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EUR jumped on better-than-expected Greek GDP
EUR/USD jumped up forming a 20-pip gap on the H1 chart. The pair’s currently trading just below 200-hour MA at $1.2320 (50- and 200-period MAs on H4 chart).
The single currency propelled up as Greek GDP data brought positive surprise: the nation’s economy contracted by 6.2% in Q2 vs. 7.0% decline expected. In addition, demand for Italian bill auctioned today was strong, though the yields were higher.
Resistance: $1.2385 (August 9 maximums), $1.2400 (August 8 maximum, 50-day MA) and $1.2444 (August 6 maximum).
Support: $1.2260 (former downtrend resistance, the recent uptrend support line and 100-period MA on H4 chart), $1.2240 (August 10 minimum), $1.2218, $1.2166 (August 3 minimum) and $1.2133 (August 2 minimum).
Commerzbank: As long as EUR/USD keeps trading below $1.2444 (August peak), the outlook for it will remain negative.
Westpac: Weak euro zone Q2 GDP is a potential hurdle for euro, but the hopes for ECB’s action will remain. “Risks of a range break are still skewed higher, towards $1.2450/2500”.
Chart. H1 EUR/USD
NZD's well supported
Analysts at BNZ expect NZD/USD to reach $0.8200 by the year end. In their view, fundamental factors are stacked in favor of NZD strength. In general, the global backdrop remains highly supportive of the risk-sensitive NZD. However, in a near-term kiwi’s bounce may be limited at $0.8245 on the back of lackluster NZ recovery and a pushing back of RBNZ rate hike expectations.
Monday Q2 retail sales report attracts traders’ attention: economists expect core retail sales to increase by 1.0% following a 2.5% decline in Q1.
Сhart. Daily NZD/USD
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FX majors from top forecasters
Here are the forecasts for EUR/USD, GBP/USD, USD/JPY, USD/CHF and EUR/JPY from top forecasters. Data were submitted on August 10.
Source: FX Week
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August 14-17: economic events
Tuesday, August 14
Euro area:
• French preliminary GDP (5:30 GMT). The euro zone’s second largest economy surprised by growing in Q4 2011 (analysts expected contraction) and remained flat in Q1 2012. PMIs and other indicators point to a 0.1% q/q decline in Q2.
• German preliminary GDP (6:00 GMT). Germany’s strong 0.5% q/q growth in Q1 saved the whole euro area from entering an official recession. However, the situation deteriorated in Q2: GDP growth is expected to drop to only 0.1% q/q.
• Flash GDP (9:00 GMT). Economists expect the euro zone’s economy to contract by 0.2% q/q in Q2 after zero growth in Q1. Note that the estimates are likely to change once Germany and France release their figures.
• German and euro zone ZEW economic sentiment (9:00 GMT). German indicator fell to -19.6 points in July, disappointing once again, and showing the growing pessimism in the German business community. In August specialists expect a very small recovery to -19.2. Meanwhile, the indicator for the entire euro zone is likely to improve from - 22.3 points in July to -19.1 in August.
• Industrial production (9:00 GMT). Industrial output may have contracted by 0.4% m/m in June after an unexpected increase by 0.6% m/m in May.
Great Britain:
• CPI (8:30 GMT). The key inflation index is expected to have increased by 2.3% y/y in July – CPI’s growth rate is slowing down from 2.8% in May and 2.4% in June.
US:
• Retail sales (12:30 GMT). Retail sales probably rose in July for the first time in four months as employment picked up. The important gauge of consumer spending is expected to rise by 0.4% m/m in July following a 0.5% m/m decline in June. Core retail sales are to rise by 0.4% after a 0.4% m/m decline in the previous month. However, according to HSBC economists, consumer spending growth remains subdued as consumers are still trying to rebuild savings.
• PPI (12:30 GMT). According to consensus, the PPI index may have added by 0.3% m/m in July following a 0.1% growth in June.
Wednesday, August 15
Britain:
• Unemployment claims from Claimant Count (8:30 GMT). Jobless claims may have increased by 6.3K in July after adding 6.1K in June. The unemployment rate is expected to remain at 8.1%. Such forecasts show that UK labor market is likely to stay weak.
• MPC meeting minutes (8:30 GMT). The odds are that the MPC’s decision to leave monetary policy unchanged in August (the key interest rate at 0.5% and QE at 375 billion pounds) was unanimous. As the central bank slashed forecasts for domestic economy last week, analysts think that there’s additional stimulus on the horizon.
US:
• CPI (12:30 GMT). According to projections, CPI inflation picked up by 0.2% m/m in July from 0% m/m in June, but should stay at the 1.7% y/y level. Core figures are seen unchanged at 0.2%. The small monthly increase won’t be considered as an argument against further easing from the Fed.
Thursday, August 16
Britain:
• Retail sales (8:30 GMT). Analysts don’t expect retail sales to cheer up the market: the reading will likely be low in July (+0.1% m/m), the same as in June.
Euro area:
• CPI (9:00 GMT). Inflation is forecasted to stay at 2.4% y/y in July, same as the 2.4% y/y reading in June.
US:
• Housing starts (12:30 GMT). The index may have remained at 760K last month. The indicator was slightly growth since the second half of 2011, but remains far below the levels seen in 2007-2008.
• Building permits (12:30 GMT). The index is seen slightly up at 770K in July vs. 760K in June. The dynamics of the indicator has been much similar to the one of the housing starts.
• Unemployment claims (12:30 GMT). Jobless claims may have increased from 361K to 365K.
• Philly Fed Manufacturing Index (14:00 GMT). The index is seen below zero for the fourth consecutive month at -4.3 in August from -12.9 in July. This would be an improvement, though negative reading means that US manufacturing sector is still weakening.
New Zealand:
• PPI Input (22:45 GMT). The index growth rate slid from 0.5% in Q1 q/q to 0.3% in Q2, analysts say.
Friday, August 17
Euro area:
• German PPI (6:00 GMT). Producer prices were worse than expected for 3 months in a row. The prices fell in the past 2 months. Specialists forecast a rise of 0.4% m/m in July.
• Current account (8:00 GMT). We saw 3 consecutive months of surpluses with a record 10.9 billion euro surplus in May. June will probably see a lower, but still positive figure of 7.8 billion.
Canada:
• CPI (12:30 GMT). Both CPI and core CPI are predicted to rise by 0.2% m/m in July, confirming that the previous 0.4% m/m drop was an exception.
US:
• Preliminary UoM consumer sentiment (13:55 GMT). US consumer confidence continued declining: it dropped to 72.3 points in July from 73.5 in the previous month. A tiny increase to 72.5 is expected in August.
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GBP/USD: technical comments
On Monday GBP/USD trades above $1.5700 mark, gaining momentum for a second consecutive day. The pair still remains in a flat range, but we can see a slightly rising channel, created in August. What’s more, since July 11 every new minimum is lower than the previous.
We see the next resistance for the pair at $1.5720 (200-day MA) and $1.5775 (the pair has been trading below these levels since May). If the pair manages to overcome this area, further growth towards $1.5904 (61.8% Fib. retracement of a May decline) would become possible. On a downside strong support lies in the $1.5480 area.
Chart. Daily GBP/USD
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Macroeconomic indicators
The table below provides recent data on the main macroeconomic indicators and is an extremely valuable resource for any trader.
Table. Main macroeconomic indicators
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August 14: forex news
The MSCI Asia Pacific Index of shares climbed 0.1%. NZD/USD moves up on the back of the positive retail sales data (+1.3% q/q vs. +0.7% expected), but a short-term trend remains negative. The markets are waiting for the data due today that may add to signs Europe’s debt crisis is worsening. AUD/USD slid to the $1.0500 area. USD/CAD edges up for a second consecutive day.
USD/JPY is strengthening for the second day in a row as demand for safe havens declined. The Bank of Japan’s July meeting minutes released yesterday signaled that the central bank’s considering ways of increasing stimulus.
EUR/USD’s trading below yesterday’s maximum at $1.2373 ahead of today’s publications: German GDP at 06:00 GMT, French Non-farm payrolls and wages at 06:45 GMT, German ZEW economic sentiment at 09:00 GMT, euro zone’s GDP, industrial production and ZEW survey at 09:00 GMT. In addition, Greece plans to sell 3.125 billion euro in 91-day bills at 09:00 GMT. French GDP came unchanged in Q2, while analysts were expecting contraction.
GBP/USD also edged higher, but stays below Monday’s high and 200-day MA around $1.5720. UK is to release July CPI figures today at 8:30 GMT. According to the forecasts, inflation declined last month by 0.1 percentage point to 2.3%. Such data will allow the markets expect more easing from the Bank of England.
Also watch for US data later today (12:30 GMT): retail sales figures for July will offer an important update on the state of consumer demand at the start of Q3. American PPI may increase a bit, but nothing that would prevent the Fed from more easing.
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Key options expiring today
Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).
Here are the key options expiring today:
EUR/USD: $1.2225, $1.2230, $1.2250, $1.2260, $1.2325, $1.2370, $1.2400;
GBP/USD: $1.5600, $1.5700;
USD/JPY: 78.25, 78.45;
AUD/USD: $1.0550, $1.0600;
NZD/USD: $0.8200;
EUR/GBP: 0.7800.
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AUD/USD: technical comments
As can be seen from the daily chart, the bulls have so far been very persistent: the pair spent quite a long time close to the upper boundary in comparison to the previous single peaks. For now, the pair hasn’t conquered levels above $1.0600.
At the same time, Aussie didn’t fall dramatically right after touching the boundary, but remains relatively flat. Australian currency may continue moving sideways from this point on the calm August market.
Some analysts expect a deeper correction to $1.0400 levels after the pair lost its ground on Monday, as investors await data that could add to global growth concerns.
Also note that AUD/USD is not far from strong technical resistance (weekly downtrend line around $1.0670). The key support area is $1.0495/45. If these levels fail to support the pair, it will become vulnerable for a decline to the 200-day MA.
Chart. H4 AUD/USD
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EUR/USD: technical update
EUR/USD renewed week’s maximum reaching $1.2385, but then was held back by the discouraging economic data.
50-period MA crossed the 200-period one on the H4 chart – a bullish signal. Analysts at Commerzbank, however, insist that the outlook for euro is negative below $1.2444.
Resistance: $1.2390, $1.2400 (50-day MA, psychological level), $1.2440 (August maximum), $1.2500, $1.2620, $1.2660 (longer-term downtrend, 50% retracement from May maximum to July minimum).
Support: $1.2320, $1.2280/60, $1.2166 (August 3 minimum), $1.2133 (August 2 minimum), $1.2040 (July minimum).
Both support and resistance look strong at this point. Tomorrow French and Italian markets are closed due to the bank holiday. The data flow from Europe is over for now, so it will be up to US to move the market.
Chart. H4 EUR/USD
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