halting the euro’s rise. Factory orders plunged by 5.6% in July – far worse than 1.1% expected. While the data set is volatile – it is another important warning sign for the euro zone’s locomotive.

The European Central Bank convenes in one week, and pressure to inject significant stimulus is rising.

Critical US data eyed

Today, investors are focused on top-tier economic indicators[3]. ADP’s private-sector jobs report serves as a hint toward Friday’s official employment report. A moderate increase of around 150,000 positions is on the cards for August – similar to July’s rise.

See US ADP Employment Preview: Good numbers, weakening trend[4]

Shortly afterward, ISM’s Purchasing Managers’ Index for the services sector will be closely watched. An increase from 53.7 to 54 points is expected for August – reflecting ongoing expansion. However, markets may fear weaker data after the manufacturing PMI fell to 49.1 points – the lowest since 2016 and representing contraction.

See US Services Purchasing Managers’ Index: The recessionary turn approaches[5]

Overall, concerns about economic performance on both sides of the Atlantic and trade developments are eyed.

EUR/USD Technical Analysis

EUR/USD continues enjoying upside momentum on the four-hour chart – but that is about the only thing supporting the pair. It has been rejected at the 50 Simple Moving Average, which comes out around 1.1040 at the time of writing. EUR/USD also trades below the 100, and 200 SMAs and the Relative Strength Index (RSI) is turning down.

Support awaits at the psychologically important 1.1000 level. IT is followed by 1.0960, which was a swing low on Friday, and then by the 2019 trough of 1.0926. Further down, 1.0900 and 1.0820 await EUR/USD.

Immediate resistance awaits at the daily high of 1.1040. Next, we find 1.1065, which provided support twice in mid-August. The next cap is 1.1090, that crushed a recovery attempt in late August.

References

^ EUR/USD (www.fxstreet.com)

^ news (www.fxstreet.com)

^ indicators (www.fxstreet.com)

^ US ADP Employment Preview: Good numbers, weakening trend (www.fxstreet.com)

^ US Services Purchasing Managers’ Index: The recessionary turn approaches (www.fxstreet.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/rxhX-qF3bJE/

[its-veso]

Natural gas and GBPCAD Mid-term Look – Elliott Wave

Natural gas made a big five-wave decline from the 5.00 psychological lvl., and in the final part of this impulse unfolded a potential EW ending diagonal within wave five, with support near the 2.03 area. If that is the case, then a three-wave reversal can now follow towards the 2.7/3.8 area.

Natural gas, daily

Another mid-term view that we are looking at is the GBPCAD chart, where we just got a strong CAD after the BOC. 

GBPCAD is in wave 4) and after that drop, seems like it is going to be a triangle. In such case, be aware of more sideways price action to complete waves D and E before a breakout into a new low for wave 5 towards 1.57 area.

GBPCAD, Daily

Get the 5 most predictable currency pairs[1]

References

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/1Vawbd43BUk/

[its-veso]

WTI remains on the road to recovery amid trade-positive news, geopolitical tension

WTI holds on to recovery gains as US-China trade optimism, US-Iran tussle please energy buyers.

Official EIA data, more details on trade/politics in the spotlight.

Although API’s weekly inventory data failed to entertain oil bulls, renewed trade optimism, escalated tension amid US and Iran, helps WTI to remain firm around $56.30 during early Thursday.

The quote initially benefited from news headlines concerning the US-Iran tussle. The US announced another sanction against Iran and is also likely not to support the French proposal of availing multi-billion credit line for the Arab nation as a part of its “maximum pressure” policy.

The black gold’s upside got additional fuel after Reuters shared details of the phone call between China’s Vice Premier Liu He, the US Trade Representative Robert Lighthizer and the Treasury Secretary Steve Mnuchin. Trade representatives of the world’s two largest economies agreed to restart trade negotiations in October with mid-September consultations to create good conditions prior to the actual meet in Washington.

Crude buyers shrugged off the American Petroleum Institute’s (API) weekly US Crude Oil Stock report that mentioned an increase of 0.401 million barrels to the inventories versus the previous decline of -11.100 million barrels of contraction.

While trade/political headlines will keep offering busy trading schedule, the official weekly Crude Oil Stocks Change report from the Energy Information Administration (EIA) for the week ended on August 30 will be watched closely for confirmation of the API data.

Technical Analysis

100-day exponential moving average (EMA) level of $56.80 acts as an immediate resistance before highlighting downward sloping trend-lines since May 20 and April 23 around $57.40 and $58.20 respectively. On the flip side, July 18 low near $54.90 and Tuesday’s bottom surrounding $52.80 seem nearby supports whereas $51.80, $50.70 and $50.00 could lure sellers afterward.

Get the 5 most predictable currency pairs[1]

References

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/FA9MsGkom8k/

[its-veso]

USD: Adding Another 25bps Cut To Our Fed’s Rate Call – ANZ

How deep will the Federal Reserve cut rates? ANZ has some answers.

ANZ Research made a change to its Fed’s rate call. ANZ now expects the Fed to cut rates at the FOMC meeting this month and again in December.

“A 25bps rate cut from the FOMC at its September meeting looks a sure thing, amid escalating trade tensions and further cracks in global growth.  We now expect the FOMC to cut by a further 25bps again before year’s end. The risks are for more easing than we anticipate,” ANZ notes.

“The Fed’s future monetary policy path remains highly uncertain. Indeed, as Fed Chair Powell indicated at Jackson Hole, there are no precedents to guide policy in response to this challenging geopolitical environment,” ANZ adds.

For lots more FX trades from major banks, sign up to eFXplus[1]

By signing up for eFXplus via the link above, you are directly supporting Forex Crunch.

References

^ sign up to eFXplus (plus.efxnews.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/GAAM8rlr4zo/

[its-veso]

EUR/USD rise has its limits

Upbeat euro-zone services figures support the euro.

Weak US data has been weighing on the US dollar.

Hawkish comments from ECB members have supported the euro.

However, EUR/USD bears are still in control according to Wednesday’s technical chart.

“It’s the economy, stupid” was strategist James Carville’s phrase in Bill Clinton’s successful election campaign in 1992. And for a change, today’s euro-zone economic indicators have beaten expectations. That is one of three reasons for the rise – but each positive development has its caveats and this recovery to 1.10 may hit the wall.

1) Euro-zone data

Markit’s Purchasing Managers’ Indexes for the services sector have exceeded expectations in almost all countries – and all are showing growth. The final euro-zone Services PMI for August scored 53.5 points – better than expected and above 50 – reflecting growth.

However, Manufacturing PMIs have published on Monday continued showing contraction with scores below 50. Most worryingly, Germany’s industrial sector – the “locomotive” of Europe – suffers more than others.

2) Fears of a US recession

The US ISM Manufacturing PMI was supposed to be a hint toward Friday’s Non-Farm Payrolls. Instead, the drop to 49.1 points – the lowest in three years and reflecting contraction. Fears of a recession are rising in the world’s largest economy – in large part due to the trade war with China.

Nevertheless, if America is struggling with the world’s second-largest economy – Germany is under pressure due to falling exports to China. US weakness is not good news for Europe.

3) Hawkish ECB comments

With the clock ticking down to the all-important European Central Bank decision on September 12, the hawks are coming out against restarting the bond-buying scheme. Madis Müller, Governor of the Estonian central bank, joined his German colleagues in saying that markets expect too much. A limited stimulus packed from the Frankfurt-based institution has helped push the euro higher.

However, the ECB also has its share of doves – first and foremost President Mario Draghi. While Draghi is stepping down in November, the nominee to succeed him, Christine Lagarde – testifying today – is no less dovish. She reiterated the need for accommodative monetary policy.

Also across the Atlantic, the Fed is split. Some members prefer no cut while others would like to slash rates by 50 basis point in on September 18. And also in Washington, the final word belongs to the Chair. Jerome Powell will speak on Friday and will have the most significant impact.

Ahead of Powell, we will hear from No. 3 at the Fed today. John Williams, President of the New York branch of the Federal Reserve, stands out among Fed and ECB speakers today.

All in all, EUR/USD is not out of the woods, and technicals are also worrying for the bulls.

EUR/USD Technical Analysis

EUR/USD still suffers from downside momentum on the four-hour chart. The Relative Strength Index (RSI) is above 30 – thus not reflecting oversold conditions anymore. Moreover, the currency pair continues trading below the 50, 100, and 200 Simple Moving Averages.

Overall, bears are in control.

Support awaits at 1.0960, which was Friday’s low. It is followed by 1.0926 – Tuesday’s fresh 2019 trough. Next, we are at levels last seen in 2017. These include the 1.0900, 1.0820, and 1.0780.

Resistance awaits at the previous 2019 low of 1.1027. Next, 1.1050 provided support last week and now works as resistance. It is followed by 1.1090 and 1.1115.

Get the 5 most predictable currency pairs[1]

References

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/YZbOEBTVrT4/

[its-veso]

Sterling set to shine if the opposition maintains its path

GBP/USD may surge if UK opposition parties win another victory.

Sequencing of bills is critical to the next moves.

Wednesday’s four-hour chart shows a critical “do or die” resistance line.

Boris Johnson’s first encounter with parliament has ended with a humiliating loss – but GBP/USD[1] has finally been able to win. The new prime minister has lost control of the House’s agenda – and his party. In a 328 to 301 vote, MPs approved a motion to seize control of the agenda in order to force the government to avert a no-deal Brexit.

Sterling – which hit the lowest levels since 2016 early on Tuesday – was on the rise as it became clear that the opposition was on course to victory. And the pound has been extending its gains after the vote as well.

Former PM Theresa May suffered rebellions from Brexiteers – including Johnson – and now came the Remainers’ revenge. No less than 21 Conservative MPs – including former senior ministers – voted against the government. They were consequently expelled from the party. Even if they fight to remain Tories, Johnson has lost his majority in parliament after his colleague Phillip Lee jumped ship and joined the staunchly pro-Remain Liberal Democrats.

Sequencing matters for sterling

Another tumultuous day awaits traders in parliament as MPs will now debate the bill. The concise law forces the government to seek a three-month extension to Article 50 if parliament does not agree on a deal or leaving without an agreement by October 19.

The “rebel alliance” faces another law tabled by the government. The embattled PM responded to the loss by calling for a general election – as expected. He wants Brits to go to the polls on October 15 – just 16 days ahead of Brexit.

While opposition parties said they are willing to go to the country, they insist that their bill must be passed first. They pledged to vote against an election if the government brings its bill before theirs. According to the law, the government can change the election date after it has passed. By moving it to November, Johnson will be able to force a hard Brexit – and MPs do not trust the PM.

This sequencing is critical to the next move in the pound. If the rebels’ bill passes the Hosue of Commons, it will then need to be approved by the House of Lords and receive Royal Ascent. Only then, the opposition is willing to vote for an election.

If this plan goes forward, GBP/USD may shoot higher. If it is intercepted, the pound may plunge.

While deliberations in Westminster are set to dominate, other events may also move the pound. Markit’s Purchasing Manager’s Index for the services is expected to show that the UK’s largest sector is still growing – a score above 50. However, data for the construction and manufacturing sectors disappointed by falling deeper below 50 – reflecting contraction and a chance of recession.

Mark Carney, Governor of the Bank of England[2], will appear before a parliamentary committee later today to testify on the recent Quarterly Inflation Report. Carney and his colleagues will likely repeat their plain message – everything depends on Brexit.

The US dollar has been under pressure after US Manufacturing PMI missed with 49.1 points – contracting. Fears of a US recession are rising. Fed[3]officials have been sending mixed messages.

Overall, Brexit[4] developments are left, right, and center.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) on the four-hour chart[5] has risen above 30 – not reflecting oversold conditions anymore.

Downside momentum is waning, and GBP/USD now faces fierce resistance 1.2155. This level is the 100 Simple Moving Average, and it was also a swing low in late August. Further up, 1.2195 provided support earlier in August and is also where the 200 SMA meets the price. The next cap is 1.2235, which held GBP/USD down on Friday. It is followed by 1.2270 and 1.2310.

Support awaits at 1.2110, which provided support in late August. Lower, 1.2065 was a swing low in mid-August. It is followed by 1.2040, 1.2015, 1.1985, and 1.1958 – the fresh 2019 low.

Get the 5 most predictable currency pairs[6]

References

^ GBP/USD (www.fxstreet.com)

^ Bank of England (www.fxstreet.com)

^ Fed (www.fxstreet.com)

^ Brexit (www.fxstreet.com)

^ chart (www.fxstreet.com)

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/Eh01stkr8Fs/

[its-veso]

BOC may send the Canadian dollar down despite upbeat data

The Bank of Canada is set to leave rates unchanged but express concern. 

The Canadian economy is doing well but uncertainty is growing.

USD/CAD may rise in the most likely scenario.

Snatching defeat from the jaws of victory – is one way to see the possible outcome of the upcoming decision by the Bank of Canada. The BOC[1] is likely to convey a dovish message and may drive down the Canadian dollar.

Glass half full

The Canadian economy is doing well. The fresh Gross Domestic Product report has shown a growth rate of 3.7% annualized in the second quarter – far better than 2% in the US. Wages are rising at 4.5% YoY – significantly better than 2.1% in Canada’s southern neighbor.

Inflation has been rising at a satisfactory rate of 2% in YoY July – and so have core prices. Governor Stephen Poloz and his colleagues – which are charged with maintaining price stability – seem to have nothing to worry about.

Glass half empty

Not all is rosy in Canada. Starting from the GDP numbers, they have also shown that business investment has declined – similar to the US. And contrary to American consumers’ shopping spree – Canadian household spending has gone soft.

And while wage growth has picked up remarkably, the economy lost jobs in the past two months – albeit after several months of rapid hiring.

The BOC’s policy is based on future projections as well as the recent past. And here, it faces the same headwinds as every other country. The Ottawa-based institution is well-aware of the ongoing US-Sino trade war. Canada trades with China and heavily depends on American demand. As both economies suffer, the Canadian economy may struggle as well.

Canada has its own trade issues with the US. The USMCA – the new trade agreement that replaces NAFTA – has yet to be ratified by the parliament in Ottawa nor Congress in Washington.

The US recently threatened Mexico with tariffs if it would not satisfy demands regarding migrant flows. Both countries quickly reached a deal – but the easiness in which President Donald Trump drew the duties weapon has probably alarmed Canadian policymakers as well.

Moreover, the US Federal Reserve cut rates in July and is likely to do so again on September 18. It is rare to see a central bank in the developed world raise interest rates while the Fed[2] is going in the other direction.

BOC and USD/CAD scenarios

1) Dovish message: All in all, the Canadian economy is doing well – justifying the current interest rate of 1.75% –or even a rate hike. However, significant worries may push the BOC to a more dovish statement, listing its concerns and downplaying the upbeat data – seeing the glass half empty.

In this scenario – which has the highest probability – the Canadian dollar is set to resume its falls, with USD/CAD[3] moving higher.

2) Balanced message: The BOC may balance its message and lay out the positives and the negatives in the Canadian economy, with only a token reference to trade wars. In this case, the loonie may shake but refrain from trending in one way or another.

The scenario has a medium probability.

3) Hawkish message: Governor Poloz may focus on the bank’s mandate – price stability – and see the glass half full. The BOC may also note that rising wages can push inflation even higher.

Given everything said earlier, this scenario is highly unlikely and may send the C$ soaring – USD/CAD plunging.

Conclusion

The BOC is set to leave its rates[4] unchanged at 1.75% on September 4 at 14:00 GMT and the bank’s accompanying statement is critical to the Canadian dollar’s response. A dovish message – especially due to high uncertainty rather than the current state of the economy – is the most likely scenario and could weigh on the loonie. Another scenario is a balanced sentiment[5] that would keep USD/CAD stable, while the loonie may rise in the unlikely case of an optimistic outcome.

References

^ BOC (www.fxstreet.com)

^ Fed (www.fxstreet.com)

^ USD/CAD (www.fxstreet.com)

^ rates (www.fxstreet.com)

^ sentiment (www.fxstreet.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/fBzJc3_OzT0/

[its-veso]

EUR/USD may resume falls despite upcoming US recession

US ISM Manufacturing PMI shows contraction that indicates growing chances of a recession.

The US dollar dropped on growing chances for a Fed cut.

EUR/USD gains may come to an end ahead of the ECB decision.

The US manufacturing sector may be contracting – indicating a recession. ISM’ Purchasing Managers’ Index (PMI) for the manufacturing sector has plunged to 49.1 points in August – far below 51.1 expected and 51.2 reported in July.

The drop below 50 points means that the industry has moved from expansion to contraction. The ominous forward-looking figure – which is the worst in three years – joins a plunge in US consumer confidence[1]. Personal consumption has held up the economy while investment has been dropping. That consumption survey showed weakness in sales, while today’s ISM figure is showing that the lack of investment may be hitting the manufacturing sector.

The soft and hard data join the yield curve inversion that is known as an early indicator of a recession.

Investors reacted by rushing into the safety of bonds thus pressuring yields lower. In turn, these yields point to higher chances of the Fed cutting interest rates and the US dollar dropped. EUR/USD[2] has bounced to a high of 1.0975 after setting fresh two-year lows at 1.0925 earlier today.

Can EUR/USD continue upward?

Not exactly. Starting from the short-term, the European Central Bank is set to introduce a stimulus package next week. The options range from a 10 basis point deposit rate cut to a deeper cut a new bond-buying scheme. The Federal Reserve announces its decision in the following week. The timing implies limited gains for EUR/USD.

Looking at the broader picture, the US economy may undergo a recession – but Germany is probably already experiencing one. The German economy shrank in the second quarter by 0.1% while the euro-zone expanded by 0.2%. However, the US economy grew by a healthy 0.5% – around 2% annualized.

The main factor for the downfall in confidence is the US-Sino trade war. Weaker business sentiment impacts investment decisions and the future of the economy. However, the damage inflicted on China is greater than the one suffered in America. Germany’s robust post-crisis growth depended heavily on exports to the Asian giant – and is now struggling.

And in general, when the US economy catches a cold – the rest of the world suffers a flue. Even if EUR/USD were to gain in the next few weeks – the direction remains down.

Get the 5 most predictable currency pairs[3]

References

^ plunge in US consumer confidence (www.fxstreet.com)

^ EUR/USD (www.fxstreet.com)

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/E_jptD09ptA/

[its-veso]

Next big levels to watch in EUR/USD – but first a recovery?

EUR/USD has hit new two-year lows, further below 1.1000.

Tuesday’s daily chart is pointing to oversold conditions as 2017 levels come into play.

US developments may trigger a short-term recovery.

Dropping below 1.1000 has proved detrimental for EUR/USD[1] – which extends its downfall and fails at every recovery attempt. Some thought that the breach of the round number late on Friday was only an end-of-month event – but they were proved wrong. The world’s most popular currency pair hit 1.0930 – the lowest since May 2017.

The fall may be partially attributed to the political drama in the UK – where high uncertainty about Brexit has sent the pound plunging. The US dollar has gained some ground against other currencies as well.

Yet the main downward driver is the fear of a recession in the EU – and especially in Germany – continue weighing on the common currency. Members of the European Central Bank have expressed contradicting positions on the level of stimulus that they will present next week – but new measures are certain.

Several developments may provide temporary relief for EUR/USD.

Temporary recovery?

The US ISM Manufacturing Purchasing Managers’ Index for August is set to remain just above 50 – reflecting modest growth. With growing concerns about the US-Sino trade wars, a drop below that level cannot be ruled out – thus adding to US recession concerns. In that case, the greenback has room to the downside as odds for a rate cut will rise. The Federal Reserve meets on September 17th.

See US Manufacturing Purchasing Managers’ Index Preview: Revival is near[2]

Another downward driver may be the US-Sino trade wars. As Americans return from their Labor Day holiday, headlines related to the spat between the world’s largest economies may weigh on the dollar.

After both countries slapped new tariffs on each other over the weekend, President Donald Trump said that talks scheduled for September in Washington will go ahead. However, recent reports have suggested that they have so far failed to find a proper time. If these high-level negotiations are canceled, investors may rush to the safety of bonds – further speculating on a Fed[3] cut and weighing on the greenback.

Jerome Powell[4], Chair of the Federal Reserve, will speak on Friday but is unable to settle trade wars nor safeguard the economy against a recession.

See Powell powerless against Trump’s trade wars – US braces for a recession, USD set to move[5]

EUR/USD Technical Analysis – -oversold conditions

The four-hour chart has long shown oversold conditions – the Relative Strength Index falling below 30. And now, also the daily chart – useful for viewing the next levels – is below 30.

Will EUR/USD bounce? If so, the first resistance line is a 1.0960, which was the low point on Friday and also a swing low in mid-2017. The psychologically important level of 1.1000 is also significant. Further up, the previous 2019 trough of 1.1027 is the next line to watch. 1.1050, 1.1090, and 1.1130 are next.

If EUR/USD ignores oversold conditions, the next cushion below 1.0930 is 1.0900 – a round number and also a resistance line in March 2017. Next, we find 1.0815, which was the upper side of a gap line on April 2017, and then 1.0780 – the lower side of that gap.

Next, 1.0570, 1.0500, 1.0460, and 1.0340 are in play. All were either support or resistance lines in early 2017.

Get the 5 most predictable currency pairs[6]

References

^ EUR/USD (www.fxstreet.com)

^ US Manufacturing Purchasing Managers’ Index Preview: Revival is near (www.fxstreet.com)

^ Fed (www.fxstreet.com)

^ Jerome Powell (www.fxstreet.com)

^ Powell powerless against Trump’s trade wars – US braces for a recession, USD set to move (www.fxstreet.com)

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/DINb9GAU3KI/