G10 Daily FX Analysis by TraderMade

Trending Update 18th July

USD is the weakest G10 currency as the market moved overnight on the news that two more Republicans have decided to not support the revised health care bill. Inability to get things passed in the Senate has made market jittery over the US growth prospects. We don’t see any change in the USD outlook as only second tier US data is due this week.
In the latest developments, the Riksbank meeting minutes revealed that Governor Ingves said that Riksbank is unlikely to hike before the ECB. This has pushed SEK lower now the second worst G10 performer after USD.
Overnight, the RBA minutes revealed that the bank was more bullish on the economy compared to the 4th July rates statement. Governor Lowe also pointed that RBA wouldnt like AUD to be more than $0.80, so no wonder market is now targeting that.
Elsewhere, the NZD CPI disappointed bulls with NZD fairing the worst versus AUD as we highlighted yesterday. Next key data for NZD is the GDT prices at 1500GMT today.
In terms of data ahead, the UK CPI (0830GMT) will be keenly watched with any upside surprise in inflation likely to push GBPUSD to new post UK election highs. That said, the GBP is more vulnerable to a CPI miss as this will alter market view on a possible November rate hike.

G10 FX - 19th July

In the G10 currencies NZD (0.33%) has taken the top spot with AUD (0.16%) at number two. EUR (-0.15%) is the weakest for the day with JPY, USD and GBP in the middle of the pack. In the equity market, Nikkei 225 has closed 0.1% higher at 20,021 and the European equities have also opened firmer with DAX and CAC40 up 0.16% and 0.18%, respectively. However, FTSE has lost 0.3% after opening 0.3% firmer earlier today. Overall, the European equities are down for the week while US counterparts are up. In the rates market, the US (2.27%) and EU (0.55) 10-year yields have both come back, 13bp and 5bp, respectively, from their last week highs, however, we have seen some consolidation today. In the energy space, the WTI front month is now consolidating around $46.40 area after failing to break $47.0 mark yesterday after ICE CFTC data for last week showed money managers cut their net existing long positions. The US EIA crude inventory data is due later today at 1430 GMT and is likely to impact CAD and NOK traders. Elsewhere, there is little data of note in the European session and US housing starts and Canadas Manufacturing sales are only data of any note in the US session.
The ECB policy meeting is the main focus on Thursday but we have already seen a move higher in EUR as the market becomes wary of a hawkish ECB No change is expected on policy with the focus likely to remain on the language around QE; we expect ECB to keep quiet on any details while keeping a hawkish rhetoric on the economy. The ECB is unlikely to turn dovish as this may hurt their credibility.

EUR/USD short-term technical analysis

USD/JPY showing signs of key resistance - 19th July

GBP/USD in a potential wedge formation

G10 FX - 20th July

In the G10 currencies, the ranges are very narrow with AUD (-0.35%) and NZD (-0.22%) the weakest currencies. The Australian employment report was strong but AUD still fell as the market focused on PM Turnball comments that he’s concerned about household debt. Overall, we dont see any change in AUD outlook. Overnight, the BoJ kept policy rate and the 10-year JGB yield target unchanged as we suggested but has pushed back the timing of meeting its 2% inflation target; understandably JPY has been sold and we see this continuing over the coming days. In the equity market, Nikkei 225 has closed 0.62% higher at 20,145 and the European equities have also opened firmer with FTSE, DAX and CAC40 up 0.25%, 0.50% and 0.54%, respectively. In the rates market, the US and EU 10 year yields are both consolidating around 2.27% and 0.55%, respectively. In the energy space, the WTI front month is now consolidating around $47.0 mark after as sharp bounce yesterday after the US EIA crude inventory data showed more than expected drawdown (-4.727M actual vs -3.214M expected) in stock.
The ECB policy meeting is the main focus on Thursday but we have already seen a move higher in EUR as the market become wary of a hawkish ECB No change is expected on policy with the focus likely to remain on the language around QE; we expect ECB to keep quiet on any details while keeping a hawkish rhetoric on the economy. The ECB is unlikely to turn dovish as this may hurt their credibility. Any hint on QE announcement in September will lift EUR to new highs. Elsewhere, the UK retail sales at 0830 GMT will be keenly watched with negative data likely to highlight that recovery may be stalling. GBP is vulnerable to a data miss.

Weekly FX Technical Analysis round-up – Tuesday 18th July 2017
SUMMARY OF KEY FX RATES

Trade ideas
AUDUSD Monthly Chart (10-years)

AUDUSD is completing a base and .8516 is targeted next with .7717 (the resistance line that was broken should now support)

AUDJPY Weekly Chart (3-years)

AUDJPY has completed a head and shoulders base pattern with neckline at 87.35 broken. MACD is also showing signs of gaining momentum and we now target 92.67 initially, possibly 97.26. Below 87.00 to avert upside

NZDUSD Daily Chart (3-years)

NZDUSD is now crossing down from the overbought area but the latest bounce has put the bearish outlook in question. A broadening wedge formation top may complete but above .7403 will avert any downside towards .7052-.7089 area, and instead will open .7484-.7525.

EURAUD Daily Chart (6-month)

AUDCHF has completed a top with a break of 1.4629 and we now target 1.4447 intially possibly 1.4169-1.4291 area. Above 1.4813 needed to change outlook.

Major Currency Pairs
EURUSD Daily Chart (6-month)

EURUSD has now entered out initial 1.1530-1.1611 (2015/2016 highs) target, with 1.1701 (August 2017 high) possible. Above there next area of any note is 1.1870-81. MACD is showing some signs of exhausation but there is no tell tell signs of the upside stalling. Below 1.1375 to question upside

GBPUSD Daily Chart (6-month)

GBPUSD MACD is moving higher into the positive territory but there is some signs of stalling around the overbought area. 1.3119 resistance has also held firm. Hence we may see a dip to 1.2915, possibly 1.2813. However, while above 1.2813 and MACD above the zero line we still see upside to 1.3186, possibly 1.3276. Below 1.2813 averts upside.

USDJPY Daily Chart (6-month)

USDJPY is rejected by resistance near 114.36 and we expect a test of former resistance-turned support area around 111.61-112.11 given MACD has started to reverse from the overbought area. While 111.61 holds chances are of an upside to 115.60. Below 111.61 to open 110.13-110.79

AUDUSD Daily Chart (6-month)

AUDUSD met our .7831 target but the price action still looks constructive and MACD is still not in the overbought category. Hence we expect a further upside to .8072, possibly .8160-.8293 area. Below .7711 is needed to question upside.

EURGBP Daily Chart (6-month)

EURGBP latest bounce has established a bull channel and we project .8948 on a bounce with .9025 likely over the coming weeks. MACD will need to move below zero and .8720 needs to give way to avert upside.

USDCAD Daily chart (6-month)

USDCAD 1.2463, 2016 low, is where we may see some support emerge but failure to hold will trigger 1.2276 test (uptrend from 2012). We expect bounce to be capped by 1.2837 but above 1.2942 will be needed to question downside.

USDINR has now found support at 64.20 area, just above the support line. an upside to 64.75 is likely but if MACD needs to improve further to raise chances of a bigger bounce to 65.00. Below 64.20opens 63.89-64.00 area.

USDINR Daily Chart (6-month)

Trending Economic - 20/07

ECB President Draghi is repeating the same rhetoric with nothing new; however, EURUSD has rallied to 1.1550 from 1.1480 as a lack of dovish signal from the ECB has calmed jittery investors who were fearful of a dovish surprise. Also, Draghi said that governing council has not set a date to change guidance and that council will take a decision on guidance in autumn. In our view, EUR is likely to be supported given the ECB constructive stance and September meeting being very much likely for a change of stance. That said, a further sharp rise seems unlikley for now beacuse German 10-year bund is still moving lower now at 0.53%.
In the G10 currencies, EUR has now become number one currency with the USD still strong. GBP is the weakest despite strong retail sales. In the equities space, the European equities have not been able to extend their morning gains with FTSE, DAX and CAC40 up 0.31%, 0.54% and 0.50%, respectively. In the rates market, the US 10-year yields have dipped 2bp to 2.25%% while the EU 10-year yields are still down 2bp. In the energy space, the Brent crude is now trading above the $50.0.

Post-ECB outlook

#EUR outlook Post-ECB #FX #Forex #Trading $EURUSD #ECB President Draghi repeated the same rhetoric with nothing new; however, EURUSD has rallied to 1.1550 from 1.1480 as a lack of dovish signal from the ECB has calmed jittery investors who were fearful of a dovish surprise. Also, Draghi said that governing council has not set a date to change guidance and that council will take a decision on guidance in autumn. In our view, EUR is likely to be supported given the ECB constructive stance and September meeting being very much likely for a change of stance. That said, a further sharp rise seems unlikely for now because German 10-year bund is still moving lower now at 0.53%.

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Trending Economic - 21/07

EURUSD is showing no signs of stopping and we are likely to see a further rise. The current bounce is very much an aftermath of the ECB President Draghi’s lack of dovish remarks and investors building EUR long positions fearing to miss the upside move. NZD (+0.4%) is number one G10 currency today after the Finance minister overnight added some supportive comments. Also, there was a sharp rise in visitor arrivals to New Zealand, a rise of 17.3% compared to a rise of 8.0% previously. AUD (-0.8%) has taken the last spot after RBA Deputy Governor Debelle made some dovish comments. In the equity market, Nikkei 225 has closed -0.22% lower at 20,100 and the European equities have also opened lower with FTSE, DAX and CAC40 down 0.0%, -0.2% and -0.12%, respectively. In the rates market, the US and EU 10 year yields are both down 2bp to 2.25% and 0.52%, respectively. In the energy space, the WTI front month is now consolidating just under the $47.0 mark after a rejection from key resistance at $47.50.
In terms of data, the Canadian inflation rate and retail sales (1230 GMT) are the only data of any note with risks skewed to upside from positive numbers.

USDJPY we are expecting a bounce back

Trending Economic Update - 24th July

This week is action packed with OPEC and non-OPEC meeting likely to get the most attention today. The US existing home sales will also be due later today but we dont expect any significant reaction. Tuesday is a bit dull with Ifo business climate only data of any note. On Wednesday, BoJ Deputy Nakaso and RBA Lowe will grab some attention along with UK Q2 GDP (Preliminary) numbers. However, the main focus will remain on the FOMC rates decision; remember there is no press conference so the rates statement will have to suffice. Friday will also be important as the US Q2 GDP (advance) will become due.
Access fundamental and technical analysis for 15 Currency Pairs here.
The Euro-Area and German Manufacturing PMI (flash) have come slightly below expectations; however, both have reported robust numbers and are likely to support EUR
In terms of the market so far, AUD and JPY are the top two G10 currencies today, up 0.50% and 0.25 gains versus the USD, respectively. NZD is the weakest and we may see no change ahead of the June trade balance on Tuesday. In the Equities space, Nikkei 225 closed down -0.62% at 19.9776 and European Equities are also weak with FTSE, DAX and CAC40 down 0.53%, 0.33 and 0.6%, respectively. In the rates market, both German (0.49%) and US (2.24%) 10-year yields have fallen sharply following ECB Press conference and this is also the key reason for the drop in USDJPY and EURJPY. In the energy space, WTI front month has fallen to $45.60 after failing to break clear $47.50 last Friday.

G10 FX Currency Analysis
In the G10 currencies, NOK and EUR are the strongest two currencies, up 0.27% and 0.16% versus the USD, respectively while JPY and NZD are at the bottom of the pile. EUR and other European currencies have had a bit of a bounce following a positive German Ifo business climate (116.0 actual versus114.9 expected) and this suggests that there is an appetite to take the EUR higher on positive data. USD is slightly soft but ranges are very narrow and we don’t see this changing much given the relatively light calendar today. US CB consumer confidence at 1400 GMT is the only data point of any note. The economic calendar is action packet on Wednesday with the Australian CPI at 1330 GMT followed by a speech from the RBA Governor Lowe. Early in the European session, the UK Q2 GDP (Preliminary) is due which has the potential to move GBP sharply. That said, the main focus will still be on the FOMC rates decision.
In the Equities market, the Nikkei 225 has closed -0.1% at 19955.20 while the European equities have opened firmer with FTSE, DAX and CAC40 up 0.3%, 0.1% and 0.3%, respectively. In the rates market, the US 10-year yield has had a bit of respite, up 3bp to 2.26% since yesterdays low while the German 10-year yield has also risen (2bp) to 0.52% following German Ifo. In the energy space, WTI front month has recovered once again, now trading at $46.70, following OPEC move to cap Nigerian oil production following talks in Russia.

G10 Currency FX Trending Update - 26th July
In the G10 currencies today, JPY and NZD are a tad stronger along with CAD and USD at number two and four. That said there is not much between the top 5 currencies today which includes GBP The UK Q2 GDP has come in as expected but we expect GBP to weaken because investors were wary of a strong GDP print which failed to materialise. Elsewhere, the European equities have opened firmer with FTSE, DAX and CAC40 up, 0.53%, 0.36% and 0.65%, respectively, so far. In the rates market, the EU (0.55%) and US (2.32%) 10-year yields are slightly softer after yesterday’s sell-off in bonds. In the energy space, crude prices have rallied helped partially by renewed confidence that Saudi Arabia is committed to curbing oil production and partially by API inventory data that showed sharp draw downs in crude inventory. The WTI front month is now consolidating around $48.32 but if EIA inventory data confirms what API data suggests we may see a further Oil upside.
There is plenty happening in the oceanic currencies; the Australian CPI missed expectations by some margin (1.9% Actual versus 2.2% expected) and RBA Governor Lowe was also dovish in his speech after the CPI release. However, AUDUSD has managed to stay above recent support levels, hence, we remain cautious ahead of the FOMC later today. The New Zealand Trade balance came in strong last night with exports and imports both beating expectations. However, NZD fell as RBNZ assistant Governor McDermott delivered dovish comments on the currency stating “A lower NZD would be needed to lower … our external vulnerabilities further”. Overall, we are still positive on NZD.
The main focus will remain on the FOMC rates decision; remember there is no press conference so the rates statement will have to suffice. We see risk to USD skewed to the downside with Friday’s US Q2 GDP (advance) more important in our view.

Trending Update - 27th July
The FOMC erred on the dovish side with language on inflation changed from running “slightly below” to “running below” 2%. The Fed was fairly positive on the labour market and also hinted balance sheet normalisation from September. However, all the positive factors are largely priced in, hence, USD fell due to dovish language on inflation. We already highlighted the risk to USD downside and no change is expected before US Q2 GDP (advance) on Friday.
In terms of the G10 currencies today, AUD (0.28%) and NZD (0.23%) is number one and two, respectively, while CHF (-0.32%) is number ten with the other European currencies also fairly weak. USD has had a pull back following yesterday’s sell-off but the dollar index is still down 0.71% since the release of the FOMC rates statement. In equities, Nikkei 225 has closed 0.15% higher at 20.079.64 while European equities are mixed with FTSE flat, DAX down 0.2% and CAC40 up 0.2%. In the rates market, both the US and EU 10-year yields have fallen post-FOMC, down to 2.29% and 0.52%, respectively. In the energy space, the WTI front month has rallied further as EIA Crude inventory data confirmed large drawdown in inventory shown by the API data on Tuesday.

GBP/JPY forming a triangle

G10 FX Analysis - 28th July 2017
In the G10 currencies, NOK, EUR and SEK are the top three with CHF at the bottom. In equities, Nikkei 225 has closed 0.6% lower at 19,959.84, down 0.7% for the week. The European equities have also opened lower with FTSE, DAX and CAC40 down 0.26%, 0.63% and 1.00%, respectively. In the rates market, the EU and US 10-year yields are consolidating at 0.53% and 2.3%, respectively. In the energy space, the WTI front month is consolidating above the $49.0 handle after a strong 8.3% rise for the week.
USD had a bit of a respite yesterday with gains across the G10 space, however, the USD-index is still down roughly 0.5% (93.75) from pre-FOMC highs. The main focus for the day remains the US Q2 GDP growth rate (advance) at 1230GMT; in our view, a strong print will be needed to keep USD from falling. The Euro-area Business confidence at 0900GMT and German inflation rate (preliminary) at 1200 GMT will also be keenly watched.
Overnight, the Tokyo core CPI increased 0.2% better than the 0.1% increase expected. The headline inflation was same as expected at 0.4%. The unemployment rate also fell unexpectedly to 2.8% from 3%. Elsewhere, the Swedish Q2 GDP growth rate came in strong at 1.7% while a rise of 1% was expected. The retail sales were also very strong and as we have said before the Riksbank is likely to be compelled by data to change their dovish stance.
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Trending Economic 31st July 2017

In the G10 currencies, USD and JPY are the top gainers for the day with CAD and NZD the top losers. In the equities space, the Nikkei 225 has closed 0.17% down, at 19925.18 but the European equities are trading slightly firm with FTSE up 0.38%, DAX up 0.1%, and CAC 40 up 0.17% so far. In the rates market, the EU and US 10-year yields are consolidating at 0.54% and 2.29%, respectively, after failing to keep the rise seen early on Friday. In the energy space, the WTI front month is consolidating after testing the $50.0 mark.
Looking ahead, this week is relatively busy with the Euro-area inflation (flash) and unemployment rate the main focus today followed by the RBA rates decision and global manufacturing PMI’s on Tuesday. The services PMI will be due on Thursday along with the BoE rates decision and Euro-area retail sales. On Friday, the US NFP data will be the main focus but with Fed dependent on inflation we doubt if the US jobs data alone is sufficient to lift USD.
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