Monday's FX Analysis: EUR/USD, GBP/USD, AUD/USD.
SGT Markets | May 15, 2017 11:55
EUR/USD
German GDP (preliminary release) as expected.
US Retail Sales and U.S. Core CPI (Inflation data) worse than expected.
In its spring economic outlook, the ECB raised euro area GDP growth forecast to 1.7% from 1.6%.
The forecast for 2018 growth was 1.8%, unchanged from its winter economic outlook.
Consumer inflation is expected to rise to 1.6% this year from 0.2% in 2016.
US Producer Price Index (PPI) rose way over the expectations and this plays an important role in defining the level of price heat in the US: this may have impact on Fed Interest Rate next decisions.
US Nonfarm Payrolls and Unemployment Rate solid better than expected.
Retail Sales and German Unemployment Change again better than expected (the latter confirms a positive 7-month strike). Eurozone GDP preliminary release stable at 1.7%, as expected.
Spanish growth plus eurozone Inflation Data (CPI, preliminary) higher than expected boosted euro. Also Manufacturing PMI is keeping the expected pace.
On the other hand, US GDP (preliminary) lower than the expectation.
As we wrote in the previous commentaries, we expected retests of 1.085 area. Now we are on a strong resistance. If it will fail, there will be possibilities to get higher and retest 1.10 area. If, on the contrary, price will drop below 1.085 again, then there are high possibilities to retest our second support in area 1.078.
Our special Fibo Retracement is confirming the following S/R levels against the monthly and weekly trendlines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Overbought
1st Resistance: 1.0950
2nd Resistance: 1.1100
1st Support: 1.0856
2nd Support: 1.0782
EUR
Recent facts:
14th of February: German GDP (preliminary release) plus German ZEW Economic Sentiment plus eurozone GDP (preliminary release)
German GDP worse than expected, German ZEW worse than expected, eurozone GDP worse than expected
15th of February, eurozone trade balance
Better than expected
21st of February, German manufacturing PMI
Better than expected
23rd of February, German GDP
Worse than expected
1st of March, German manufacturing plus German unemployment change
German Manufacturing Worse than expected, German Unemployment Change Better than expected
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2nd of March, eurozone inflation data
In line with expectations
3rd of March, German services PMI plus eurozone retail sales
Worse than expected
7th of March, Germany Factory Orders
Worse than expected
8th of March, German industrial production
Better than expected
9th of March, ECB interest rate decision plus ECB press conference
Interest rates unchanged, ECB President dovish (can be cut again in the future if necessary)
14th of March, German CPI plus German ZEW Economic Sentiment
German CPI as expected, German ZEW worse than expected
24th of March, German manufacturing PMI
Significantly better than expected
30th of March, German CPI
Lower than expected
31st of March, German unemployment change plus eurozone CPI
German unemployment change better than expected (for the sixth time in a row), eurozone CPI worse than expected
3rd of April, German manufacturing PMI
As expected
11th of April, German ZEW Economic Sentiment
Better than expected
21st of April, French manufacturing PMI plus German manufacturing PMI
Better than expected
23rd of April, French elections (first round)
Centrist Emmanuel Macron, a pro-EU ex-banker and former economy minister, emerged as the leader of the first round of voting and qualified for a May 7 runoff alongside the second-place finisher, far-right leader Marine Le Pen
24th of April, German Ifo Business Climate
Better than expected
27th of April, ECB interest rate decision and ECB press conference
Unchanged, eyes on next inflation data
28th of April, CPI (Preliminary)
Higher than expected
2nd of May, German manufacturing PMI
As expected
3rd of May, German unemployment change plus eurozone GDP (preliminary)
German unemployment change better than expected (for the fifth time in a row)
Eurozone GDP (preliminary) as expected
7th of May, French elections
Centrist pro-EU Macron won French presidential election
12th of May, German GDP (preliminary release)
As expected
USD
Recent facts:
2nd of December: Nonfarm Payrolls plus Unemployment Rate
Better than expected
27th of January, GDP plus Durable Good Orders
GDP Significantly Worse than expected, Durable Good Orders as expected
1st of February, ADP Nonfarm Unemployment Change plus U.S. Institute for Supply Management Manufacturing
Better than expected (ISM Manufacturing at its highest level since November 2014)
3rd of February, Nonfarm Payrolls plus Unemployment Rate
Nonfarm Payrolls better than expected, Unemployment Rate Worse than expected
14th of February, Producer Price Index (PPI)
Better than expected
15th of February, Core CPI (Consumer Price Index) plus retail sales
Better than expected
16th of February, Building Permits plus Initial Jobless Claims plus Philadelphia Fed Manufacturing Index
Better than expected
21st of February, Manufacturing PMI plus Services PMI
Worse than expected
27th of February, Core Durable Good Orders plus Pending Home Sales
Worse than expected
28th of February, GDP (preliminary release)
Worse than expected
3rd of March, ISM Non-manufacturing PMI plus Fed Chair Yellen Speech
ISM Non-manufacturing PMI Better than expected, Yellen noted that a rate increase at next meeting "would likely be appropriate" insisting on the condition that data on employment and inflation have to move in line with expectations.
8th of March, ADP Nonfarm Employment Change
Better than expected
10th of March, Nonfarm Payrolls plus Unemployment Rate
Better than expected
14th of March, Producer Price Index
Higher than expected
15th of March, Core CPI plus Retail Sales
As expected
15th of March, FOMC Economic Projections plus FOMC Statement plus Fed Interest Rate Decision plus FOMC Press Conference
The Federal Reserve increased interest rates by 0.25% to a 0.75-1% range. Dovish speech of Chairwoman Yellen
16th of March, Building Permits plus Philadelphia Fed Manufacturing Index
Building Permits Worse than expected, Philadelphia Fed Manufacturing Better than expected
24th of March, Core Durable Goods Orders
Worse than expected
24th of March, Manufacturing PMI plus Services PMI (preliminary release)
Worse than expected (4th time in a row)
28th of March, Conference Board Consumer Confidence
Better than expected (the highest since December 2000)
30th of March, GDP
Better than expected
5th of April, ADP Nonfarm Employment Change plus ISM Non-Manufacturing Employment plus ISM Non-Manufacturing PMI
ADP Nonfarm Employment Change Better than expected
ISM Non-Manufacturing Employment plus ISM Non-Manufacturing PMI Worse than expected
7th of April, Nonfarm Payrolls plus Unemployment Rate
Nonfarm Payrolls Worse than expected, Unemployment Rate Better than expected
14th of April, Core CPI plus Retail Sales
Core CPI (Inflation) Lower than expected
Retail Sales Worse than expected
20th of April, Philadelphia Fed Manufacturing Index
Worse than expected
25th of April, New Home Sales plus CB Consumer Confidence
New Home Sales Better than expected, CB Consumer Confidence Worse than expected
27th of April, Durable Good Orders plus Pending Home Sales
Worse than expected
28th of April, GDP (preliminary release)
Worse than expected but Price Index Higher than expected
3rd of May, ADP Nonfarm Employment
ADP Nonfarm Employment better than expected
5th of May, Nonfarm Payrolls plus Unemployment Rate
Better than expected
11th of May, U.S. Producer Price Index (PPI)
Higher than expected
12th of May, U.S. Retail Sales plus Core CPI (Inflation data)
Worse than expected
GBP/USD
UK Manufacturing Production and trade balance worse than expected. U.S. Retail Sales and U.S. Core CPI (Inflation data) worse than expected too.
The Bank of England made no changes to monetary policy at the outcome of its meeting. Left interest rates on hold at current record lows and warned that living standards will fall this year as the headwinds from Brexit mount.
U.S. Producer Price Index (PPI) rose way over the expectations and this plays a very important role in defining the level of price and next Fed’s Interest Ratedecisions. US. Nonfarm Payrolls and Unemployment Rate solid better than expected. In the last FOMC Meeting Statement the Fed reiterated its view that monetary policy remains accommodative to support both an uptick in labour market conditions and a sustained return to 2% inflation.
UK Services PMI and Construction PMI better than expected, and also last UK Manufacturing PMI was pretty higher than expected.
UK GDP (preliminary release) was worse than expected and this was probably ignored too quickly.
And there are still some unresolved tensions with Scotland and Northern Ireland, which voted against leaving the EU. Theresa May provided no clear plan about the comprehensive “free-trade” partnership with EU members she wants to achieve.
Sterling jumped as Theresa May called for early general elections on June 8. She said Britain needed a strong and stable leadership going into Brexit talks and beyond.
Now market is ranging between 1.283 and 1.298 levels, in general overbought setup and we already had both good news from the U.S. and bad news for the UK. Possibilities to get down to 1.27 area are high. In the opposite case, a strong breakout of 1.2978 will lead up to 1.3185 area.
Our special Fibo Retracement is confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2001:
Weekly Trend: Overbought
1st Resistance: 1.2978
2nd Resistance: 1.3185
1st Support: 1.2705
2nd Support: 1.2530
GBP
Recent Facts:
4th of August, Bank of England Interest Rates decision (expected a cut)
Bank of England lowers Interest Rates as expected (record low of 0.25%) and increases purchase program
20th of January, Retail Sales
Worse than expected
26th of January, GDP (preliminary release)
Better than expected
1st of February, UK Manufacturing PMI
As expected
2nd of February, Construction PMI
Worse than expected
3rd of February, Services PMI
Worse than expected
10th of February, Manufacturing Production
Better than expected
14th of February, Consumer Price Index (CPI)
Worse than expected
15th of February, Job Market
Better than expected
17th of February, Retail Sales
Worse than expected
1st of March, Manufacturing PMI
Worse than expected
2nd of March, Construction PMI
Better than expected
3rd of March, Services PMI
Worse than expected
10th of March, Manufacturing Production plus trade balance
UK Manufacturing Production worse than expected, trade balance better than expected
15th of March, Job Market
Better than expected
16th of March, Interest Rates Decision plus BoE Meeting Minutes
A Bank of England policymaker unexpectedly voted to raise interest rates
21st of March, CPI
CPI higher than expected
23rd of March, Retail Sales
Better than expected
31st of March, GDP YoY
Worse than expected
3rd of April, Manufacturing PMI
Worse than expected
5th of April, Services PMI
Better than expected
7th of April, Manufacturing Production
Worse than expected
11th of April, UK CPI
Higher than expected
12th of April, UK Job Market
Worse than expected
21st of April, UK Retail Sales
Worse than expected
28th of April, UK GDP (preliminary release)
Worse than expected
2nd of May, Manufacturing PMI
Better than expected
3rd of May, Construction PMI
Better than expected
4th of May, Services PMI
Better than expected
11th of May, UK Manufacturing Production plus trade balance plus BoE Interest Rate Decision
Manufacturing Production plus trade balance worse than expected
The Bank of England made no changes to monetary policy but warned that living standards will fall this year as the headwinds from Brexit mount
USD
Recent Facts:
See above.
AUD/USD
U.S. Retail Sales and U.S. Core CPI (Inflation data) worse than expected.
The RBNZ (New Zealand's central bank) left its benchmark interest rate unchanged at 1.75%, in a widely expected move but the central bank surprised markets by saying it expects to tighten monetary policy in late 2019 (and not around the first half of 2019 as expected).
Australia Retail Sales worse than expected.
U.S. Producer Price Index (PPI) rose way over the expectations and this plays a very important role in defining the level of price heat in the U.S.: this has impact on Fed Interest Rate next decisions. US. Nonfarm Payrolls and Unemployment Rate solid better than expected.
The Reserve Bank of Australia held Interest Rates at 1.5% as expected signalling that further interest rate cuts were off the table as wage gains are weaker than hoped, though house prices in some markets remain a worry. Australia New Home Sales and trade balance below expectations.
OPEC and non-OPEC oil producers look likely to extend their agreement to limit supplies beyond its June expiry to help clear a glut.
A very important Support (around 0.7408) failed recently but it is being retested in these days. Overbought will start around 0.7472.
Our special Fibo Retracements are confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Neutral
1st Resistance: 0.7408
2nd Resistance: 0.7472
1st Support: 0.7310
2nd Support: 0.7203
AUD
Recent Facts:
1st of November, RBA Interest Rates Statement
RBA’s Governor Lowe signals tolerance for weak inflation and bets seem off for future rate cuts
3rd of November, RBA Monetary Policy Statement plus Retail Sales
RBA said it is focused on the medium-term inflation target
Retail Sales better than expected
8th of November, ELECTION OF THE 45th PRESIDENT OF THE UNITED STATES
Donald Trump elected President
9th of November, Reserve Bank of New Zealand Interest Rate Decision plus Monetary Policy Statement
Interest Rates cut to 1.75% from 2.00% as expected
19th of December, Mid-Year Economic and Fiscal Outlook
Scott Morrison announced lower than an original prediction of A$37.1 billion, investors see it as promising to stave off a downgrade of its AAA (triple A) rating from S&P Global
9th of January, Retail Sales
Worse than expected
19th of January, Employment Change
Better than expected
25th of January, CPI (Consumer Price Index measures the change in the price of goods and services from the perspective of the consumer)
Lower than expected
1st of February, AIG Manufacturing Index
Worse than expected
2nd of February, Building Approvals plus trade balance
Better than expected
7th of February, RBA Interest Rates Decision plus RBA Rate Statement
RBA held steady as expected at a record low 1.50%, while noting better economic conditions with China
8th of February, New Zealand Interest Rate Decision plus RBNZ Monetary Policy Statement
Interest Rates Unchanged and RBNZ’s agenda contains no changes for 2017
16th of February, Employment Change
Better than expected
28th of February, New Home Sales, Current Account, Private Sector Credit
1st of March, Australia GDP
Better than expected
16th of March, Employment Change plus Unemployment Rate
Worse than expected
2nd of April, Retail Sales
Worse than expected
4th of April, RBA Interest Rate Decision
Interest Rates Unchanged, as expected. Dovish tone in Philip Dowe’s Speech
9th of April, Home Loans
Worse than expected
13th of April, Australia Employment Change
Better than expected
18th of April, RBA Meeting Minutes
Dovish
26th of April, Australia CPI
Lower than expected
2nd of May, RBA Interest Rate Statement
RBA holds Rates at 1.5%
4th of May, Australia New Home Sales plus trade balance
Worse than expected
9th of May, Australia Retail Sales
Worse than expected
USD
Recent Facts:
See above.
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