Weekly Outlook: 2014, June 08 - 15

USD/JPY forecast for the week of June 9, 2014, Technical Analysis

The USD/JPY pair broke higher during the previous week, cracking the top of the hammer that had formed the week before. However, the market is still within consolidation, thereby making this a difficult pair to trade for the longer term focused investor. Pullbacks should continue to offer buying opportunities, and we see far too much in the way of resistance at both the 103 and the 104 levels, and as a result we feel that the market is probably one that is best suited for short-term traders, at least for now.

USD/CAD forecast for the week of June 9, 2014, Technical Analysis

The USD/CAD pair had a positive week, grinding straight up from the absolute open for the week. However, we are still below the 1.10 level, and that area needs to be broken to the upside in order to start buying for the longer term. Pullbacks at this point time should continue to offer buying opportunities, so therefore if we form some type of supportive candle below, we are more than likely to continue to start buying. We believe that ultimately this market will head to the 1.1250 level, and as a result we are certainly biased to the upside.

NZD/USD forecast for the week of June 9, 2014, Technical Analysis

The NZD/USD pair went back and forth during the course of the week, basically finishing unchanged. Because of this, a longer-term trader can look at this large range and place a trade based upon which direction we break. Ultimately though, we do feel more comfortable buying a break above the top of the candle, and going long. There is quite a bit of noise underneath this area, and as a result we feel that selling could be a bit more difficult. Nonetheless, we will simply follow where the market leads us.

GBP/USD forecast for the week of June 9, 2014, Technical Analysis

The GBP/USD pair had a slightly positive week over the last 5 sessions, as we continue to bounce around the 1.68 level. This market is still very bullish as far as we can tell, and we are approaching an area that we could consider to be an uptrend line. Nonetheless, we still have a target of 1.70 before it’s all said and done, and as a result we are buyers. We believe that there is a significant “floor” in this market all the way down to the 1.65 handle. That area getting broken to the downside would be very negative, but we do not see that happening anytime soon.

EUR/USD forecast for the week of June 9, 2014, Technical Analysis

The EUR/USD pair fell drastically during the course of the week as we slammed into the 1.35 handle. All things being equal though, the buyer stepped in and formed a bit of a brick wall. With that, it’s obvious that the market has a “floor” in this area, and it’s quite likely that it will be the lowest print that we will see over the course of the summer. In fact, we are starting to believe that we are finding the summer range between the 1.35 handle, and the 1.40 handle. The 1.37 handle does cause some type of reaction though, and that must be paid attention to.

The fact that the European Central Bank went into real negative interest rates, and that the Euro still managed to find its footing suggests to us that the market will not sell off below that level. With that being the case, we feel the longer-term traders can play this more or less is a range bound market, but pullbacks should be thought of as buying opportunities. In fact, we would even suggest going to shorter timeframe charts to find a decent entries based upon supportive candles. Anytime this market pulls back, we would be very interested in what the 4 hour chart is doing. A nice 4 hour supportive candle within the context of the longer-term chart might be a nice way to play this market. Buying a supportive candle on the 4 hour chart while using the backdrop of the weekly chart as your guidelines, might just be the way to go.

We find it very difficult to imagine that this market is going to go above the 1.40 handle anytime soon. It could possibly down the road, but right now it appears that the market is fairly content to go sideways. This particular market has been very choppy even when it’s “trending” so that’s not a huge surprise truthfully. If we did manage to break down below the 1.35 handle however, we would feel this market was coming undone and would become very bearish.

Forex - Weekly outlook: June 9 - 13

The dollar pushed higher against the other major currencies on Friday after the nonfarm payrolls report for May indicated that the U.S. labor market is continuing to gradually improve.

The Department of Labor reported that the U.S. economy added 217,000 jobs last month, just under expectations for jobs growth of 218,000, while April's figure was revised to 282,000. The unemployment rate remained steady at a five-and-a-half year low of 6.3%.

EUR/USD initially touched a two-week high of 1.3677 following the release of the data, before pulling back to 1.3642 late Friday. For the week, the pair was 0.34% higher.

The U.S. jobs report came one day after the European Central Bank unveiled a package of measures to avert the threat of persistently low inflation in the euro area, briefly sending the single currency to four month lows of 1.3502 against the dollar, before later erasing the day’s losses.

The ECB cut the main refinancing rate in the euro area to a record low 0.15% and imposed negative deposit rates on commercial lenders, in a bid to stimulate lending to businesses.

The bank also implemented a new Long-Term Refinancing Operation, designed to help banks lend to small companies and said it would "intensify" its preparatory work on the 'asset-backed security' market.

The ECB acted after a report showed that the annual rate of inflation in the euro zone slowed to 0.5% in May, far below the ECB’s target of close to but just under 2%.

The dollar inched higher against the yen on Friday, with USD/JPY at 102.47 at the close of trade, recovering from session lows of 102.12 struck immediately after the jobs data was released.

The dollar was also higher against the pound and the Swiss franc, with GBP/USD slipping 0.11% to 1.6801 and USD/CHF rising 0.24% to 0.8933.

Elsewhere Friday, the Canadian dollar ended slightly lower against the U.S. dollar following the release of a lackluster domestic jobs report.

Statistics Canada reported that the economy added 25,800 jobs in May, above expectations for 25,000, but gains were due to the creation of part time positions, while the unemployment rate ticked up to 7.0% from 6.9% in April.

USD/CAD touched highs of 1.0948 before settling at 1.0931 late Friday.

In the week ahead, investors will be looking ahead to Thursday’s U.S. retail sales report for further indications on the strength of the economic recovery. A rate review by New Zealand’s central bank and the latest U.K. jobs report will also be in focus.

Monday, June 9

• Markets in Australia are to remain closed for a national holiday.
• Japan is to release revised data on first quarter growth, as well as reports on the current account and bank lending.
• Canada is to publish data on housing starts.

Tuesday, June 10

• Japan is to release data on tertiary industry activity.
• Australia is to publish private sector data on business confidence, as well as official data on home loans.
• China is to produce data on consumer and producer prices.
• In the euro zone, France is to publish data on industrial production. Elsewhere in Europe, 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 data on industrial and manufacturing production.

Wednesday, June 11

• Japan is to publish the latest reading of its BSI manufacturing index.
• Australia is to release private sector data on consumer sentiment.
• The U.K. is to publish data on the change in the number of people employed and the unemployment rate, as well as data on average earnings.

Thursday, June 12

• The Reserve Bank of New Zealand 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 is also to hold a press conference to discuss the monetary policy decision.
• Japan is to produce data on core machinery orders.
• Australia is to release data on the change in the number of people employed and the unemployment rate, and a private sector report on inflation expectations.
• The euro zone is to release data on industrial production, while the ECB is to publish its monthly bulletin.
• Canada is to publish data on new house price inflation, while Bank of Canada Governor Stephen Poloz is to speak at an event in Ottawa.
• The U.S. is to release the weekly report on initial jobless claims, in addition to data on retail sales and import prices.
• BoE Governor Mark Carney is to speak at an event in London.

Friday, June 13

• New Zealand is to release private sector data on manufacturing activity.
• The Bank of Japan 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.
• China is to release data on industrial production and fixed asset investment.
• Canada is to publish data on manufacturing sales.
• The U.S. is to round up the week with data on producer price inflation and preliminary data on consumer sentiment from the University of Michigan.

USD/JPY weekly outlook: June 9 - 13

The dollar edged slightly higher against the yen on Friday after data showing that May marked the fourth month of jobs growth in the U.S. indicated that the economic recovery is on track.

The Department of Labor reported that the U.S. economy added 217,000 jobs last month, just under expectations for jobs growth of 218,000, while April's figure was revised to 282,000.

The U.S. unemployment rate remained unchanged at a five-and-a-half year low of 6.3%.

USD/JPY was at 102.47 late Friday, recovering from session lows of 102.12 struck immediately after the jobs data was released.

The pair is likely to find support at 102.00 and resistance at 102.78, last Wednesday’s high.

Elsewhere Friday, EUR/JPY was almost unchanged at 139.87 at the close of trade, recovering from the lows of 138.66 struck in the previous session. For the week, the pair was 0.42% higher.

The euro remained supported even after the European Central Bank unveiled a package of measures to avert the threat of persistently low inflation in the euro area on Thursday.

The ECB cut the main refinancing rate in the euro area to a record low 0.15% and imposed negative deposit rates on commercial lenders, in a bid to stimulate lending to businesses.

The bank also implemented a new Long-Term Refinancing Operation, designed to help banks lend to small companies and said it would "intensify" its preparatory work on the 'asset-backed security' market.

The ECB acted after a report showed that the annual rate of inflation in the euro zone slowed to 0.5% in May, far below the ECB’s target of close to but just under 2%.

In the week ahead, investors will be looking ahead to Thursday’s U.S. retail sales report for further indications on the strength of the recovery. Revised data on Japanese first quarter growth and the outcome of a monetary policy meeting by the Bank of Japan will also be closely watched.

Monday, June 9

• Japan is to release revised data on first quarter growth, as well as reports on the current account and bank lending.

Tuesday, June 10

• Japan is to release data on tertiary industry activity.

Wednesday, June 11

• Japan is to publish the latest reading of its BSI manufacturing index.

Thursday, June 12

• Japan is to produce data on core machinery orders.
• The U.S. is to release the weekly report on initial jobless claims, in addition to data on retail sales and import prices.

Friday, June 13

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

USD/CHF weekly outlook: June 9 - 13

The dollar moved higher against the Swiss franc on Friday after data showing that the U.S. economy added jobs for a fourth straight month in May bolstered optimism over the broader economic recovery.

The Department of Labor reported that the U.S. economy added 217,000 jobs last month, just under expectations for jobs growth of 218,000, while April's figure was revised to 282,000.

The U.S. unemployment rate remained unchanged at a five-and-a-half year low of 6.3%.

USD/CHF was at 0.8934 late Friday, up 0.25% for the day. For the week, the pair was off 0.59%.

The pair is likely to find support at 0.8907, Thursday’s low and resistance at 0.9035, Thursday’s high and a four-month high.

The dollar briefly rallied to the highest level since February against the Swiss franc on Thursday, before erasing the day’s gains in choppy trade after the European Central Bank unveiled a package of measures to avert the threat of persistently low inflation in the euro area.

The ECB cut the main refinancing rate in the euro area to a record low 0.15% and imposed negative deposit rates on commercial lenders, in a bid to stimulate lending to businesses.

The ECB acted after a report showed that the annual rate of inflation in the euro zone slowed to 0.5% in May, far below the ECB’s target of close to but just under 2%.

EUR/CHF was at 1.2188 late Friday, recovering from three-week lows of 1.2165.

Also Friday, data showed that the annual rate of inflation in Switzerland rose 0.2% in May, the largest annual increase since the Swiss National Bank imposed a minimum exchange rate floor against the euro in September 2011.

On a month-over-month basis, Swiss consumer prices rose 0.3% in May.

In the week ahead, investors will be looking ahead to Thursday’s U.S. retail sales report for further indications on the strength of the U.S. recovery. Tuesday’s report on Swiss retail sales will also be closely watched.

Tuesday, June 10

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

Thursday, June 12

• The U.S. is to release the weekly report on initial jobless claims, in addition to data on retail sales and import prices.

Friday, June 13

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

USD/CAD weekly outlook: June 9 - 13

The Canadian dollar ended the day slightly lower against the U.S. dollar on Friday as a lackluster domestic jobs report was offset by a report showing solid jobs growth in the U.S. last month.

USD/CAD touched session highs of 1.0948 in volatile trade, before settling at 1.0931 late Friday, 0.09% higher for the day.

The pair is likely to find support at 1.0890 and resistance at 1.0960, Thursday’s high and a one-month high.

Statistics Canada reported that the economy added 25,800 jobs in May, above expectations for 25,000, but gains were due to the creation of part-time positions.

Meanwhile, the Canadian unemployment rate ticked up to 7.0% from 6.9% in April.

At the same time, U.S. data showing that the economy added jobs for a fourth straight month in May bolstered optimism over the broader economic recovery.

The Department of Labor reported Friday that the U.S. economy added 217,000 jobs last month, just under expectations for jobs growth of 218,000, while April's figure was revised to 282,000.

The U.S. unemployment rate remained unchanged at a five-and-a-half year low of 6.3%.

Earlier in the week, the Canadian dollar weakened after the Bank of Canada said that slower than expected global growth meant that the risks associated with low inflation still remain, despite an increase in Canadian consumer prices in April.

The comments came after the BoC left its benchmark interest rate on hold at 1% on Wednesday.

In the week ahead, investors will be looking ahead to Thursday’s U.S. retail sales report for further indications on the strength of the recovery. A speech on Thursday by the head of the BoC will also be in focus.

Monday, June 9

• Canada is to publish data on housing starts.

Thursday, June 12

• Canada is to publish data on new house price inflation, while BoC Governor Stephen Poloz is to speak at an event in Ottawa.
• The U.S. is to release the weekly report on initial jobless claims, in addition to data on retail sales and import prices.

Friday, June 13

• Canada is to publish data on manufacturing sales.
• The U.S. is to round up the week with data on producer price inflation and preliminary data on consumer sentiment from the University of Michigan.

AUD/USD weekly outlook: June 9 - 13

The Australian dollar rose to a more than two-week high against its U.S. counterpart on Friday, after the highly-anticipated U.S. nonfarm payrolls report for May came in broadly in line with market expectations.

AUD/USD hit 0.9358 on Friday, the pair’s highest since May 19, before subsequently consolidating at 0.9334 by close of trade on Friday, down 0.06% for the day but 0.25% higher for the week.

The pair is likely to find support at 0.9256, the low from June 5 and resistance at 0.9358, the high from June 6.

The Department of Labor said Friday that the U.S. economy added 217,000 jobs last month, just under expectations for jobs growth of 218,000. The unemployment rate remained steady at a five-and-a-half year low of 6.3%.

The data disappointed some market expectations for a more robust reading but indicated that the U.S. economy continued to shake off the effects of a weather-related slowdown over the winter, bolstering the outlook for the broader economic recovery.

Meanwhile, in Australia, official data released Wednesday showed that the Pacific nation’s economy grew at a rate of 1.1% in the first quarter, above expectations for an expansion of 0.9%.

On Tuesday, the Reserve Bank of Australia left its benchmark interest rate at 2.5% in a widely expected move and said that "on present indications, the most prudent course is likely to be a period of stability in interest rates."

Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the Australian dollar in the week ending June 3.

Net longs totaled 21,527 contracts, compared to net longs of 15,848 in the preceding week.

In the week ahead, investors will be looking ahead to Thursday’s U.S. retail sales report for May for further indications on the strength of the economic recovery.

Australian employment data for May due Thursday will also be closely-watched.

Monday, June 9

• Markets in Australia are to remain closed for a national holiday.

Tuesday, June 10

• Australia is to publish private sector data on business confidence, as well as official data on home loans.
• China is to produce data on consumer and producer prices. The Asian nation is Australia’s largest trade partner.

Wednesday, June 11

• Australia is to release private sector data on consumer sentiment.

Thursday, June 12

• Australia is to release data on the change in the number of people employed and the unemployment rate, and a private sector report on inflation expectations.
• The U.S. is to release the weekly report on initial jobless claims, in addition to data on retail sales and import prices.

Friday, June 13

• China is to release data on industrial production and fixed asset investment.
• The U.S. is to round up the week with data on producer price inflation and preliminary data on consumer sentiment from the University of Michigan.