Weekly Outlook: 2014, October 05 - October 12

USD/CAD forecast for the week of October 6, 2014, Technical Analysis

The USD/CAD pair initially fell during the course of the week, but as you can see found enough support near the 1.11 level in order to bounce and form a hammer. The fact that we closed at roughly the 1.1250 level tells us that the market is ready to break out to the upside. If we can break the top of the candle for the week, we should continue to the 1.15 handle. Any pullback from here should continue to attract buyers, and as a result we have no interest in selling this pair.

NZD/USD forecast for the week go October 6, 2014, Technical Analysis

The NZD/USD pair initially tried to rally during the course of the week, but as you can see the 0.79 level did in fact offer enough resistance to turn things back around and form a massive shooting star. The shooting star sits just above the 0.7750 level, which is of course support from the previous week. With that being the case, we feel that the market will continue to drop from here, and head towards the 0.75 level. A break down below the 0.7750 level, we are sellers.

GBP/USD forecast for the week of October 6, 2014, Technical Analysis

The GBP/USD pair initially tried to rally during the course of the week, but then fell hard. We ultimately broke down below the bottom of the 1.60 handle, and as a result it looks like we are testing serious support levels right now. The British pound continues to suffer overall, and we believe that if we can break down below the 1.58 level, we should then head to the 1.55 handle next. Any rally at this point time will be treated with suspicion, and we believe the sellers will get involved when those happen.

EUR/USD forecast for the week of October 6, 2014, Technical Analysis

The EUR/USD pair fell hard during the course of the week, slamming into the 1.25 level. That level of course is a large, round, psychologically significant number and therefore we would not be surprise at all to see a little bit of a bounce from here. However, we believe that the 1.28 level above is massively resistive, and as a result we would be willing to sell on some type of pullback at this point in time. We have no interest in buying, as we believe that although this market is oversold, it is far too risky to go long of the Euro right now.

Forex - Weekly outlook: October 6 - 10

The U.S. dollar rallied to more than four year peaks against the other major currencies on Friday after the latest employment report showed that the economy added more jobs than expected last month, fuelling expectations for an early hike in U.S. interest rates.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 1.23% to 86.79 in late trade, a high last seen in June 2010, capping its twelfth consecutive weekly gain. The twelve-week rally is the longest since the index was created in 1971.

The U.S. economy added 248,000 jobs in September the Labor Department reported, well ahead of forecast for jobs growth of 215,000. The unemployment rate ticked down from 6.0% to 5.9%, the lowest level since July 2008.

The upbeat jobs report was tempered by slow growth in wages. Average hourly earnings rose by 2.0% year-over-year, slowing slightly from August.

The upbeat data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner than markets are expecting.

In contrast, the Bank of Japan and the European Central Bank look likely to stick to a loose monetary policy stance amid concerns over faltering economic growth.

USD/JPY was up 1.22% to 109.77 in late trade, not far from Wednesday’s six year highs of 110.07.

The dollar also gained more than 1% against the euro, with EUR/USD dropping 1.22% to 1.2514, the weakest level since August 2012.

The European Central Bank refrained from implementing additional stimulus measures at its meeting on Thursday, despite euro area inflation slowing to a five year low last month, indicating that it will wait to see the effects of recent stimulus measures on the region’s economy.

Data on Friday showed that the bloc’s service sector slowed more sharply than initially estimated in September, fuelling fears that the economy is losing momentum.

The dollar hit a 15-month high against the Swiss franc, with USD/CHF adding 1.39% to settle at 0.9671. The pound slumped to 11-month lows, with GBP/USD down 1.08% to 1.5970.

Sterling came under pressure after Kristin Forbes, an external member of the Bank of England’s monetary policy committee, warned in a speech on Friday that the strong pound was acting as a drag on economic growth.

The Canadian dollar fell to six month lows, with USD/CAD up 0.82% to 1.1247 in late trade.

The Canadian dollar weakened after official data on Friday showed that the country unexpectedly posted a trade deficit in August as imports rose by the most in nearly two years, while exports slowed.

Elsewhere, the Russia rouble fell to record lows against the dollar on Friday. USD/RUB advanced 1.47% to 40.15 in late trade.

The rouble has been pressured lower by capital flight from Russia as a result of Western sanctions over the Ukraine crisis and by declining oil prices.

In the coming week, investors will be looking ahead to Wednesday’s Federal Reserve meeting minutes for further indications on the future possible direction of U.S. monetary policy.

Monetary policy decisions by the BoJ, Reserve Bank of Australia and the BoE will also be in focus.

Monday, October 6

• Markets in China are to remain closed for a national holiday.
• In the euro zone, Germany is to release data on factory orders.
• Later in the day, Canada is to publish its Ivey PMI.

Tuesday, October 7

• New Zealand is to release private sector data on business confidence.
• Markets in China are to be closed for a national holiday.
• The BoJ is to publish its monetary policy statement and hold a press conference to discuss the monetary policy decision.
• Separately, the RBA is to announce its benchmark interest rate and publish its rate statement.
• 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 prices and retail sales.
• The U.K. is to produce data on industrial and manufacturing production.
• Canada is to produce data on building permits.

Wednesday, October 8

• Japan is to publish data on the current account.
• China is to report on its HSBC services PMI.
• Canada is to release data on housing starts.
• In the U.S., the Federal Reserve is to publish the minutes of its latest policy setting meeting.

Thursday, October 9

• Japan is to release a report on core machinery orders.
• Australia is to release data on the change in the number of people unemployed and the unemployment rate.
• The BoE is to announce its benchmark interest rate.
• Canada is to report on new house price inflation.
• The U.S. is to publish its weekly government report on initial jobless claims.
• Later Thursday, ECB President Mario Draghi is to speak at an event in Washington; his comments will be closely watched.

Friday, October 10

• The BoJ is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. Japan is also to release data on tertiary industry activity.
• Australia is to release a report on home loans.
• In the euro area, France is to produce data on industrial production.
• The U.K. is to release a report on the trade balance.
• Canada is to publish a report on the change in the number of people unemployed and the unemployment rate.
• The U.S. is to round up the week with data on import prices.

USD/JPY weekly outlook: October 6 - 10

The dollar moved higher against the yen on Friday, re-approaching six year peaks after data showed that the U.S. economy added more jobs than expected last month, indicating the economic recovery is on track.

USD/JPY was up 1.22% to 109.77 in late trade, not far from Wednesday’s six year highs of 110.07.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 1.23% to 86.79 in late trade, a high last seen in June 2010, capping its twelfth consecutive weekly gain. The twelve-week rally is the longest since the index was created in 1971.

The U.S. economy added 248,000 jobs in September, the Labor Department reported, well ahead of forecast for jobs growth of 215,000. The unemployment rate ticked down to 5.9%, the lowest level since July 2008.

The upbeat jobs report was tempered by slow growth in wages. Average hourly earnings rose by 2.0% year-over-year, slowing slightly from August.

The robust employment data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner. The central bank is on track to end its asset purchase program later this month.

In contrast, the Bank of Japan looks likely to stick to a loose monetary policy stance amid concerns over the outlook for inflation and growth.

The yen had pushed higher against the dollar earlier in the week as concerns over unrest in Hong Kong sent stocks lower, boosting safe haven demand for the Japanese currency.

Disappointing U.S. data on manufacturing activity and consumer confidence had also dented optimism over the outlook for the recovery, sending the dollar lower.

Elsewhere, the euro was little changed against the yen on Friday, with EUR/JPY at 137.38, holding above Thursday’s almost one month lows of 136.85.

The European Central Bank refrained from implementing additional stimulus measures at its meeting on Thursday, despite euro area inflation slowing to a five year low last month, indicating that it will wait to see the effects of recent stimulus measures on the region’s economy.

Data on Friday showed that the bloc’s service sector slowed more sharply than initially estimated in September, fuelling fears that the economy is losing momentum.

In the coming week, investors will be looking ahead to Wednesday’s Federal Reserve meeting minutes for further indications on the future possible direction of U.S. monetary policy. Meanwhile, the BoJ is to conclude its two day policy meeting on Tuesday.

Tuesday, October 7

• The BoJ is to publish its monetary policy statement and hold a press conference to discuss the monetary policy decision.

Wednesday, October 8

• Japan is to publish data on the current account.
• In the U.S., the Federal Reserve is to publish the minutes of its latest policy setting meeting.

Thursday, October 9

• Japan is to release a report on core machinery orders.
• The U.S. is to publish its weekly government report on initial jobless claims.

Friday, October 10

• The BoJ is to publish monetary policy meeting minutes, which contain valuable insights into economic conditions from the bank’s perspective. Japan is also to release data on tertiary industry activity.
• The U.S. is to round up the week with data on import prices.

USD/CAD weekly outlook: October 6 - 10

The U.S. dollar rose to its highest level in six months against the Canadian dollar on Friday boosted by a stronger-than-forecast U.S. jobs report and unexpectedly weak Canadian trade data.

USD/CAD hit highs of 1.1269, the most since March 230 and was last up 0.82% to 1.1247. For the week, the pair added 0.75%.

The Labor Department reported Friday that the U.S. economy added 248,000 jobs in September, well ahead of forecast for jobs growth of 215,000. The unemployment rate ticked down to 5.9%, the lowest level since July 2008.

The upbeat jobs report was tempered by slow growth in wages. Average hourly earnings rose by 2.0% year-over-year, slowing slightly from August.

The robust employment data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner. The central bank is on track to end its asset purchase program later this month.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 1.23% to 86.79 in late trade, a high last seen in June 2010, capping its twelfth consecutive weekly gain. The twelve-week rally is the longest since the index was created in 1971.

The Canadian dollar weakened after official data showed that the country unexpectedly posted a trade deficit in August, as imports rose by the most in nearly two years, while exports slowed.

Statistics Canada said imports rose 3.9% in August, while exports decreased 2.5%. As a result, Canada's trade balance went from a surplus of C$2.2 billion in July to a deficit of C$610 million in August.

The weak data fuelled concerns over the outlook for economic growth in the third quarter.

In the coming week, investors will be looking ahead to Wednesday’s Federal Reserve meeting minutes for further indications on the future possible direction of U.S. monetary policy. Canada is to release its September jobs report on Friday.

Monday, October 6

• Canada is to publish its Ivey PMI.

Tuesday, October 7

• Canada is to produce data on building permits.

Wednesday, October 8

• Canada is to release data on housing starts.
• In the U.S., the Federal Reserve is to publish the minutes of its latest policy setting meeting.

Thursday, October 9

• Canada is to report on new house price inflation.
• The U.S. is to publish its weekly government report on initial jobless claims.

Friday, October 10

• Canada is to publish a report on the change in the number of people unemployed and the unemployment rate.
• The U.S. is to round up the week with data on import prices.

AUD/USD weekly outlook: October 6 - 10

The Australian dollar plunged to a more than four-year low against its U.S. counterpart on Friday, as stronger than forecast U.S. nonfarm payrolls data bolstered bets that the Federal Reserve will begin to raise rates sooner than previously thought.

AUD/USD hit a daily low of 0.8643 on Friday, a level not seen since July 2010, before subsequently consolidating at 0.8676 by close of trade, down 1.43% for the day and 1.03% lower for the week.

The pair is likely to find support at 0.8632, the low from July 19, 2010, and resistance at 0.8748, the high from October 1.

In a report, the Department of Labor said that the U.S. economy added 248,000 jobs in September, well ahead of forecast for jobs growth of 215,000. The unemployment rate ticked down from 6.0% to 5.9%, the lowest level since July 2008.

The upbeat data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner than markets are expecting.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 1.23% to 86.79 in late trade, a high last seen in June 2010, capping its twelfth consecutive weekly gain. The twelve-week rally is the longest since the index was created in 1971.

Meanwhile, in Australia, official data released earlier in the week showed that retail sales rose 0.1% in August, disappointing expectations for a 0.4% gain.

The weak data fuelled concerns over the outlook for economic growth in the third quarter.

Data from the Commodities Futures Trading Commission released Friday showed that speculators turned bearish on the Australian dollar in the week ending September 30.

Net shorts totaled 2,017 contracts, compared to net longs of 8,347 in the preceding week.

In the coming week, investors will be looking ahead to Wednesday’s Federal Reserve meeting minutes for further indications on the future possible direction of U.S. monetary policy.

A monetary policy decision by the Reserve Bank of Australia will also be in focus.

Tuesday, October 7

• The RBA is to announce its benchmark interest rate and publish its rate statement.

Wednesday, October 8

• In the U.S., the Federal Reserve is to publish the minutes of its latest policy setting meeting.

Thursday, October 9

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

Friday, October 10

• Australia is to release a report on home loans.
• The U.S. is to round up the week with data on import prices.

NZD/USD weekly outlook: October 6 - 10

The New Zealand dollar lost more than 1% against its U.S. counterpart on Friday, as upbeat U.S. employment data added to expectations that the Federal Reserve could raise interests sooner and faster than previously expected.

NZD/USD hit 0.7707 on Monday, the pair’s lowest since July 8, 2013, before subsequently consolidating at 0.7763 by close of trade on Friday, down 1.73% for the day and 1.76% lower for the week.

The pair is likely to find support at 0.7707, the low from September 29, and resistance at 0.7859, the high from October 1.

In a report, the Department of Labor said that the U.S. economy added 248,000 jobs in September, well ahead of forecast for jobs growth of 215,000. The unemployment rate ticked down from 6.0% to 5.9%, the lowest level since July 2008.

The stronger than expected data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner than markets are expecting.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 1.23% to 86.79 in late trade, a high last seen in June 2010, capping its twelfth consecutive weekly gain. The twelve-week rally is the longest since the index was created in 1971.

Meanwhile, in New Zealand, data released earlier in the week showed that the ANZ business confidence index fell to a more than two-year low of 13.4 in September, from a reading of 24.4 the previous month.

The weak data fuelled concerns over the outlook for economic growth in the third quarter.

The New Zealand dollar had come under broad selling pressure last week after Reserve Bank of New Zealand Governor Graeme Wheeler signaled that he is prepared to sell the nation's currency to weaken it.

Data from the Commodities Futures Trading Commission released Friday showed that speculators decreased their bullish bets on the New Zealand dollar in the week ending September 30.

Net longs totaled just 64 contracts, down sharply from net longs of 1,841 in the preceding week.

In the coming week, investors will be looking ahead to Wednesday’s Federal Reserve meeting minutes for further indications on the future possible direction of U.S. monetary policy.

Tuesday, October 7

• New Zealand is to release private sector data on business confidence.

Wednesday, October 8

• In the U.S., the Federal Reserve is to publish the minutes of its latest policy setting meeting.

Thursday, October 9

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

Friday, October 10

• The U.S. is to round up the week with data on import prices.

GBP/USD weekly outlook: October 6 - 10

The pound slumped to 11-month lows against the dollar on Friday after data showed that the U.S. economy added more jobs than expected last month, while dovish remarks by a Bank of England official also weighed.

GBP/USD was down 1.08% to 1.5970 in late trade. For the week, the pair lost 1.66%.

The Labor Department reported Friday that the U.S. economy added 248,000 jobs in September, well ahead of forecasts for jobs growth of 215,000. The unemployment rate ticked down to 5.9%, the lowest level since July 2008.

The upbeat jobs report was tempered by slow growth in wages. Average hourly earnings rose by 2.0% year-over-year, slowing slightly from August.

Despite this, the employment data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner. The central bank is on track to end its asset purchase program later this month.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 1.23% to 86.79 in late trade, a high last seen in June 2010, capping its twelfth consecutive weekly gain. The twelve-week rally is the longest since the index was created in 1971.

Sterling came under pressure after Kristin Forbes, an external member of the BoE’s monetary policy committee, warned in a speech on Friday that the appreciation of the pound at the start of this year has acted as a drag on economic growth.

Also Friday, data showed that U.K. services sector growth eased slightly in September, indicating that the economic recovery may be moderating.

The U.K. services purchasing managers index ticked down to a three month low of 58.7 from 60.5 in August.

The report came after data on Wednesday showed that output in the U.K. manufacturing sector slowed to a 17 month low in September.

The data was seen as increasing the likelihood that the BoE will leave rates on hold until next year.

In the coming week, investors will be looking ahead to Wednesday’s Federal Reserve meeting minutes for further indications on the future possible direction of U.S. monetary policy.

The BoE is to hold its monthly monetary policy meeting on Thursday.

Tuesday, October 7

• The U.K. is to produce data on industrial and manufacturing production.

Wednesday, October 8

• In the U.S., the Federal Reserve is to publish the minutes of its latest policy setting meeting.

Thursday, October 9

• The BoE is to announce its benchmark interest rate.
• The U.S. is to publish its weekly government report on initial jobless claims.

Friday, October 10

• The U.K. is to release a report on the trade balance.
• The U.S. is to round up the week with data on import prices.