Weekly Outlook: 2016, May 01 - May 08

Week Ahead: The question about the importance of the ‘Yellen put’ as a driver of the risk rally will become more relevant next week

Attachment 20609

• "The question about the importance of the ‘Yellen put’ as a driver of the risk rally will become more relevant next week when US data could highlight the temporary nature of the latest economic slowdown and the continuing tightening of US labour market conditions. Given how entrenched the latest USD-bearishness has become, however, we think that it would take positive data surprises to bring the latest USD-bashing to an end."
• "Elsewhere, AUD could continue to struggle ahead of the RBA although we would prefer to express any bearish views against other commodity currencies like NZD or CAD. The latter could remain resilient if the upcoming labour data adds to the stream of positive surprises from NZ and Canada. We maintain a constructive view on SEK but recognise that investors could turn more cautious after the latest disappointing data. JPY could remain resilient given that the BoJ’s inaction fuelled concerns about its officials’ ability to boost growth and inflation."

the source

The US dollar suffered quite a bit and the yen was a shining star in the closing week of April. Draghi’s speech, A rate decision in Australia, Draghi’s speech and a full build up to the Non-Farm Payrolls stand out this week.

1. Mario Draghi speaks: Monday, 15:00. ECB President Mario Draghi will speak in Frankfurt. He may refer to the recent criticism from Germany that the ECB’s low rates were squeezing savers. Draghi defended this policy of printing money and keeping borrowing costs at rock bottom saying this strategy proves to be affective. Draghi also called on euro zone governments to help get the region’s sluggish economy on a more solid footing through economic reforms. Market volatility is expected.
2. US ISM Manufacturing PMI: Monday, 15:00. US manufacturing sector regained strength in March, amid a sharp rise in new orders. The ISM index edged up from 49.5 to 51.8 in March. The reading was better than the 50.8 expected by analysts. The employment index declined to 48.1 from 48.5 a month earlier, but new orders soared to 58.3 from 51.5. Furthermore, the prices paid index increased to 51.5 from 38.5 exceeding expectations. March was the first month of expansion in manufacturing activity since August 2015. The index is expected to decline slightly to 51.6 this time.
3. Australian rate decision: Tuesday, 5:30. The Reserve Bank of Australia maintained the official cash rate at a record low 2% for a 10th straight meeting. RBA governor Glenn Stevens stated that low inflation may prompt another rate cut to boost economic activity. The decision was widely anticipated. The RBA seemed a bit less worried about the global outlook while domestically the economy is continuing to stabilize following the mining investment boom.
4. NZ employment data: Tuesday, 23:45. New Zealand’s labor market recovered in the last quarter of 2015 as unemployment plunged to a six-year low of 5.3% from 6% in the third quarter. However, the sharp decline in unemployment was also facilitated by a 0.2% fall in labor market participation. New Zealand work force increased by 0.9% to 2.369 million during the quarter. Analysts expected unemployment to rise to 6.1% and job growth to rise 0.8%. Private sector wages grew by 0.4% , a bit softer than the 0.5% rise anticipated. New Zealand employment market is expected to increase by 0.6% in the first quarter while the unemployment rate is estimated to rise to 5.5%.
5. US ADP Non-Farm Employment Change: Wednesday, 13:15. U.S. private sector added 200,000 jobs in March, beating forecasts of 195,000. Private payroll figures in February were revised down to 205,000 from an originally reported 214,000 increase.The ADP reports comes ahead of the major employment release from the U.S. Labor Department, which includes both public and private-sector employment. US private sector is expected to add 205,000 new jobs in April.
6. US ISM Non-Manufacturing PMI: Wednesday, 15:00. The US ISM Non-manufacturing PMI index edged up to 54.5% in March from 53.4 in the previous month, rising more than the 54.1 forecast. The reading shows the non- manufacturing sector is in expansion for 74 months. However, despite the positive figures Non-manufacturing PMI index has been declining since peaking in July 2015, where the index stood at a multi-year high of 60.3%. The report shows business conditions are mostly positive and that the economy is stable and will continue on a course of slow, steady growth. The non-manufacturing PMI is expected to register a gain of 54.9 in April.
7. US Crude Oil Inventories: Wednesday, 15:30. Us oil inventories limbed by 2 million barrels last week, reaching an all-time peak of 540.6 million barrels. Oil prices edged up about 3%, hitting new highs for 2016 as the dollar weakened after the Federal Reserve announced it would keep U.S. interest rates unchanged. Analysts expected a rise of 1.4 million barrels. Economists believe the recent rose in inventories is fueled by the weakness on the dollar.
8. US Unemployment Claims: Thursday, 13:30. The number of Americans filing new claims for unemployment benefits rose last week by 257,000 but remained at a historically low level consistent with a robust labor market. The number of claims increased by 9,000 from the week before, broadly in line with market forecast. The labor market continued to post healthy gains despite worries about the broader slowdown in U.S. economic growth in early 2016. The number of new claims is expected to reach 261,000 this week.
9. Canadian employment data: Friday, 13:30. Canada’s labor market created 40,600 jobs in March, reducing the unemployment rate from 7.3% in February to 7.1%. It was the largest monthly increase since October 2015. 35,300 positons were full time, 65,100 jobs were created in the private sector, public-sector positions fell by 2,600, and 74,700 net new positions were in the services sector. The country’s youth unemployment rate crept up 13.4 per cent last month, from 13.3 per cent in February. The report also showed that self-employed positions across Canada increased 22,000 last month, while the net number of employee jobs increased by 62,600.Canadian Job market is expected to grow by only 200 jobs while the unemployment rate is expected to rise to 7.2%.
10. US Non-Farm Employment Change and Unemployment rate: Friday, 13:30. US monthly employment release showed solid expansion in March with a rise in wages, indicating the economy remains resilient signaling the Fed to proceed with its gradual rate raise plan. Nonfarm payrolls increased 215,000 in March following a 242,000 addition in the previous month. Average hourly earnings edged up seven cents. However, the unemployment rate increased to 5.0% from an eight-year low of 4.9% posted in February, since more Americans continued returned to the labor force, a positive sign of confidence in the jobs market. The Fed has downgraded its economic outlook amid cheap oil prices and the strong dollar, saying it is appropriate for policymakers to “proceed cautiously in adjusting policy.” However the positive figures in March show a positive trend in the US economy. US monthly Job growth is expected to reach 206,000 as the unemployment rate should remain at 5%.

the source

Just about EUR/USD

Attachment 20611

As we see from the image above - weekly price is breaking Senkou Span 'reversal' line to above for the global bullissh reversal with the secondary ranging: the price will be inside Ichimoku cloud in this case. But Absolute Strength indicator together with Trend Strength indicator are estimating the ranging trend to be continuing with no any strong direction of the trend. So, no bearish and no bullish - just a ranging.

Daily price is on primary bearish market condition for testing key support level at 1.2514 to below for the bearish trend to be continuing. Chinkou Span line and Absolute Strength indicator are estimating the ranging condition, and Trend Strength indicator is evaluating the trend as the bearish in the near future.

Attachment 20638

If D1 price will break 1.2514 support level on close bar so the bearish trend will be continuing.
If D1 price will break 1.2857 resistance level on close bar from below to above so the local uptrend as the bear market rally will be started.
If not so the price will be on ranging within the levels.

• Recommendation for long: watch close D1 price to break 1.2857
  for possible buy trade
• Recommendation to go short: watch D1 price to break 1.2514 support level for possible sell trade
• Trading Summary: bearish

Resistance	Support
1.2857	1.2514
1.3295	N/A

SUMMARY : bearish

TREND : ranging

Economic Calendar Of The Week - May 2-6, 2016

With a new month there is hopes for better economic results. Last week central banks and earning were the main focus. All three banks, the US Fed, the Bank of Japan and the Bank of New Zealand all held rates and policy. Facebook and Amazon surprised the markets to the upside as a dismal earning season winds down this week.

Economic data sees PMI numbers from the UK, plus Chinese PMI figures and US non-farm payrolls at the end of the week. Markets were rocked by the Bank of Japan’s decision to hold fire at its most recent meeting, and with Japanese data relatively thin on the ground we may see a recovery in the Nikkei. Elsewhere, the focus will be on crude oil, which has made new 2016 highs this week.

Purchasing managers´ indices for the manufacturing and services sector scheduled for release on Tuesday and Thursday will provide further real-time readings on the current state of affairs in the British economy. Nevertheless, and as the Monetary Policy Committee pointed out at its last meeting, the uncertainty relating to the 23 June referendum can be expected to continue clouding the data.

Acting as a backdrop, and as occurs on the first week of each month, the most important release by far will be Friday´s US non-farm payrolls number for April, especially given the steady stream of warnings from central bank officials stateside regarding the possibility the debt markets might be too complacent when it comes to pricing-in further rate hikes this year.

Starting off the week ECB President Mario Draghi will speak in Frankfurt. He may refer to the recent criticism from Germany that the ECB’s low rates were squeezing savers. Draghi defended this policy of printing money and keeping borrowing costs at rock bottom saying this strategy proves to be affective. Draghi also called on euro zone governments to help get the region’s sluggish economy on a more solid footing through economic reforms. Market volatility is expected.

Tuesday’s Asian session will be busy with Australian rate decision. The Reserve Bank of Australia maintained the official cash rate at a record low 2% for a 10th straight meeting. RBA governor Glenn Stevens stated that low inflation may prompt another rate cut to boost economic activity.

Next we will have New Zealand’s jobs data. The labor market recovered in the last quarter of 2015 as unemployment plunged to a six-year low of 5.3% from 6% in the third quarter. However, the sharp decline in unemployment was also facilitated by a 0.2% fall in labor market participation. New Zealand work force increased by 0.9% to 2.369 million during the quarter. Analysts expected unemployment to rise to 6.1% and job growth to rise 0.8%.

Wednesday bring up leading indicating data from ADP. U.S. private sector added 200,000 jobs in March, beating forecasts of 195,000. Private payroll figures in February were revised down to 205,000 from an originally reported 214,000 increase. The ADP reports comes ahead of the major employment release from the U.S. Labor Department, which includes both public and private-sector employment. US private sector is expected to add 205,000 new jobs in April.

The global focus will shift to the US Nonfarm payroll report due Friday morning. US monthly employment release showed solid expansion in March with a rise in wages, indicating the economy remains resilient signaling the Fed to proceed with its gradual rate raise plan. Nonfarm payrolls increased 215,000 in March following a 242,000 addition in the previous month. The Fed has downgraded its economic outlook amid cheap oil prices and the strong dollar, saying it is appropriate for policymakers to “proceed cautiously in adjusting policy.” However, the positive figures in March show a positive trend in the US economy. US monthly Job growth is expected to reach 206,000 as the unemployment rate should remain at 5%.

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