Filed under Forex and Currency Trading News, Latest FX Articles · Tagged with interest rate expectations, international merchandise trade, labor productivity, rising oil prices, risk appetite
The week opened with dollar strength on a rather light calendar. Today is already very bust: major releases in Europe are followed by the rate decision in the US: will Bernanke send new signals? Heres the daily outlook.
The strong volatility seen on Mondays trading was also influenced by the different time difference between Europe and North America. This will accompany us for two more weeks.
Australias Monetary Policy Meeting Minutes are released at the beginning of the day. Well see how the members see the next decisions: more rate hikes? A pause?
On the other side of the day, the MI Leading Index will give an overview of the Australians economy. For more on the Aussie, read the AUD/USD forecast.
In Switzerland, the SECO Economic Forecasts might shake the currency after it strengthened significantly yesterday. An intervention by the central bank can happen anytime.
In Germany, the ZEW Economic Sentiment is expected to drop once again, from 45.1 to 43.5, continuing the trend in the past months. Also the all-European sentiment is released at the same time, but its considered less accurate than the German one.
At the same time, well get a look at Europes inflation: CPI is expected to confirm the initial read of a year-over-year rise of 0.9%. Core CPI will probably be confirmed at 0.8%.
For more on the Euro, read the EUR/USD forecast, and Casey Stubbs latest analysis.
In Britain, CB Leading Index will probably edge up, following last months small rise. Later in Britain, MPC member Charles Bean will make a public appearance, the first out of a long list of speakers this week.
Read more on the Pound at the GBP/USD forecast.
In Canada, the quarterly Labor Productivity is expected to rise by 0.7% after a drop of 0.3% last quarter. Remember that a lower number is better for the currency.
Also in Canada, Manufacturing Sales are predicted to rise by 0.7%, less than last months 1.6% rise. For more on the loonie, struggling around 1.02, read the USD/CAD forecast.
In the US, Building Permits are expected tick down from 620K to 610K. Also in the same sector, Housing Starts are predicted to edge down as well from 590K to 570K.
Import Prices are expected to drop by 0.1%, after jumping by 1.4% last month. Just before Ben Bernanke takes the stage, Treasury Secretary Timothy Geithner will speak as well about the budget. This may move currencies as well.
At 18:15 GMT, an hour earlier than usual for Europeans, a new Federal Funds rate will be announced in the US. It isnt expected to move from the rock bottom figure of 0.25%. As usual, every word of the FOMC Statement will be closely analyzed and will shake the markets before and after the release, possibly for many hours.
Ben Bernanke made a small move by raising the discount rate. Another member wants to remove the words extended period of time concerning the regular rate. Will we see a different statement this time?
Just before the end of the day, Japans Tertiary Industry Activity is due. Its expected to rise by 1.3%, hours before the Japanese rate decision in the following day.
Thats it. Happy forex trading!
The strong volatility seen on Mondays trading was also influenced by the different time difference between Europe and North America. This will accompany us for two more weeks.
Australias Monetary Policy Meeting Minutes are released at the beginning of the day. Well see how the members see the next decisions: more rate hikes? A pause?
On the other side of the day, the MI Leading Index will give an overview of the Australians economy. For more on the Aussie, read the AUD/USD forecast.
In Switzerland, the SECO Economic Forecasts might shake the currency after it strengthened significantly yesterday. An intervention by the central bank can happen anytime.
In Germany, the ZEW Economic Sentiment is expected to drop once again, from 45.1 to 43.5, continuing the trend in the past months. Also the all-European sentiment is released at the same time, but its considered less accurate than the German one.
At the same time, well get a look at Europes inflation: CPI is expected to confirm the initial read of a year-over-year rise of 0.9%. Core CPI will probably be confirmed at 0.8%.
For more on the Euro, read the EUR/USD forecast, and Casey Stubbs latest analysis.
In Britain, CB Leading Index will probably edge up, following last months small rise. Later in Britain, MPC member Charles Bean will make a public appearance, the first out of a long list of speakers this week.
Read more on the Pound at the GBP/USD forecast.
In Canada, the quarterly Labor Productivity is expected to rise by 0.7% after a drop of 0.3% last quarter. Remember that a lower number is better for the currency.
Also in Canada, Manufacturing Sales are predicted to rise by 0.7%, less than last months 1.6% rise. For more on the loonie, struggling around 1.02, read the USD/CAD forecast.
In the US, Building Permits are expected tick down from 620K to 610K. Also in the same sector, Housing Starts are predicted to edge down as well from 590K to 570K.
Import Prices are expected to drop by 0.1%, after jumping by 1.4% last month. Just before Ben Bernanke takes the stage, Treasury Secretary Timothy Geithner will speak as well about the budget. This may move currencies as well.
At 18:15 GMT, an hour earlier than usual for Europeans, a new Federal Funds rate will be announced in the US. It isnt expected to move from the rock bottom figure of 0.25%. As usual, every word of the FOMC Statement will be closely analyzed and will shake the markets before and after the release, possibly for many hours.
Ben Bernanke made a small move by raising the discount rate. Another member wants to remove the words extended period of time concerning the regular rate. Will we see a different statement this time?
Just before the end of the day, Japans Tertiary Industry Activity is due. Its expected to rise by 1.3%, hours before the Japanese rate decision in the following day.
Thats it. Happy forex trading!
Filed under Latest FX Articles · Tagged with core cpi, economic sentiment, eur usd forecast, inflation cpi, labor productivity
The Canadian dollar made a significant move at the end of the week, and approaches parity with the US dollar. 6 events will shape the direction of the loonie, with the most important ones kept for Friday. Heres an outlook and an updated technical analysis for USD/CAD, now on lower ground.
USD/CAD chart with support and resistance lines marked. Click to enlarge:
Canadas unemployment rate fell again, surprising analysts. Although it wasnt too far from early expectations, this gave the loonie the necessary push. Inflation and retail sales promise another action-full Friday for the Canadian dollar. Lets start:
After breaking below 1.04 almost two weeks ago, USD/CAD continued south, very slowly, and on Friday managed to break the stubborn 1.02 line. Lower lines have been added on last weeks outlook.
USD/CAD is now bound between 1.02 and and parity 1.0000. Looking up, 1.04 is the next line of resistance, serving as both a support and a resistance line many times in the past.
Above, 1.0780 is the border of the range that characterized the loonie for a long time. Even higher, 1.0850 is the next line of resistance.
Looking down, parity is the ultimate round number. It also was a technical barrier in the past. USD/CAD will probably struggle with this line.
Over the cliff, the next line below is 0.98, which was a support line back in the summer of 2007. Even lower, 0.97 is the next line of support.
I remain bearish on USD/CAD.
As seen in the last employment figures, the Canadian economy is in the right direction, and supports a stronger currency. Reaching parity with the greenback is a big challenge though.
Further reading:
USD/CAD chart with support and resistance lines marked. Click to enlarge:
Canadas unemployment rate fell again, surprising analysts. Although it wasnt too far from early expectations, this gave the loonie the necessary push. Inflation and retail sales promise another action-full Friday for the Canadian dollar. Lets start:
- Labor Productivity: Published on Tuesday at 12:30 GMT. This is a quarterly release, hence its importance. In the previous quarter, productivity fell this means that workers got more for their work pushing prices higher. A small rise in productivity is predicted this time. A lower figure is better for the loonie.
- Manufacturing Sales: Published on Tuesday at 12:30 GMT, and overshadowed by the previous release. Sales have risen in the past 4 months, but last time they rose in a smaller scale than expected. This figure provides a good reflection of the Canadian economy steady growth. Its expected to rise modestly this time.
- Wholesale Sales: Published on Wednesday at 12:30 GMT. Zooming out to the wholesaler level, weve seen a similar picture: 4 months of small rises. Last months 0.7% growth is predicted to be followed by a similar rise this time, supporting the loonie.
- Foreign Securities Purchases: Published on Thursday at 12:30 GMT. In the past two months, foreigners have shown growing confidence in the Canadian economy: a net purchase of over 10 billion was reported. This time, the net figure is expected to be under 10 billion.
- CPI: Published on Friday at 11:00 GMT. This is a key figure for raising the rates. Without prices pressure, theres no urge to raise the rates. Three months ago, prices picked up in Canada, but they dropped afterwards, returning to stability. A rise of 0.4% is expected in consumer prices, and a rise of 0.3% in Core CPI, which is closely watched by the central bank.
- Retail Sales: Published on Friday at 12:30 GMT. Just 90 minutes after the CPI release, another important indicator is due. Retail sales are expected to rise by 0.6% after the 0.4% rise last time, and core retail sales are predicted to rise by 0.5%. Consumer confidence, seen in sales volume, is important for pushing the Canadian dollar higher.
After breaking below 1.04 almost two weeks ago, USD/CAD continued south, very slowly, and on Friday managed to break the stubborn 1.02 line. Lower lines have been added on last weeks outlook.
USD/CAD is now bound between 1.02 and and parity 1.0000. Looking up, 1.04 is the next line of resistance, serving as both a support and a resistance line many times in the past.
Above, 1.0780 is the border of the range that characterized the loonie for a long time. Even higher, 1.0850 is the next line of resistance.
Looking down, parity is the ultimate round number. It also was a technical barrier in the past. USD/CAD will probably struggle with this line.
Over the cliff, the next line below is 0.98, which was a support line back in the summer of 2007. Even lower, 0.97 is the next line of support.
I remain bearish on USD/CAD.
As seen in the last employment figures, the Canadian economy is in the right direction, and supports a stronger currency. Reaching parity with the greenback is a big challenge though.
Further reading:
- For a broad view of all the weeks major event in all currencies, read the forex weekly outlook.
- For the Euro, read the EUR USD Forecast.
- For GBP/USD, look into the GBP/USD forecast.
- For the Australian dollar, read the AUD/USD forecast.
- For USD/CAD, check out the Canadian dollar forecast.
