| Canadian Dollar Outlook - September 7-11 2009 Posted: 06 Sep 2009 12:41 AM PDT USD/CAD remained in the mainstream, with perfect range trading. This week’s rate decision and 3 more important Canadian indicators will shape the loonie’s direction. Here’s an outlook for the key Canadian events, and a technical analysis for USD/CAD. USD/CAD updated forex graph, with support and resistance lines 
The surprising rise in Canadian jobs (employment change) pushed USD/CAD down on Friday, but it wasn’t enough to breach technical levels. Let’s see what’s up this week, after the Labor Day holiday on Monday: - Building Permits: After the long weekend, Canadian Building Permits are the first indicator, and quite an important one. This figure has been better than expected in the last 4 months. It rose by 1% last month. This time, the rise is expected to be more modest - 0.5%. Published on Tuesday at 12:30 GMT.
- Housing Starts: Another major housing indicator is due on Wednesday at 12:15 GMT. Contrary to the Building Permits, this indicator disappointed last time by falling below expectations and below the previous month’s number. After hitting 134K last time, Housing Starts are expected to rise to 137K.
- Trade Balance: As usual, Canadian Trade Balance is published together with the American one. This double-feature release makes USD/CAD very volatile around the releases, on Thursday at 12:30 GMT. In the past three months, Canada is experiencing a deficit in trade balance, although it isn’t big. After last month’s 100 million deficit, it’s expected to double this time.
- Rate decision: No inflation fears loom over Canada and its rock bottom Overnight Rate of 0.25%. The BOC isn’t expected to raise the interest rate - not now and not until the end of the year. Traders’ eyes will be on the BOC Rate Statement. Mark Carney and co. will hint on future policy, and more importantly will speak their mind on the Canadian economy. Published on Thursday at 13:00 GMT.
- NHPI: The week began with the housing sector and also ends with it. New Housing Price Index dropped ten months straight, and is expected to drop once again, this time by 0.1%. Published on Friday at 12:30 GMT, when there aren’t any major US indicators.
USD/CAD Technical Analysis Similar to other currencies, the loonie exercised range trading. The range was 1.0824 to 1.1102, with the support line of 1.08 and the resistance line of 1.1130 mentioned in last week’s USD/CAD outlook. The dip to 1.0720 in the week before was merely a false break due to low volume in the summer. All in all, I stay with my current support line of 1.08 as a pivotal line. Below 1.08, 1.0340 is the next support line, far down. It'll be approached only a major collapse of the greenback. Looking up, 1.1130 is a resistance line that served as such two weeks ago. Above that, a strengthening US dollar will meet major resistance at 1.1470, which worked as both support and resistance in the past. I’m moving from a slightly bullish sentiment to a neutral one about this pair. Only a surprising rate statement will shake USD/CAD. Further reading: |
| EUR/USD Outlook - September 7-11 2009 Posted: 05 Sep 2009 09:54 PM PDT Range trading was the name of the game this week. EUR/USD that closed the week in the same place as last week. Here’s an outlook for this week’s events, and a technical analysis for EUR/USD. Will it break the range this week? EUR/USD forex graph with uptrend channels 
Last week’s rate decision didn’t surprise anybody. Also the other indicators were more or less inline with expectations. Let’s see what events await us this week:
I must that no indicator stands out this week, but these ones will still move EUR/USD. - Sentix Investor Confidence: This wide survey of investors and analysts starts the list of European indicators. It hasn’t shown optimism since June 2009. Pessimism is expected to be reflected in this month’s survey as well, with a negative number of -13.5 rather than -17 last month. Published on Monday at 8:30 GMT.
- German Factory Orders: More orders from factories mean more demand. In Europe’s largest economy, factory orders have leaped in the past two months unexpectedly. These surprises made economists more optimistic this time - they’re expected a nice rise of 2% this time. Published on Monday at 10:00 GMT.
- German Trade Balance: Germany’s export oriented economy usually enjoys a surplus in trade. This surplus has grown up to 11 billion in recent months, and is expected to stay at the same levels. Published on Tuesday at 6:00 GMT.
- German Industrial Production: Contrary to other German releases, this figure disappointed last month when it showed an unexpected decline last month. This makes this month’s release more interesting. It’s expected return to growth and rise by 1.6% this time. Published on Tuesday at 10:00 GMT.
- German Final CPI: The Euro zone is suffering from deflation more than other regions in the world. But in the last release from the German states, prices showed a rise of 0.2% rather than a fall. The Final CPI is expected to confirm the initial read. Any weaker result will hurt the Euro. Published on Wednesday at 6:00 GMT.
- French Industrial Production: Europe’s second largest economy is also recovering at a nice pace. In the past two months, unexpected growth was seen in France’s industrial production. After rising by 0.3% last month, a 0.5% is predicted this time.
- ECB Monthly Bulletin: The monthly bulletin exposes the data that the ECB was reviewing before making the rate decision. This insight on current economic conditions as bankers see it is interesting to watch. Published on Thursday at 8:00 GMT.
- German WPI: The Wholesale Price Index is another indicator for inflation. Contrary to the German CPI that showed a small rise, the WPI fell by 0.5% last time. Hopes are for a rise this time of 0.3%. Published on Friday at 6:00 GMT.
EUR/USD Technical Analysis EUR/USD traded in a 200 pip range: 1.4177 to 1.4377. It fell under 1.42 this week, but didn’t go very far. All in all, it closed the week around the same place it began it - 1.4294. In last week’s EUR/USD outlook I wrote that I wasn’t sure where it’s going. Well, this hasn’t changed… The uptrend channels that I’m following are wide enough, and still hold for another week. The cap of 1.4444 as a resistance line is also out there. Here are two recent EUR/USD technical opinions: Further reading: |
| AUD/USD Outlook - September 7-11 2009 Posted: 05 Sep 2009 03:15 PM PDT AUD/USD traded in a perfect range, and in the late hours of Friday afternoon, it made a breakout and closed above 0.85. This week’s employment figures, as well as 7 other indicators, will shape the direction. Here’s a review for this week’s Australian events and a technical analysis for AUD/USD. AUD/USD forex chart, with support and resistance lines marked. The Aussie breakout is small but apparent. 
The Australian economy didn’t plunge into recession, and even growth was strong in the second quarter: 0.6% - double the expectations. Also other Australian figures did well last week, and the interest rate remained the highest in the West - 3%. Let’s check out this week’s 9 indicators:
- AIG Construction Index: This survey focuses on construction companies, and reflects on the whole economy. The Australian Industry Group publishes this indicator very early in the week, at 23:30 GMT. Though this isn’t the most important Australian release, the outcome and the response to it may tell us how real the breakout is.
- ANZ Job Advertisements: Also published early, on Monday at 1:30 GMT, this is already a more important indicator, especially since it’s published before the official employment figures. The number of job advertisements in the media reflects the job market quite well. This figure has dropped for over a year and a half. Last month it fell by 1.7%. Will it rise again?
- NAB Business Confidence: The National Australia Bank polls about 350 businesses to get their feel of the economy. This figure already overcame the crisis according to the last two releases that were positive. Last month’s result was 10 points, and it should rise again. Published on Tuesday at 1:30 GMT.
- Westpac Consumer Sentiment: Another bank this time, the Westpac Banking Corporation, publishes a survey of consumers. 1200 consumers are asked about the economy. In the past three months, consumer sentiment has improved nicely, last time by 3.7%. Also this indicator should be on the rise. Published on Wednesday at 1:00 GMT.
- Home Loans: Since most people need a mortgage for buying a new house, the Home Loans figure is a good reflection of the economy. What makes this specific release important is the negative sentiment: it’s expected to drop by 1%, for the first time in 10 months. It’s published on Wednesday at 1:30 GMT, together with the Retail Sales that may overshadow it.
- Retail Sales: Australian Retail Sales are have fallen unexpectedly last month by 1.4%. This worrying fall is in contrast to other strong Australian figures. This month, return to growth is predicted - 0.6%. The release, together with Home Loans, make this quite a choppy hour for AUD/USD.
- MI Inflation Expectations: The Melbourne Institute showed that inflation is slowly picking up in Australia, despite high interest rates. Last month’s 3.5% was the highest since the crisis broke out. A further rise will put pressure for a rate hike, and might send the Aussie up. Published on Thursday at 1:00 GMT.
- Employment Change: Australia’s job market surprised with a rise of 32.2K jobs, when a drop was expected. A fall of 14.7K jobs is expected this week, despite the last gain. Published on Thursday at 1:30 GMT, together with the complementary figure - Unemployment Rate.
- Unemployment Rate: Australian unemployment rate remained at 5.8%, posting a surprise for the second month in a row. This employment figure is quoted by the media more than the employment change. Economists are predicting a small rise to 5.9%, but a surprise is very possible.
AUD/USD Technical Analysis In the past week I’ve paid much attention to the Aussie. AUD/USD traded in fixed range, and then made the breakout on Friday. My bullish sentiment in last week’s Aussie outlook proved correct Although not a big break, this is a return of last breakout’s pattern. So, we can begin looking up: 0.8836 is out there. It was a significant peak twice in the past. For another technical analysis, read the story by Mohammed Isah. Looking down, the area of 0.85 is still sensitive. The breakout could prove as false if AUD/USD dips below. Under that, 0.8230 remains a strong support line. If a major dollar surge begins, 0.77 will become relevant, but the direction seems different. Needless to say, I continue to be bullish on the Aussie. Further reading: |
| British Pound Outlook - September 7-11 2009 Posted: 05 Sep 2009 10:00 AM PDT After a bad start, the Pound made a comeback and finished the week higher. It still trades in a range, like many other pairs. This week’s interest rate, as well as 9 other indicators will set the direction of the Pound. Here’s an outlook for this week’s key events, and an updated technical analysis for GBP/USD. GBP/USD forex chart with updated support and resistance lines: 
Last week’s Manufacturing PMI, and the negative Net Lending to Individuals figure took the Pound downhill, while the Services PMI helped it recover near the end of week. Let’s see what indicators will shake the Pound this week:
- Halifax HPI: Delayed from last week, this important housing indicator will probably published this week, although the exact timing is unknown.It's importance comes from the base of this index - the bank's internal data. After rising by 1.1% last month, Halifax HPI is predicted to rise more modestly - by 0.5% this time.
- BRC Retail Sales Monitor: The British Retail Consortium releases this early retail sales indicator before the government does, though this doesn’t consist of all the retailers. It rose nicely in the past two months, and should rise again. Published on Monday at 23:00 GMT (midnight UK).
- RICS House Price Balance: At the same time of the BRC Retail Sales Monitor release, RICS publishes the percentage of property surveyors reporting a price movement. This indicator hasn’t been positive in over two years. In the past 5 months, this figure was better than early expectations, reaching -8.1% last time. An almost insignificant drop of 0.1% is expected this time. If it turns positive, it’ll be a boost for the British Pound.
- Manufacturing Production: This major indicator is published on Tuesday at 8:30 GMT. Manufacturing consists of 80% of the industrial production, which is released at the same time - therefore overshadowing it. After surprising with a 0.5% rise last month, Manufacturing Production is expected to continue upwards, with a 0.3% rise.
- Nationwide Consumer Confidence: This survey of consumers isn’t large in its scale, but has a good reputation. Since May, this index was on the rise and made a positive surprise each time. This time it’s expected to rise from 60 to 62 points. Published on Tuesday at 23:00 GMT.
- Trade Balance: Britain traditionally has a deficit in its trade balance. Last month, it posted a slightly bigger than expected deficit - 6.5 billion. It’s expected to return to the previous figure of 6.3 billion this time. Published on Wednesday at 8:30 GMT.
- NIESR GDP Estimate: The National Institute of Economic and Social Research checks the pulse of economy on a monthly basis, building p quarterly GDP before the official release. In the past two months, they showed a contraction of 0.4%. They haven’t shown growth in over a year. Will they show an improved result for August? Answers on Wednesday at 23:00 GMT.
- CB Leading Index: 7 major economic indicators build up this composite index. In the past three months, this index was positive, rising by 1% last time. The Conference Board publishes this index at 9:00 GMT, close to the rate decision.
- Rate Decision: The BoE surprised last time when they announced that the Quantitative Easing program will be expanded. The Pound suffered a great deal from this decision. As the Official Bank Rate is expected to remain at the historic low of 0.5%, the decision regarding bonds and the exact wording of the MPC Rate Statement will have a strong impact on the Published on Thursday at 11:00 GMT.
- PPI Input: The producer price index fell by 1.4%, much more than expected. The fear that Britain is also diving into deflation is strong. This month’s PPI is predicted to rise by 0.6%. Published on Friday at 8:30 GMT.
GBP/USD Technical Analysis The British Pound had a bad start - when British bankers returned to work on Tuesday, GBP/USD fell below the 1.62 resistance line, and went as low as 1.6111, the lowest in two months. But then it made a comeback and finished the week at 1.6389, more than a hundred pips higher. In last week’s British Pound Outlook, I’ve updated the minor support line to 1.6150, but the Pound went 40 pips under before making a comeback. I’m now lowering the line to 1.60, which was the bottom point two months ago and also a round psychological number. Below 1.60, 1.58 is a strong support line. If GBP/USD makes a big and real break down, it'll aim for 1.58. On the upside, 1.6660 continues to maintain its position as an ultra strong resistance line. Only a dollar collapse could send GBP/USD above this line. Above that, August’s high at 1.70 is the next point, and far in the horizon, 1.74 awaits major Pound strength. I continue to have a negative sentiment on the British Pound, despite the gains it made. For a broad overview of this week's events, read the Forex Weekly Outlook. |
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