Weekly Forex WrapUP

[B]Weekly Forex WrapUP: July 06 - July 10[/B]
The [B]greenback[/B] was traded mixed against the other G10 currencies during the week on the mixed data released and the FOMC minutes that passed unnoticed. Moreover, on Thursday the liquidity was very thin in the markets. The Initial Jobless Claims surged to 297k from 275k expected reaching an eighteenth-week high! The Continuing Jobless Claims was also on a record high reflecting the weakness of the last NFP Report. The Economic Optimism for July remained unchanged at 48.1 despite the forecast to have increased to 48.9.

The International Monetary Fund warned for one more time that the US Financial System is vulnerable and the government does not prevent its system sufficiently, according to the IMF. The FOMC Minutes was almost indifferent from the market amid of China’s Stock Crisis and Greek Turmoil, as not major surprises included in it. Due to the aforementioned big crises the FOMC members believe interest rates will not rise in 2015.

[B]Greek Crisis: Weekly Review[/B]
The week was very busy for the Eurozone countries as on Monday the market open with gaps due to Greece “NO” to more austerity measures. The last Eurogroup was fruitful according to the Greek Prime Minister and it must have done months ago. The Greek Government submitted their proposals for a deal in the Eurozone on Thursday and now there are meetings scheduled from the EU finance ministers and representatives to accept or reject the reforms as the schedule below. If the a deal does not be accepted until Sunday Greece faces the Euro exit! If the reach an agreement, most likely will follow a debt restructuring and bailout funds to Greece. The Bank Closures extended until Monday, 13th July with the daily limit of withdrawal of €60 continues.

The [B]euro[/B] was higher against the other G10 currencies during the week despite Greece situation. The only exception was the New Zealand dollar. The single currency remains stuck in a tight range against the greenback slightly above the psychological level of 1.1000. So far today an attempt to break the 200-SMA and the ascending trendline which started back in mid-April has been defeated. The [B]EUR/USD[/B] pair is threatened to end the week negative, currently at -0.15%, followed by a -0.47% the previous week and the -1.65% the week started on June 21. On the downside, the first hurdle to clear is the 1.0950 level, which would then push as towards 1.0820, a strong technical level for the bulls in the short and medium term.

[B]Pound on selling pressure[/B]
The [B]pound [/B]was faced a heavy selling pressure against all of the G10 counterparts since Monday on the weak economic data. The Bank of England left its interest rate unchanged at 0.5% and the Asset Purchase Facility to £375B.

The [B]UK Budget Report[/B], on Wednesday, was not so pleasant for the traders. The Chancellor of the Exchequer George Osborne unveiled plans to increase the wage growth and reach £7.20 to £9 per hour in 2020 from £6.50 minimum wage per hour currently, but other core changes worried the investors. The students’ grants will be replaced by loans that the students will repay later if they earn above £21,000 yearly. The chancellor froze working age benefits but decreased the pace of welfare cuts as well. The main rate of income tax will be increased as well as the VAT for the next 5 years. The changes of important economic facts spread the fear to the GBP traders and the sterling suffered from a significant sell-off against the major currencies. Beyond that the economy is stronger fundamentally rather than 5 years before, according to the Chancellor, the UK latest GDP shows that the growth of the economy slowed down. The forecast for the economic growth revised slightly downwards from the previous budget report in March as it was expected to grow by 0.7% the first quarter but grew just by 0.4%, despite that the first term weakness considered temporary. The yearly growth cut down to 2.4% or 2.3% from 2.5% in the last Budget Report.

Although, the NIESR GDP Estimate for the last three months to June increased slightly to 0.7% from 0.6% before. The Industrial production remained stable on May, on the monthly basis, at 0.4% but showed an improvement on the yearly view (2.1% vs 1.2% prior). Conversely, The Manufacturing Production in May missed expectations to have accelerated and slowed down to -0.6% mom below the previous month’s performance.

[B]GBP/USD slightly recovered[/B]
The [B]GBP/USD[/B] pair slightly recovered yesterday following the rebound from the 200-SMA on the daily chart. The pound is down more than 1% for the week after falling to a monthly low on Wednesday. The level of 1.5330 is key to understanding whether we are watching for a further continuation, with the next obstacle to be the 1.5230 and then the psychological level of 1.5200, both a strong and significant levels. The ability of this pair to close above the 200-SMA on the daily chart would bring a more bullish outlook for the pair where the 1.5500 and 1.5540 provide clear targets for any upside momentum. If we drop down to the 4-hour chart, the 50 and the 200-SMAs are ready to provide a significant resistance to the price action in case it attempts to break above there.

[B]USD/JPY on a correction[/B]
Even though the [B]USD/JPY[/B] pair opened higher the day by +0.40%, it’s down for the week -0.80% as well as for the month -1.29%. Taking a look at the daily chart, the pair has been in a long-term uptrend for more than a two years, however the recent developments in Greece and China showed some signs of weakens with traders, technically, expecting some kind of correction and thus we have seen the pair falling for a fifth consecutive week, recording more than 0.8% the previous and 0.83% the current week. It is a very significant development that the pair is currently finding strong support from the 200-SMA on the daily chart slightly above the psychological level of 120.00. On the topside will see buyers above the 122.80 where the 50-SMA on the daily chart will try to prevent the bulls for moving further up.

[B]Gold pauses its rally[/B]
The rally in the [B]precious metal[/B] has been stopped in its tracks, mostly due to the expectation of further dollar strength but also to a perception that the gains of the past few days were not much more than an oversold bounce. Even though the precious metal is trading higher for a third day in a row is still under pressure as a daily close below the $1,174 will mark the third negative week in a row, which could be a significant point for gold. Certainly the decisive rebound from the rising trend line which started back in November 2014 signalled that the bears were losing control, and a close back above the $1,162 would signal further upside towards the all-important $1,200 level.

[B]Economic Indicators[/B]
Today, the Norwegian Inflation Rate for June will be eyed as Norwegian Krone was rising against the majors during the week ahead of the release. In [B]Canada[/B], the [B]Unemployment Rate[/B] and the [B]Employment Change[/B] will attract traders’ attention, as usually these indicators are released with NFP report and lose their glory. In the [B]US[/B], the Wholesale Inventories for May and[B] Monthly Budget Statement[/B] for June will be posted. A while later, the Chair of Fed Board Governors [B]Janet Yellen[/B] will give a [B]speech[/B].

[B]Weekly Wrap UP: July 13 – July 17[/B]
During the week, both Fed chair Janet Yellen and BoE Governor Mark Carney were very optimistic for their countries’ economy and left behind hawkish messages raising the US dollar and the British Pound respectively. Investors believe that BoE may raise interest rates before the historical time that Fed will change its rate from the record low of 0.25% after more than six years. Euro fell after the announcement that ECB increased emergency liquidity to Greece.

[B]Greenback wins the weekly battle against the G10[/B]
The dollar is traded higher than its opening level on Monday against almost all the other G10 currencies on comments of the Fed Chairwoman Janet Yellen at her testimony. The Chairwoman was confident that the [B]Fed will raise interest rates in 2015 [/B]and certainly the possibility for an interest rate hike in September is still on the table as a later raise could need faster increases, a scenario they would like to avoid. The Fed policymakers agree that interest rates must be raised gradually with small rises to avoid big surprises in the market and minimize negative consequences. The Central Bank continues to monitor closely all the labour data.

However, the [B]economic data[/B] released from US during the week was mixed. The Industrial Production and the Capacity Utilization showed a healthy growth of the economy. The Industrial Production in June accelerated by 0.3% mom after two months of contractions beating expectations to have speeded up 0.2% and the Capacity Utilization rose for the first time after six months of consecutive declines by 78.4% from 78.2% before. The Producer Price Index on a yearly basis improved slightly for the third straight month, as well as the ex Food and Energy indicator and rose by 0.8% from 0.7% expected and 0.6% before. The US Monthly Budget Statement showed a strong economy summed more than expected at $51.8B in June from $-82.4B before.

On the other side, the [B]Retail Sales[/B] released earlier in the week disappointed on the downsides. After the weak first quarter and the heavy winter, economists have expected consumers to spend more than stepping a step back. The Retail Sales decreased to -0.3% month over month missing expectations to have decreased to 0.3% from 1.0% before. The Retail Sales ex Autos has also decelerated significantly to -0.1% from 0.5% expected. The Retail Sales is one of the important economic indicators until September, that Fed will take into account to raise its Interest rate. In addition, the Business Inventories for May confirmed the consumer spending weakness.

[B]Euro declines substantially after ECB Governor Speech [/B]
The single currency came under pressure and fell to a [B]seven-week low[/B] against the greenback after European Central Bank President Mario Draghi said that the [B]central bank increased emergency liquidity assistance to Greece[/B] on Thursday. ECB President Mario Draghi said the central bank decided to raise its assistance ceiling by €900 million to Greek lenders. Even though the rise seems to be small, not enough to support the capital controls, it could help the cash machines, in the short-term at least, not to run out of money. Draghi confirmed that the bank left its benchmark refinancing rate unchanged at a record low of 0.05%, while he referred that ECB’s bond-buying program is going smoothly and will continue until September 2016. The market didn’t react on the Inflation rate announcement as all the related indicators came out as expected.

The euro moved to 1.0853 on the Draghi speech, where the EUR/USD pair found support and retraced half of its losses. However, the pair finished the day negative 0.67% adding to the weekly -2.4%. The pair recovered from a spike (4-hour chart) lower to 1.0856, where it met strong support from the ascending trend line, before recovering to currently sit slightly below the psychological level of 1.0900. On the upside, the pair needs to clear the key resistance at 1.0915, which coincides with the 50-SMA, before testing 1.0950. On the downside 1.0850 – 1.0860 zone and the ascending trendline seems to protect the immediate downside and a clear break below these obstacles, sets the stage to reach yesterday’s target at 1.0820.

[B]Sterling elevated on BoE prospect to raise rates sooner[/B]
The sterling surged against the most of its G10 counterparts on the hawkish comments of the Bank of England Governor Mark Carney, despite the disappointing data from UK. Carney said that [B]the time for BoE to raise interest rates is coming closer[/B]. However, the increase will be on a smooth pace and is not expected go back to the historical levels soon.

On the other hand, the British economic releases during the week were pessimistic. Most economic indicators missed forecasts on the bad way. [B]June’s Inflation Rate[/B] was flat despite expectations to have just slowed down to 0.1% from 0.2% before. Comparing the consuming prices with the corresponding month in the year before show that they also remained unchanged. The Producer Price Index was also below than anticipated in June. The labor data was also disappointing for the market participants compared with the forecasts, however, the sterling was held impressively against its G10 peers as the indicators showed improvement compared to the numbers prior. The [B]unemployment rate[/B] in May rose to 5.6% of the Labor force for the first time in the last one and a half year while it was forecasted to have remained stable at 5.5%. The number of people claiming job benefits in the UK increased sharply by 7.0K and was positive after more than two years that is continuously negative. The market was expected the number to decrease by -8.8K rather than increasing so sharply. The [B]wages[/B], a field that is closely eyed from the BoE policymakers, grew by 3.2% missing the consensus to have grown by 3.3% but is well above the previous month growth of 2.7%. The wages have a steadily increasing pace the last year with a small pullback the first two of months of 2015.

The aggressive rally in the [B]GBP/USD[/B] pair, fuelled by Mark Carney’s comments few days ago, continues. Bank of England governor Mark Carney has indicated that interest rates could begin to rise at the turn of this year. Interest rates have been at 0.5% for six years as the UK economy still recovers from the financial crisis which started back in 2008. The GBP/USD remained strong, supported by the 200-SMA on the 4-hour chart, slightly above the psychological level of 1.5550. The pair is in a process to end the week positive 0.68%, reversing course three weeks of losses. That said, I remain bullish on this pair, with then next target now being Wednesday’s highs of 1.5675. On the other hand, only a break of 1.5550 would suggest the bias has become more bearish in the markets.

[B]Commodity Currencies AUD, CAD and NZD[/B]
All of the commodity currencies are set to finish the week lower against the US dollar, with the NZD to record its biggest losses compare to the others. The New Zealand Inflation Rate was negative for the currency as it came out 0.4% below the foreseen growth of 0.6% for the second quarter, on a quarterly basis. The two previous months the country was in deflation. On a yearly basis, the consuming prices were expected to pick up by 0.4% from 0.1% before but they grew just 0.3%. The [B]NZD/USD[/B] sits at -2.67% for the week, following eleven negative weeks out of thirteen. The pair in less than 3 months has rallied more than 1200 pips, which is very impressive. Following a negative May -6.7%, the pair came under pressure and lost -4.83% in June and is on track to deliver another negative month, third in a row, as it stands at -3.35 mid-July. This is a significant development for the NZD/USD pair with a potential break below the psychological level of 0.6500 to open the way towards a fresh-lows, following the break below the key support level of 0.6550 few hours ago.

A similar picture prevails in AUD, with the pair now trading negative -0.37% for the last day of the week, following three negative week in a row. Australian Inflation Rate Expectations for the next twelve months increased to 3.4% from 3.0% before despite the slowdown in the commodities’ prices and amid China’s stock crisis, as China is the largest trading partner of Australia. The [B]AUD/USD[/B] pair closed the day positive 0.58% despite the recent dollar strength. The pair managed to recover above the key support level of 0.7370 and is now trading in a more positive manner above the psychological level of 0.7400. From a longer time perspective, the pair is stuck in a trading range, with well-established turning points of support and resistance, however the pair’s outlook remains bearish since the price is trading below the falling trend line which started back in 2010 and 2013, as well as below both the 50 and 200-SMAs on the daily, weekly and monthly charts.

[B]USD/CAD [/B]surged to a 6-year high following the break above the psychological level of 1.2835, previous high and previous resistance. The upward move in this pair started after the Bank of Canada decided to cut its interest rate to a record low at 0.5%. Moreover, Fed Chair Yellen comments also helped the dollar to gain value against the CAD. The pair is running an impressive rally following the strong rebound from the 1.1930 level, where the 200-SMA on the daily chart has provided a strong support to the pair, at a crucial point. Next target for the USD bulls is now the 1.3080, 2008 highs.

[B]Economic Indicators[/B]
The last working day of the week continues to unveil important news for the most traded currencies. The greenback tends to reflect the Inflation Rate changes and today the final Inflation Rate for June is expected. Moreover, the Housing Starts and the Building Permits for May will add to the US housing picture. A while later, the University of Michigan will show us the first estimate for the Consumer Sentiment Index in July. Meanwhile, in Canada the final Inflation Rate for June will affect the CAD cross pairs despite its consolidation the last months with only minor changes.

Weekly Wrap UP: Jul 20 – Jul 24
Gold, Oil and China’s manufacturing plunge pushing the commodity currencies on 6-year record lows. RBNZ cut interest rates for the second straight month while euro strengthens as Greece passed the new economic reforms. Sterling suffers from the surprise decline in Retail Sales and greenback is mixed despite the strong economic data from the housing and employment sectors.

USD mixed despite the Upbeat Data; Jobless Claims on 40-year record low!
The greenback was traded mixed in the week just passed ahead of the next week’s Fed policy meeting, despite the upbeat data came out. The next challenging days for the dollar are the Fed Policy meeting and the GDP Growth for the second quarter scheduled for the coming week.At the start of the week just past, after Greece accepted the second package of bailout reforms the USD traders were taking profits from their long positions and the USD declined severely against the euro. Later in the week, the strong report for the Housing Sector and the record low jobless claims pushed it upwards but failed to cover all the previous losses against all the G10 currencies.

The Existing Home Sales in June picked up at 5.49M more than anticipated to grow at 5.40M from 5.32M before. The Existing Home Sales Change accelerated to 3.2% compared to the market forecast of 1.2%. The Housing Price Index for the month before released along with the other indicators mentioned above and showed stability in the prices. The Initial Jobless Claims were 255K the smaller number since 1973, missing expectations of 280K. The Continues Jobless Claims were also below than anticipated, 2.207M vs 2.225M expected. Today, the Markit Manufacturing PMI for July and the New Home Sales for June are expected to come out.

Euro strengthens as Greece uncertainty fades but still below 1.1000
The shared currency rose against the major currencies during the week after Greece Parliament passed the new Economic reforms to start officially the talks for the third bailout package. Greece met both the bond redemption deadline to ECB and the accrued debt repayment to IMF. Thereby, Greece secured its place in Eurozone. The Preliminary Consumer Confidence in Euro Area dropped repeatedly the last five months reaching 7.1 and missing forecasts to have decreased to -5.7 from -5.6 before. The German Buba Monthly Report that released on Monday revealed the optimism of the German Finance Minister that the German economy will grow 0.3% the second quarter with domestic demand being the main driver for the economic growth. He believes that the Industrial Sector also strengthens boosting morale among the companies. Conversely, the Producer Price Index released in the week showed greater than anticipated decrease in producing prices in Germany.

Even though yesterday the EUR/USD currency pair was able to register a slight appreciation, the pair was unable to break above the psychological resistance level of 1.1000. Moreover, the bearish price structure is still in play and amid the end of the trading week we do not expect the single currency to gain any more advantage against the greenback. Our forecast is that today the Euro will give back most of its weekly gains and the next trading week the downtrend will accelerate towards the major horizontal support of 1.0450.

Pound lower vs G10 on record low Retail Sales
The Pound ended the week lower against the other G10 currencies after the surprise drop in Retail Sales. While the sterling picked up after the BoE minutes, it lost all of its earlier gains on the Retail Sales release. The Bank of England left its interest rates on hold at 0.5% and the Quantitative Easing Program unchanged. The ongoing Greek and Chinese financial uncertainty made their decision “clear cut”. Beyond that, if Greece has not been a factor, a number of policymakers would vote to raise the interest rates according to BoE. The BoE Governor had suggested before the rate hike in the second half of the year or during the end of the year may take place. He also stated that the half of the historical average rate level would meet in three years. In addition, the minutes made known that several BoE policymakers see rising inflation risks. But even if the inflation stuck at zero, a strong wage growth could confirm the country’s economic recovery.
The British Consumer cut down its expenses in June dropping the year over year Retail Sales to 4.0% in June, the lowest in the last nine months. On a monthly basis, the Retail Sales was on three-month low at -0.2% missing expectations to have accelerated.

After the bad UK Retail Sales report, the GBP/USD currency pair took a bearish stance. We see that the prices rebounded strongly in favour of the bears from the horizontal resistance level of 1.5670. Yesterday the pair formed a bearish engulfing pattern that is a signal for further declines. The first target that we expect the prices to reach is 1.5300 followed by 1.5000.

Australian Dollar declined further on China’s weak Manufacturing
The Australian dollar continues to decline considerably against the US dollar running on the fifth straight week of losses on the RBA minutes, the disappointing Inflation rate as well as the 15-month low on China’s Manufacturing. The minutes RBA revealed that the country is affected from the China’s and Greece’s crises and the developments in the two countries will be important for the next Interest Rate decisions. It’s notable that Reserve Bank of Australia cut interest rates twice during 2015 and left the door open for a further rate cut. In July’s meeting, the policymakers said that the upcoming economic data will be indications for the outlook assessment and all the appropriate moves will be done for a sustainable growth and to achieve the inflation target.

However, the Inflation rate for the second quarter disappointed the RBA officials as missed the expectations pushing the Aussie price lower. The quarter over quarter CPI came out 0.7% for the second quarter missing forecasts of 0.8% but well above the previous quarter’s rate of 0.2%. On a yearly basis, the Consuming prices rose by 1.5% below the 1.7% expected. On the other hand, the RBA trimmed mean CPI qoq was 0.6% above than anticipated in the second quarter 0.5%, but below the previous figure of 0.7%. Beyond that, the bank officials stated that continue to feel safe with a lower dollar as the commodity prices and especially the gold continues to depreciate. The pair fell further early on Friday, on the release of the China’s Preliminary HSBC Manufacturing PMI that showed that the sector has the lowest performance in the last fifteen month in July. China is the biggest trading partner of Australia and a weak manufacturing sector means lower need of commodities that are imported from Australia.

The AUD/USD currency pair registered heavy declines during the last couple of days, it is more than 1.00% lower than its opening level on Monday and more than 6.50% down the last five weeks. The price broke below the prior lows located at 0.7330. Moreover, the pair is traded way below the 7-period SMA as that is a signal for a heavy downtrend in motion. We expect the bearish move to continue as a main target should be the psychological support level of 0.7000. The downtrend for the AUD/USD pair is supported by the resumed downtrend of the Oil Prices. On the macro view, the pair depreciated more than 30% since July 2011.

RBNZ cut rate cut interest rates for the second straight month picking up the NZD
The New Zealand dollar picked up against the US dollar during the week after the Reserve Bank of New Zealand announced its rate cut of 25 basis points as the central bank worry that the inflation rate would fall further. The central bank left the door open for further rate cuts but not in the next meeting. The overnight rate is 3.25% after June’s rate cut from 3.5% before and now, after the second consecutive cut is 3.00%.

However the NZD/USD pair continues to look bearish and is trading below the sharp descending trend line started back in April and trading at a six-year low but found temporary support on the psychological level of 0.6500.

USD/CAD stacked at 1.3000 despite the plunging Gold and Oil
The USD/CAD faces difficulties to continue its uptrend above the psychological level of 1.3000, despite the commodities’ depreciation. The Gold is near to close the week below the significant level of $1,100 which is dreaded to drop down to $1,060 as next level. The WTI Crude Oil is on the fifth consecutive week of losses, decreasing more than 6% and is now traded below the $50 per barrel. The Wholesales Sales in May, which released at the start of the week, declined considerably by -1.0% whole it was expected to remain unchanged at 0.0% from 1.7% before boosting slightly the rally of USD/CAD.

One of the factors that hold the pair back near the 1.3000 level was the strong Canadian Retail Sales was The Retail Sales on a monthly basis rose by 1.00% in May well above the forecasts to have risen by 0.5% from -0.1% before. The Retail Sales ex-Autos also accelerated more than anticipates and far above the last figure, 0.9% in June vs 0.8% expected and -0.5% before.

[B]Weekly FX WrapUP: Jul 27 - 31[/B]
The two most traded major currencies, the US dollar and the euro, are traded mixed against its G10 counterparts since Monday. The US economy has strong indications for its healthy growth, but Fed stills indecisive for the timing of the first rate hike. The euro suffers from Greek problem as IMF believes that the reforms Greece recently accepted are not sufficient.
In addition, the International Monetary Fund refuses to take part in the bailout funds without debt relief. The pound started the week potentially after the strong UK GDP and kept its momentum, bolstered by other optimistic indicators came out.

[B]USD mixed on the Upbeat Data and indecisive Fed[/B]
The greenback was mixed against the other major currencies in the week just past despite that the majority of the economic indicators came out were optimistic for the economy. The economic growth rebounds the second quarter and came out 2.3% well above the preceding quarter of 0.6%. However, the market forecast was to have advanced by 2.6%. The flash [B]Personal Consumer Spending,[/B] the spine of the economic growth, picked up strongly by 2.2% in Q2, leaving behind the expectations of 2.0% and the contraction of last quarter of -1.9%. The core spending also surpassed expectations. The [B]Durable Goods Orders [/B]released on Monday jumped by 3.4% more than anticipated in June. Following two months of slowdown, the market participants expected the orders to grow by 3.0%. The Durable Goods Orders out of transportation showed the biggest growth in nearly a year, +0.8%. The Preliminary Markit Services PMI for July overpassed expectations, as well as the Richmond Fed Manufacturing Index also for July.

The two-day [B]FOMC Policy meeting[/B] concluded on Wednesday with current monetary policy unchanged, where it has been since the Great Recession, but left the door open for a rate hike in the next three FOMC meetings during 2015. While the big portion of the economists were expected that Fed will endorse the rumors for September’s rate hike and even though they left the option on the table on the table, policymakers stated that further improvement in the country’s labor market is needed before raise the rates. Thereby, July’s, August’s and September’s Non-Farm Payrolls report would be determined for the timing of the first interest rate increase after six years of being at a record low of 0.25%.

The negative economic news for the buck that released in the week was the Case-Shiller Home Prices Indices for May came out 4.9% missing expectations to have risen up to 5.6% and the [B]Consumer Confidence[/B] that dropped in July affected from the Global Turmoil. It decreased substantially to 90.9 from 100.0 that expected.

[B]Euro extends losses on Greek uncertainty; Mixed data from Eurozone[/B]
The shared currency is running negative against the other G10 currencies from Monday on the back of the weak German data and a repeat from [B]IMF[/B] that [B]will not be part in another bailout for Greece without a debt relief[/B]. The new reforms that Greek government accepts do not make the debt viable. Meanwhile, the Greek Prime minister called for a party referendum on the bailout on Sunday as he doesn’t have enough support from its party.

The [B]German preliminary CPI [/B]on a yearly basis came out 0.2% in July below than anticipated to remain stable at 0.3%. June’s Retail Sales dipped by -2.3% from 0.4% before and the G[B]erman Unemployment change[/B] increased by 9,000 while it was expected to have dropped by 5,000. On the other hand, the [B]Economic Sentiment[/B] in Eurozone jumped higher in July as well as the optimism in Germany for the same month, according to the IFO Survey.

On Thursday, the [B]EUR/USD[/B] currency pair moved according to our expectations and continued to depreciate after the prices moved below the psychological support of 1.1000. The prices structure on a daily basis remains strongly bearish and we expect the pair to continue towards the prior lows located at 1.0500. A daily close below 1.0800 will be a confirmation for further declines. Only in case we see the pair being traded above 1.1150 we can say that bulls are having an upper hand.

The [B]EUR/GBP [/B]pair is traded in a very strong downtrend. The prices have confirmed the bearish prices structure and successfully rebounded from the 50-period SMA. Currently, the pair is traded below the 7-period SMA and that is a signal for a strong bearish impulse. We expect the downtrend to continue as a daily close below 0.7000 would indicate that further declines are going to take place. Our expectations are that the pair will reach the support zone around 0.6800 before a correction takes place.

[B] Pound Ramped up on the Upbeat Economic Data[/B]
The Pound reordered robust strength against all of the G10 currencies on the potent economic indicators that came out. The estimate of the [B]GDP growth[/B] met expectations and showed that the UK economy advanced by 0.7% in the second quarter, on a quarterly basis, greater than the 0.4% before. The [B]Bank of England accepted more mortgages than expected[/B] in June and well above the month prior, something that will push the housing and manufacturing sectors. The consumer credit also overpassed forecasts in June. It’s worth notice that as good news keep coming for UK, the possibility for a rate hike in 2015 increases, pushing the sterling higher.

As we expected the [B]GBP/USD [/B]currency pair confirmed the levels around 1.5670 as a solid resistance zone and on a daily basis there are strong price action patterns pointing for further declines. We expect the pair to continue the bearish set-up and the prices are likely to continue depreciating towards the horizontal support level of 1.5320. A daily close below 1.5320 would open the path for further declines towards 1.51000. On the other hand, if we see the prices being traded above 1.5670, the bulls will have an upper hand.

[B]NZD lifted-off on RBNZ Governor Comments[/B]
The New Zealand dollar rose aggressively versus the US dollar on Tuesday and kept its gains after the RBNZ Governor Graeme Wheeler said that [B]the country needs further Monetary Policy Easing [/B]and a lower exchange rate. According to the price levels of exports the governor believes that [B]a greater depreciation on the NZD exchange rate is required[/B] “to stabilise the net external liabilities position relative to GDP”, to return to Bank’s Inflation target and maintain economic growth. However, he stated that [B]large rate cuts would materialize if the economy moves in recession[/B], disappointing some commentators that forecasted otherwise. The RBNZ cut interest rates in two months in a row, 25 basis points down each time. Currently, the benchmark interest rate is 3% and is seen to drop further as 2.5% until the end of the year. The last year, the inflation rate is below 1% and slightly above zero the first two quarters of 2015 (0.1% in Q1, 0.3% in Q2) reaching a 15-year low in the first quarter. The kiwi depreciated for eleven weeks out of fourteen and is now running on a positive week. The pair weakened more than 13% since mid-April and more than 26% during the last year.

[B]Economic Indicators[/B]
Finally, today, Italy’s and Eurozone’s Preliminary Inflation Rate as well as Eurozone’s unemployment rate, all for July, will be published and will be keenly eyed from the market participants. While all the CAD traders will await the final GDP for May, in US, the Employment Cost Index for Q2, the Chicago Purchasing Managers’ Index for July and the final Michigan Consumer Sentiment Index for June will be released.

The British pound declined significantly in the week just past after the “Super Thursday” with triple released from the BoE. The dollar is traded higher as the traders await the NFP report which is expected to be soft according to the already known labour data. Euro was traded mixed against the majors during the week on mixed data while the Athens General Index recorded gains for the first time after Athens Stock Exchange reopened!

[B]USD higher ahead of the NFP Report[/B]
Since Monday, the US Dollar is traded higher against the G10 currencies ahead of the NFP Report scheduled to be released later today, despite the downbeat indications for it. The payroll services firm, [B]ADP[/B], in its employment report, revealed that the private sector less than 200,000 jobs for July, [B]by far below market expectation[/B]. This is a bad signal for the [B]Non-Farm Payrolls[/B] report which is expected to show that both the public and the private sector added 222,000 jobs slightly below last month’s figure of 223,000. It’s remarkable that Fed will closely eye the next three NFP numbers until the Fed Policy meeting, as it is a main indicator for the time of the first rate hike. The Initial Jobless Claims was 270k above the figure of the week before, but below the forecasts to have risen at 273k. By contract, the Continuing Jobless Claims picked up at 2.255M while the market had predicted a slowdown to 2.240M.

In other news, the Construction sector slowed down its spending pace at 0.1% missing forecasts of dipping to 0.6% from 1.8% before. The factory activity, according to Markit economics, met the initial forecasts at 53.8 in July but rebound from a 20-month low registered in June. However, the factories eased pace according the Institute for Supply Management (ISM). The index regarding Manufacturing slipped to 52.7 missing market consensus to have been 53.5 as the previous estimate. The Personal Income accelerated at a steeper than expected pace in June by 0.4% vs 0.3% expected while the Consumer spending for the same month advanced at its slowest pace for the four months to June (0.2% vs 0.7% before).

[B]Euro mixed on mixed data! Athens General Index recorded gains![/B]
Euro was traded mixed versus the other G10 currencies during the week on the mixed economic data released. Eurozone’s Retail Sales not only missed the expectations to have slowed down in June but contracted severely. It decreased by -0.6% vs +0.1% before. Comparing with the same month the year before, the Retail Sales advanced just 1.2% from 2.6% before. [B]German Industrial Production contracted[/B] -1.4% in June, the steeper pace of slowdown in the last 10 months.

Both Eurozone’s and Germany’s[B] services sector showed strong growth[/B] beating expectations to have remained stable. In Germany the Markit Services PMI came out 53.8 slightly above the forecast of 53.7 and in Eurozone as a whole the Survey concluded at an expansion by 54.0 vs 53.8 expected. July’s Markit Manufacturing PMIs for Eurozone, Germany and Italy surpassed expectations while the French PMI met the forecasts. The better than expected figures confirmed the strong expansion the Eurozone Factories for the last months.

Meanwhile, the [B]Athens General Index[/B] plunged 16.41% since Monday’s Athens Stock Exchange opening after five weeks. The index dropped severely the first three days but recorded gains of 3.65% on Thursday. Greece needs to repay 3.5 billion euros by August 20, thus the Bailout Package of 86 billion euros must be settled soon or another one Bridge Loan need to me agreed.

[B]EUR/USD[/B] is struggling in a battle between both market forces (bulls and bears) as it remains stuck in a range between the 1.0850 and 1.0950 levels. Last week we saw a break attempt on both sides but without any success, highlighting the fact that the investors are cautious ahead of the US NFP report, as a result to drive the market out of direction. Clearly, to confirm a bearish bias we still need to see a daily close below the psychological level of 1.0800, but given how aggressive the rally has been over the last few days, this looks extremely likely. The pair was already looking bearish after breaking below both, the 50- and 100-period SMAs as well as the failure to break back above the 1.1115 – 1.1130 zone, which includes also the descending trend line that started back in early July. Alternatively, a failure to break below the 1.0800 could provide an opportunity to retest the key resistance level at 1.0950 and then the psychological level of 1.1000, slightly below the 200-SMA on the 4-hour chart.

[B]GBP plunged after “Super Thursday”; MPC Voted 8-1[/B]
The sterling plummet against the major currencies on “Super Thursday” after the publication of the BoE decision along with the BoE minutes and the Quarterly Inflation Report. A while later the BoE Governor Mark Carney hold a press conference followed from the release the NIESR GDP Estimate.

The [B]B[/B][B]ank of England left interest rates unchanged[/B] at the historical low of 0.5%, as expected, but the MPC votes for an interest rate hike fell short of the estimations. Only one MPC member out of the nine voted for in favour of a rate rise rather than two as the market expected. The dovish pushback dropped the pound [B]more than 150 pips[/B] against the dollar. BoE left the Asset Purchase Facility unchanged at £375B and will continue to re-invest QE funds at least until rates start to rise. The minutes revealed that most of the committee members believe inflation will rise steadier that had previously supposed on the sterling’s appreciation and oil depreciation, thus a change in the monetary policy is not necessary. The [B]bottom line[/B] is that the exact time for the first rate hike cannot be predicted. It is [B]“data-dependent”[/B] as Mark Carney stated. The NIESR GDP showed a stable pace of expansion of 0.7%. However, [B]inflation [/B]forecasted to remain near zero until the end of 2015 on the back of the strong pound the low oil prices and [B]return to BoE target near 2% yearly, by 2017.[/B]

UK[B] Industrial Output[/B] fell by -0.4% in June from 0.1% expected due to the falling oil prices, gas and weak mining production. The Construction sector slowed down in July according to the PMI. However, the report was unlikely to stoke sell-off or lower demand among the investors on the back of the modest increase of the Nationwide Housing Prices in July as anticipated. The services sector, the key part of Britain’s economy, also slowed down in July as revealed from the Markit PMI Survey but the number stills above over 50 which is considered growth in the sector.

[B]GBP/USD [/B]plunged after the BoE meeting. The pair violated the 1.5580 barrier, which included the 50-SMA and the 200-SMA, but the fall was halted by the short-term ascending trendline around the 1.5460. The upside attempt above 1.5525 seen in the early European session found resistance at 1.5540 and the pair wasn’t able to hold there, easing back below the 1.5525. Today’s Non-Farm Payroll release will definitely create volatility which may be the catalyst needed for the pair to exit the sideways channel of 1.5450 to the downside and the key of 1.5560 – 1.5700 zone.

[B]AUD lifted-off after the RBA Announcement[/B]
The Australian dollar lifted-off against the US dollar early on Tuesday’s morning after the RBA Interest Rate decision but lost almost the half of the gains on the release of July’s labour data. However, preserved the weekly winning position against the dollar. The [B]Reserve Bank of Australia kept its interest rate unchanged [/B]at 2.0%, as expected, as it stills want to judge the impact of the two last rate cuts. The thought behind policy easing is that low interest rates support borrowing and spending. Credit is already on a gradual growth keeping the housing sector steady. The Rate statement encloses for another one time the officials believe that a lower foreign exchange rate is both likely and necessary on the back of the plunging commodity currencies. The unemployment rate rose to 6.3% in July while it was predicted to have fallen to 6.0% from 6.1% before. On the other hand, the Employment Change climbed at 38.5K and surpassed expectations of 15.0K from 7.0K, which make clear that the [B]unemployment rate[/B] picked up on the increased participation rate. Even though, the pair felt intensely the selling pressure.

The[B] AUD[/B] is looking pretty weak against the [B]USD [/B]at the moment, having broken through the key support level of 0.7400, as well as the 50-SMA on the 4-hour chart few days ago. In addition, the pair is moving inside a downward sloping channel, with the bulls struggling to break above both, the 1.0.7380 and 0.7430 levels, including the 0.7400 barrier. On the downside, the pair found strong support from the 200-SMA near the 0.7300 level. A breakout cannot be too far away now with some important data coming out from the US, including the all-important Non-farm Payrolls report.

[B]Economic Indicators[/B]
Finally, today, the big US event of the month, the NFP Report will be out. The last FOMC meeting, policymakers said that improvement in the labor market is needed to raise interest rates. Thereby, the number of jobs added in both the private and public sector will be strongly eyed. The market expects 222,000 jobs to have created in July, lower than 223,000 added the preceding month, but still above 200,000. In Canada, July’s labour data are also expected as usual.

The greenback fell against all of the major currencies on Thursday and Friday morning, with an exception the Japanese Yen ahead of the policy meeting the upcoming week. The US jobless claims released yesterday declined the points to a strong job market. The number of persons continued to receive unemployment benefits surpassed expectations. Both the Import and Export Price Indexes slowed down more than the market forecasts in August while the Wholesales inventory was the only upbeat for the economy in July.

[B]Euro is Broadly Higher[/B]
The euro was traded mixed versus the major currencies on Thursday and early Friday while it was broadly higher on the weekly performance. Eurozone’s economic growth surprised on the upside for the second quarter, overpassing expectations and coming out 1.5% on a yearly basis. Early on Friday, Germany released its Consumer Price Index report that met expectations.

[B]EUR/USD Technical Outlook
[/B]On the 4-hour chart, the EUR/USD pair has been traded below the resistance of 1.1315 and for now the bulls are unable to push through it. Despite the euro’s appreciation during the last couple of days, the overall daily trend remains bearish and we expect the resistance to hold and the prices to head towards 1.1000. On the other hand, a 4-hour close above the 1.1315 will be an indication that the pair may rally towards 1.1500.

[B]GBP/USD Climbed after BoE Policy Meeting[/B]
The British pound soared against the other G10 currencies during the week on the BoE decision, despite the soft data from the manufacturing and industrial sectors. The production in these sectors was decreased in July, however, through the Bank of England minutes, policymakers are optimistic that production will pick up shortly. The BoE left its monetary policy unchanged on Thursday’s policy meeting. The Monetary Policy Committee voted 8 – 1 to keep interest rates on hold at the record low of 0.5% and the Asset Purchase Facility at £375B. The decision was not unanimous, Ian McCafferty has voted in favor of an interest rate hike by 25bp to 0.75%. However, the central bank has not expressed significant worries for the global and domestic conditions. The inflation rate rose slightly to 0.1% the last year but remains far below the central bank’s target. The lowered forecast of GDP for Q3 is based on the belief of the policymakers that Q3 will reflect the past weakness of the domestic growth and the unit labor costs. In general, according to the BoE minutes, looks like the committee members want to raise interest rates but do not rush to do it now on the rising emanating risks from China.

During the US session, the GBP/USD pair gained an upward momentum and surged above the 1-hour 50-SMA, as well as, above the significant zone of 1.5400 – 1.5415. The pair is receiving a strong support from some important technical levels, including the 1-hour 2000-SMA and the 4-hour 50-SMA. The longer term bias in the market certainly appears to be more bullish in this pair with the 1.5500 being the next possible target! The stochastic and CCI are both pushing into a more bullish territory, supporting the notion that we could see a move towards the psychological level of 1.5500. Additionally, the MACD oscillator lies above both its zero and signal lines, favoring the continuation of the uptrend.

[B]GBP/JPY Technical Outlook[/B]
After the prices rebounded from the support zone around 180.50, the GBP/JPY pair turned bullish and on the 4-hour chart we observe that the last cross of the 50-SMA with the 14-SMA and the 7-SMA is a theoretical signal for an upcoming rally. A confirmation that the bulls are having an upper hand over the pair will be a 4-hour close above 187.50. On the other hand, if we see the pair traded below 184.50, the scenario turns bearish again that will push the price towards the 182.50.

[B]AUD/USD Rise in Employment[/B]
Australian dollar picked up against the U.S. dollar following the Australian dollar labour data report amid the rising risks from the China! The AUD/USD pair halted its fall on 0.6900 support level. The country’s unemployment rate fell to 6.2% as expected and 17.4k job vacancies filled up rather than 5.0k expected.
The AUD/USD pair has not been able to hold the trading below the level of 0.7000. Even though the prices depreciated down to 0.6900, the pair quickly rebounded and yesterday, on a daily basis, closed above 0.7000. Our forecast is that the bulls will continue to dominate the pair and we will expect a rally towards 0.7170 - 0.7200. On top of that, the levels below 0.7000 are extremely oversold even for a weekly or a monthly basis so we do not support any long-term bearish tendencies for the pair.

[B]Gold to continue depreciation[/B]
On both the 1-hour and the 4-hour charts, the price of gold is traded in a very well established downtrend pattern. The quotes are way below the 50-SMA and the last cross of the three SMAs (7 - 14 - 50 SMAs) is clearly bearish. We expect the commodity to continue depreciating towards the support zone at $1080.00. On the other hand, if we see the bulls take the upper hand and push the prices above both $1130.00 and the short-term descending trendline, as well as above the 4-hour 50-SMA, a rally towards $1150.00 is the alternative scenario.

[B]Brent Crude looks bearish
[/B]The Brent Crude is traded again in a bearish fashion. We expect the prices to continue the main downtrend as our expectations are that the bears will go for a test of the prior lows around the $42.00 support. However, first we would like to see a 4-hour close below $46.70 to say that from a technical point of view, the path towards $42.00 is clear. On the 4-hour chart, the price is traded below the 50-SMA and we also observe a bearish cross of the 50-SMA with the 14-SMA and the 7-SMA.

[B]Economic Indicators[/B]
In UK, the Consumer Inflation Expectations will be published. From US, the Producer Price Index, Augusts Monthly Budget Statement and the flash Michigan Consumer Sentiment for September will be out. An EcoFin meeting will start today and last until tomorrow. The Eurogroup meeting is scheduled for tomorrow.