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AUD/CAD: Fundamental Review & Forecast

The CAD continues strengthening against the AUD. Investors expect an increase of the interest rate today.

The rates of the AUD/CAD continue in the frames of a downtrend. Last month the Canadian dollar successfully withstood the pressure due to low oil prices and strengthened against the Australian dollar. The Australian dollar continued decreasing even after the positive statistics about the trade balance, although this did support the AUD for a few days. Last week the RBA refused to raise the interest rate. Despite the positive economic data, the RBA supposes that the goals of its stimulus program haven't been achieved yet. In particular, the RBA is concerned about the situation on the labour market.


This week we do not expect important information about the AUD. The only thing that can have an impact on the value of the AUD is information about the Chinese economy. As for the CAD, we expect important information. In particular, this evening investors expect a decision from the Bank of Canada regarding raising the interest rate. Given the recent information about the PMI index and positive reports about the employment market, investors are sure that the Bank of Canada will raise the interest rate by 25 pips - up to 0.75%, for the first time since 2010. Thus, Canada will become the first country after the United States to tighten its monetary policy amid the good economic situation in the country. Another reason for the further strengthening of the CA, is a growth in oil prices, which have increased due to information about a reduction in the reserves of WTI crude oil by 2.1 million barrels for a week in the main oil storage reservoir of the United States. In addition, it was reported that OPEC can limit the volume of oil extraction in Nigeria and Libya, which were free from obligations to reduce the volume of oil production with the current agreement.

In this situation, the optimal decision is to open the deals on the trend. The Stochastic oscillator also gives a signal for short deals indicating the rates in the overbought zone.

Qatar Crisis Continues

Qatar is still under blockade by Saudi Arabia, the UAE, and two other countries. Can Qatar's economy weather this storm?

A few weeks ago we shed a little bit of light on the current diplomatic crisis in Qatar. It has been essentially blockaded by its neighbouring countries on the grounds of supposedly promoting terrorism and destabilizing the Middle East. This has made it slightly more complicated for Qatar to import and export goods, but as we learned from Qatar’s finance minister, there was no need to worry too much. Or is there?

The countries opposing Qatar are Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain. They made a list of demands that aim at making Qatar work for better stability in the region. However, the blockaded state has refused to comply, stating that the demands may constitute a violation of international law, reports CNN. In retaliation, the four countries which cut ties with Qatar have showed a determination to step up their measures and increase pressure on Qatar, though the meaning of this is yet unclear.

Read more: https://superforex.com/analytics/qatar-crisis-continues

EUR/JPY Technical Outlook before the Rate Decisions
The BOJ's policy rate will push the Yen to rise a little.
This week the markets are looking forward to the rate decisions of two important banks - the European Central Bank and the Bank of Japan. This will cause a huge volatility. We will take a look at the instrument most likely to be affected, the EUR/JPY currency pair, and hunt for good opportunities for this week.

The EUR/JPY pair recorded its highest levels in 17 months at 130.75 and then it bounced back to trade now at 129.00. It declined last week on the release front as the Eurozone Final CPI edged down to 1.3%, matching the forecast. On Tuesday Germany and the eurozone will release ZEW Economic Sentiments.

The pair broke an important support level at the moving average 50 and it’s trading now at an important key area at the upside trend line. We predict it will break the trend line and decline further but we have to wait to see where this candle will close exactly.
So, what can we do in the next hours?

As we mentioned above, we will wait for a candle close below the trend line below 128.70 and sell the pair, keeping our first target at 127.50 and the second one at 126.20; that's in case the pair breaks the second trend line.

This week we have to be careful in our trades because we have important events which will cause high volatility in the market such as a decision from the BOJ regading the policy rate and the press conference for Kuroda, as well as the minimum Bid Rate for the European Central Bank on Thursday.

USD/MXN: Fundamental Review & Forecast

The MXN has achieved its April 2016 level, while the USD is losing positions due to the failure of the health care reform.

The rates of the USD/MXN pair continue in the frames of the downtrend which has lasted for more than six months, when the Mexican peso fell as a result of the presidential elections in the USA and D. Trump's anti-immigration protectionist policies openly directed against Mexico. Despite several factors against the Mexican peso, such as perspectives for lowering oil prices and the worsened relations between the U.S. and Mexico, the peso managed to recover its lost positions.


This week the MXN reached the level from April 2016 amid the rising oil prices and the failure of the health care reform in the United States. This points to the inefficiency and weakness of Donald Trump's administration. The failure of the health care reform threatens the further policies of Donald Trump and decreases his popularity in the United States. The US dollar was also negatively impacted by the cautious rhetoric of Yellen about a further tightening the FED policy. Also, amid disappointing data about inflation and retail sales, investors began to doubt whether we would see a further increasing of the interest rate this year.

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The Euro Back to 2015 Highs

The euro continues to take on the USD in a confident bullish movement.

This week we turn our eyes to Europe once more. The economic climate in the European Union seems to be quite heated these days: many reports coming from all around the eurozone are flooding in, and investors are paying close attention to the euro, particularly in the context of the much weaker dollar we’ve been seeing these days.

Earlier today the European Central Bank’s Survey of Professional Forecasters was published. The survey, which is quite important to the ECB and whose results always figure into the decision-making process of the ECB, showed that while there is stable economic growth and a decrease in the unemployment rate, the inflation rate still remains relatively low. As we’ve mentioned before on our blog, the ECB is currently in the midst of a massive stimulus program whose goal is to boost inflation to a healthy level. It appears this level still hasn’t been achieved, despite investors’ hopes that the ECB might be satisfied with the current progress and start turning towards more hawkish policies.

USD/JPY Technical Overview ahead of the Fed Rate

The USD/JPY pair returned back to the channel and we expect further lows.

Last week the US Dollar was weaker against most of the majors, especially since there were few economic calendar events from the USA and investors focused instead on Washington’s rising political tensions. However, this week is different and trading will depend on fundamentals with the release of consumer confidence, the Fed’s July rate statement, and the preliminary second quarter gross domestic product (GDP).

The USD/JPY currency pair returned back to the price channel again after breaking it upward. We took a buy position and our first target was at 114.32 - the prices already hit it and returned again, then the pair broke the moving average last Friday. It has a key support area at 110.23, 50 pips down. The MACD indicator gave us the sell signal after the columns appeared below the zero level. It’s expected that the Fed will keep the interest rate unchanged this month and won’t increase it, so we predict the pair will decline further.

The Next Few Days

After we saw the prices back inside the channel again we can sell the pair from the current levels at 110.75 and keep our first target at 110.23, with a second one at 108.34 at this year’s low. Nevertheless, if the prices return back to 112.00 again we will change our vision to be bullish.

This week is overwhelming with much hot news from the United States which hold the potential to cause high volatility on the market: the CB Consumer Confidence, the FOMC statement, and the GDP for the second quarter.

XAU/USD: Short Review and Forecast
The market has been extremely volatile the last few months. Investors are waiting for the results of the FED meeting. The GOLD has good chances to increase in price if the FED doesn't change the rate.

The Gold has been extremely volatile for the last few months. On the H4 chart we can see a large number of different micro trends that continually replace each other every month. This has created uncertainty on the market. Volatility is higher than ever: in just three months, the price varied in the range of 1216-1294 dollars. Overall, the trend looks flat, but with a huge range.


This week, the price achieved a monthly maximum, but decreased a bit because investors are awaiting the results from the Federal Reserve meeting held today. The Fed meeting will show if the interest rate is going to be increased or not. Investors suppose that interest rates are unlikely to be increased before December. Inflation in the United States was lower than expected for the fourth month in a row. Other economic indicators also do not impress the market. The Gold also has been rising in price due to the failure of the health care reform and the weakening of the USD.

Given that the Federal Reserve rate hike is unlikely in the near future, we expect a further increasing of Gold value, after the price correction. This also confirmed by the Stochastic oscillator, which indicates that the current rates are in the oversold zone. A further increase of the Gold's value will lead to the formation of a steady uptrend. Therefore, the deals to BUY can be considered as the most effective.

How Healthcare Failed the Dollar

Amid the ruins of the Republicans' attempts to repeal and replace Obamacare, the USD is the true victim.

While we have been focusing on other regions in our most recent articles, one detail often popped up in our analysis: the fact that the American dollar has weakened. Why did that happen? That’s what we’ll try to find out today.

Now, if you take a look back to 2015 and 2016, you’d see the dollar overtaking most major currencies, making consistent gains as the US economy was doing splendidly. The USD experienced volatility around the 2016 Presidential elections, but after Trump’s win investors decided to back him up in hopes that his protectionist policies and focus on infrastructure would boost the economy. As a result, the dollar ended 2016 at record highs and at the turn of 2017 people were already talking of possible parity with the euro, with various temporal prognoses, most commonly by the year’s end.

However, we are now seven months into 2017 and six months into Trump’s presidency, and things are not looking good. Trump has failed repeatedly to find support for his policy-making, and save for his promise to revive the coal industry, he hasn’t achieved much from what was on his campaign’s agenda. Investors have been continuously changing their expectations of his presidency with every passing day, and have little to no confidence in him right now, since polls are showing massive losses in Trump’s popularity among American citizens. This led to a lack of confidence in the American dollar too; the USD has suffered losses, while safe-haven trading instruments such as gold have regained some of their popularity in recent times.

The most recent political fiasco of Trump’s administration is undoubtedly the failed healthcare reform. Republicans have been attempting to get rid of the Affordable Care Act (commonly known as Obamacare) even before it was enacted years ago. Now that they finally have the upper hand in the Senate, it is astonishing just how poorly this was handled. Republicans kept details about their reform secret; the President expressed support for the bill without having seen it, and later switched his position, calling it “mean.” After a series of failed votes (including from Republican senators), the massively unpopular bill failed. It was then replaced with a plan to simply repeal Obamacare and return things to the way they were. In light of this, however, an estimate of 15 million people would have been left without insurance next year, and even more in the future. Last night even the vote to repeal Obamacare failed.

CL/WTI: Short Review & Middle Term Forecast

After the depressed period we have an upward trend again and preconditions for further growth, given the long-term perspectives for increasing demand.

Between May and the end of June the market was depressed. Oil fell in price from $51 to $42. It seemed that the falling of oil prices is unstoppable. The oversupply of crude oil, the increase of oil extraction volumes even amid OPEC countries and the growth of oil reserves in the United States created a desperate situation, whereby market participants were unable to control the market and achieve a balance between demand and supply.

However, in July oil began to recover due to the reduction of oil stocks in the United States and the reduction of drilling activity. In addition, the oil recovered in price amid the long-term forecasts which show perspectives for growth in the demand for oil, although some analysts disagree with that. Nevertheless, given the recent data such as the index of business activity in China from Caixin, which marks the increasing of business activity, there are good preconditions for an increasing demand for raw materials in China. The decreasing in oil reserves in the United States will ease the pressure on the oil market for the next few months.

CL/WTI, H4
In the near future the market will focus on the upcoming OPEC meeting, which will take place on August 7-8. The volatility over the past few months has remained very high, but it's decreasing. We can expect for sure a continuation of the rates in the frames of the current uptrend. After the price correction, prices may recover to the level of 50-51 dollars. The Stochastic oscillator also indicates a good time to open the deals to BUY on the trend.

British Struggles

The fallout from Brexit is a deteriorating economic climate in the UK, and the British pound shows it.

Despite the unexpected strength of economic growth in Europe, the struggles of the United Kingdom continue. After the devastating losses incurred immediately before and after the Brexit referendum vote last summer and the disastrous elections results earlier this year, Britain and its currency still find themselves in a tight spot.

Yesterday we heard from the Bank of England, who this time announced that they are taking a more pessimistic prognosis of the UK’s economy and downgraded their forecasts for economic growth for 2017 and 2018 for the second time this summer. As a result, the British pound sterling suffered losses versus the American dollar of almost 1%.

The Bank of England’s stance is likely rooted in the disappointing wages. Since the pound slumped, goods imported to the United Kingdom naturally cost more for Brits, essentially driving their purchasing power lower. The BoE expects this problem to worsen in the future and is somewhat apprehensive regarding wage growth.

Bank of England governor Mark Carney expressed a concern for businesses who find it additionally difficult to invest amid the political struggle inside of the United Kingdom and the problematic negotiations with the European Union regarding Brexit.

The United Kingdom is currently lagging behind its European counterparts, and Carney expects an even slower economic growth. Needless to say, the bank chose not to increase interest rates yet, in hopes of stimulating the economy.

Despite the political discord within the United Kingdom due to Theresa May’s party failing to achieve a definitive majority in the preliminary parliamentary elections she called and the lack of strong British leadership that resulted from that, the UK has proceeded with the EU negotiations. However, even though negotiators have met several times now, not much has been decided, especially since the EU is putting pressure on the UK to meet its critical demands regarding immigration and payment.

Overall, the situation seems really unclear right now. British politicians are not helping much, as they provide contradictory statements from time to time, indicating the British government is not on the same page. The British pound has already dropped 13% since the Brexit vote, and due to the lack of proper leadership and the absence of clarity regarding the negotiations with the European Union we expect the GBP to continue its decrease versus major currencies.