Forex Market Overview 02.02.2015

GROWTHACES.COM Forex Trading Strategies:
Trading Positions:
EUR/USD trading strategy: long at 1.1300, target 1.1550, stop-loss 1.1240
GBP/USD trading strategy: long at 1.5040, target 1.5250, stop-loss 1.4950
USD/CHF trading strategy: long at 0.9160, target 0.9400, stop-loss 0.9200
AUD/USD trading strategy: long at 0.7780, target 0.7990, stop-loss 0.7740
EUR/GBP trading strategy: long at 0.7470, target 0.7650, stop-loss 0.7490
EUR/CHF trading strategy: long at 1.0160, target 1.0650, stop-loss 1.0400
Pending Orders:
USD/JPY trading strategy: sell at 118.60, if filled target 116.60, stop-loss 119.10
USD/CAD trading strategy: buy at 1.2590, if filled target 1.2980, stop-loss 1.2480

EUR/USD: Better Macro Data May Support The EUR
(long for 1.1550)
[ul]
[li] U.S. GDP expanded at a 2.6% annual pace in the fourth quarter after the third quarter’s spectacular 5% rate. Consumer spending advanced at a 4.3% pace in the fourth quarter - the fastest since the first quarter of 2006 and an acceleration from the third quarter’s 3.2% pace. Business spending on equipment fell at a 1.9% rate (vs. growth of 11% in the third quarter). It was the largest contraction since the second quarter of 2009. A wider trade deficit subtracted 1.02 percentage point from GDP growth in the fourth quarter.
[/li][li] The University of Michigan’s final January reading on the overall index on consumer sentiment came in at 98.1 on better job and wage prospects. It was the highest reading since January 2004. The reading was up from 93.6 the month before but slightly under the preliminary reading of 98.2. The survey’s barometer of current economic conditions rose to 109.3 from 104.8 in December. The survey’s gauge of consumer expectations climbed to 91 from December’s reading of 86.4.
[/li][li] Chicago PMI rose to 59.4 in January from 58.8 in December, compared to the expected drop to 57.5.
[/li][li] St. Louis Fed President James Bullard said that Federal Reserve should not wait for wage growth before raising rates. He added the Fed should raise rates at a pace that is based on incoming economic data, and not necessarily at every meeting.
[/li][li] According to sources of German daily Handelsblatt European Commission president Jean-Claude Juncker wants to scrap the troika mission, but remains firmly opposed to the possibility of Greek debt haircut.
[/li][li] European Central Bank Executive Board member Benoit Coeure said the ECB would reassess its bond-buying programme as it progresses towards its stated end in 2016 and is ready to do more if needed to lift inflation toward the bank’s target. Coeure declined to comment on Greece in detail, saying political dialogue was under way between the new government and its European partners.
[/li][li] Euro zone final January manufacturing PMI amounted to 51.0, in line with an earlier flash reading and slightly above December’s print of 50.6. Manufacturing production rose at the fastest pace for six months in January, underpinned by a mild increase in new order volumes and work on existing contracts. Growth of production and new business was registered in Germany, Spain, the Netherlands and Ireland. Italy saw a slight gain in output for the first time since September 2014, and the rate of decline in France eased to the weakest in the current eight-month sequence of contraction.
[/li][li] Exporting manufacturers from the Euro zone should benefit from a fall of the EUR and lower oil prices in the coming months. On the other hand reduced fuel costs are likely to increase consumer income to spend on durable goods.
[/li][li] Our baseline scenario assumes that better macroeconomic data in the Euro zone will strengthen the EUR in the medium term, while interest rates hike in the USA in the middle of the year are highly uncertain. We stay EUR/USD long with the short-term target at 1.1550.
[/li][li] Traders are waiting for today’s U.S. ISM manufacturing data. Our forecast is 53.6 vs. the market consensus of 54.5 and below the level of 55.5 in the previous month. The reading is likely to support the EUR/USD.
[/li][/ul]

Significant technical analysis’ levels:
Resistance: 1.1364 (high Jan 30), 1.1368 (high Jan 29), 1.1384 (high Jan 28)
Support: 1.1280 (hourly low Feb 2), 1.1263 (low Jan 29), 1.1224 (low Jan 27)

EUR/CHF: 1.0650 Is In Sight
(stay long)
[ul]
[li] The Swiss PMI fell to a seasonally adjusted 48.2 points in January from 53.6 points in the previous month, below market consensus of 50.4 points. It is worth noting that the reading has only slightly reflected the influence of the SNB decision made on January 15. The full influence will be seen in the coming months and we should expect much lower PMI levels then.
[/li][li] A Swiss newspaper, citing sources close to the bank, reported that the Swiss National Bank is unofficially targeting an exchange rate of 1.05-1.10 CHF per EUR. A spokesman for the central bank declined to comment on the story.
[/li][li] The amount of cash commercial banks hold with the Swiss National Bank rose last week to CHF 383.325 bn from CHF 365.486 bn the previous week despite introducing negative interest rates on sight deposits by the SNB.
[/li][li] We keep our EUR/CHF and USD/CHF longs.
[/li][/ul]

USD/JPY Traders May Lose Their Faith In Additional BOJ Easing
(sell at 118.60)
[ul]
[li] The final Japan’s PMI amounted to 52.2 in January, slightly above a preliminary reading of 52.1 and higher than 52.0 in December. The output and new orders components were both higher than in December.
[/li][li] Bank of Japan Governor Haruhiko Kuroda said he did not think the recent weakening of the yen was severely hurting Japan’s economy. He added, however, it is desirable for exchange rates to move stably in a way that reflects economic fundamentals. A weak JPY boosts profits at big exporters, but hurts small non-manufacturers and squeezes households’ disposable income by pushing up the cost of imports.
[/li][li] The USD/JPY fell to 116.64 after triggering stop-losses but managed to find a foothold above 117.00 and is back above 117.50. The hints that the BOJ will take a pause before considering more easing steps made the USD/JPY traders undecided.
[/li][li] In our opinion the JPY is likely to strengthen slightly against the USD in the medium term on the BOJ not suggesting further acceleration of monetary easing and weaker U.S. macro data. We keep our sell order on the USD/JPY at 118.60.
[/li][/ul]

Significant technical analysis’ levels:
Resistance: 117.88 (session high Feb 2), 118.47 (high Jan 30), 118.50 (high Jan 29)
Support: 116.64 (session low Feb 2), 115.85 (low Jan 14), 115.56 (low Nov 16, 2014)

USD/CAD: The Loonie Is Weakening On Poor Macro Data
(buy at 1.2590)
[ul]
[li] Canada’s economy unexpectedly shrank by 0.2% mom in November vs. market consensus of 0.0% mom. The month-on-month decline was the largest since a 0.4% drop in December 2013. GDP shrank on weaker manufacturing, mining and oil and gas extraction.
[/li][li] Manufacturing output fell by 1.9% mom. Mining, quarrying, and oil and gas extraction fell by 1.5% mom. Wholesale trade retreated by 0.6% mom, while retail trade - boosted by promotions and sales - grew by 0.9% mom.
[/li][li] The central bank is due to make an interest rate announcement on March 4 and market participants have priced in above 75% chance of another cut then.
[/li][li] The International Monetary Fund said on Friday Canada’s economy will retain its momentum this year, despite a sharp drop in oil prices, thanks to exports to a recovering United States that will offset declines in domestic consumption and investment. The IMF expects the economy to see 2.3% growth this year, slightly lower than 2014’s estimated 2.4% rate.
[/li][li] The disappointment after the release of Canadian GDP figures made the USD/CAD rise to 1.2800. Bias remains firmly on the upside and we expect further gains towards 1.3000. We are looking to get long at 1.2590.
[/li][/ul]

Significant technical analysis’ levels:
Resistance: 1.2772 (high Feb 2), 1.2800 (high Jan 30), 1.2845 (high Mar 13, 2009)
Support: 1.2681 (session low Feb 2), 1.12608 (low Jan 30), 1.2600 (psychological level)

AUD/USD: All Eyes on RBA Tomorrow
(long for 0.7990, but the risk is high)
[ul]
[li] The Reserve Bank of Australia is likely to shave a quarter point off its 2.5% cash rate at its meeting on Tuesday (3:30 GMT), because the economy is facing falling prices for many of Australia’s major resource exports and a darker outlook for China. Monetary easing by many other central banks increased expectations for a rate cut by the RBA.
[/li][li] The cash rate is already at an historic low and has not been lowered since the last move in August 2013. One argument against an easing has been speculative froth in the housing markets of Sydney and Melbourne.
[/li][li] A rate cut is not our baseline scenario but the likelihood of such a move is significant. We expect the RBA to reiterate that “the Australian dollar remains above most estimates of its fundamental value.”
[/li][li] If the RBA does not cut interest rates the AUD/USD is likely to go up above 10-dma of 0.7927 or even towards 0.8000. The market sees about 70% likelihood of a rate cut tomorrow. That is why the AUD/USD reaction to a cut should be less significant, but the rate may break below its 5.5-year lows at fall to 0.7700.
[/li][li] We got long on the AUD/USD at 0.7780 and set the target at 0.7990, but the risk on this position is high. Our stop-loss level is at 0.7740.
[/li][/ul]

Significant technical analysis’ levels:
Resistance: 0.7907 (high Jan 29), 0.7927 (10-dma), 0.8008 (50% of 0.8295-0.7720)
Support: 0.7720 (low Jan 29), 0.7700 (monthly low Jul, 2009), 0.7241 (monthly low, May 2009)

Source: Forex Trading Strategies