Weekly Outlook: 2014, April 6 - 13

Gold forecast for the week of April 7, 2014, Technical Analysis

The gold markets fell initially during the week, but as you can see found enough support below the $1300 level to bounce and form a hammer. This hammer suggests that the market is going to go higher, something that we see on the daily charts as well. We believe the market will head towards the $1400 level, and then possibly break out above there. We are buyers on a break of the top of the hammer as it should continue to show bullishness in this market as gold may have just bottomed and the $1200 level.

USD/JPY forecast for the week of April 7, 2014, Technical Analysis

The USD/JPY pair rose during the bulk of the week, but fell backwards and formed a shooting star. This suggests that we are going to continue to bounce around in the consolidation area that we’ve seen recently, so while it is a bearish signal, we believe that there’s enough support below to keep this market somewhat afloat. That being the case, we feel that the market will be a “buy on the dips” type of situation, and believe that that opportunity will present itself rather soon. Selling is not an option.

USD/CAD forecast for the week of April 7, 2014, Technical Analysis

The USD/CAD pair fell during the bulk of the week, breaking below the 1.10 level. That of course is a negative sign, but we see support only down to the 1.09 handle, so even though we’ve had a fairly negative week, it would not surprise us at all to see support come back into the marketplace in this general vicinity. Right now, we do not have a trade signal at all but are paying attention to this next week as it could be pivotal for our positioning in this market going forward.

NZD/USD forecast for the week of April 7, 2014, Technical Analysis

The NZD/USD pair spent most of the week falling, but as it approached the 0.85 level, found enough buyers to push the market back up. The resulting candle is somewhat of a hammer, and it tells us that the market is more than likely going to try to continue to go higher, and a break of that high has this market looking for the 0.90 level given enough time. The 0.85 level is now support as far as we can tell, and in fact we considered it the “floor” of the market.

GBP/USD forecast for the week of April 7, 2014, Technical Analysis

The GBP/USD pair fell during the week, but really didn’t have that wide of the range. The 1.65 level below is still support as far as we can tell, and as a result we think that this market will offer a buying opportunity soon. Any supportive candle in that general vicinity has us buying, but the question then remains whether or not we would even get there? After all, the Friday candle was in fact a hammer, which of course is a nice buying opportunity and signal as it were.

EUR/USD forecast for the week of April 7, 2014, Technical Analysis

The EUR/USD pair ended up forming a shooting star for the week, but as you can see on the daily charts, we formed a hammer for the Friday session. The 1.37 level has offered support in the past, and it appears that it’s doing so now. However, if you only look at the weekly chart, you will not see that there is in fact underlying support at the moment. With that in mind, it’s a bit difficult to get involved in the long side, simply because the longer-term chart looks a bit on the soft side right now, even though the daily chart tells you the exact opposite. Nonetheless, we certainly wouldn’t sell this market, because there is so much support shown not only on the daily chart, but the fact that there is a cluster that goes all the way down to the 1.3450 level.

With this, we believe that this market may continue to have a slightly positive bias, but quite frankly it’s a difficult one to be concerned about for a longer-term trader, as it will more than likely simply offer headaches had, and not necessarily profits.

Even if we broke down here, is going to be difficult to hang onto the trade to the downside Sibley because there is so much in the way of noise below and the volatility would be a bit much for us to be interested in being involved in. There are easier markets out there to trade, and the EUR/USD pair will more than likely continue to be one that is preferred buying short-term traders, especially once the trade very short timeframe charts.

On the other hand, if we broke above the top of the shooting star from either this week or last week, we believe at that point in time the market would break out to the upside eventually, and clear the 1.40 level would be a longer-term buy-and-hold type of situation in the making

Forex: Australian Dollar Outlook Hinges on Jobs Data, FOMC Minutes

Fundamental Forecast for Australian Dollar: Neutral

• Australian Dollar May Rise if the Jobs Report Surprises vs Forecasts
• Hawkish March FOMC Minutes May Undermine Aussie Upside Push

Monetary policy expectations are in focus for the Australian Dollar. The aftermath of Friday’s disappointing US Non-Farm Payrolls release proved quite telling. The Aussie rose even as stocks fell and the Japanese Yen – a currency traditionally on the opposite end of the risk sentiment spectrum from Australian unit – launched a formidable recovery. The move tracked a jump in the Australia-US 10 year bond yield spread, reflecting erosion in Fed monetary policy expectations relative to those of the RBA.

In the week ahead, this puts the spotlight on March’s Australian Employment report. Expectations point to a 2,500 increase in hiring, marking the smallest gain in three months. Meanwhile, the unemployment rate is expected to rise to 6.1 percent, the highest since July 2003. This sets the bar relatively low for an upside surprise, an outcome with distinct possibility considering Australian news-flow has outperformed consensus forecasts by the largest margin since May 2013 over recent weeks (according to data from Citigroup). Such a scenario is likely to further amplify the Aussie’s perceived policy advantage, allowing the currency to build on its latest gains.

The US side of the policy outlook equation will likewise find itself in flux as the Federal Reserve releases minutes from the March 18-19 meeting. That sit-down produced a notably hawkish shift in the central bank’s rhetoric and traders will be keen to parse through the conversation underlying policymakers’ confidence. The release will be bracketed by a busy calendar of official commentary, with speeches from the Fed’s Evans, Tarullo, Plosser and Kocherlakota (the lone dissenting vote at the March meeting) all due to cross the wires. Evidence pointing to QE cutback continuity can offer a lifeline to the greenback and cap AUD/USD gains.

Forex - Weekly outlook: April 7 - 11

The dollar pared back gains against the euro on Friday and fell against the yen, despite the latest U.S. employment report indicating that the economic recovery is on track.

The Labor Department reported Friday that the U.S. economy added 192,000 jobs in March, below expectations for jobs growth of 200,000. February’s figure was revised up to 197,000 from a previously reported 175,000. The U.S. unemployment rate remained unchanged at 6.7%, compared to expectations for a tick down to 6.6%.

The data disappointed some market expectations for a more robust reading but indicated that the Federal Reserve is likely to stick to the current pace of reductions to its asset purchase program.

EUR/USD ended Friday’s session down 0.12% to 1.3703, after falling to a five-week low of 1.3673 earlier. For the week, the pair lost 0.52%.

The shared currency remained under pressure after the European Central Bank said Thursday it would use unconventional measures if necessary to stave off the risk of deflation in the euro zone.

ECB President Mario Draghi said the governing council was "unanimous" in its commitment to using all unconventional instruments within its mandate to cope with the risk of low inflation becoming entrenched. He added that the bank discussed the possibility of negative deposit rates. The comments came after the bank left rates on hold at a record low 0.25%.

USD/JPY fell 0.63% to end Friday’s session at 103.27, after hitting session highs of 104.13 immediately following the release of the jobs report.

Elsewhere, the Canadian dollar rose to five-week highs against the greenback, bolstered by a stronger-than-forecast domestic jobs report for March.

Statistics Canada reported that the economy added 42,900 jobs last month, well above the forecast jobs growth of 21,500, while the unemployment rate unexpectedly ticked down to 6.9% from 7.0% in February.

USD/CAD fell 0.51% to settle at 1.0980, after falling to a session low of 1.0955 after the release of the data. For the week, the pair ended down 0.67%.

The Australian and New Zealand dollar were also higher against the greenback on Friday, with AUD/USD settling at 0.9292, not far from the four month peaks of 0.9306 hit earlier in the session. NZD/USD was up 0.63% to 0.8598.

In the week ahead, markets will be focusing on Wednesday’s minutes of the Fed’s most recent policy setting meeting. Monetary policy meetings by the Bank of Japan and the Bank of England will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 7

• Markets in China will be closed for a national holiday.
• The Swiss National Bank is to publish data on its foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets. Switzerland is also to release data on consumer price inflation.
• The Bank of Canada is to publish its quarterly business outlook survey.

Tuesday, April 8

• Both Australia and New Zealand are to publish private sector reports on business confidence.
• The BoJ is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the bank’s decision. The announcement is to be followed by a press conference. Japan is also to publish data on the current account.
• Switzerland is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• The U.K. is to release a report on industrial and manufacturing production, a leading indicator of economic health.
• Canada is to produce data on building permits.

Wednesday, April 9

• Australia is to release private sector data on consumer sentiment, as well as official data on home loans.
• Both Germany and the U.K. are to produce data on the trade balance, the difference in value between imports and exports.
• Later Wednesday, the Federal Reserve is to publish what will be the closely watched minutes of its latest policy meeting.

Thursday, April 10

• New Zealand is to release private sector data on manufacturing activity.
• Australia is to release data on the change in the number of people employed and the unemployment rate, in addition to private sector data on inflation expectations.
• Japan is to produce a report on core machinery orders.
• The BoE is to announce its benchmark interest rate.
• Canada is to publish data on new house price inflation.
• In the U.S., the Labor Department is to release its weekly report on initial jobless claims.

Friday, April 11

• The BoJ is to publish monetary policy meeting minutes.
• China is to produce data on consumer price inflation.
• The U.S. is to round up the week with data on producer price inflation and the preliminary report on the University of Michigan’s consumer sentiment index.

USD/JPY weekly outlook: April 7 - 11

The dollar fell against the yen on Friday, after a report showing that the U.S. economy added slightly fewer than expected jobs in March, but the data was unlikely to sway the Federal Reserve from its current timetable for reductions to its stimulus program.

USD/JPY fell 0.63% to end Friday’s session at 103.27, after hitting session highs of 104.13 immediately following the release of the jobs report, the strongest level since January 23.

The pair was likely to find support at 103.00 and resistance at 104.11.

The Labor Department reported Friday that the U.S. economy added 192,000 jobs in March, below expectations for jobs growth of 200,000. February’s figure was revised up to 197,000 from a previously reported 175,000. The U.S. unemployment rate remained unchanged at 6.7%, compared to expectations for a tick down to 6.6%.

The data disappointed some market expectations for a more robust reading but indicated that the U.S. central bank is likely to stick to the current pace of reductions to its asset purchase program.

The yen fell to 10-week lows against the dollar earlier Friday as risk appetite continued to be underpinned by hopes that China will implement economic stimulus measures to shore up slowing growth.

The yen also came under pressure after Japan’s sales tax increase to 8% from 5% came into effect on Tuesday. The increase is expected to present a challenge to the Bank of Japan’s attempts to bolster economic growth and stave off deflation.

Elsewhere, the yen was sharply higher against the euro on Friday, with EUR/JPY dropping 0.73% to close at 141.54. For the week, the pair lost 0.44%.

The shared currency weakened broadly after the European Central Bank said Thursday it would use unconventional measures if necessary to stave off the risk of deflation in the euro zone.

ECB President Mario Draghi said the governing council was "unanimous" in its commitment to using all unconventional instruments within its mandate to cope with the risk of low inflation becoming entrenched. He added that the bank discussed the possibility of negative deposit rates. The comments came after the bank left rates on hold at a record low 0.25%.

In the week ahead, markets will be focusing on Wednesday’s minutes of the Fed’s most recent policy setting meeting, while Tuesday's BoJ policy setting meeting will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events on this day.

Tuesday, April 8

• The BoJ is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the bank’s decision. The announcement is to be followed by a press conference. Japan is also to publish data on the current account.

Wednesday, April 9

• The Federal Reserve is to publish what will be the closely watched minutes of its latest policy meeting.

Thursday, April 10

• Japan is to produce a report on core machinery orders.
• In the U.S., the Labor Department is to release its weekly report on initial jobless claims.

Friday, April 11

• The BoJ is to publish monetary policy meeting minutes.
• The U.S. is to round up the week with data on producer price inflation and the preliminary report on the University of Michigan’s consumer sentiment index.

USD/CHF weekly outlook: April 7 - 11

The dollar pared gains against the Swiss franc on Friday, pulling back from five-week highs after a report showed that the U.S. economy added slightly fewer than expected jobs last month.

USD/CHF ended Friday’s session at 0.8916, down from highs of 0.8953, the strongest since February 13. For the week, the pair was 0.81% higher.

The pair was likely to find support at 0.8850 and resistance at 0.8951.

The Labor Department reported Friday that the U.S. economy added 192,000 jobs in March, below expectations for jobs growth of 200,000. February’s figure was revised up to 197,000 from a previously reported 175,000. The U.S. unemployment rate remained unchanged at 6.7%, compared to expectations for a tick down to 6.6%.

The data disappointed some market expectations for a more robust reading but indicated that the U.S. central bank is likely to stick to the current pace of reductions to its asset purchase program.

The dollar rose to more than five-week highs against the Swissy earlier Friday as risk appetite continued to be underpinned by hopes that China will implement economic stimulus measures to shore up slowing growth.

In the week ahead, markets will be focusing on Wednesday’s minutes of the Fed’s most recent policy setting meeting. Switzerland is to release data on retail sales inflation and foreign currency reserves.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 7

• The Swiss National Bank is to publish data on its foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets. Switzerland is also to release data on consumer price inflation.

Tuesday, April 8

• Switzerland is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Wednesday, April 9

• The Federal Reserve is to publish what will be the closely watched minutes of its latest policy meeting.

Thursday, April 10

• The Labor Department is to release its weekly report on initial jobless claims.

Friday, April 11

• The U.S. is to round up the week with data on producer price inflation and the preliminary report on the University of Michigan’s consumer sentiment index.