GBP/USD Chart

Summary :
Target Level : 1.3385
Target Period : 3 days
Analysis :
Ascending Triangle has broken through the resistance line at 02-Aug-16:00 2016 GMT. Possible bullish price movement forecast for the next 3 days towards 1.338.
Supporting Indicators :
Upward sloping Moving Average
Resistance Levels :
Support Levels
( A ) 1.3172Last support turning point of Ascending Triangle.

Chart date range : 14-Jul-08:00 GMT-> 04-Aug-08:00 GMT Data interval : 4 hour RSI: 34 Candles MA: 34 Candles

Crude Oil Inventories surprised the markets with a surplus of 1.4 million last week

US crude is trading just below the $40 level on Wednesday. In the North American session, WTI/USD futures are trading at $39.97 Brent crude is trading at $42.54, as the Brent premium has widened t0 $2.57. On the release front, Crude Oil Inventories gained 1.4 million, surprising the markets which had expected a decline. ADP Nonfarm Payrolls improved to 179 thousand, beating the estimate. The ISM Non-Manufacturing PMI came in at 55.5 points, short of expectations. On Thursday, the US releases Unemployment Claims and the RBA will publish a monetary policy statement.
Crude Oil Inventories surprised the markets with a surplus of 1.4 million last week. The estimate stood at -1.6 million. The gain underscores the oversupply of crude on world markets, which has weighed on oil prices. US crude has broken below the symbolic $40 level, and with producer countries showing little appetite to curb output, the downturn in prices could continue.

The British pound is showing little movement on Wednesday

The British pound is showing little movement on Wednesday. Early in the North American session, GBP/USD is trading at 1.3340. On the release front, it’s a quiet day. British Construction PMI was unchanged at 47.4 points, matching the forecast. In the US, there are two key indicators on the schedule. ADP Nonfarm Employment Change improved to 179 thousand, beating expectations. Later in the day, the US releases ISM Non-Manufacturing PMI. On Thursday, we could see some volatility from the pound, as the the BoE is widely expected to lower interest rates, Over in the US, the key event is Unemployment Claims.
•GBP/USD has shown limited movement in the Wednesday session
•1.3219 is providing strong support
•1.3359 was tested earlier in resistance and is a weak line. It could break in the North American session
Further levels in both directions:
•Below: 1.3219, 1.3142, 1.3064 and 1.2938
•Above: 1.3359, 1.3513 and 1.3667
•Current range: 1.3219 to 1.3359
GBP/USD ratio has shown slight gains in short positions. Long and short positions are close to an even split, indicative of a lack of trader bias as to what direction GBP/USD will take next.

XAU/USD ratio has shown slight gains in short positions

XAU/USD ratio has shown slight gains in short positions. Long positions command a strong majority (60%), indicative of trader bias towards XAU/USD continuing to move upwards. Gold prices continue to move higher this week as the disappointing US GDP report has weighed on market sentiment. Preliminary GDP for the second quarter disappointed, as the markets had expected a strong gain of 2.6%, while the economy responded with a much smaller gain of 1.2%. A September rate hike appears less likely, given recent economic data. On Sunday, FOMC William Dudley, a close ally of Janet Yellen, said that the Brexit fallout posed a risk to the US economy and urged the Fed to proceed with caution before raising interest rates. The US will release wage growth and nonfarm payrolls later in the week, and these key employment numbers will be carefully monitored by the Fed as it mulls over a possible rate hike. The markets have circled September and December as the most likely dates for a rate hike, but if the Fed isn’t satisfied with the economy’s performance, it could delay any moves until 2017

The USD/JPY ratio has little movement on Tuesday

The USD/JPY ratio has little movement on Tuesday. Currently, long positions have a majority (65%), indicative of trader bias towards USD/JPY reversing directions and moving to higher ground.
•USD/JPY was flat in the Asian session and has posted considerable losses in the European session
•101.20 is providing support
•There is resistance at 102.36
•Current range: 101.20 to 102.36
The Japanese yen has posted gains on Tuesday, following a lackluster start to the week. USD/JPY is currently trading at 101.80. On the release front, Japan announced the first step in its stimulus package, totaling JPY 13.4 billion. Japanese Consumer Confidence came in at 41.3, short of expectations. We’ll get a look at the BoJ minutes later today. In the US, today’s major event is Personal Spending, with the estimate standing at 0.3%. On Wednesday, the US releases two key events – ISM Non-Manufacturing PMI and ADP Nonfarm Employment Change.

Oil chart

Just as it looked as though we may see a correction in Brent crude as it ran into support around a key zone, it’s taken another dip lower breaking through the lower bound of the support zone and the 200-day simple moving average in the process.

 

EUR/USD breaking out and moving lower.

The euro is unchanged on Monday, following sharp gains in the Friday session. EUR/USD is currently trading at 1.1170. On the release front, manufacturing PMIs are in focus in both the Eurozone and the US. German Manufacturing PMI came in at 53.7, while Eurozone Manufacturing PMI showed a reading of 52.0. Both figures were very close to the estimates. Later in the day, the US will release ISM Manufacturing PMI. Little change is expected in the July reading, with an estimate of 53.1 points.
The euro gained closed to 100 points on Friday and closed the week at 1.1170, its highest level since the Brexit vote in late June. The euro took advantage of a surprisingly soft US GDP report. Preliminary GDP for the second quarter was projected at 2.6%, but posted a much smaller gain of 1.6%. The soft reading not only pushed the dollar lower, but has dampened enthusiasm regarding a rate hike by the Fed, which last week stayed on the sidelines yet again.EUR/USD ratio showed gains in long positions on Friday, consistent with strong gains by EUR/USD on Friday. Short positions have a strong majority (63%), indicative of trader bias towards EUR/USD breaking out and moving lower.

GBP/USD ratio is almost unchanged on Monday

GBP/USD ratio is almost unchanged on Monday, consistent with the lack of movement from GBP/USD. Long positions have a majority (55%), indicative of trader bias towards GBP/USD breaking out and moving higher.
•GBP/USD posted gains in the Asian session. The pair reversed directions in the European session and posted sharp losses. The pair is unchanged early in North American trade
•1.3142 is providing support
•1.3219 was tested in resistance earlier and is under pressure
The British pound has posted small losses at the start of the week. In Monday’s North American session, GBP/USD is trading at the 1.32 line. On the release front, British Manufacturing PMI dipped to 48.2 points, below the estimate of 49.1. Later in the day, the US will release ISM Manufacturing PMI, a key indicator. Little change is expected in the July reading, with an estimate of 53.1 points. On Tuesday, the UK will publish Construction PMI, with the markets bracing for a weak reading of 44.2 points.
British PMI reports are important gauges of economic activity, and the week kicked off on a sour note. Manufacturing PMI came in at 48.2 points in July, following the previous release which also indicated contraction in the manufacturing sector. There are growing worries that third quarter data such as PMI reports will point to a weakening British economy, due to the fallout from the Brexit vote. Construction and Services PMIs are also expected to contract, and this could weaken the pound. The markets will also be keeping a close eye on the BoE, which is widely expected to cut interest rates when it meets on Thursday. The BoE surprised the markets in July when it maintained rates at 0.50%, but faces losing credibility if it stays on the sidelines again. The bank hasn’t lowered rates since 2009, so such a dramatic move could push the pound to lower levels.

USD/JPY posted sharp losses in the Asian session

The USD/JPY ratio has shown slight movement towards long positions. Currently, long positions have a majority (62%), indicative of trader bias towards USD/JPY reversing directions and moving to higher ground.
•USD/JPY posted sharp losses in the Asian session. The pair has shown limited movement in the European session
•104.99 is a strong resistance line
•103.73 was tested earlier and is a weak support level. It could see further action in the Friday session
•Current range: 103.73 to 104.99
The Japanese yen has posted strong gains on Friday. In the North American session, USD/JPY is trading at 102.80. On the release front, Japanese consumer inflation and consumer spending indicators disappointed. Tokyo Core CPI posted a decline of 0.4%, while Retail Sales dropped 2.2%. The Bank of Japan surprised the markets as it did not lower interest rates at its policy meeting. The yen continues to improve following a soft GDP report in the US on Friday. Advanced GDP for the second quarter climbed 1.2%, much weaker than the forecast of 2.6%. Later in the day, we’ll get a look at a key consumer confidence indicator, with the release of UoM Consumer Sentiment. The markets are braced for the indicator to dip to 90.2 points

AUD/USD was flat in the Asian session.

•AUD/USD was flat in the Asian session. The pair has posted small gains in European trade
•0.7440 is providing strong support
•0.7560 is under pressure as resistance
•Current range: 0.7440 to 0.7560
Further levels in both directions:
•Below: 0.7440, 0.7339, 0.7251 and 0.7105
•Above: 0.7560, 0.7701 and 0.7835
AUD/USD ratio has shown movement towards short positions. Currently, long positions retain a majority (54%), indicative of trader bias towards AUD/USD continuing to gain ground.
The Australian dollar is subdued on Thursday, as AUD/USD is currently trading at 0.7530. On the release front, Australian Import Prices declined 1.0%, well off the estimate of a 1.6% gain. Later in the day, Australia releases PPI, an important inflation indicator. The markets are expecting a small gain of 0.2%. In the US, there are just two releases, highlighted by Unemployment Claims. The indicator is expected to rise to 261 thousand.
The markets were keeping a close eye on Australia’s CPI release on Wednesday. The index rebounded nicely in the second quarter, posting a gain of 0.4%, compared to a decline of 0.2% in the first quarter. It’s not clear how the RBA, which will set interest rates next week, plans to respond to the CPI release.

AUD/USD was choppy in the Asian session

0.7251 0.7339 0.7440 0.7560 0.7701 0.7835
•AUD/USD was choppy in the Asian session. The pair posted slight losses in European trade and is unchanged early in the North American session
•0.7440 is under strong pressure in support
•0.7560 is has strengthened in resistance following gains by AUD/USD on Wednesday
•Current range: 0.7440 to 0.7560
AUD/USD ratio has shown movement towards long positions. Currently, long positions retain a majority (58%), indicative of trader bias towards AUD/USD reversing directions and moving higher.
The Australian dollar has posted losses on Wednesday, erasing the gains from the Tuesday session. In the North American session, AUD/USD is trading slightly above the 0.7470. On the release front, Australian CPI posted a gain of 0.4%, matching the forecast. In the US, economic indicators were dismal. Core Durable Goods Orders and Durable Goods Orders both posted declines. As well, Pending Homes Sales posted a small gain of 0.2%, well below expectations. Later in the day, the Federal Reserve will conclude its meeting and issue a policy statement. On Thursday, the US will release Unemployment Claims.
Australia released a highly-anticipated CPI reading for the second quarter on Wednesday. The index rebounded nicely, posting a gain of 0.4%, compared to a decline of 0.2% in the first quarter. It’s not clear how the RBA, which will set interest rates next week, will respond to the CPI release. The markets have priced in a 50% chance that the bank will lower rates, and an unexpected CPI reading could have swayed the odds of a rate cut. However, the reading matched the forecast, so the question of whether the RBA will act remains up in the air. The annual inflation rate stands at just 1.0%, well below the RBA’s stated target of 2% to 3%. Will this be enough of a factor to prod the RBA into action? We’ll have to wait and see. Many economists see interest rates steadily declining, with Capital Economics chief analyst Paul Dales projecting that rates could drop as low as 1%.

The USD/JPY ratio has shown gains in long positions

•USD/JPY has posted gains in the Asian and European sessions
•104.99 has switched to support following gains by USD/JPY in the Wednesday session
•105.87 was tested earlier in resistance and remains a fluid line
•Current range: 104.99 to 105.87
The USD/JPY ratio has shown gains in long positions. Currently, long positions have a majority (63%), indicative of trader bias towards USD/JPY continuing to move towards higher ground.
The Japanese yen has reversed directions on Wednesday, posting considerable losses. USD/JPY is currently trading at 105.70. On the release front, there are no Japanese releases. In the US, the Federal Reserve will set the benchmark rate and issue a policy statement. As well, we’ll get a look at durable good orders and pending home sales.
There was positive news out of the US on Tuesday. CB Consumer Confidence dipped to 97.3 points in July, lower than the June reading of 98.0, but nonetheless another excellent release. New Home Sales followed suit, jumping to 592 thousand in June. This figure easily beat the forecast of 560 thousand. There was more good news from the manufacturing sector, as the Richmond Manufacturing Index surged, posting a reading of plus-10 points. This crushed the forecast of minus-4 points.
The Abe government is planning a significant fiscal spending package, but how big is big? On Wednesday, Abe announced a spending package of JPY 28 trillion, higher than the markets had expected. This report sent the yen lower. On Tuesday, a Nikkei report stated that the government would unveil a direct fiscal stimulus of about JPY 6 trillion yen over the next few years, pushing the Japanese currency higher. We can expect further volatility from USD/JPY as additional details about the fiscal package are released. The BoJ will issue a policy statement late Thursday, and it remains unclear if the bank will adopt further easing measures.

The dollar sunk Tuesday to its weakest level against the yen

The dollar sunk Tuesday to its weakest level against the yen in nearly two weeks amid reports that Japanese stimulus efforts might fall short of investors’ expectations.
The greenback  tumbled 1.3% to ¥104.37 in recent trade, its weakest level since July 14, compared with ¥105.81 late Monday in New York.
A Nikkei report published over the weekend said a fiscal stimulus package planned by the government would be much smaller than expected. Taro Aso, Japan’s finance minister, played down the report, saying the government had not yet decided on the size of the package.
Aso’s comments undermined expectations for a sizable expansion of the Bank of Japan’s easing efforts on Friday following the close of its two-day policy meeting, according to a team of currency strategists at Scotiabank. The BOJ might want to gauge the size of the government’s fiscal stimulus before deciding whether supplemental measures are needed, the team said.
The greenback plunged to its weakest level against the yen in more than two years late last month after the U.K. voted to leave the European Union, sending investors scrambling into safety plays like the yen and gold.
But it has risen off its lows against the yen this month after Prime Minister Shinzo Abe’s ruling coalition won a decisive electoral victory, increasing the likelihood of more monetary and fiscal stimulus measures.
“I’d be surprised if they hesitate,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange. “Because that would see the yen rocket higher and that’s something policy makers in Japan want to avoid at all costs.”
 

EUR/USD Chart

Summary :
Target Level : 1.106
Target Period : 3 days
Analysis :
Falling Wedge identified at 25-Jul-20:00 2016 GMT. This pattern is still in the process of forming. Possible bullish price movement towards the resistance 1.106 within the next 3 days.
Resistance Levels :
( B ) 1.106Last resistance turning point of Falling Wedge.
Support Levels
( A ) 1.0955Last support turning point of Falling Wedge.

Chart date range : 07-Jul-08:00 GMT-> 26-Jul-08:00 GMT Data interval : 4 hour RSI: 34 Candles MA: 34 Candles

US crude has dropped sharply on Monday

US crude has dropped sharply on Monday, continuing the downward trend seen late last week. In the North American session, WTI/USD futures are trading at $43.19. Brent crude is trading at $44.80, as the Brent premium stands at $1.59. It’s a quiet start to the trading week, with no US releases on the schedule. On Tuesday, there are two key releases, CB Consumer Confidence and New Home Sales.
Crude prices continue to slide. WTI/USD has plunged 4.9% since Wednesday, dropping close to the $43 level. US crude inventory reports continue to point to declines week after week, but crude prices haven’t rebounded, due to the oversupply of crude. Drilling activity in the US is on the upswing, as the number of US drilling rigs continues to increase. This is raising concerns that higher production levels in the US will exacerbate supply levels and push down crude prices even further. In late June, US crude broke above the $50 level, but has since dropped sharply, losing more than 12 percent in that time.

The British pound

The British pound is unchanged at the start of the new trading week. Early in the North American session, GBP/USD is trading slightly at the 1.31 line. On the release front, it’s a quiet start to the week, with just one event on the schedule. British CBI Industrial Order Expectations came in at -4 points, within expectations. There are no US releases on Monday. On Tuesday, the US releases CB Consumer Confidence and New Home Sales, both key indicators.•GBP/USD was flat in the Asian session and has posted sharp losses in the European session. The pair is showing limited movement early in the North American session
•1.3142 has switched to a resistance role following sharp losses by GBP/USD in the European session
•1.3064 is providing support. It is a weak line and could be tested in the North American session
GBP/USD ratio is showing gains in long positions on Friday, consistent with the sharp losses recorded by GBP/USD. Currently, long positions have a majority (54%), indicative of trader bias towards GBP/USD reversing directions and moving higher.

The Japanese yen is almost unchanged in the Monday

The Japanese yen is almost unchanged in the Monday session, as USD/JPY is trading slightly above the 106 level. On the release front, Japanese Trade Balance came in at JPY 33 trillion, easily beating expectations. Later in the day, Japan releases the Services Producer Price Index, which measures inflation in the corporate sector. The markets are expecting a weak gain of 0.1%. In the US, there are no events on the schedule. On Tuesday, the US releases CB Consumer Confidence and New Home Sales, both key indicators.
Although there were no major releases out of Japan last week, the yen showed a fair bit of volatility. Much of the movement can be attributed to market speculation as to what measures the Abe government and Bank of Japan will take in the next few weeks. The yen slipped on Wednesday on speculation that the government was planning a large fiscal spending package. However, the currency reversed directions and climbed on Thursday after BoJ Governor Haruhiko Kuroda flatly rejected the use of “helicopter money” – or increasing the budget deficit by a permanent increase in monetary base – in order to combat deflation. This tool is seen as an alternative to quantitative easing and some economists have suggested it could be used in Japan, with interest rates in negative territory and the economy in danger of recession. Kuroda added that the bank has not changed its stance of adopting further easing by way of quantitative easing, qualitative easing or lowering interest rates. The Bank of Japan meets for a policy meeting on Thursday and the markets will be looking for hints as to what, if any, monetary steps the bank will choose to implement.
The USD/JPY ratio is currently showing long positions with a majority (55%), indicative of trader bias towards USD/JPY breaking out and moving towards higher ground.

GBP/USD Chart

Summary :
Target Level : 1.3065
Target Period : 3 days
Analysis :
Head and Shoulders identified at 22-Jul-16:00 2016 GMT. This pattern is still in the process of forming. Possible bearish price movement towards the support 1.306 within the next 3 days.
Supporting Indicators :
Downward sloping Moving Average
Resistance Levels :
( B ) 1.3292Last resistance turning point of Head and Shoulders.
Support Levels
( A ) 1.3065Last support turning point of Head and Shoulders.

Chart date range : 05-Jul-00:00 GMT-> 25-Jul-08:00 GMT Data interval : 4 hour RSI: 34 Candles MA: 34 Candles

GBP/USD ratio is showing slight movement

GBP/USD ratio is showing slight movement in short positions. Long and short positions are close to an even split, indicative of a lack of trader bias as to what direction GBP/USD will take.•GBP/USD was flat in the Asian session and has posted considerable losses in the European session
•1.3142 is providing support
•1.3219 was tested earlier in resistance and remains a weak line
Further levels in both directions:
•Below: 1.3142, 1.3064 and 1.2938
•Above: 1.3219, 1.3349, 1.3513 and 1.3675
•Current range: 1.3142 to 1.3219
The British pound has reversed directions on Thursday, posting slight losses. Early in the North American session, GBP/USD is trading at the 1.32 line. In economic news, British Retail Sales declined by 0.9%, missing expectations. Public Sector Net Borrowing improved to GBP 7.3 billion, beating the estimate. Over in the US, it’s a busy day. Unemployment Claims remained steady at 253 thousand, well below the forecast. The Philly Fed Manufacturing Index disappointed with a decline of 2.9 points. Later in the day, we’ll get a look at Existing Home Sales, with the indicator expected to soften to 5.48 million.

EUR/USD

Summary :
Target Level : 1.107
Target Period : 2 days
Analysis :
Falling Wedge has broken through the resistance line at 21-Jul-04:00 2016 GMT. Possible bullish price movement forecast for the next 2 days towards 1.107.
Resistance Levels :
( B ) 1.1077Last resistance turning point of Falling Wedge.
Support Levels
( A ) 1.0981Last support turning point of Falling Wedge.

Chart date range : 05-Jul-16:00 GMT-> 21-Jul-04:00 GMT Data interval : 4 hour RSI: 34 Candles MA: 34 Candles

The pound climbed from a one-week low as a report showed

The pound climbed from a one-week low as a report showed the U.K. unemployment rate fell below 5 percent for the first time since 2005.
Sterling was further boosted by a Bank of England survey which showed that despite an increase in business uncertainty after the June 23 referendum where the U.K. voted to leave the European Union, firms sought to maintain “business as usual.”
The British currency gained versus all of its 16 major peers as data showed the U.K. jobless rate, as measured by International Labour Organisation standards, dropped to 4.9 percent in the three months through May. The median forecast in a Bloomberg survey of economists was for an unchanged reading of 5 percent. Separate wage data showed average weekly earnings unexpectedly fell.
“It’s a double push really for the pound,” said Neil Jones, London-based head of hedge-fund sales at Mizuho Bank Ltd. “We have got insight into the thinking of businesses and it looks like the hiring plans” are not expected to change “for the moment, so we can probably maintain some healthy levels of employment.”
The pound rose 0.3 percent to $1.3154 as of 2:26 p.m. London time, after falling earlier to $1.3065, the lowest since July 12. Sterling strengthened 0.5 percent to 83.61 pence per euro.

Brent is testing its July lows

Should we see a break of this level, it could spark another move lower with the next key area of support coming around $42.20-43.30, where the 200 and 240-day SMAs intersect a prior zone of support and resistance.
This would also coincide with the channel support that Brent appears to have been trading within over the last seven weeks and would therefore not yet indicate a more severe move lower.
That said, should we see a break below here, then price would now be trading below all of these moving averages and potentially have broken below its established range which would indicate that any bullish correction may have run its course and we could be heading much lower.
 Brent is testing its July lows having broken lower in the last hour or two, a break of which could prompt a break of the 89-day SMA mentioned above.

EUR/USD ratio has shown movement towards long positions

EUR/USD ratio has shown movement towards long positions Wednesday. Short positions have a majority (53%), indicative of trader bias towards EUR/USD breaking out and moving to lower levels.•EUR/USD was flat in the Asian session and has posted small losses in European trade
•1.1054 is a weak resistance line
•1.0925 is providing support
Further levels in both directions:
•Below: 1.0925, 1.0821 and 1.0708
•Above: 1.1054, 1.1150, 1.1278 and 1.1376
•Current range: 1.0925 to 1.1054
EUR/USD is unchanged on Wednesday, following losses on the Tuesday session. The pair is currently trading at the 1.10 line. On the release front, there are no major releases on the schedule. German PPI posted a gain of 0.4%, beating the estimate. Eurozone Current Account dipped to EUR 30.8 billion, but this was above expectations. In the US, today’s sole event is Crude Oil Inventories, with the estimate standing at -1.3 million. On Thursday, the ECB meets for a policy meeting and will set the benchmark rate. Over in the US, the key release is Unemployment Claims.
German ZEW Economic Sentiment, a highly regarded report, shocked the markets by posting a sharp decline in July, the first since October 2014. The reading of -6.8 points was nowhere near the forecast of +8.2 points, and recorded a sharp downturn after a gain of 19.2 points in June. Eurozone ZEW Economic Sentiment followed suit with a reading of -14.7 points, compared to an estimate of +12.3 points. In June, the index boasted a strong gain of 20.2 points. These dismal readings point to deep pessimism on the part of institutional investors and analysts, as the shock Brexit vote has raised serious concerns that Germany and the Eurozone could suffer a downturn in economic growth due to Britain exiting from the European Union.

USD/JPY

Summary :
Target Level : 104.639
Target Period : 2 days
Analysis :
Rising Wedge identified at 20-Jul-04:00 2016 GMT. This pattern is still in the process of forming. Possible bearish price movement towards the support 104.639 within the next 2 days.
Resistance Levels :
( B ) 106.535Last resistance turning point of Rising Wedge.
Support Levels
( A ) 104.639Last support turning point of Rising Wedge.

Chart date range : 06-Jul-12:00 GMT-> 20-Jul-04:00 GMT Data interval : 4 hour RSI: 34 Candles MA: 34 Candles

Japanese yen is showing limited change on Tuesday

The Japanese yen is showing limited change on Tuesday, after posting considerable losses in the Monday session. In the North American session, the yen is trading at 106.34. There are no Japanese events on Tuesday. Over in the US, Building Permits matched the forecast, while Housing Starts beat expectations.
The yen suffered a dismal week, plunging close to 600 points before reversing directions and dropping 400 points on the week. The yen dropped to levels not since the Brexit vote in late June, as Prime Minister Shinzo Abe’s election victory last week has paved the path for further monetary moves as part of the government’s economic platform. The government is busy preparing a fiscal stimulus package and the markets will be keeping an eye on the Bank of Japan, which meets in late July and could adopt further easing measures. The yen had gained ground after the Brexit vote, even breaking below the 100-level, as the political and economic turmoil bolstered the safe-haven yen.
US consumer indicators were on center stage on Friday, and the numbers were a mixed bag. Consumer inflation reports posted small gains of 0.2%, as inflation levels remain soft. There was better news on the consumer spending front, as Core Retail Sales posted a strong gain of 0.7%, beating the estimate. The UoM Consumer Sentiment report dipped below the 90-point level for the first time in three months, missing expectations. The Federal Reserve is unlikely to raise rates before September at the earliest, unless there is some strong improvement in economic data, particularly inflation and wage growth, which remain at low levels.


USD/JPY Fundamentals
Tuesday (July 19)

• 8:30 US Building Permits. Estimate 1.15M
• 8:30 US Housing Starts. Estimate 1.17M

*Key events are in bold
*All release times are EDT

USD/JPY for Tuesday, July 19, 2016

USD/JPY July 19 at 10:00 EDT
Open: 106.18 High: 106.53  Low: 105.62 Close: 106.40

USD/JPY Technical

S3	S2	S1	R1	R2	R3
103.73	104.99	105.87	106.81	107.65	108.61

• USD/JPY posted slight losses in the Asian session. The pair showed limited movement in the European session and has moved higher in North American trade
• 106.81 is a weak resistance line
• 105.87 is providing support
• Current range: 105.87 to 106.81

Further levels in both directions:

• Below: 105.87, 104.99, 103.73 and 102.36
•  Above: 106.81, 107.65 and 108.61

Australian dollar has posted sharp losses on Tuesday

The Australian dollar has posted sharp losses on Tuesday, as AUD/USD has dropped below the 0.75 level. In economic news, the RBA minutes pointed to a dovish stance by the central bank regarding a rate cut in the near future. Later in the day, Australia releases the MI Leading Index. In the US, we’ll get a look at construction data, with the release of Building Permits and Housing Starts. Neither indicator is expected to show much change in the June reports.
The RBA published its minutes from its July policy meeting, indicating that there was more room to lower rates, given low inflation levels. However, the minutes added that a monetary move by the bank would be data-dependent. In other words, if inflation and other key indicators show improvement, there will be less pressure on the bank to cut rates in order to boost inflation and bolster economic growth. The RBA caught the markets flat-footed in May, when it lowered rates from 2.00% to 1.75% in response to a dismal CPI release in the first quarter of -0.2%. The next CPI release is due on July 27, and another weak reading could be a sign that the RBA will again lower interest rates in order to boost economic growth.

GBP/USD is on a downward trend

•GBP/USD is on a downward trend, having posted losses in the Asian and European sessions
•1.3142 is providing support
•1.3219 has switched to a resistance role following losses by GBP/USD. It is a weak line
Further levels in both directions:
•Below: 1.3142, 1.3064 and 1.2938
•Above: 1.3219, 1.3349, 1.3513 and 1.3675
•Current range: 1.3142 to 1.3219
The British pound has posted considerable losses on Tuesday, erasing the gains from the Monday session. GBP/USD is currently trading at the 1.32 level. On the release front, the UK released a host of consumer inflation indicators, led by CPI. The index posted a respectable gain of 0.5%, beating the forecast of 0.4%. In the US, we’ll get a look at construction data, with the release of Building Permits and Housing Starts. Neither indicator is expected to show much change in the June reports. On Wednesday, it’s another busy day in the UK, with the release of key employment reports, led by Employment Change.
The pound has started the week quietly, in sharp contrast to last week, which was marked by strong volatility. A solid CPI reading for June failed to boost GBP/USD. CPI climbed 0.5%, its strongest monthly gain in three months. Other inflation indicators also beat their estimates. Still, we’ll have to wait for the July CPI report to better gauge the fallout of the Brexit vote, which took place on June 23.

USD/CHF

Summary :
Target Level : 0.9764
Target Period : 3 days
Analysis :
Triangle identified at 18-Jul-20:00 2016 GMT. This pattern is still in the process of forming. Possible bearish price movement towards the support 0.976 within the next 3 days.
Resistance Levels :
( B ) 0.9844Last resistance turning point of Triangle.
Support Levels
( A ) 0.9764Last support turning point of Triangle.

It was a brutal week for the yen

The markets had plenty of US consumer indicators to sift through on Friday, and the numbers were a mixed bag. US consumer inflation reports posted small gains of 0.2%, as inflation levels remain soft. There was better news on the consumer spending front, as Core Retail Sales posted a strong gain of 0.7%, beating the estimate. The UoM Consumer Sentiment report dipped below the 90-point level for the first time in three months, and was short of expectations. The Federal Reserve is unlikely to raise rates before September at the earliest, unless there is some strong improvement in economic data, particularly inflation and wage growth, which remain at low levels.
It was a brutal week for the yen, which plunged close to 600 points before reversing directions and closing the week with losses of 400 points. The yen dropped to levels not since since late June, as Prime Minister Shinzo Abe’s election victory last week has paved the path for further monetary stimulus as part of the government’s economic platform. Abe has asked Economic Minister Nobuteru Ishihara to prepare a fiscal stimulus package and the markets will be keeping an eye on the Bank of Japan, which meets in late July and could adopt further easing measures. The yen had gained ground after the Brexit vote, even breaking below the 100-level, as the political and economic turmoil bolstered the safe-haven yen. Still, with the divorce between Britain and the European Union likely to be acrimonious and difficult, the yen could rebound on Brexit aftershocks.

Bollinger Squeeze

Sometimes called the "Bollinger Squeeze," this technique has been adopted by the breakout style of stock or forex traders and involves findings market situations where the bands narrow tightly around the candles, showing a contraction or indecision in the price. These times of consolidation can lead to a movement in price as many traders know. This charting technique can be useful to the well planned and disciplined trader.
Bollinger Bands were invented by the market technician John Bollinger in the 1980's. He took the idea of the moving average, he then set a moving average on the trading chart as a "center line" that represented the average price of the stock being charted. He then calculated and applied two separate lines above and below the center moving average. The lines were formulated as a measure of volatility by showing the trader these Bollinger Bands as +2 and -2 standard deviations from the center line. Traders can use a momentum indicator such as ADX or MACD. Even multiple moving averages can give a trader looking to determine trend strength. These indicators can help you place a less risky trade.

Bollinger Squeeze

Gains were broad-based

U.S retail sales for June beat consensus by a “country mile” (+0.6% headline, core +0.7%), further proof of how strong the U.S consumer strength has been in Q2. In Canada, the domestic consumer is painting a different picture as Canadian factory sales fell for a third consecutive month in May, dropping -1% on lower car and energy sales.
U.S details:
Foodservice sales climbed a seasonally adjusted +0.6% from May, with growth +0.7% ex-autos vehicles and gasoline.
Gains were broad-based, with only clothing stores, restaurants and bars showing a slowdown from the previous month. The only blackspot in today’s report was May’s overall growth being revised down to +0.2% from the initially reported +0.5%.
Nevertheless, this morning’s stellar print would suggest a significant pickup for consumer spending after a lacklustre Q1.
Will today’s report change fixed income dealers thinking on the Fed’s next move higher for rates?
A key measure of U.S. inflation rose last month for the fourth straight month, the latest indication that the effects of low energy prices and a strong dollar are fading.
The CPI increased a seasonally adjusted +0.2% in June (It climbed +0.2% in May and +0.4% in April). Ex-food and energy, consumer prices also rose +0.2%.
Before the release, Dec fed fund futures were pricing in a +34% chance of a rate hike, the odd’s have now rallied to +40% for December and +18% for September.

Canada details:
Manufacturing sales volume fell a whopping -2.1% on the disappointing headline print (-1.0%). A weaker report was probably not too much of a surprise given last week’s worse-than-anticipated trade report.
Expect the market to strongly question the Bank of Canada’s (BoC) viewpoint that Canada’s export recovery remains on track and that sales abroad will be supported by solid U.S demand and past depreciation of the Canadian dollar.
A plus weighing on the factory sales results were one-time factors such as auto-supply disruptions in Japan due to an earthquake and the Alberta wildfires.
Nevertheless, the BoC’s view of non-energy exports is likely to be put to the test with June’s factory-sales report.

EUR/USD has posted slight gains on Friday

EUR/USD has posted slight gains on Friday, as the pair trades at 1.1150. On the release front, Friday is data-heavy, so we can expect some movement from EUR/USD, especially in the North American session. Eurozone Final CPI posted a small gain of 0.1%, while Core Final CPI climbed 0.9%, as both readings matched the forecast. In the US, we’ll get a look at CPI and Retail Sales reports, as well as the UoM Consumer Sentiment Index. Consumer numbers are critical for economic growth, so the markets will be following the US releases closely. Any unexpected readings could have a strong impact on the movement of EUR/USD.

EUR/USD

Summary :
Target Level : 1.119
Target Period : 2 days
Analysis :
Ascending Triangle has broken through the resistance line at 14-Jul-12:00 2016 GMT. Possible bullish price movement forecast for the next 2 days towards 1.119.
Supporting Indicators :
Upward sloping Moving Average
Resistance Levels :
( B ) 1.1126Last resistance turning point of Ascending Triangle.
Support Levels
( A ) 1.1043Last support turning point of Ascending Triangle.

 

USD/JPY recorded small gains in the Asian session

•USD/JPY recorded small gains in the Asian session but and continued with sharp gains in European trade. The pair is unchanged in North American trade
•105.87 is under strong pressure as resistance
•104.99 has switched to support after sharp gains by USD/JPY in the Thursday session
•Current range: 104.99 to 105.87
The Japanese yen has resumed its downward slide on Thursday and posted sharp losses. In the North American session USD/JPY is trading at 105.80. On the release front, there are no Japanese events on Thursday. In the US, the Producer Price Index gained 0.5 percent, beating the estimate. Unemployment Claims remained at 254 thousand, beating expectations. Friday promises to be busy, as the US releases consumer inflation, retail sales and consumer confidence reports.
There was positive news out of the US on Thursday. Inflation showed some strength, as PPI climbed 0.5 percent, ahead of the estimate of 0.3 percent. This marked the highest monthly gain since May 2015. Core PPI followed suit with a gain of 0.4 percent, beating the forecast of 0.1 percent. On the employment front, Unemployment Claims remained at 254 thousand, below the estimate of 263 thousand. Is US inflation on the move? We’ll get a look at CPI numbers on Friday, and a solid release could boost the US dollar.

Sterling rose 1.4% against the dollar

Sterling rose 1.4% against the dollar to $1.330 by late afternoon in Europe after rising around 2% in the wake of the decision. The FTSE 100 and FTSE 250 share indexes fell 0.7% and 0.15%, respectively, in the immediate aftermath of the BOE's announcement. Both were trading slightly higher by late afternoon in Europe.
The Stoxx Europe 600, a broad measure of large European stocks, also recovered most if its losses and was trading up 0.9%.
"The Bank of England stood firm today, surprising markets, which had been bracing themselves for a rate cut," said Dean Turner, economist at UBS Wealth Management. "But this is not the end of the story."
Markets had been expecting a cut, pricing an 80% chance that the central bank will lower its rate to 0.25%. This would have been the first cut since the depths of the financial crisis in 2009.

Canadian currency was boosted by the less dovish outlook

The USD/CAD lost 0.364 percent in the last 24 hours. The pair is trading at 1.2988 after the Bank of Canada (BoC) left interest rates unchanged this morning. The loonie got a boost from the central bank holding rates despite the drop in oil prices that came after the release of U.S. crude inventories.
The Monetary Policy Report published quarterly by the central bank also gave an assessment of the detrimental impact of the Alberta wildfires. The disaster eroded 1.1 percent of the Q2 growth taking with it the forecasted growth and turning it into a contraction.
The Canadian currency was boosted by the less dovish outlook as Governor Poloz continued his optimism about a second half rebound.

GBP/USD ratio is showing limited movement

The British pound has shown movement in both directions on Wednesday but is unchanged over the course of the day. GBP/USD is currently trading at 1.3260. This follows strong gains in the Tuesday session. On the release front, the BOE released its quarterly Credit Conditions Survey. In the US, there are no major releases on the schedule. Wednesday’s highlight is Crude Oil Inventories, with the estimate standing at -2.3 million barrels. On Thursday, the US will release two key events – PPI and Unemployment Claims.GBP/USD ratio is showing limited movement on Wednesday. Long positions have a slight majority (52%), indicative of slight trader bias towards GBP/USD moving higher.