Weekly Outlook: 2014, July 20 - 27

Forex Weekly Outlook July 21-25

Glenn Stevens’ speech, US housing data, inflation and industrial data, NZ rate decision, British GDP data are the main events on FX calendar this week. Here is an outlook on the main market-movers ahead.

Last week the Philly Fed Index jumped to 23.9 points in July marking the highest reading since March 2011. Current activity rose to 23.9 from 17.8 in June, orders index jumped to 34.2 from 16.8. Economists expected the index to fall to 15.6. This release suggests manufacturing has accelerated across the board in the Philadelphia region heading towards a successful second half –year. More positive news came from the US employment market with a lower than expected release of 302,000 clams, down 3,000 from the prior week, beating expectations for a rise to 310,000. Will the US economy continue its upturn trend?

1. Glenn Stevens speaks: Tuesday, 3:00. Governor Glenn Stevens, head of the Reserve Bank of Australia will speak in Sydney. He may talk about the increasing value of the Australian dollar. In a former speech Stevens noted that the zero interest rate policies of major central banks are partly to blame for the inflation of the Australian dollar, and also warned market participants that this was no reason to remain complacent on the value of the currency. He continued to say that the RBA still has room to cut interest rates when required.
2. US inflation data: Tuesday, 12:30. U.S consumer prices edged up 0.4% in May, amid sharp rise in food prices. Economists expected a smaller increase of 0.2 %, getting close to the Fed’s target of 2.0%. Meanwhile, core prices also climbed more than expected, rising 0.3% from a 2.0% gain posted in April. In a yearly base, the core CPI increased 2.0 %, up from 1.8 % in April and the biggest gain since February of last year. The increase in prices, suggest the Fed may raise interest rates sooner than expected. U.S consumer prices are expected to gain 0.3% while core prices are predicted to increase by 0.2%.
3. US Existing Home Sales: Tuesday, 14:00. The number of pre-owned home sales edged up in May to a nearly three year high, reaching an annualized rate of 4.89 million from 4.66 million posted in the previous month. Analysts expected a lower rise to 4.74 million units. The housing recovery continues amid higher income and lower housing prices, which increase affordability. A further rise to 4.98 million is expected this time.
4. NZ rate decision: Wednesday, 21:00. New Zealand’s central bank announced a rate hike of 25 basis points in its June meeting, reaching 3.25%. This was the highest level since January 2009 and the third consecutive rise. The central bank said rates need to be higher as long as economic growth fuels inflation. Annual inflation slowed mildly to 1.5 % in the first quarter, while the RBNZ wants rates to be around 2 %, the mid-point of its 1-3 % target band. New Zealand’s central bank is expected to raise rates again to 3.50%.
5. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits declined 3,000 last week reaching 302,000, indicating the US labor market recovery is picking up. Analysts expected claims to reach 310,000 last week. The four-weak average fell 3,000 to 309,000, the lowest level since June 2007. Yellen warned that the Fed may kike rates sooner than planned in case the labor market continues to strengthen. The numer of claims is expected to rise to 310,000.
6. US New Home Sales: Thursday, 14:00. Sales of new U.S. single-family homes climbed to a six-year high in May, reaching a seasonally adjusted annual rate of 504,000 units, 18.6% more than in the previous month, beating predictions for 442,000 units. The high mortgage rates seen in the second half of 2013 are beginning to settle increasing affordability. The median price of a new home increased 6.9% from May since inventory remained unchanged, but prices are beginning to settle and should help to stimulate demand for houses. Sales of new homes is predicted to reach 485,000.
7. Eurozone German Ifo Business Climate: Friday, 8:00. German business climate index declined to 109.7 in June from 110.4 in May, posting its second consecutive monthly fall. Economists expected a minor drop to 110.3. German manufacturers fear the potential consequences of the crises in Ukraine and Iraq. More than 6,000 German companies are related to Russia and business and trade bodies have warned that further escalation in tensions over Ukraine may result in catastrophic losses for firms. Business sentiment is expected to edge down to109.6.
8. UK Prelim GDP: Friday, 8:30. In Q1 2014 the UK economy expanded by 0.8% in the first quarter and by 3.1% when compared with 2013 Q1. This was the fifth consecutive rise, the longest growth period since the economic downturn reaching 0.6% below its pre-downturn peak in Q1 2008. The main contributor to growth was the services industry, which grew by 0.9% on the quarter. The labor market also performs well. UK economy is predicted to expand 0.8% in the second quarter.
9. US Core Durable Goods Orders: Friday, 12:30. Orders for U.S. durable goods fell 1 % in May amid a sharp decline in demand for military equipment. The reading was worse than the 0.1% drop predicted by analysts and lower than the previous release of 0.6%. However, excluding defense-related goods, orders actually rose, and orders in a key category that signals business investment also increased. Meanwhile core orders excluding transportation, declined by 0.1%, while expected to rise 0.3%. Durable goods orders are expected to rise 0.4%, while core orders are predicted to gain 0.6%.

US Dollar Awaits Heavier Volatility, Rate Speculation Returns

Fundamental Forecast for Dollar: Bullish

- Consumer inflation (CPI) stats will look to take control of rate forecasts led astray by Treasury demand
- Volatility measures can’t fall much further, and that imbalance offers immediate benefit to the US Dollar

Attachment 8661


There was a considerable commotion in the financial markets this past week with sharp declines in global equities and sizable swells in volatility measures (the short-term equity-based measure increased nearly 60 percent on Thursday). Yet, a notable contrast to this chaos was the more moderate response from FX – and particularly the calm demeanor of the US Dollar. If the greenback is considered a safe haven, why did it not rally as other capital markets felt the effects of fear? What does this mean for the currency moving forward?

Last week’s volatility originated with two startling headlines: a downed plane in the disputed territory between Russia and Ukraine, and the start of a ground offensive in the Gaza Strip. Both carry serious geopolitical ramifications and thereby generate distinct concern amongst investors that have increasingly exposed themselves to risky assets and are dependent on stability. As grave as these concerns are, we have seen comparable bouts of fear in the past whereby the market has recognized and acclimated – ultimately returning to ‘status quo’. What separates the current situation from similar circumstances in the past is the financial backdrop. Activity levels, positioning and underlying fundamental themes are shifting.

Volatility measures have, in recent weeks, hit multi-year (equity, emerging markets, commodities) and record (FX and rates) lows. A natural low is inevitable where real returns (activity adjusted) have evaporated. The absence of premia in turn dissuades short-term traders – the primary active market participant through 2014 – looking to buy dips or “sell volatility”. Anemic volumes and open interest reflect the steady withdrawal of active market participants and liquidity that is crucial to stabilize market when fear arises. We can already see this eroding conditions: in the ‘stickiness’ of this most recent spell of volatility and a growing divergence in the performance of ‘risk’-sensitive assets.

The dollar represents a safe haven with a particular appeal. Fronting the world largest and most regulated market, it is prized for liquidity. That means that temporary jumps in volatility carry far less weight here than with an equity index or even a Yen cross. Then again, the current reach for yield in thinner markets represents a perfect opportunity for the currency as a conditions normalize.

Looking at the docket ahead, there are few events that look to carry the heft of a definitive change in sentiment. Furthermore, given the market’s immunity to so many other high-level event risks – FOMC decision, employment reports, external headlines – it is more likely that optimism will cave to the reality of positioning under its own power. On the other hand, the docket offers up a listing of key event risk for the other key driver for the dollar: interest rate expectations.

There is no true level in unemployment that the Fed is necessarily forced to hike rates at. The need to tighten monetary policy is developed through inflation pressure. That means the timing on the Fed’ s first hike and subsequent pace depends on readings like Tuesday’s CPI consumer inflation figures for June. The headline figure is expected to hold at 2.1 percent and core at 2.0 percent – both conspicuously at the central bank’s target. While the group’s favored measure is the PCE – which is materially softer than this reading – the more pressure seen in this market-favorite, the more pervasive the situation and more likely a bank response.

Another consideration for interest rate speculation behind the dollar is the knowledge that there is higher profile event risk due the following week. July NFPs, 2Q GDP and a FOMC rate decision are all on the docket another week out. It is commonplace for the market to weather near-term fundamental turmoil in deference to bigger event risk on the horizon. So, while there is plenty of favorable opportunity in both risk trends and rate forecast potential moving forward, we must bear in mind its timing as a catalyst.

GBP/USD Needs Hawkish BoE Minutes, Upbeat 2Q GDP for Fresh Highs

Fundamental Forecast for Pound: Bullish

• GBP/USD Hits Fresh Session Highs, Breaks 1.7100 Handle After UK CPI
• British Pound is an Attractive Buy on Dips

Attachment 8663

The Bank of England (BoE) Minutes and the U.K.’s 2Q Gross Domestic Product (GDP) report is likely spark increased volatility in the GBP/USD as market participants continue weigh the outlook for monetary policy.

The BoE policy statement may prop up the British Pound as a growing number of central bank officials show a greater willingness to normalize monetary policy sooner rather later, but we would need to see a greater dissent within the Monetary Policy Committee (MPC) to see fresh yearly highs in the GBP/USD as the pair retains the range-bound price action from earlier this month. With that said, a more hawkish statement along with a greater rift within the MPC may drive the British Pound higher ahead of the next quarterly inflation report due out on August 13, and the going shift in the policy outlook may continue to heighten the bullish sentiment surrounding the sterling as it boosts interest rate expectations.

However, the 2Q GDP print may undermine the bullish outlook for the British Pound as the economy is expected to retain a 0.8% rate of growth in the second-quarter, and we would need to see a more meaningful pickup in private sector activity to see a bullish reaction in the sterling as the BoE continues to mull the margin of spare capacity in the U.K.

With that said, we would need to see a series of positive fundamental developments to see a higher-low being carved ahead of the 1.7000 handle, but the GBP/USD may face a larger correction over the remainder of the month should the U.K. event risks drag on interest rate expectations.

AUD Braces For Jawboning From Stevens And Quarterly Inflation Data

Fundamental Forecast for Australian Dollar: Neutral

• AUD/USD finishes flat despite a bumpy week on RBA minutes, China data, and geopolitical shocks
• CPI figures and Stevens’ speech unlikely to shift expectations for a “period of stability” for rates
• If geopolitical tensions fail to intensify, traders could return to the Aussie for its yield appeal

Attachment 8666

The Australian Dollar’s consolidation continued over the most recent week with AUD/USD remaining within its narrow range between 0.9210 and 0.9440. A status-quo set of Minutes from the RBA and positive Chinese second quarter growth figures failed to inspire the Aussie bulls. While a sell-off on heightened geopolitical tensions proved to be short-lived, with the currency bouncing back during Friday’s trading. Over the week ahead, two key themes are likely to continue to offer the Aussie guidance; policy expectations and risk appetite.

On the risk-appetite front; geopolitical turmoil carries the potential to put pressure on the risk-sensitive currencies like the Aussie. There is considerable uncertainty over whether the flare-up between Israel and Hamas, as well as tensions in Eastern Europe could escalate, which could leave traders hesitant to move back to the Aussie. Investors’ reactions to the latest developments suggests that the market is highly sensitive to outside shocks at present. If either situation were to intensify, it could lead to an unwinding of AUD carry trade positions built up over recent months.

However, we have witnessed several of these geopolitical shocks this year, which have ultimately failed to leave a lasting impact on sentiment. When the dust settles from the latest flare-up traders could again be tempted to return to the Aussie for its yield appeal.

Next week’s domestic CPI data and speeches by RBA officials could feed the policy expectations theme. A surprise second quarter inflation reading may see a knee-jerk reaction from the currency, however given a shift in the rate outlook remains unlikely at this stage, follow-through could prove limited.

Similarly, another attempt at jawboning the Aussie lower from Stevens may fail to leave a lasting impact on the unit. In recent addresses the RBA Governor has simply been delivering the central bank’s view that the currency is overvalued, and at this stage remains unwilling to take action such as intervention to put pressure on the AUD.

Gold Posts 2% Weekly Loss- $1324 Key Resistance ahead of US CPI

Fundamental Forecast for Gold: Neutral

• Gold Trades into Resistance; Resistance at 1325 and 1335
• Gold, Crude Prep For Volatility As Unrest In Eastern Europe Escalates

Attachment 8667

Gold prices are considerably lower on the week with the precious metal down more than 2.3% to trade at $1307 ahead of the New York close on Friday. The losses come amid a tumultuous week for markets with geopolitical tensions continuing to build both in Ukraine and Israel. A downed civilian airliner in Ukraine and an Israeli ground invasion of Gaza fueled a substantial rally in gold on Thursday as broader equity markets turned over. The subsequent gold rally halted at a key resistance range and while the technical picture here is a little murky, our baseline scenario is for further weakness in gold while sub $1324.

Looking ahead to next week, investors will be closely eyeing the release of the US Consumer Price Index (CPI) with consensus estimates calling for the headline reading to hold at an annualized rate of 2.1%. In light of the recent commentary from Janet Yellen in this week’s Humphrey Hawkins testimony, the central bank chair continued to suggest that the inflation outlook remains “noisy” due to temporary factors. However, a strong inflation print may undermine the Fed’s dovish tone as a growing number of central bank officials show a greater willingness to normalize monetary policy sooner rather than later. As a result we would need to see a significant deviation from market expectations for the data to spur a material shift in the Fed’s policy outlook. Should the inflation data come in stronger than expected, look for gold to trade heavy as interest rate expectations fuel strength in the greenback.

From a technical standpoint the outlook for gold remains clouded with a mid-week rally taking prices back above the initial July opening range low. That said, it’s important to note that our topside bearish invalidation level remains at the zone between the 38.2% extension off the 2013 low and the 61.8% retracement from this month’s high at $1322/24.This week’s rally met strong resistance at this threshold and near-term focus will favor the short-side of the trade while below this threshold. Interim support rests at $1305 and is backed by the confluence of the monthly low, the 50% retracement of the June rally, the 50-day moving average and trendline support off the June low at $1292. A break below this level further validates our broader directional bias with such a scenario eyeing subsequent targets into more significant support at $1270. A topside breach/close above $1324 invalidates our near-term approach with subsequent resistance levels seen higher at $1335 the monthly high at $1345 and the 78.6% retracement of the decline off the March highs around $$1360. We will maintain a neutral bias heading into next week’s CPI data while noting a greater inclination to sell while below $1324.

DAX forecast for the week of July 21, 2014, Technical Analysis

The DAX as you can see initially tried to rally during the course of the week, but was be back at the €9900 region. The resulting candle is of course a shooting star but it sits on top of a significant amount of support in the area of €9600. With this, we feel that the market may continue to test support, but we feel that there is plenty below and therefore have no real interest in selling this market. With that, we are waiting on some type of supportive candle in order to go long again.

http://youtu.be/kPVXXAducgs

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Nikkei forecast for the week of July 21, 2014, Technical Analysis

The Nikkei as you can see went back and forth during the course of the previous five sessions, forming a relatively neutral candle. At this into candle suggests that there is support at the ¥15,000 level, and that the market still is in an uptrend although we are starting to slow down again. Any pullback at this point in time will find support at the ¥15,000 level, as well as the ¥14,000 level. In other words, we feel that this is a “buy only market” at the moment as the trend has definitely been to the upside for the longer term.

http://youtu.be/4oAMqVSnM5M

Attachment 8669

Dow Jones 30 forecast for the week of July 21, 2014, Technical Analysis

The Dow Jones 30 as you can see rose during the course of the week, break out to a fresh, new high. We believe that ultimately that this market should continue to go higher, and that we should head to the 20,000 handle. We are long-term bullish of this market, and believe that pullbacks will invite buying opportunities as it is perceived value. Selling at this point in time is something that we have absolutely no interest in, and as a result we are “buy only” of the Dow Jones.

http://youtu.be/LCoAeFEDf0w

Attachment 8670

NASDAQ forecast for the week of July 21, 2014, Technical Analysis

The NASDAQ initially fell during the course of the week, but found enough support at the 4350 level to turn things back around and have a nice bounce. This bounce cents the market high enough to form a significant hammer, which happens to be on the aforementioned 4350 level. This level was one significant resistance back during the month of March, and now we have essentially “broken out, and retested the resistance for support.” This is basic technical analysis, and as a result we believe that the NASDAQ might be one of the most bullish markets we follow at the moment.

We need to get above the 4500 level in order to feel comfortable buying and holding, but we do think it’s about to happen. With that being said, a break to a fresh, new high has us buying this market and thinking that it will more than likely hit the 5000 level given enough time. We don’t really see much in the way of a selling opportunity at this point in time, because the trend has been so bullish, and so obvious. Only the fools are stepping into short this market now, and as a result we feel that it is essentially a “one-way bet.”

It isn’t that you can’t lose money buying this market, it’s just that the odds favor going long. This market looks like one that’s quite healthy, and as a result we feel that the move above 4500 should be essentially when the floodgates open, bring in the buyers in from everywhere. It will more than likely coincide with a break of the 2000 level in the S&P 500 as well, so that should just have risk assets in general going quite well. Remember, the NASDAQ is typically time to global growth as there’s a lot of technology involved in the index, and most of the technological companies on the NASDAQ tend to do a lot of business in places like Europe and Asia. With this, it is one of the better “risk on” financial assets that we track.level

http://youtu.be/d7u7XZhWoDk

Attachment 8671

S&P 500 forecast for the week of July 21, 2014, Technical Analysis

The S&P 500 pulled back initially during the week, but found significant support just below the 1960 level. That being the case, the market should continue to go higher, but we need to get above the 2000 level in order to feel comfortable going long of this market for a significant amount of time. Alternately, if we did pullback from here, we could find plenty of support down near the 1900 level, which would have us buying as well. We have no interest in selling this market now as it has been such a nice uptrend.

http://youtu.be/0ho2y68zbiQ

Attachment 8675

US Dollar Index forecast for the week of July 21, 2014, Technical Analysis

The US Dollar Index as you can see initially fell during the week, testing the 80 handle. However, the bounce from there since the market back above the 80.50 level. It is a bullish candle, but we believe that the 81 handle above is going to be resistive, so quite frankly it’s difficult to get overly excited one way or the other. This is not a long-term traders market at the moment, and as a result we will sit on the sidelines. We do believe that the market is going higher, it’s just that shorter-term charts will probably be needed to navigate the contract.

http://youtu.be/Rx2UYB2cXTM

Attachment 8676

Silver forecast for the week of July 21, 2014, Technical Analysis

The silver markets fell during the course of the week, as the market formed a red candle for the first time in over a month. That being the case, the market looks like it could pull back a little bit, but would find significant support at the $20 handle. If we get a supportive candle in that general vicinity, we are comfortable buying this market. On the other hand, if we break above the $22 level, we would be buyers there as well. Selling is not an option at this point in time.

http://youtu.be/SWgJ64DaNpg

Attachment 8680

Gold forecast for the week of July 21, 2014, Technical Analysis

Gold markets fell during the course of the week, testing the $1300 level. This market bounce from there, but the candle was in exactly supportive enough to get us too excited about buying. We certainly wouldn’t sell though, as the market certainly has support underneath that level as well. With that being the case, we think that the gold market is essentially going to be flat in the short-term, with maybe just the slightest of upward momentum. With that, we are necessarily interested in trading this from a long-term perspective.

http://youtu.be/LuXQ_QysA64

Attachment 8686

NZD/USD forecast for the week of July 21, 2014, Technical Analysis

The NZD/USD pair fell hard during the course of the week, breaking below the 0.87 handle. There is a significant amount of support below though, so we are not necessarily excited about shorting at this point. In fact, we think that the massive amount of support below should come into play, and we would be buyers of a supportive candle, as we see the 0.85 level as the beginning of massive support. On the other hand, if we get above the 0.88 level, we believe that this market that goes to the 0.90 handle.

http://youtu.be/xvMy-awp8rs

Attachment 8687

USD/CAD forecast for the week of July 21, 2014, Technical Analysis

The USD/CAD pair tried to rally during the course of the week, but as you can see the 1.08 level continue to be rather resistive, and as a result the market turned back around and formed a massive shooting star. The shooting star of course signifies that the sellers step back in, and as a result we feel that the market could pullback from this area. There is a nice uptrend line just below though, so we are not willing to start selling right away.

If we do break down below the uptrend line though, there is a significant amount of support at the 1.06 level, and that could keep the market somewhat afloat. It is not until we break down below the 1.06 level that we feel that the market can be sold. If we break down below 1.06, we think that the market will probably head to the 1.02 level, and possibly even all the way down to the parity level. The parity level is an area that we have been that a couple of times now, so it doesn’t bear the same psychological significance that it used to.

On the other hand, if we pullback and find support at the uptrend line, we feel that the market should go much higher. It will be enough to build up pressure in order to break out to the upside. Breaking down to the upside is something that we do think that this market will probably do given enough time, but we have to get above the 1.08 level on at least a daily close in order to feel comfortable without some type of supportive candle below. If we break the top of that shooting star for the week, that of course would be a very positive sign as it not only would break resistance horizontally, but would also break the top of that very negative shooting star.

And we get above the 1.08 level, ran into the 1.10 level first, and then possibly the 1.12 level. Remember, the uptrend line is a long-term uptrend line, so it should still bear quite a bit of weight.

http://youtu.be/W8i98FwP4TE

Attachment 8688

USD/JPY forecast for the week of July 21, 2014, Technical Analysis

The USD/JPY pair went back and forth during the course of the week, forming a very neutral candle. With that being the case, we feel that the market should continue to meander just above the 101 level, and as a result will remain in this fairly tight range. Because of this, the market is more of a short-term type of market, and as a result we do not see much in the way of a longer-term opportunity, although we do think ultimately the market does break out to the upside and head towards the 105 level.

http://youtu.be/6ru2VeASYbU

Attachment 8689

GBP/USD forecast for the week of July 21, 2014, Technical Analysis

The GBP/USD pair went back and forth during the course of the week, showing the 1.70 level to be supportive yet again. Ultimately, we did not have that larger range, but we do recognize that the market is still positive as long as we are above the aforementioned 1.70 handle. A supportive candle could get us to start buying, just as a break of the top of the range for the previous week would. We believe that the market should go to the 1.75 handle given enough time, and that is our longer-term target.

http://youtu.be/JqiJPhEF2AQ

Attachment 8690

EUR/USD forecast for the week of July 21, 2014, Technical Analysis

The EUR/USD pair fell during the course of the week after initially trying to rally. However, we remain above the 1.35 handle, and therefore we feel that the market is still simply going to consolidate in this relatively tight range. Because of that, we don’t necessarily like the idea of being involved in this market from a longer-term perspective, and with this, we are positive, but only for the very short-term. If we break down below the 1.35 level however, this market could go down to the 1.33 level.

http://www.youtube.com/watch?feature=player_embedded&v=xsraTiVs8oI

Attachment 8691

EUR/USD weekly outlook: July 21 - 25

The broadly weaker euro fell to its lowest level in five months against the safe haven dollar and Japanese yen on Friday before recovering some of these losses late in the session.
EUR/USD touched lows of 1.3491, the weakest since February 6 before pulling back to 1.3525 late Friday. For the week, the pair was down 0.56%.

The drop in the euro came amid increased demand for safe haven assets following the shooting down of a Malaysia Airlines jet in eastern Ukraine on Thursday.

Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza.

The euro came under additional pressure after the Bank of Italy cut its growth forecast for this year to 0.2% from 0.7% on Friday and warned that risks to the economy remained to the downside. The announcement underlined concerns over the faltering economic recovery in the currency bloc.

Earlier in the week European Central Bank President Mario Draghi said that large scale asset purchases are “squarely” within the bank’s mandate. The remarks were the latest indication that the central bank is open to further monetary easing measures to stave off the risk of deflation in the euro area.

Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.

Elsewhere, EUR/JPY hit lows of 136.72, the lowest since February 5 and was last at 137.07. The pair lost 0.59% for the week.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders. Investors will also be awaiting surveys on private sector activity in the euro zone.

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 Wednesday as there are no relevant events on this day.

Monday, July 21

• In the euro zone, Germany’s Bundesbank is to publish its monthly report.

Tuesday, July 22

• The U.S. is to release reports on consumer price inflation and existing home sales.

Thursday, July 24

• The euro zone is to publish preliminary data on manufacturing and service sector activity, while Germany and France are to publish individual reports on private sector growth.
• Meanwhile, Spain is to release its latest employment report.
• The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• In the euro zone, Germany is to publish the Gfk report on consumer climate and the Ifo report on business climate.
• The U.S. is to round up the week with data on durable goods orders.

GBP/USD weekly outlook: July 21 - 25

The pound fell to three-week lows against the dollar on Friday amid concerns over escalating geopolitical tensions between Russia and the West before recovering slightly late in the session.

GBP/USD touched lows of 1.0737, the weakest since June 30 before pulling back to 1.0786 late Friday, ending the day down 0.08%. For the week, the pair lost 0.20%. It was the second straight week of losses after the pair hit an almost six-year high of 1.7190 on July 15.

Cable is likely to find support at around the 1.7000 level and resistance at 1.7150.

The drop in the pound came amid increased demand for save haven assets following the shooting down of a Malaysia Airlines jet in eastern Ukraine. Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza.

Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.60 late Friday, after rising to one-month highs of 80.75 earlier in the session.

Elsewhere Friday, sterling also edged lower against the euro, with EUR/GBP touching highs of 0.7934 before easing back to 0.7914 at the close, not far from Wednesday’s 22-month low of 0.7880.

The single currency remained under pressure after the Bank of Italy cut its growth forecast for 2014 to 0.2% from 0.7% on Friday and warned that risks to the economy remained to the downside.

The announcement underlined concerns over the faltering economic recovery in the currency bloc.

Earlier in the week European Central Bank President Mario Draghi said that large scale asset purchases are “squarely” within the bank’s mandate. The remarks were the latest indication that the central bank is open to further monetary easing measures to stave off the risk of deflation in the euro area.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders. Investors will also be awaiting data on second quarter growth from the U.K.

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, July 22

• The U.K. is to release data on public sector net borrowing.
• The U.S. is to release reports on consumer price inflation and existing home sales.

Wednesday, July 23

• The Bank of England is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. Later in the day, BoE Governor Mark Carney is to speak.

Thursday, July 24

• 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 produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• The U.K. is to release preliminary data on second quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
• The U.S. is to round up the week with data on durable goods orders.

NZD/USD weekly outlook: July 21 - 25

The New Zealand dollar ended Friday’s session close to a four-week low against its U.S. counterpart, amid speculation that the Federal Reserve could hike U.S. interest rates sooner than expected.

NZD/USD hit 0.8648 on Thursday, the pair’s lowest since June 17, before subsequently consolidating at 0.8688 by close of trade on Friday, up 0.24% for the day but 1.45% lower for the week.

The pair is likely to find support at 0.8648, the low from July 17 and resistance at 0.8717, the high from July 17.

Demand for the U.S. dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.

Meanwhile, investors reassessed the geopolitical situation in Eastern Europe and in the Middle East.

A Malaysian Airlines passenger jet crashed in eastern Ukraine on Thursday. All 298 people on board were killed, with the U.S. blaming pro-Russian separatists for the act.

Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza against Hamas militants who fired hundreds of rockets into Israel.

Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the New Zealand dollar in the week ending July 15.

Net longs totaled 15,453 contracts, compared to net longs of 14,416 in the preceding week.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders, while a rate statement by New Zealand’s central bank will also be in focus.

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 and Wednesday as there are no relevant events on these days.

Tuesday, July 22

• The U.S. is to release reports on consumer price inflation and existing home sales.

Thursday, July 24

• 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 central bank is also to hold a press conference to discuss the monetary policy decision.
• New Zealand is also due to release a report on its trade balance.
• The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• New Zealand is to release private sector data on business confidence.
• The U.S. is to round up the week with data on durable goods orders.

USD/CAD weekly outlook: July 21 - 25

The U.S. dollar fell to one-week lows against the Canadian dollar on Friday after official data showed that the annual rate of inflation in Canada rose at the fastest pace since February 2012 in June.

USD/CAD touched lows of 1.0709, the weakest since July 11 and was last down 0.23% to 1.0734.

The pair was likely to find support at around the 1.0700 level and resistance at 1.0775.

The Canadian dollar strengthened after Statistics Canada reported that the annual rate of inflation rose to 2.4% last month, up from 2.3% in May. Market expectations had been for an unchanged reading.

Core inflation, which excludes some food and energy costs, rose to 1.8% from 1.7%.

On a monthly basis, inflation slowed to 0.1% from 0.5% in May, while core inflation declined to 0.1% after a 0.5% gain in May.

A separate report that showed that wholesale sales rose by a larger-than-forecast 2.2% in May.

Earlier in the week, the Bank of Canada said the recent increase in inflation was due to temporary factors, such as the high cost of energy, rather than any change in economic fundamentals.

The bank left rates on hold at 1.0% in a widely anticipated decision on Wednesday and said the future path of monetary policy would be data dependent.

In the wider markets, investors remained cautious following the shooting down of a Malaysia Airlines jet in eastern Ukraine on Thursday. Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders, while Canada is to release data on retail sales.

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, July 22

• The U.S. is to release reports on consumer price inflation and existing home sales.

Wednesday, July 23

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

Thursday, July 24

• The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• The U.S. is to round up the week with data on durable goods orders.

AUD/USD weekly outlook: July 21 - 25

The Australian dollar rose to a more than one-week high against its U.S. counterpart on Friday, as disappointing U.S. consumer sentiment data weighed on the greenback, while investors reassessed the geopolitical situation in Eastern Europe and in the Middle East.

AUD/USD hit 0.9409 on Friday, the pair’s highest since July 10, before subsequently consolidating at 0.9392 by close of trade on Friday, up 0.44% for the day and flat for the week.

The pair is likely to find support at 0.9334, the low from July 17 and resistance at 0.9455, the high from July 10.

In a report, the University of Michigan said Friday that its consumer sentiment index fell to a four-month low of 81.3 in July, from a reading of 82.5 in June, confounding expectations for rise to 83.0.

Meanwhile, sentiment remained under pressure after a Malaysian Airlines passenger jet crashed in eastern Ukraine on Thursday. All 298 people on board were killed, with the U.S. blaming pro-Russian separatists for the act.

Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza against Hamas militants who fired hundreds of rockets into Israel.

Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.

Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the Australian dollar in the week ending July 15.

Net longs totaled 39,743 contracts, compared to net longs of 36,603 in the preceding week.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders.

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, July 22

• Reserve Bank of Australia Governor Glenn Stevens is to speak, his comments will be closely watched.
• The U.S. is to release reports on consumer price inflation and existing home sales.

Wednesday, July 23

• Australia is to produce data on consumer price inflation.

Thursday, July 24

• The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• The U.S. is to round up the week with data on durable goods orders.

USD/JPY weekly outlook: July 21 - 25

The dollar pushed higher against the yen late Friday after falling to one week lows earlier in the session as safe haven demand for the Japanese currency was boosted by heightened geopolitical tensions.

USD/JPY touched lows of 101.05, the lowest since July 10 before edging up 0.16% to 101.32 late Friday, to end the week little changed.

The pair is likely to find support at the 100.85 level and resistance at 101.68, Thursday’s high.

The yen strengthened broadly on Friday following the shooting down of a Malaysia Airlines jet in eastern Ukraine. Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.

Markets were also unsettled as Israel expanded its ground offensive in Gaza.

Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.

Elsewhere Friday, the weaker euro fell to five month lows against the yen. EUR/JPY hit lows of 136.72, the lowest since February 5 and was last at 137.07. The pair lost 0.59% for the week.

The single currency came under pressure after the Bank of Italy cut its growth forecast for 2014 to 0.2% from 0.7% and warned that risks to the economy remained to the downside.

The announcement underlined concerns over the faltering economic recovery in the currency bloc.

Earlier in the week European Central Bank President Mario Draghi said that large scale asset purchases are “squarely” within the bank’s mandate. The remarks were the latest indication that the central bank is open to further monetary easing measures to stave off the risk of deflation in the euro area.

In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders, while Japan is to produce data on trade and inflation.

Monday, July 21

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

Tuesday, July 22

• The U.S. is to release reports on consumer price inflation and existing home sales.

Thursday, July 24

• Japan is to release data on the trade balance, the difference in value between imports and exports.
• The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

Friday, July 25

• Japan is to release data on consumer inflation.
• The U.S. is to round up the week with data on durable goods orders.

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