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Forex Advisor, Hermannstadt (2026)

19/08/2016

Intraday

The dollar traded higher against all but two of its G10 counterparts during the European morning Friday. The biggest losers were NOK, AUD and CAD in that order, while the sole winner was JPY. The greenback remained virtually unchanged only against NZD.
In a particularly light calendar day, the only noteworthy indicator we get is Canada’s CPI for July, due out later in the European afternoon. The forecast is for the headline rate to have declined, while the core rate is expected to have remained unchanged. This suggests that fluctuations in the prices of volatile items such as food and energy may be the cause of a potential slowdown in the headline CPI. We see the risks surrounding the core rate as skewed to the downside as well though, given that the Price index of the Ivey PMI for July declined somewhat but remained safely within expansionary territory. Following very soft employment data for July, a slowdown in inflation could cause BoC officials to adopt a somewhat not-so-optimistic tone at their upcoming meeting in early September. Combined with an oil rally that seems to be losing momentum so far today, this could curb some of CAD’s recent gains.
USD/CAD reversed some of its recent losses during the European morning Friday, after it hit support at 1.2760 (S1). Nevertheless, the rate is still trading below the medium-term upside support line taken from the lows of the 23rd of June, and below the well-tested round figure of 1.3000 (R3). This keeps the short-term trend negative, in my view. However, I would like to see a decisive dip below the 1.2760 (S1) obstacle before getting confident on larger bearish extensions. Something like that is possible to open the way for our next support area of 1.2700 (S2). A reason I believe it is not the best time to follow that short-term downtrend though, is the Canadian CPI data to be released later the day. Expectations are for a soft report, which could cause USD/CAD to rebound above 1.2850 (R1) and perhaps challenge the 1.2920 (R2) zone. Switching to the daily chart, I would like to see the pair breaking below the 1.2650 (S3) level to trust that the longer-term downtrend is back in force. Therefore, I prefer to take the sidelines with regards to the broader picture.
Support: 1.2760 (S1), 1.2700 (S2), 1.2650 (S3)
Resistance: 1.2850 (R1), 1.2920 (R2), 1.3000 (R3)

19/08/2016

• Fed’s Williams joins the “hawkish” side The dollar’s retreat was halted yesterday following some remarks by San Francisco Fed President John Williams that he would like to get back to a pace of gradual rate increases, preferably sooner rather than later. He said that the economy’s strength warrant...

18/08/2016

Intraday

The dollar traded lower or unchanged against all but one of its G10 peers during the European morning Thursday. It was lower against GBP, SEK, CHF, NOK and CAD in that order, while it was higher only versus JPY. The greenback remained virtually unchanged against EUR, NZD and AUD.
UK retail sales skyrocketed in July, despite any uncertainty the “Brexit” referendum may have caused. Retail sales rebounded to +1.4% mom from -0.9% mom previously, far exceeding the forecast of a minor rise to 0.2% mom. The core rate, which excludes auto fuel, rose to 1.5% mom from -0.9% mom, beating expectations of +0.4% mom. The British pound surged on the news and continued higher in the following minutes. Considering that there are no major UK indicators next week aside from Q2 GDP data, we believe that this positive sentiment could keep fueling sterling demand for a while. However, although these stellar gains dispelled some concerns that consumer confidence would take a direct hit from the referendum uncertainty, we would not jump to any conclusions about overall demand just yet. Admittedly, part of the acceleration may be due to seasonal factors and the weaker pound that may have encouraged foreigners to spend. We doubt this heralds an extended period of strong consumer demand, and we see the risks surrounding retail sales in coming months as tilted to the downside. This was also acknowledged by the BoE’s latest Inflation Report, where the MPC judged that private domestic demand growth is likely to slow over the coming year.
EUR/GBP plunged following the strong rebound of the UK retail sales, breaking below the support-turned-into-resistance line of 0.8650 (R1). The decline was halted at the crossroad of the 0.8580 (S1) support line and the uptrend line taken from the lows of the 24th of June. A break below that key territory could carry larger bearish implications and perhaps challenge our next support, the psychological 0.8500 (S2) barrier. Our momentum studies support the case for a continuation of the decline. The RSI fell below its 50 line and approaches the 30 zone, while the MACD, although positive has crossed below its trigger line and could fall below zero anytime soon. Switching to the daily chart though, I still see a longer-term uptrend. I would treat any short-term declines that stay limited above the 0.8500 (S2) support level as corrective moves of the 24th of June – 16th of August advance.
Support: 0.8580 (S1), 0.8500 (S2), 0.8440 (S2)
Resistance: 0.8650 (R1), 0.8730 (R2), 0.8770 (R3)

18/08/2016

• FOMC keeps its options open but dollar slumps The dollar came under renewed selling pressure yesterday following the release of the FOMC July policy meeting minutes. The Committee kept the door open for a rate hike as soon as September, with some members judging that another rate increase would so...

17/08/2016

Intraday

The dollar traded higher or unchanged against its G10 peers during the European morning Wednesday, ahead of the July FOMC meeting minutes. It was higher versus NOK, AUD, NZD, CAD and JPY in that order, while it remained virtually unchanged against SEK, CHF, GBP and EUR.
The British pound surged briefly after the nation’s employment report for June was released. The unemployment rate held firm at 4.9% while average weekly earnings accelerated somewhat, both in line with expectations. However, these were mostly pre-referendum data and only a single week was captured after the “Brexit” vote. This suggests that these figures may not reflect the current state of the labor market. With regards to post-vote data, the report also included the claimant count for July, which is the number of people that claim jobseeker’s allowance that month. The figure was expected to rise but instead it declined, easing some concerns that the “Leave” vote would be immediately followed by countrywide job losses. Cable rose initially on these encouraging data, but sterling demand remained short-lived as the pair found fresh sell orders and gave back all its gains, and retreated even further in the following minutes. The next noteworthy release from the UK will come tomorrow in the form of retail sales for July, the first major indication of how consumer demand fared in the aftermath of the referendum. Retail sales could determine sterling’s short-term direction, with any disappointment likely to bring the already battered currency under renewed selling pressure.
GBP/JPY traded slightly higher during the European morning Wednesday, but stayed below the upper boundary of the downslope channel that has been containing the rate since the 21st of July. Given that the rate is still within that channel, I would consider the short-term outlook to be negative. I would expect the sellers to regain momentum again and perhaps push the price below the 130.50 (S1) level. A dip below that support line could open the way for the 129.60 (S2) area. Taking a look at our short-term oscillators, I see that the RSI found resistance just above its 50 line and turned down, while the MACD, already negative, shows signs that it could move below its trigger line. These momentum studies support the case for the pair to continue lower. Zooming out to the daily chart, I still see a longer-term downtrend. In my view, the short-term slide started on the 21st of July confirms that the 8th - 15th recovery was just a corrective phase and that the broader trend is back in force.
Support: 130.50 (S1), 129.60 (S2), 128.60 (S3)
Resistance: 132.50 (R1), 133.80 (R2), 135.90 (R3)

17/08/2016

• “Hawkish” Fed talk boosts the dollar After being weak for most of the European day yesterday, the dollar rallied despite disappointing CPI data for July, following some “hawkish” remarks from NY Fed President William Dudley. The Fed official said that we are edging closer to the time to raise rate...

15/08/2016

Intraday

The dollar traded lower against most of its G10 peers during the European morning Monday. It was lower against NZD, AUD, JPY, CAD, EUR and NOK in that order, while it traded higher only versus GBP. The greenback remained virtually unchanged against SEK and CHF.
In a very light economic calendar day, the European trading session is marked by smaller-than-usual trading volatility up until now, as some European markets remain closed in celebration of Assumption Day. The next market moving event is likely to be during the Asian morning Tuesday, when the Reserve Bank of Australia will release the minutes of its August policy meeting. At that gathering, the Bank cut its policy rate by 25bps and noted that the prospects for growth and inflation would be improved by that move. Given that officials did not include an easing bias in the meeting statement, or any form of forward guidance on the rate outlook, we believe that these minutes will be critical with regards to market expectations for the RBA’s rate path. In its Statement on Monetary Policy, which was released a few days after the rate cut, the Bank leaned towards the dovish side we think, by indicating that “inflation is likely to remain below 2% over most of the forecast period”. A confirmation of this dovish bias in the meeting minutes could curb some of the Aussie’s recent gains.
AUD/USD advanced a bit during the European morning Monday, following the selloff in the late US session Friday and the break of the lower boundary of the upside channel that had been containing the price action since the 27th of July. The pair found some buy orders near 0.7640 (S1) and moved higher towards the 0.7675 (R1) resistance line. Given that the pair fell below the aforementioned channel, this has shifted the short-term outlook cautiously negative in my view. However, I would need to see a break below the 0.7640 (S1) support barrier in order to trust further declines. Such a break could challenge our next support at 0.7600 (S2). Taking a look at our short-term oscillators, I see that the RSI hit resistance at its 50 line and turned down, while the MACD, has fallen below its trigger line and could turn negative anytime soon. These indicators give evidence that further declines may be on the cards. As for the longer-term timeframes, the pair is trading above the upside support line drawn from the lows of January. This keeps the broader outlook cautiously positive, but I prefer to wait for a clear close above 0.7800 before I get confident on larger upside extensions.
Support: 0.7640 (S1), 0.7600 (S2), 0.7570 (S3)
Resistance: 0.7675 (R1), 0.7725 (R2), 0.7755 (R3)

15/08/2016

• Japan’s GDP data disappoint but Yen still strong Japanese data released overnight showed that economic growth was flat in Q2 from +0.5% qoq in Q1, missing the forecast of a slowdown to +0.2% qoq. The softness in the report was owed mainly to falling exports, perhaps due to a stronger yen this year...

05/08/2016

Intraday

The dollar traded virtually unchanged against most of its G10 counterparts during the European morning Friday. It was lower only against NZD, EUR, and JPY in that order.
In the absence of any major data releases thus far, investors are likely to keep their attention fixed on the US jobs report for July due out later in the day. Nonfarm payrolls are expected to have risen by 180k, lower than June’s astonishing gain of 287k, though a solid reading overall. The encouraging ADP report for July and the relatively low initial jobless claims throughout the month, both support a robust NFP print today. The unemployment rate is expected to have declined to 4.8% from 4.9%, while average hourly earnings are forecast to have accelerated on a monthly basis, something that would keep the yearly rate unchanged. The forecasts point to a month of strong employment gains overall, which could reverse some of the dollar’s recent losses.
At the same time, we also get Canada’s jobs data for July. The unemployment rate is expected to have ticked up and the net change in employment to have turned positive. We suspect that the tick-up in the unemployment rate may be due to a rebound in the labor force participation rate, something that would be positive news for the Loonie. Considering that the Canadian jobs report is released at the same time as the US report, the initial reaction on USD/CAD could be primarily due to the latter. In case of a solid US release, USD/CAD could spike higher.
USD/CAD traded somewhat lower during the European morning Friday after it hit resistance at 1.3035 (R1). Nevertheless, the rate is still trading above the well-tested round figure of 1.3000 (S1). The short-term trend appears to be negative, but given that the rate remains above the 1.3000 (S1) zone and also above the medium-term upside support line taken from the low of the 3rd of May, I would take the sidelines for now. I would like to see a decisive dip below those key support obstacles before getting confident on larger bearish extensions. Something like that is possible to open the way for our next support area of 1.2930 (S2). Another reason, I believe it is not the best time to follow that short-term downtrend is the US employment report, due out later in the day. Expectations are for a strong report, which could cause USD/CAD to rebound above 1.3035 (R1) and perhaps challenge the 1.3090 (R2) zone. Switching to the daily chart, I see that the pair is back within the triangle pattern that has been containing the price action since the 5th of April. Therefore, I prefer to take the sidelines with regards to the broader picture as well.
Support: 1.3000 (S1), 1.2930 (S2), 1.2860 (S3)
Resistance: 1.3035 (R1), 1.3090 (R2), 1.3140 (R3)

05/08/2016

• BoE unveils stimulus package, more easing to follow On its first “Super Thursday” following the EU membership referendum, the Bank of England delivered a package of easing measures over and above market expectations. The MPC lowered the Bank Rate by 25bps to 0.25% as was expected, but also expande...

03/08/2016

Intraday

The dollar traded higher or unchanged against all but one of its G10 counterparts during the European morning Wednesday. It was higher against JPY, CHF, NZD, AUD and EUR in that order, while it was lower only versus GBP. The greenback remained virtually unchanged versus CAD, SEK and NOK.
The final UK services PMI for July confirmed its preliminary estimate, indicating that the sector contracted in the immediate aftermath of the “Brexit” referendum. This follows the manufacturing and construction indices for the same period, both of which showed that activity contracted in those sectors as well. Even though the softness in the PMIs may not necessarily translate into softness in other data, it definitely increases the pressure on BoE policymakers to take action tomorrow in order to stimulate the British economy. Expectations for easing at this meeting are very high already, with the implied probability for a 25bps rate cut currently standing at 96%. Given that a rate reduction is already largely priced in, the key question is whether policymakers will opt to deliver more. Will they choose to restart their asset purchases program? A sole 25bps cut could disappoint investors who expect more, and may even cause the pound to rebound. Thus, we maintain the view that in order for sterling to weaken materially, the BoE has to deliver measures over and above market expectations, such as another round of asset purchases or a clear easing bias moving forward.
EUR/GBP traded lower during the European morning Wednesday after it hit resistance near 0.8430 (R1). Then, the rate fell below the upside support line taken from the low of the 14th of July. In my view, this has turned the short-term outlook somewhat negative and as a result, I would expect the bears to continue pushing the rate lower and perhaps aim for the 0.8345 (S1) support level. A decisive break below that barrier could open the way for the 0.8300 (S2) area. Our short-term momentum indicators detect negative momentum and amplify the case for EUR/GBP to continue trading lower for a while. The RSI turned down again after it hit resistance slightly below its 50 line, while the MACD, already below its trigger line, has turned negative. Zooming out to the daily chart, I see that on Tuesday, the pair printed a lower peak. Therefore, although the prevailing trend still looks positive, the recent slide makes me switch my stance to “wait and see” for now with regards to the broader trend.
Support: 0.8345 (S1), 0.8300 (S2), 0.8260 (S3)
Resistance: 0.8430 (R1), 0.8500 (R2), 0.8580 (R3)

03/08/2016

• Japanese officials resume intervention talk Overnight, Japanese Vice Finance Minister Asakawa stated that the moves in the FX markets were nervous and that he would watch the market carefully. In our view, this suggests that intervention talks are likely back on the table. Considering the BoJ’s un...

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