Weekly Outlook: 2014, August 03 - August 10

GBP/USD forecast for the week of August 4, 2014, Technical Analysis

The GBP/USD pair as you can see fell hard during the course of the week, slamming into the 1.68 level. We are now testing the very uptrend line that has shot this market higher, and as a result the next couple of weeks should be rather interesting. We quite simply need to see some type of supportive candle between here and 1.67 in order to stay positive. If not, we could have a rather significant correction. If we get that correction, we would expect the 1.65 level to be targeted first, and then the 1.62 level.

EUR/USD forecast for the week of August 4, 2014, Technical Analysis

The EUR/USD pair initially sold off during the week, but as you can see we ended up bouncing and forming a nice-looking hammer. While this hammer looks like an opportunity to start buying this pair, we are a bit cautious as we recognize that the 1.35 level is in fact an area that should be resistive now. With that being the case, it’s likely that the markets will be a bit difficult to navigate from the longer-term perspective, just as they have for some time now.

That being the case, we feel that a move above 1.35 would of course be very bullish for us, and having us buying this market and aiming for the 1.37 region. That being the case, on a move above there then we are willing to give the Euro a bit of a chance. Ultimately though, we think that this market is probably still going to head towards the serious support level at the 1.33 level, which of course we haven’t touched yet.

That being the case, on a resistant candle at the 1.35 level we be more than willing to sell this market as it should continue the downtrend and head towards that level. We also believe that a break of the bottom of the hammer would in fact be very bearish as well, having us selling for more of a short-term trade. Because of that, it’s difficult to really glean some type of information out of this chart for larger move, but a move above the 1.35 level has us thinking that perhaps we can bounce and potential even go as high as 1.40 as we did previously.

With that, we think that this market is still continuing to be a very difficult market to deal with, and would more than likely be more in tune with the shorter-term trader. However, keep in mind that a break down below the 1.33 level is catastrophic, just as a move above 1.35 is very bullish. Until we get one of those, it’s probably more or less a difficult longer-term market.

Forex - Weekly outlook: August 4 - 8

The dollar fell against the other major currencies on Friday after a weaker-than-expected jobs report for July tempered expectations that U.S. rates could rise sooner than anticipated.

The Labor Department reported that that U.S. economy added 209,000 jobs in July, below forecasts for jobs growth of 233,000. The previous month’s figure was revised up to a gain of 298,000 from a previously reported increase of 288,000.

Although it was the sixth successive month that the U.S. economy added more than 200,000 jobs, the unemployment rate unexpectedly ticked up to 6.2% from 6.1% in June. In addition, wage growth was flat, pointing to underlying slack in the economy.

The data prompted investors to trim back expectations on the timing of a possible rate hike by the Federal Reserve, sending the dollar lower.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.19% at 81.39 late Friday, off Thursday’s 10 month highs of 81.66.

The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. economy expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.

USD/JPY was down 0.18% to 102.61 late Friday, but still ended the week with gains of 0.84%.

EUR/USD added 0.29% to trade at 1.3429 late Friday, backing away from Wednesday’s eight month trough of 1.3366. The euro remained under pressure after data on Thursday showed that the annual rate of inflation in the euro zone slowed in July.

The weak data added to pressure on the European Central Bank to implement further stimulus measures to shore up growth and stave off the threat of deflation in the currency bloc.

The pound was also lower against the dollar on Friday, with GBP/USD down 0.38% to 1.6822 at the close, bringing the week’s losses to 0.94%.

The drop in sterling came after data on Friday showed that the U.K. manufacturing sector expanded at the slowest pace in a year in July.

In the week ahead, investors will be focusing on the outcomes of a spate of central bank meetings, with the ECB, the Bank of Japan, the Bank of England and the Reserve Bank of Australia all to hold monetary policy assessments.

The latest employment reports from Australia, New Zealand and Canada will also be closely watched.

Monday, August 4

• Markets in Australia are to remain closed for a national holiday; however the country is still to release data on retail sales.
• In the euro zone, Spain is to produce a report on the change in the number of people employed.
• Elsewhere in Europe, Switzerland is to publish its SVME PMI.
• The U.K. is to publish data on construction sector activity.
• Markets in Canada are to remain closed for a national holiday.

Tuesday, August 5

• Australia is to release data on the trade balance, the difference in value between imports and exports.
• The RBA is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the monetary policy decision.
• China is to publish the HSBC services PMI.
• The euro zone is to release data on retail sales, while Spain and Italy are to produce reports on service sector activity.
• The U.K. is also to release a report on service sector expansion.
• Later Tuesday, the U.S. is to publish data on factory orders, while the Institute of Supply Management is to release data on service sector growth.

Wednesday, August 6

• New Zealand is to release data on the change in the number of people unemployed and the unemployment rate.
• Germany is to publish a report on factory orders.
• Switzerland is to release a report on consumer price inflation.
• The U.K. is to produce data on manufacturing and industrial production.
• Later in the day, both the U.S. and Canada are to publish data on the trade balance.

Thursday, August 7

• Australia is to release data on the change in the number of people unemployed and the unemployment rate.
• 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.
• The ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with President Mario Draghi.
• The BoE is also to announce its benchmark interest rate, following its monthly rate review.
• Canada is to produce reports on building permits and the Ivey PMI.
• The U.S. is to publish the weekly report on initial jobless claims.

Friday, August 8

• Japan is to release data on the current account. Meanwhile, the BoJ is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank will hold a press conference following the announcement.
• The RBA is to publish its monetary policy statement. Australia is also to release data on home loans.
• China is to release a report on its trade balance.
• In the euro zone, France is to publish data on industrial production, while Germany is to publish a report on its trade balance.
• Canada is to release data on the change in the number of people unemployed and the unemployment rate.

USD/JPY weekly outlook: August 4 - 8

The yen pushed higher against the dollar on Friday after the latest U.S. employment report dampened speculation that the Federal Reserve could raise rates sooner.

The Labor Department reported that that U.S. economy added 209,000 jobs in July, below forecasts for jobs growth of 233,000. The previous month’s figure was revised up to a gain of 298,000 from a previously reported increase of 288,000.

Although it was the sixth successive month that the U.S. economy added more than 200,000 jobs, the unemployment rate unexpectedly ticked up to 6.2% from 6.1% in June. In addition, wage growth was flat, pointing to underlying slack in the economy.

The weaker-than-expected data prompted investors to trim back expectations on the timing of a possible rate hike by the Fed, sending the dollar lower.

USD/JPY was down 0.18% to 102.61 late Friday, after touching session lows of 102.34. The pair still ended the week with gains of 0.84%.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.19% at 81.39 late Friday, off Thursday’s 10-month highs of 81.66.

The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. economy expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.

The Fed also upgraded its view on the economy on Wednesday, but reiterated that considerable slack still remains in the labor market.

Elsewhere Friday, the euro edged higher against the yen, with EUR/JPY inching up 0.10% to 137.78.

The euro’s gains were held in check after data on Thursday showed that the annual rate of inflation in the euro zone slowed to 0.4% in July from 0.5% in June.

The weak data added to pressure on the European Central Bank to implement further stimulus measures to shore up growth and stave off the threat of deflation in the currency bloc.

In the week ahead, investors will be awaiting the outcome of Friday’s monetary policy meeting by the Bank of Japan, while Tuesday’s report on U.S. service sector activity will also be in focus.

Tuesday, August 5

• The U.S. is to publish data on factory orders, while the Institute of Supply Management is to release data on service sector growth.

Wednesday, August 6

• The U.S. is to publish data on the trade balance.

Thursday, August 7

• The U.S. is to publish the weekly report on initial jobless claims.

Friday, August 8

• Japan is to release data on the current account. Meanwhile, the BoJ is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank will hold a press conference following the announcement.

USD/CAD weekly outlook: August 4 - 8

The Canadian dollar was lower against the U.S. dollar on Friday after data showed that the U.S. nonfarm payrolls report for July fell short of expectations.

USD/CAD touched highs of 1.0944 on Friday, the most since June 6, before pulling back to 1.0915 at the close, ending the session 0.11% higher.

The Labor Department reported that that U.S. economy added 209,000 jobs in July, below forecasts for jobs growth of 233,000. The previous month’s figure was revised up to a gain of 298,000 from a previously reported increase of 288,000.

Although it was the sixth successive month that the U.S. economy added more than 200,000 jobs, the unemployment rate unexpectedly ticked up to 6.2% from 6.1% in June. In addition, wage growth was flat, pointing to underlying slack in the economy.

The data prompted investors to trim back expectations on the timing of a possible rate hike by the Federal Reserve.

The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. GDP expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.

The Fed also upgraded its view on the economy on Wednesday, but reiterated that considerable slack still remains in the labor market.

Investors remained risk adverse after a selloff in U.S. equities markets on Thursday, fuelled by fears over Argentina’s sovereign debt default. Concerns over heightened geopolitical tensions between the West and Russia following the downing of an airliner over Ukraine last month also weighed on sentiment.

In the week ahead, investors will be awaiting Friday’s Canadian jobs report for July, while Tuesday’s report on U.S. service sector activity will also be in focus.

Monday, August 4

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

Tuesday, August 5

• The U.S. is to publish data on factory orders, while the Institute of Supply Management is to release data on service sector growth.

Wednesday, August 6

• Both the U.S. and Canada are to publish data on the trade balance, the difference in value between imports and exports.

Thursday, August 7

• Canada is to produce reports on building permits and the Ivey PMI.
• The U.S. is to publish the weekly report on initial jobless claims.

Friday, August 8

• Canada is to release data on the change in the number of people unemployed and the unemployment rate.

AUD/USD weekly outlook: August 4 - 8

The Australian dollar bounced off an eight-week low against its U.S. counterpart on Friday, as traders pared back their expectations for how soon the Federal Reserve will begin raising interest rates following the release of disappointing U.S. employment data.

AUD/USD hit a daily low of 0.9276 on Friday, the pair’s weakest level since June 5, before subsequently consolidating at 0.9314 by close of trade, up 0.22% for the day but still 0.86% lower for the week.

The pair is likely to find support at 0.9276, the low from August 1 and resistance at 0.9387, the high from July 30.

The U.S. Department of Labor said Friday that non-farm payrolls rose by a seasonally adjusted 209,000 in July, below expectations for an increase of 233,000.

The unemployment rate ticked up to 6.2% last month from 6.1% in June. Analysts had expected the jobless rate to hold steady at 6.1% in July.

The disappointing jobs report dampened optimism over the strength of the labor market and reduced expectations that the Federal Reserve will begin to raise rates sooner than previously thought.

The Aussie also found support after official data released Friday showed that China's manufacturing purchasing managers’ index rose to a two-year high of 51.7 in July from 51.0 in June, beating market expectations for a 51.4 reading.

Still, China's HSBC final manufacturing PMI for July ticked down to 51.7 from a preliminary reading of 52.0. Analysts had expected the index to remain unchanged.

The Asian nation is Australia’s largest trade partner.

The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. economy expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.

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 29.

Net longs totaled 39,606 contracts, up from net longs of 38,793 in the preceding week.

In the week ahead, investors will be looking ahead to Tuesday’s rate decision by the Reserve Bank of Australia, as well as highly-anticipated Australian July employment data scheduled for Thursday.

Monday, August 4

• Markets in Australia are to remain closed for a national holiday; however the country is still to release data on retail sales.

Tuesday, August 5

• Australia is to release data on the trade balance, the difference in value between imports and exports.
• The RBA is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the monetary policy decision.
• Later Tuesday, the U.S. is to publish data on factory orders, while the Institute of Supply Management is to release data on service sector growth.

Wednesday, August 6

• The U.S. is to publish data on the trade balance.

Thursday, August 7

• Australia is to release data on the change in the number of people unemployed and the unemployment rate.
• The U.S. is to publish the weekly report on initial jobless claims.

Friday, August 8

• The RBA is to publish its monetary policy statement. Australia is also to release data on home loans.
• China is to release a report on its trade balance.

NZD/USD weekly outlook: August 4 - 8

The New Zealand dollar rebounded from a two-month low against its U.S. counterpart on Friday, as weaker than expected U.S. employment data forced investors to recalibrate their assumptions about the future course of the Federal Reserve's monetary policy.

NZD/USD hit 0.8462 on Friday, the pair’s lowest since June 5, before subsequently consolidating at 0.8514 by close of trade on Friday, up 0.16% for the day but 0.47% lower for the week.

The pair is likely to find support at 0.8462, the low from August 1 and resistance at 0.8556, the high from July 29.

The Labor Department reported that that U.S. economy added 209,000 jobs in July, below forecasts for jobs growth of 233,000. The previous month’s figure was revised up to a gain of 298,000 from a previously reported increase of 288,000.

Although it was the sixth successive month that the U.S. economy added more than 200,000 jobs, the unemployment rate unexpectedly ticked up to 6.2% from 6.1% in June. In addition, wage growth was flat, pointing to underlying slack in the economy.

The data prompted investors to trim back expectations on the timing of a possible rate hike by the Federal Reserve, sending the dollar lower.

The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. economy expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.

The kiwi also found support after official data released Friday showed that China's manufacturing purchasing managers’ index rose to a two-year high of 51.7 in July from 51.0 in June, beating market expectations for a 51.4 reading.

Still, China's HSBC final manufacturing PMI for July ticked down to 51.7 from a preliminary reading of 52.0. Analysts had expected the index to remain unchanged.

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

The New Zealand dollar had been under broad selling pressure since the Reserve Bank of New Zealand last week raised its benchmark interest rate to 3.50% from 3.25%, but signaled that rates will not go any higher this year.

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 22.

Net longs totaled 15,289 contracts, up slightly from net longs of 15,132 in the preceding week.

In the week ahead, investors will be looking ahead to key U.S. data on service sector activity in July, while second quarter employment data out of New Zealand will also be in focus.

Tuesday, August 5

• The U.S. is to publish data on factory orders, while the Institute of Supply Management is to release data on service sector growth.

Wednesday, August 6

• New Zealand is to release data on the change in the number of people unemployed and the unemployment rate.
• Later in the day, the U.S. is to publish data on the trade balance.

Thursday, August 7

• The U.S. is to publish the weekly report on initial jobless claims.

Friday, August 8

• China is to release a report on its trade balance.

GBP/USD weekly outlook: August 4 - 8

The pound fell to one-and-a-half month lows against the dollar on Friday after reports showing weaker-than-expected U.S. jobs growth July and a slowdown in the U.K. manufacturing sector.

GBP/USD was down 0.38% to 1.6822 late Friday, and the pair ended the week with losses of 0.94%.

The Labor Department reported that that U.S. economy added 209,000 jobs in July, below forecasts for jobs growth of 233,000. The previous month’s figure was revised up to a gain of 298,000 from a previously reported increase of 288,000.

Although it was the sixth successive month that the U.S. economy added more than 200,000 jobs, the unemployment rate unexpectedly ticked up to 6.2% from 6.1% in June. In addition, wage growth was flat, pointing to underlying slack in the economy.

The data prompted investors to trim back expectations on the timing of a possible rate hike by the Federal Reserve.

The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. GDP expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.

The Fed also upgraded its view on the economy on Wednesday, but reiterated that considerable slack still remains in the labor market.

Sterling remained weaker after data earlier on Friday showed that the U.K. manufacturing sector expanded at the slowest pace in a year in July.

The manufacturing purchasing managers’ index for July dropped to 55.4 from a downwardly revised 57.2 in June, the lowest level since July 2013 and was well below expectations of 57.2.

The Bank of England has indicated that it expects the economic recovery to slow in the second half of the year, but the data did little to alter expectations that the central bank will hike rates before then end of 2014.

In the week ahead, investors will be looking ahead to reports on U.K. service sector activity and U.K. industrial output on Tuesday and Wednesday respectively.

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 Friday as there are no relevant events on this day.

Monday, August 4

• The U.K. is to publish data on construction sector activity.

Tuesday, August 5

• The U.K. is also to release a report on service sector expansion.
• Later Tuesday, the U.S. is to publish data on factory orders, while the Institute of Supply Management is to release data on service sector growth.

Wednesday, August 6

• The U.K. is to produce data on manufacturing and industrial production.
• The U.S. is to publish data on the trade balance.

Thursday, August 7

• The BoE is to announce its benchmark interest rate, following its monthly rate review.
• The U.S. is to publish the weekly report on initial jobless claims.

EUR/USD weekly outlook: August 4 - 8

The euro pushed higher against the dollar on Friday after data showed that the U.S. economy added fewer-than-expected jobs in July, but gains were held in check amid concerns over the subdued inflation outlook for the euro area.

EUR/USD was up 0.29% to 1.3429 late Friday, off Wednesday’s eight-month trough of 1.3366.

The Labor Department reported that that U.S. economy added 209,000 jobs in July, below forecasts for jobs growth of 233,000. The previous month’s figure was revised up to a gain of 298,000 from a previously reported increase of 288,000.

Although it was the sixth successive month that the U.S. economy added more than 200,000 jobs, the unemployment rate unexpectedly ticked up to 6.2% from 6.1% in June. In addition, wage growth was flat, pointing to underlying slack in the economy.

The data prompted investors to trim back expectations on the timing of a possible rate hike by the Federal Reserve, sending the dollar lower.

The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. GDP expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.

The Fed also upgraded its view on the economy on Wednesday, but reiterated that considerable slack still remains in the labor market.

The euro remained under pressure after data on Thursday showed that the annual rate of inflation in the euro zone slowed to 0.4% in July from 0.5% in June. The European Central Bank targets an inflation rate of close to but just under 2%.

The poor data added to pressure on the ECB to implement further stimulus measures to shore up growth and stave off the threat of deflation in the currency bloc.

In the week ahead, investors will be focusing on the outcome of Thursday’s ECB policy meeting, while Tuesday’s report on U.S. service sector activity 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.

Monday, August 4

• In the euro zone, Spain is to produce a report on the change in the number of people employed.

Tuesday, August 5

• The euro zone is to release data on retail sales, while Spain and Italy are to produce reports on service sector activity.
• Later Tuesday, the U.S. is to publish data on factory orders, while the Institute of Supply Management is to release data on service sector growth.

Wednesday, August 6

• Germany is to publish a report on factory orders.
• The U.S. is to publish data on the trade balance.

Thursday, August 7

• The ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with President Mario Draghi.
• The U.S. is to publish the weekly report on initial jobless claims.

Friday, August 8

• In the euro zone, France is to publish data on industrial production, while Germany is to publish a report on its trade balance.

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