Fundamental Weekly Forecasts for US Dollar, GBPUSD, GOLD, USDJPY and GBPUSD: Gold prices are higher this week with rallying more than 1.9%

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newdigital, 2014.12.06 14:02

USDJPY Fundamentals (based on dailyfx article)

• Looming Japanese Election Unlikely to Trigger a Dramatic Yen Response
• Yen Torn Between Influence of Year-End Flows, Fed Policy Expectations

Domestic developments remain largely an afterthought for the Japanese Yen even as the December 14 snap election looms ahead. Polls ahead of the vote suggest Shinzo Abe and his LDP/Komeito coalition will probably retain its two-thirds majority, giving the Prime Minister the mandate he is after. As we discussed two weeks ago, the inherently expansionary nature of “Abenomics” means the markets are unlikely to be perturbed unless the current government looks to be genuinely threatened. As long as the status quo looks firmly set, the whole ordeal will probably pass relatively quietly. This puts the focus to external factors. The Yen plunged to a seven-year low against the US Dollar following November’s impressively strong Nonfarm Payrolls print, but the response from risk appetite was suspiciously lackluster.

Indeed, the S&P 500 stock index – a benchmark for sentiment trends – was barely changed in Friday’s session. This may be foreshadowing the emergence of year-end capital flows as a formative driver of price action.

Risk-taking has been well-supported in the past year but markets would be wise to question the likelihood of more of the same in 2015. While the precise timing of the first post-QE Fed interest rate hike is a matter of some debate, the general likelihood of stimulus withdrawal in the year ahead is increasingly seen as a given. That may drive liquidation of risk-geared exposure ahead of the calendar year turn as market participants move to lock in performance numbers ahead of a more difficult 12-month stretch ahead.

For currency markets, such a scenario may take the form of an exodus from carry trades, which a usually funded in terms of the perennially low-yielding Japanese unit. That would imply a wave of short-covering on anti-Yen exposure, pushing prices higher. The extent to which US economic news-flow can alter this dynamic remains unclear. November’s Retail Sales and PPI reports as well as December’s UofM Consumer Confidence gauge are on tap. If these prove strong – fueling Fed tightening bets – another Yen selloff mirroring the markets’ post-NFP reaction may be triggered. Outcomes broadly close to forecasts that do not dramatically disrupt the established policy outlook may yield the spotlight to seasonal forces however.

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newdigital, 2014.12.06 14:05

GBPUSD Fundamentals (based on dailyfx article)

• GBP/USD in at Session Highs as Autumn Statement Strikes Optimistic Tone
• British Pound Forecast to Hit Further Lows versus USD

GBP/USD slipped to a fresh monthly low of 1.5568 as U.S. Non-Farm Payrolls marked the largest advance since January 2012, and the pair may continue to track lower in the week ahead should the fundamental developments coming out of the world’s largest economy ramp up bets of seeing the Federal Reserve normalize monetary policy sooner rather than later.

In contrast, it seems as though the Bank of England (BoE) Minutes, due out on December 17, will show another 7-2 split within the Monetary Policy Committee (MPC) as the central bank refrained from releasing a policy statement following the December 4 meeting, and the British Pound may continue to underperform against its U.S. counterparts over the near to medium-term as the majority remains in no rush to normalize monetary policy. Nevertheless, the underlying strength in the sterling is likely to be better seen in crosses rates such as GBP/AUD especially as BoE Governor Mark Carney continues to prepare U.K. households and businesses for higher borrowing costs.

Beyond the U.K. data prints, MPC members Martin Weale and Ian McCafferty, the two dissenters on the MPC, are schedule to speak in the week ahead, and the fresh batch of BoE rhetoric may heighten the appeal of the British Pound as the central bank hawks continue to push for a rate hike. However, the U.S. data prints due out next week may trump the U.K. event risks as market participants gauge interest rate expectations ahead of the next Federal Reserve interest rate decision on December 17, and the bullish sentiment surrounding the greenback may gather pace going into the end of the year should the developments boost interest rate expectations.

With that said, the downside targets for GBP/USD remain favored as price and the Relative Strength Index (RSI) retain the bearish trends from back in July, and another batch of positive data prints out of the U.S. may generate fresh monthly lows in the exchange rate as market participants see the Fed normalizing monetary policy ahead of the BoE.

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newdigital, 2014.12.06 14:07

GOLD Fundamentals (based on dailyfx article)

• Gold Trading Around Year Open; Bottoming Process?
• Gold Stalls Near Key Resistance After Largest Rally in Over 2 Years

Despite the ‘No’ vote on the Swiss Referendum, Gold prices are higher this week with the yellow metal rallying more than 1.9% to trade at $1189 ahead of the New York close on Friday. Gains early in the week were pared as improving US economic data and persistent strength in the greenback continued to pressure gold lower. Despite the late-week spill however, prices closed higher on the week with bullion looking to end the week just above near-term support.

The US Non-Farm Payrolls release on Friday spurred a steep sell-off in gold after the print topped consensus estimates with a blowout read of 321K and an upward revision of last month’s print to 236K. As a result, gold remains vulnerable to U.S. dollar strength on expectations that the Federal Reserve will be looking to move on interest rates amid the improving US economic outlook. Looking ahead to next week, traders will be eyeing US retail sales report and the University of Michigan Confidence survey for further guidance especially ahead of the FOMC interest rate decision on December 17. Another batch of positive U.S. data may heighten the bullish sentiment surrounding the greenback, which could continue to cap the near-term advance in bullion.

From a technical standpoint, Monday’s rally into $1220 completed a 100% extension off the November low and we’ll maintain more neutral stance heading into next week while noting a medium-term constructive outlook while above $1175/80. A move below this threshold leaves the trade vulnerable with subsequent support targets seen at $1165 and the December opening range low at 1142. A breach of the highs eyes objectives at $1237, $1248 and key resistance at $1262/68.

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newdigital, 2014.12.07 12:23

EUR/USD trading forecast for Monday (based on binarytribune article)

Friday’s trade saw EUR/USD within the range of 1.2271-1.2393. The daily low has also been the lowest level since August 16th 2012. The pair closed at 1.2379, gaining 0.01% on a daily basis, while losing 0.58% for the whole week.

Germany’s seasonally adjusted index of industrial production probably fell 0.2% in October compared to a month ago, according to market expectations, following a 1.4% expansion in September. Annualized industrial output contracted 0.1% in September, after another 1.9% decline in August. The index reflects the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities. In case industrial output shrank more than anticipated, this would mount selling pressure on the euro. Destatis is to publish the official data at 7:00 GMT on Monday.

Confidence among investors in the Euro zone probably continued to worsen during the current month, with the corresponding index coming in at a reading of -13.5. In November it stood at -11.87. If so, this would be the fourth consecutive month, during which the gauge occupied negative territory. The index is based on results from the SENTIX survey, one of the most prominent surveys, reflecting investors’ opinion in Germany. It encompasses 2 800 respondents, with 510 of them being institutional investors. Respondents present their expectations regarding ten different markets for a period of one and six months. Readings above zero indicate that respondents were predominantly optimistic, while readings below zero show pessimism. Lower-than-expected readings would have a bearish effect on the common currency. The official index value is due out at 9:30 GMT.

At the press conference on Thursday European Central Bank President Mario Draghi noted that bank policy makers would wait until early next year in order to determine whether Euro area economy is in need of additional monetary stimulus.

ECB Governing Council expects to take into consideration a proposal to widen the bank’s asset purchases, meaning the inclusion of sovereign debt, at the upcoming policy meeting on January 22nd, Bloomberg reported.
”We’re looking for the euro to go down to $1.07 by the end of 2015,” Marvin Barth, head of European foreign-exchange strategy at Barclays Plc in London, said on Friday in an interview with Bloomberg Television. ”You’ve reached a tipping point in people’s expectations to where the euro is likely to go. The ECB is providing a significant amount of accommodation in conjunction with negative deposit rates.”

Pivot Points

The central pivot point for the pair is at 1.2348. In case EUR/USD manages to breach the first resistance level at 1.2424, it will probably continue up to test 1.2470. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2546.

If EUR/USD manages to breach the first key support at 1.2302, it will probably continue to slide and test 1.2226. With this second key support broken, the movement to the downside will probably continue to 1.2180.

The mid-Pivot levels for Monday are as follows: M1 – 1.2203, M2 – 1.2264, M3 – 1.2325, M4 – 1.2386, M5 – 1.2447, M6 – 1.2508.

In weekly terms, the central pivot point is at 1.2385. The three key resistance levels are as follows: R1 – 1.2500, R2 – 1.2620, R3 – 1.2735. The three key support levels are: S1 – 1.2265, S2 – 1.2150, S3 – 1.2030.

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newdigital, 2014.12.08 05:38

EUR/USD Technical Analysis: Wedge Pattern Hints at Bounce (based on dailyfx article)

• EUR/USD Technical Strategy: Short at 1.2710
• Support: 1.2279, 1.2213, 1.1974
• Resistance:1.2455, 1.2529, 1.2683

The Euro may be preparing to rebound against the US Dollar as prices carve out a bullish Falling Wedge chart formation. A daily close above the 1.2360-86 area marked by the 14.6% Fibonacci expansion and the November 21 close exposes the wedge top at 1.2440. Alternatively, a reversal below the 1.2213-38 zone (wedge floor, 23.6% level) opens the door for a challenge of the 38.2% Fib at 1.1974.

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EURUSD, M5, 2014.12.08

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EURUSD M5: 20 pips price movement by EUR - France Trade Balance