Weekly Outlook: 2014, December 14 - 21

The GBP/USD pair broke higher during the course of the week, testing the 1.57 region. The fact that we done so far into the previous two shooting stars tells us that we could in fact see continuation as we have certainly seen quite a bit of pressure put on the resistance. However, we believe that the market should offer selling opportunities at higher levels. We are especially keen on selling at the 1.60 handle, as it should continue to be important based upon previous support, and now what we believe to be future resistance.



the source

The EUR/USD pair broke higher during the course of the week, but as you can see struggled at the 1.25 handle. This is an area that has been resistive in the past, so it makes sense that we would run into resistance again. We believe that the downtrend is most certainly still in effect, but we do not have a resistant candle to start selling yet. Because of this, we are on the sidelines as far as longer-term trades are concerned, but we certainly wouldn’t be interested in buying this market.

After all, we are heading towards the end of the year, and the liquidity will all but disappear. With that, we think that short-term traders only can be bothered to be in this marketplace, and that sudden erratic corrections can occur at any time. I have a yellow box drawn on the chart which for me signifies when the trend changes. If we get above there, extensively the 1.30 handle, we could see the market go much higher. Probably to the 1.135 level would be the next target at that point time, but it takes a lot for that to happen in our opinion.

More than likely, the market will probably do very little over the next couple of weeks, at least as far as anything along the lines of a substantial move. Ultimately, the market could bounce a bit from here and offer a selling opportunity but we would need to see the resistive candle form in order to do so. Perhaps we may get a little bit of a late December surprise, but ultimately we feel that this market is going to continue going lower once the liquidity returns the marketplace.

Looking at the longer-term charts, we believe that the 1.2050 level is the target given enough time, and as a result we are not interested in buying under any circumstances, even though we do recognize that a bit of a bounce could happen. We believe that 2015 will be very hard on the Euro as well.



the source

The dollar gained ground against the euro on Friday following the release of strong U.S. economic data and surged to more than five year highs against the commodity-exposed Canadian dollar as oil prices continued to drop.

EUR/USD was up 0.44% to 1.2461 in late trade. The dollar was boosted after data showing U.S. consumer sentiment rose to an almost eight-year high in December.

The preliminary reading of the University of Michigan's consumer sentiment index rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7. Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.

The data underlined expectations for a hike in U.S. interest rates by the Federal Reserve next year.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, recovered from session lows of 88.12 following the report to settle at 88.34, still off 0.26% for the day. On Monday the index rose to a five year high of 89.53.

The dollar also pushed higher against the yen, with USD/JPY at 118.77 in late trade, off lows of 118.05.

Elsewhere, the Canadian dollar fell to five-and-a-half year lows, with USD/CAD hitting highs of 1.1590, before easing back to 1.1578 in late trade.

Oil prices dropped to their lowest level in five years on Friday after the International Energy Agency cut its forecast for global oil demand for the fifth time in six months.

Canada is a major oil exporter and the currency's sensitivity to crude prices has intensified as prices continued to tumble.

The Russian ruble fell to record lows against the dollar on Friday and the Norwegian krone fell to 11-year lows after rate hikes by both countries central banks on Thursday failed to offset the selling pressure brought to bear by the continued decline in oil prices.

USD/RUB jumped 3.23% to 58.20 late Friday while USD/NOK was up 0.98% to settle at 7.36 after hitting highs of 7.39 earlier, the most since September 2003.

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise. Japan’s central bank is also to hold a policy setting meeting next week. The euro zone is to produce what will be closely watched reports on private sector activity.

Monday, December 15

• Japan is to publish reports on the Tankan manufacturing and non-manufacturing index.
• Switzerland is to publish data on producer price inflation.
• In the euro zone, Germany’s Bundesbank is to publish its monthly report.
• The U.K. is to release private sector data on industrial order expectations.
• Later Monday, the U.S. is to release reports on manufacturing activity in the New York region and industrial production.

Tuesday, December 16

• The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• China is to publish the preliminary reading of its HSBC manufacturing index.
• In the U.K., the Bank of England is to publish its financial stability report. BoE Governor Mark Carney is to hold a press conference about the report.
• The U.K. is also to release data on consumer inflation, which accounts for the majority of overall inflation.
• The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.
• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• Canada is to produce data on manufacturing sales and foreign securities purchases.
• The U.S. is to publish reports on building permits and housing starts.
• Later in the day, New Zealand is to release data on its current account.

Wednesday, December 17

• Japan is to publish a report on its trade balance.
• The U.K. is to release data on the change in the number of people employed, the unemployment rate and average earnings. In addition, the BoE is to publish the minutes of its latest policy meeting.
• The euro zone is to produce revised data on consumer price inflation.
• Canada is to publish a report on wholesale sales.
• The U.S. is to release data on consumer inflation and the current account. Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.
• New Zealand is to release data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.

Thursday, December 18

• Switzerland is to report on its trade balance.
• The Ifo Institute is to release a report on German business climate.
• The U.K. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

Friday, December 19

• New Zealand is to release private sector data on business confidence.
• The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank will hold a press conference following the announcement.
• Germany is to release a report by Gfk on consumer climate.
• The U.K. is to release data on public sector net borrowing, as well as a private sector report on retail sales.
• Canada is to round up the week with reports on retail sales and consumer inflation.

the source

The U.S. dollar edged higher against the yen on Friday after data showed that U.S. consumer sentiment rose to an almost eight-year high this month, underlining the view that the economic recovery is continuing to gain momentum.

USD/JPY edged up 0.08% to 118.77 in late trade, off lows of 118.05. The pair ended the week down 2.33%.

The preliminary reading of the University of Michigan's consumer sentiment index rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7.

Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.

The data underpinned expectations for a hike in U.S. interest rates by the Federal Reserve next year.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, recovered from session lows of 88.12 following the report to settle at 88.34, still off 0.26% for the day.

The dollar fell sharply against the yen earlier in the week, reversing a rally to Monday’s seven year highs of 121.83, as concerns over political uncertainty in Greece hit market sentiment, boosting demand for the traditional safe haven yen.

Investors were spooked by a surprise decision by the Greek government to bring forward a parliamentary vote for president to next week from February.

The move raised the prospect of snap elections if Prime Minister Antonis Samaras’ candidate is not approved by parliament, which could see the anti-bailout Syriza party take power.

Economic reports pointing to a slowdown in China and the ongoing decline in oil prices also fuelled risk aversion.

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise.

Japan’s central bank is also to hold a policy setting meeting next week.

Monday, December 15

• Japan is to publish reports on the Tankan manufacturing and non-manufacturing index.
• Later Monday, the U.S. is to release reports on manufacturing activity in the New York region and industrial production.

Tuesday, December 16

• The U.S. is to publish reports on building permits and housing starts.

Wednesday, December 17

• Japan is to publish a report on its trade balance.
• The U.S. is to release data on consumer inflation and the current account. Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.

Thursday, December 18

• The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

Friday, December 19

• The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank will hold a press conference following the announcement.

the source

The U.S. dollar rose to more than five-year highs against the commodity exposed Canadian dollar on Friday amid the ongoing decline in oil prices and after a strong report on U.S. consumer sentiment.

USD/CAD hit highs of 1.1590, the most since July 2009, before easing back to 1.1578 in late trade.

Oil prices hit lows not seen since 2009 on Friday, with Brent below $62 per barrel and US crude down to $57 a barrel after the International Energy Agency cut its forecast for global oil demand for the fifth time in six months.

Canada is a major oil exporter and the currency's sensitivity to crude prices has intensified as prices have tumbled.

The greenback received an additional boost after data showing U.S. consumer sentiment rose to an almost eight-year high in December.

The preliminary reading of the University of Michigan's consumer sentiment index rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7. Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.

The data underlined expectations for a hike in U.S. interest rates by the Federal Reserve next year.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, recovered from session lows of 88.12 following the report to settle at 88.34, still off 0.26% for the day. On Monday the index rose to a five year high of 89.53.

The loonie, as the Canadian dollar is also known, fell to two month lows against the euro on Friday, with EUR/CAD up 0.95% to 1.4428 in late trade.

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise. Friday's reports on Canadian retail sales and inflation will also be closely watched.

Monday, December 15

• The U.S. is to release reports on manufacturing activity in the New York region and industrial production.

Tuesday, December 16

• Canada is to produce data on manufacturing sales and foreign securities purchases.
• The U.S. is to publish reports on building permits and housing starts.

Wednesday, December 17

• Canada is to publish a report on wholesale sales.
• The U.S. is to release data on consumer inflation and the current account. Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.

Thursday, December 18

• The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

Friday, December 19

• Canada is to round up the week with reports on retail sales and consumer inflation.

the source

The Australian dollar ended close to the lowest level in more than four years against its U.S. counterpart on Friday, amid indications a strengthening U.S. economic recovery will force the Federal Reserve to start raising interest rates sooner and faster than previously thought.

AUD/USD fell to 0.8213 on Thursday, the pair's lowest since June 2010, before subsequently consolidating at 0.8246 by close of trade on Friday, down 0.28% for the day and 0.78% lower for the week.

The pair is likely to find support at 0.8213, the low from December 11, and resistance at 0.8374, the high from December 11.

The preliminary reading of the University of Michigan's consumer sentiment index released Friday rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7.

Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.

The data underpinned expectations for a hike in U.S. interest rates by the Federal Reserve next year.

Economic reports pointing to a slowdown in China also fuelled risk aversion.

Official data released Friday showed that industrial production in China rose 7.2% in November, missing expectations for an increase of 7.5% and slowing from a 7.7% gain in October.

The disappointing data added to fears that China will miss its annual growth target of 7.5% and boosted speculation that the government will need to roll out fresh stimulus measures to avert a sharper slowdown.

The Asian nation is Australia's largest trade partner.

Meanwhile, in Australia, data published Thursday showed that the number of employed people increased by 42,700 last month, beating expectations for a 12,400 rise.

The report also showed that Australia's unemployment rate ticked up to 6.3% in November from 6.2% the previous month, in line with expectations.

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting amid speculation that policymakers could drop an assurance that interest rates will stay low for a "considerable time".

Monday, December 15

• The U.S. is to release reports on manufacturing activity in the New York region and industrial production.

Tuesday, December 16

• The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• China is to publish the preliminary reading of its HSBC manufacturing index.
• The U.S. is to publish reports on building permits and housing starts.

Wednesday, December 17

• The U.S. is to release data on consumer inflation and the current account. Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.

Thursday, December 18

• The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

the source

The New Zealand dollar edged lower against its U.S. counterpart on Friday, as upbeat U.S. consumer sentiment data added to expectations that the Federal Reserve could raise interests sooner and faster than previously expected.

NZD/USD hit 0.7607 on Tuesday, the pair's lowest since June 2012, before subsequently consolidating at 0.7778 by close of trade on Friday, down 0.49% for the day but 0.8% higher for the week.

The pair is likely to find support at 0.7660, the low from December 10, and resistance at 0.7870, the high from December 11.

The preliminary reading of the University of Michigan's consumer sentiment index released Friday rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7.

Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.

The data underpinned expectations for a hike in U.S. interest rates by the Federal Reserve next year.

Economic reports pointing to a slowdown in China also fuelled risk aversion.

Official data released Friday showed that industrial production in China rose 7.2% in November, missing expectations for an increase of 7.5% and slowing from a 7.7% gain in October.

The disappointing data added to fears that China will miss its annual growth target of 7.5% and boosted speculation that the government will need to roll out fresh stimulus measures to avert a sharper slowdown.

The Asian nation is New Zealand's second-largest trade partner.

Meanwhile, the Reserve Bank of New Zealand held its benchmark interest rate at 3.50% on Thursday and added that "some further increase in the official cash rate is expected to be required at a later stage."

Commenting on the decision, RBNZ Governor Graeme Wheeler said that "gradual increases in interest rates will still be needed as the economy expands at around 3% a year and the country's jobless rate falls."

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting amid speculation that policymakers could drop an assurance that interest rates will stay low for a "considerable time".

A report on third quarter economic growth out of New Zealand will also be closely watched.

Monday, December 15

• The U.S. is to release reports on manufacturing activity in the New York region and industrial production.

Tuesday, December 16

• China is to publish the preliminary reading of its HSBC manufacturing index.
• The U.S. is to publish reports on building permits and housing starts.
• Later in the day, New Zealand is to release data on its current account.

Wednesday, December 17

• The U.S. is to release data on consumer inflation and the current account.
• Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.
• New Zealand is to release data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.

Thursday, December 18

• The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

Friday, December 19

• New Zealand is to release private sector data on business confidence

.

the source

The euro gained ground against the dollar on Friday, but gains were held in check following a strong report on U.S. consumer sentiment, while falling oil prices and fears over political uncertainty in Greece continued to fuel risk aversion.

EUR/USD was up 0.44% to 1.2461 in late trade, extending its pullback from the two-year trough of 1.2246 struck on Monday.

The dollar found support after data showing U.S. consumer sentiment rose to an almost eight-year high in December.

The preliminary reading of the University of Michigan's consumer sentiment index rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7.

Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices. The data underlined expectations for a hike in U.S. interest rates by the Federal Reserve next year.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, recovered from session lows of 88.12 following the report to settle at 88.34, still off 0.26% for the day. On Monday the index rose to a five year high of 89.53.

Investors remained wary in the wake of a surprise decision by the Greek government to bring forward a parliamentary vote for president to next week from February.
The move raised the prospect of snap elections if Prime Minister Antonis Samaras’ candidate is not approved by parliament, which could see the anti-bailout Syriza party take power.

Economic reports pointing to a slowdown in China and the ongoing decline in oil prices also fuelled risk aversion.

Oil prices hit lows not seen since 2009 on Friday, with Brent below $62 per barrel and US crude down to $57 a barrel after the International Energy Agency cut its forecast for global oil demand for the fifth time in six months.

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise. The euro zone is to produce what will be closely watched reports on private sector activity.

Monday, December 15

• In the euro zone, Germany’s Bundesbank is to publish its monthly report.
• Later Monday, the U.S. is to release reports on manufacturing activity in the New York region and industrial production.

Tuesday, December 16

• The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.
• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• The U.S. is to publish reports on building permits and housing starts.

Wednesday, December 17

• The euro zone is to produce revised data on consumer price inflation.
• The U.S. is to release data on consumer inflation and the current account. Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.

Thursday, December 18

• The Ifo Institute is to release a report on German business climate.
• The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

Friday, December 19

• Germany is to release a report by Gfk on consumer climate.

the source