Weekly Outlook: 2014, October 19 - 26

GBP/USD forecast for the week of October 20, 2014, Technical Analysis

The GBP/USD pair fell initially during the course of the week, but bounce significantly enough to form a nice-looking hammer. What is also interesting about this hammer is that it sits right at the 50% Fibonacci retracement level, and with that we feel that this market should continue to go higher given enough time. We believe that this market could very easily bouncer here and head towards the highs again, which was all the way up to the 1.72 level. Selling at this point in time is not something we are interested in until we break the bottom of the hammer that formed during this week.

EUR/USD forecast for the week of October 20, 2014, Technical Analysis

The EUR/USD pair broke out during the course of the week, climbing above the 1.28 handle. However, we could not keep the gains from that move, and we turned back around to form a massive shooting star. That shooting star suggests that the market is going to drop down to the 1.25 level yet again, and as a result we think that ultimately this market will break down below that level and head to the 1.20 level given enough time. On the other hand, if we can break above the 1.30 level, we would be buyers.

Weekly outlook: October 20 - 24

The dollar gained ground against the euro and the yen on Friday as upbeat U.S. economic reports eased concerns over the outlook for the recovery, after a week of volatile trading, fuelled by fears over a slowdown in global growth.

USD/JPY was up 0.53% to 106.88 late Friday, while EUR/USD slid 0.38% to 1.2759.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.33% to 85.31, but still ended the week lower, its second consecutive weekly decline.

The greenback was boosted after a report showed that the University of Michigan’s consumer sentiment index unexpectedly rose to 86.4 in October, the most since July 2007.

Another report showed that housing starts rose more than expected last month, bolstering the outlook for the sector.

The data reinforced expectations that the Federal Reserve will raise interest rates in the second half of 2015.

The dollar fell against the other major currencies on Wednesday, touching a one month low against the yen and a three week trough against the euro amid a selloff sparked by fears that slower global growth would act as a drag on the U.S. economy.

Dovish comments by central bank officials on Friday also helped ease investor jitters over slowing growth in major economies.

Bank of England chief economist Andy Haldane that rates could remain lower for longer and warned that global economic conditions have worsened.

On Thursday, European Central Bank official Ewald Nowotny said the bank still has leeway for more action to address slowing inflation in the euro area and added that quantitative easing would start as soon as December.

The dollar was also higher against the Swiss franc on Friday, with USD/CHF rising 0.37% to 0.9459. The pound was little changed, with GBP/USD at 1.6092 in late trade.

In the week ahead, China and the U.K. are to release preliminary data on third quarter economic growth, while the euro zone is to release preliminary data on private sector activity.

The U.S. is to release data on consumer inflation, as well as reports on both existing and new home sales.

Monday, October 20

• Germany’s Bundesbank is to publish its monthly report.
• Canada is to release data on wholesale sales.

Tuesday, October 21

• The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• China is to release what will be closely watched data on third quarter gross domestic product and separate reports on industrial production and fixed asset investment.
• Switzerland is to report on the trade balance, the difference in value between imports and exports.
• The U.K. is to produce data on public sector borrowing.
• The U.S. is to release private sector data on existing home sales.

Wednesday, October 22

• Japan is to release a report on the trade balance.
• Australia is to publish data on consumer price inflation, which comprises the majority of overall inflation.
• The BoE is to release the minutes of its latest policy meeting.
• Canada 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 consumer prices.
• Later in the day, the Bank of Canada is to announce its overnight rate and publish its rate statement. The announcement is to be followed by a regularly scheduled press conference.

Thursday, October 23

• RBA Governor Glenn Stevens is to speak at an event in Sydney; his comments will be closely watched.
• New Zealand is to release data on consumer prices.
• Australia is to publish private sector data on business confidence.
• China is to release the preliminary reading of its HSBC manufacturing index.
• The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.
• The U.K. is to report on retail sales and also release private sector data on mortgage approvals and industrial order expectations.
• The U.S. is to publish its weekly report on initial jobless claims.

Friday, October 24

• New Zealand is to release data on the trade balance.
• The Gfk think tank is to release its report on German business climate.
• The U.K. is to release preliminary data on third quarter GDP growth.
• The U.S. is to round up the week with a report on new home sales.

USD/JPY weekly outlook: October 20 - 24

The dollar moved higher against the yen on Friday, as upbeat data on U.S. consumer sentiment boosted the outlook for an early rate hike by the Federal Reserve.

USD/JPY was up 0.53% to 106.88 late Friday, from 106.32 on Thursday.

The pair is likely to find support at 106.12, Friday’s low and resistance at 107.65.

The dollar strengthened broadly after a report showed that the University of Michigan’s consumer sentiment index unexpectedly rose to 86.4 in October, the most since July 2007.

Another report showed that U.S. housing starts rose more than expected in September, bolstering the outlook for the sector.

The data reinforced expectations that the Fed will raise interest rates in the second half of 2015.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.33% to 85.31, but still ended the week lower, its second consecutive weekly decline.

The dollar fell against the other major currencies on Wednesday, touching a one month low against the yen amid a selloff sparked by fears that slower global growth would act as a drag on the U.S. economy.

Germany’s government cut its forecast for economic growth for this year and next on Tuesday, after recent data pointed to weakness in exports and industrial output.

The euro area’s largest economy now expects growth of 1.2% this year down from 1.8% previously and growth of 1.3% in 2015, down from 2%.

The euro edged higher against the yen on Friday, with EUR/JPY easing up 0.15% to 136.38 in late trade, off Thursday’s 11-month lows of 134.12.

On Thursday, European Central Bank official Ewald Nowotny said the bank still has leeway for more action to address slowing inflation in the euro area and added that quantitative easing would start as soon as December.

In the week ahead, the U.S. is to release data on consumer inflation, as well as reports on both existing and new home sales, while Japan is to release trade data.

Tuesday, October 21

• The U.S. is to release private sector data on existing home sales.

Wednesday, October 22

• Japan is to release a report on the trade balance.
• The U.S. is to produce data on consumer price inflation, which comprises the majority of overall inflation.

Thursday, October 23

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

Friday, October 24

• The U.S. is to round up the week with a report on new home sales.

USD/CAD weekly outlook: October 20 - 24

The U.S. dollar posted modest gains against the Canadian dollar on Friday after data showed that U.S. consumer sentiment improved unexpectedly this month, while Canadian consumer prices were in line with the central bank’s target.

USD/CAD was up 0.17% to 1.1274 in late trade, not far from session highs of 1.1284.

The pair is likely to find support at around the 1.12 level and resistance at about 1.1312.

The greenback was boosted after a report showed that the University of Michigan’s consumer sentiment index unexpectedly rose to 86.4 in October, the most since July 2007.

Another report showed that U.S. housing starts rose more than expected in September, bolstering the outlook for the sector.

The data reinforced expectations that the Federal Reserve will raise interest rates in the second half of 2015.

The Canadian dollar had a subdued reaction after official data showed that the country’s consumer price index rose 2.0% year-over-year in September after rising 2.1% in August.

The data indicated that the Bank of Canada will stick to its neutral stance on interest rates at its upcoming policy meeting on Wednesday.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.33% to 85.31 late Friday, but still ended the week lower, its second consecutive weekly decline.

The greenback rose to five year peaks against its Canadian cousin on Wednesday as fears that slower global growth would act as a drag on the U.S. economy fuelled a broad-based selloff in riskier assets.

In the coming week, Investors will be looking ahead to Wednesday’s rate statement by the BoC, with the bank expected to leave rates on hold at 1.0%. Canada is also to release data on retail sales.

The U.S. is to release data on consumer inflation, as well as reports on both existing and new home sales.

Monday, October 20

• Canada is to release data on wholesale sales.

Tuesday, October 21

• The U.S. is to release private sector data on existing home sales.

Wednesday, October 22

• Canada 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 consumer prices.
• Later in the day, the BoC is to announce its overnight rate and publish its rate statement. The announcement is to be followed by a regularly scheduled press conference.

Thursday, October 23

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

Friday, October 24

• The U.S. is to round up the week with a report on new home sales.

AUD/USD weekly outlook: October 20 - 24

The Australian dollar edged lower against its U.S. counterpart on Friday, as upbeat U.S. economic data eased concerns over the strength of the recovery.

AUD/USD hit a daily low of 0.8734 on Friday, before subsequently consolidating at 0.8744 by close of trade, down 0.14% for the day but still 0.66% higher for the week.

The pair is likely to find support at 0.8684, the low from October 16, and resistance at 0.8827, the high from October 16.

The greenback was boosted after a report showed that the University of Michigan’s consumer sentiment index unexpectedly rose to 86.4 in October, the most since July 2007.

Another report showed that U.S. housing starts rose more than expected in September, bolstering the outlook for the sector.

The data reinforced expectations that the Federal Reserve will raise interest rates in the second half of 2015.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.33% to 85.31 late Friday, but still ended the week lower, its second consecutive weekly decline.

Data from the Commodities Futures Trading Commission released Friday showed that speculators added to their bearish bets on the Australian dollar in the week ending October 14.

Net shorts totaled 30,271 contracts, compared to net shorts of 26,486 in the preceding week.

In the week ahead, investors will be awaiting U.S. data on consumer price inflation and new home sales for fresh signals on the strength of the economic recovery.

Market players are also looking ahead to a raft of Chinese economic data later this week, including reports on third quarter gross domestic product, as well as data on industrial production and retail sales.

Tuesday, October 21

• The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• China is to release what will be closely watched data on third quarter gross domestic product and separate reports on industrial production and fixed asset investment.
• The U.S. is to release private sector data on existing home sales.

Wednesday, October 22

• Australia is to publish data on consumer price inflation, which comprises the majority of overall inflation.
• The U.S. is to produce data on consumer prices.

Thursday, October 23

• RBA Governor Glenn Stevens is to speak at an event in Sydney; his comments will be closely watched.
• China is to release the preliminary reading of its HSBC manufacturing index.
• The U.S. is to publish its weekly report on initial jobless claims.

Friday, October 24

• The U.S. is to round up the week with a report on new home sales.

NZD/USD weekly outlook: October 20 - 24

The New Zealand dollar declined against its U.S. counterpart on Friday, as upbeat U.S. economic data boosted demand for the greenback.

NZD/USD hit a daily low of 0.7877 on Friday, before subsequently consolidating at 0.7917 by close of trade on Friday, down 0.45% for the day but still 1.3% higher for the week.

The pair is likely to find support at 0.7805, the low from October 15, and resistance at 0.7996, the high from October 16.

The greenback was boosted after a report showed that the University of Michigan’s consumer sentiment index unexpectedly rose to 86.4 in October, the most since July 2007.

Another report showed that U.S. housing starts rose more than expected in September, bolstering the outlook for the sector.

The data reinforced expectations that the Federal Reserve will raise interest rates in the second half of 2015.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.33% to 85.31 late Friday, but still ended the week lower, its second consecutive weekly decline.

Data from the Commodities Futures Trading Commission released Friday showed that speculators turned bearish on the New Zealand dollar in the week ending October 14.

Net shorts totaled 2,384 contracts, compared to net shorts of 100 in the preceding week.

In the week ahead, investors will be awaiting U.S. data on consumer price inflation and new home sales for fresh signals on the strength of the economic recovery.

Market players are also looking ahead to a raft of Chinese economic data later this week, including reports on third quarter gross domestic product, as well as data on industrial production and retail sales.

Tuesday, October 21

• China is to release what will be closely watched data on third quarter gross domestic product and separate reports on industrial production and fixed asset investment.
• The U.S. is to release private sector data on existing home sales.

Wednesday, October 22

• The U.S. is to produce data on consumer prices, which comprises the majority of overall inflation.

Thursday, October 23

• New Zealand is to release data on consumer prices.
• China is to release the preliminary reading of its HSBC manufacturing index.
• The U.S. is to publish its weekly report on initial jobless claims.

Friday, October 24

• New Zealand is to release data on the trade balance.
• The U.S. is to round up the week with a report on new home sales.

GBP/USD weekly outlook: October 20 - 24

The pound was little changed against the dollar late Friday after data showed that U.S. consumer sentiment rose unexpectedly in October and following dovish remarks by a bank of England official earlier in the day.

GBP/USD was trading at 1.6092 late Friday, off session highs of 1.6125.

Cable is likely to find support at around 1.5940 and resistance at the 1.6180 level.

The dollar was boosted after a report showed that the University of Michigan’s consumer sentiment index unexpectedly rose to 86.4 in October, the most since July 2007.

Another report showed that housing starts rose more than expected last month, bolstering the outlook for the sector.

The data reinforced expectations that the Federal Reserve will raise interest rates in the second half of 2015.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.33% to 85.31, but still ended the week lower, its second consecutive weekly decline.

Earlier Friday, BoE Chief Economist Andy Haldane said that rates could remain lower for longer and warned that economic conditions have worsened.

Haldane pointed to slowing global growth, heightened geopolitical and financial risks and the subdued inflation outlook due to slow U.K. wage growth and falling commodity prices worldwide.

Sterling slumped to 11-month lows against the dollar earlier in the week after data showed that the annual rate of U.K. inflation slowed to 1.2% in September, down from 1.5% in August.

The data added to the view that the BoE is likely to keep rates on hold at record lows for longer.

Elsewhere, sterling was higher against the euro on Friday, with EUR/GBP down 0.41% to 0.7928.

In the week ahead, the U.S. is to release data on consumer inflation, as well as reports on both existing and new home sales. The BoE is to publish it latest meeting minutes, while Friday’s first look at third quarter growth will be highly anticipated.

Tuesday, October 21

• The U.K. is to produce data on public sector borrowing.
• The U.S. is to release private sector data on existing home sales.

Wednesday, October 22

• The BoE is to release the minutes of its latest policy meeting.
• The U.S. is to produce data on consumer price inflation, which accounts for the majority of overall inflation.

Thursday, October 23

• The U.K. is to report on retail sales and also release private sector data on mortgage approvals and industrial order expectations.
• The U.S. is to publish its weekly report on initial jobless claims.

Friday, October 24

• The U.K. is to release preliminary data on third quarter economic growth.
• The U.S. is to round up the week with a report on new home sales.

EUR/USD weekly outlook: October 20 - 24

The euro fell against the dollar on Friday as the greenback was boosted by data showing that U.S. consumer sentiment unexpectedly improved this month.

EUR/USD was down 0.38% to 1.2759 in late trade, not far from session lows of 1.2745.

The pair is likely to find support at around 1.2625 and resistance at 1.2843, Thursday’s high.

The greenback was boosted after a report showed that the University of Michigan’s consumer sentiment index unexpectedly rose to 86.4 in October, the most since July 2007.

Another report showed that housing starts rose more than expected last month, bolstering the outlook for the sector.

The data reinforced expectations that the Federal Reserve will raise interest rates in the second half of 2015.

The dollar fell against the other major currencies on Wednesday, touching a three-week trough against the euro amid a selloff sparked by fears that slower global growth would act as a drag on the U.S. economy.

Germany’s government cut its forecast for economic growth for this year and next on Tuesday, after recent data pointed to weakness in exports and industrial output.

The euro area’s largest economy now expects growth of 1.2% this year down from 1.8% previously and growth of 1.3% in 2015, down from 2%.

On Thursday, European Central Bank official Ewald Nowotny said the bank still has leeway for more action to address slowing inflation in the euro area, but added that the euro zone economy did not need emergency measures.

In recent months the ECB has cut interest rates to record lows, extended new four-year loans to banks and announced a plan to purchase asset-backed securities, a form of quantitative easing, in a bid to shore up the ailing euro area economy.

Elsewhere, the single currency edged higher against the yen on Friday, with EUR/JPY easing up 0.15% to 136.38 in late trade, off Thursday’s 11-month lows of 134.12.

In the week ahead, the euro zone is to release preliminary data on private sector activity. The U.S. is to release data on consumer inflation, as well as reports on both existing and new home sales.

Monday, October 20

• Germany’s Bundesbank is to publish its monthly report.

Tuesday, October 21

• The U.S. is to release private sector data on existing home sales.

Wednesday, October 22

• The U.S. is to produce data on consumer price inflation, which accounts for the majority of overall inflation.

Thursday, October 23

• The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.
• The U.S. is to publish its weekly report on initial jobless claims.

Friday, October 24

• The Gfk think tank is to release its report on German business climate.
• The U.S. is to round up the week with a report on new home sales.

Keep an economic schedule close by that rundowns the indicators and when they are expected to be released. Likewise, watch out for the future; regularly markets will move fully expecting a specific indicator or report due to be released sometime soon. Be educated about the economic indicators that are catching most of the the market's consideration at some random time. Such indicators are impetuses at the biggest cost and volume developments. For instance, when the U.S. dollar is feeble, swelling is frequently one of the most-watched indicators.