Weekly Outlook: Sep 26 – 30; Lots Of Speeches Ahead

A super busy week ahead with many news on the economic calendar that is expected to affect the market. A number of speeches are scheduled from ECB President Draghi, from Fed Yellen and many other Fed members, as well as from BoC Governor Poloz and BoJ Governor Kuroda. The U.S. and U.K. will release their final GDP growths for Q2 while CPIs from Euro Area and Japan will be published.

The schedule [B]today[/B] starts with the IFO survey. The IFO business climate index, current assessment, and expectations for Germany will be released. In the U.K., the mortgage approvals for August are coming out with the expectation to be 37.2K from 37.7K in July. The most important events of the day are the SBN Chairman Jordan speech at 9:30 GMT and the ECB President Draghi’s speech at 13:30 GMT. Later in the day, we shift to the U.S. where some indexes from the housing sector will complete the picture of last week’s data. The new home sales are forecasted to plunge to 610K in August from 654K the month prior. Last week, the National Association of Realtors revealed that the existing home sales dropped more than expected in August. Dallas Fed manufacturing business index for September is also coming out. Moreover, the ECB’s Nowotny will have a speech and overnight BoC Governor will give also a speech. In the same time, the BoJ monetary policy meeting minutes will be released.

Early on [B]Tuesday[/B] import price index in Germany will be announced and is estimated to fell 2.4% from a drop of 3.8% the previous month. Eurozone’s M3 money supply is forecasted to have grown at +4.9% yoy pace in August, a slight acceleration from +4.8% yoy in July. From the U.K., the Confederation of British industry releases its latest CBI distributive trades survey. In the U.S. the S&P/Case-Shiller housing price indices for March are also due out at the same time with the flash Markit services PMI and Markit composite PMI. The Markit services PMI forecasted to rise up to 51.2 from 51.0 before. In addition, the consumer confidence figure for September is expected to fall 99.8 from 101.1 previously. Overnight, the RBA Assist Governor Edey will give a speech.

On [B]Wednesday[/B], early in the morning, the German Gfk consumer confidence for October is forecasted to remain unchanged at 10.2. From the U.S., the MBA mortgage approvals are expected to be released. Later, the U.S. durable goods for August are coming out and expected to slow 1.5% from an increase of 4.4% in the prior month. Additionally, ECB president Draghi will have a speech at 13:30 GMT and afterwards in the U.S. Fed Yellen testifies at 14:00 GMT. Both the euro and the U.S. dollar traders will closely attend the two speeches as are widely expected to trigger volatility in the aforementioned currencies cross pairs. Following the two speeches, the Fed’s Bullard, the Fed’s Evans, FOMC member Loretta J. Mester and Fed’s George will give their own speeches. The day ends with the announce of August’s retail trade in Japan and overnight a speech from the Bank of Japan Governor Kuroda.

On [B]Thursday[/B], we start the day with the German unemployment rate which is expected to remain unchanged at 6.1%. In Euro area, various sentiment indicators are coming out. The economic sentiment indicator, services sentiment, and consumer confidence are expected to remain stable in September while industrial and business sectors are predicted to be more optimistic than the month before. In Germany, the preliminary consumer price index for September is forecasted to show an increase to 0.6% yoy from 0.4%. In the second half of the trading day, the U.S. GDP will be closely eyed. The annualized figure is predicted to rise 1.2% in Q2 from 1.1% before. The personal consumption expenditure for the Q2 is also scheduled to be released. The pending home sales for August will be the second report from the U.S. housing sector this week. Fed’s Lockhart has a speech at 12:50 GMT and FOMC Member Powell at 14:00 GMT while the most important speech comes a while later by Fed Chairwoman Janet Yellen at 20:00 GMT.

Later in the day, U.K.’s GFK consumer confidence for September is expected to reveal a slight improvement to -5 from -7 prior. Thereafter, attention will turn in Japan where many reports will be published. The inflation report is not expected to show significant changes in the related indicators as well as the employment report. Currently, the unemployment in Japan is 3% and the national inflation rate at -0.4%. Bank of Japan will publish its Summary of Opinions, a report that includes projections for inflation and economic growth. August’s industrial production is also coming out.

On [B]Friday[/B], the significant market driver news is not over. Early in the European morning, the German retail sales will be released. A while later, attention turns to U.K. The U.K. GDP growth report for Q2 is expected to reveal any surprises, the economy is forecasted to keep the same pace of growing at 2.2% annually and at 0.6% quarterly. Eurozone’s flash inflation report for September is expected to show an increase of 0.4% from a smaller rise of 0.2% before. If the forecasts come true, it will be the biggest increase since October 2014. Moreover, August’s unemployment rate is estimated to fall at 10.0 from 10.1% before, giving us one more signal that Euro area’s economy may have started to pick up.

In U.S., the personal income and spending figures for August will be released as well as the PCE – price index. A while later, the Michigan consumer sentiment index is coming out for September and is predicted to have increased slightly to 90.0 from 89.8 before.

EUR/USD: Retested The Falling Trend Line
The EUR/USD pair failed to break out of its consolidation area in the previous week, even after all of the important events last days. The common currency surged more than 0.7% during the prior week and recorded four green candles in a row. For most of September, the currency pair was confined to the 1.1120 support level and 1.1285 resistance level.

From a technical point of view, the pair rebounded on the descending short-term trend line early this morning and currently is trading near the 1.1230 price level. On the 4-hour chart, the 50-SMA is a strong obstacle for the bears since the price is still moving above it. The support area at 1.1200 – 1.1220 is also a significant difficulty for the price to slip below it since the 50-daily SMA and the 200-daily SMA overlaps with the 1.1200 psychological level. A penetration of the aforementioned obstacles should open the door for a retest of the 1.1140 and 1.1120 barriers. On the other hand, a break above the downtrend line will expose the price to the 1.1285 resistance level. On the same chart, technical indicators hold neutral in a positive territory, whilst the MACD indicator still lies above its trigger line. The RSI oscillator is moving slightly above the 50 level with some weak momentum.



GBP/USD: Third Negative Week in A Row

There were no major U.K. economic reports announced in the previous week, however, the GBP/USD pair created the third negative week in a row and plunged more than 2.4% the last three weeks. The pair continues to look bearish, pushing beyond the 1.2915 – 1.2945 support zone.

The technical structure suggests further downward price action since the pair is developing well below the three SMAs on the 4-hour chart. Last Thursday, the main currency had a pullback on the 50-SMA and currently is moving below the 1.2990 resistance level. A break above the latter level will open the way towards the 50-SMA on the 4-hour chart which is near the 1.3070 price level. On the other hand, the bearish scenario is more probable since technical indicators are following a negative path. The MACD oscillator is moving below both its zero and trigger line while the RSI indicator is sloping downwards. So, the pair will continue the downtrend until the 1.2865 support barrier for the next sessions.


USD/JPY: Will the Price Break the 100.60?
September has been a challenging month for the U.S. dollar. The greenback lost value against most of the major currencies and the USD/JPY pair plummeted more than 4% over the last 4 weeks and recorded four red candles in a row.

The pair is moving in a downtrend since December 2015 and during last week the price retested the descending trend line and failed to surpass above it. Now is moving near the 100.60 support level and the next levels to watch is the key support area at 99.80 – 100.00. On the other hand, a break above the 101.25 resistance level the pair will expose to the 102.00 psychological level which overlaps with the downtrend line. On the short-term timeframe, the price continues developing well below its moving averages, whilst the technical indicators hold within the negative territory endorsing the bearish thought. The RSI indicator is sloping downwards with some weak momentum while the MACD oscillator is flattening below its zero line.