Key To Markets - Discussions

[KeyToMarketsUK]

KTM EURGBP Weekly: Wait for a catalyst

The pound has activated the “reverse thrust” across the board again, ever since the MPC hike last week. Brexit headline took back the central stage after the MPC’s unanimous 25bps hike. The week ahead the first release of the Q2 GDP will be the key driver to the GBP in the short-term.

Over the weekend, Brexit related news kept the lid for the GBP. Liam Fox, U.K. international trade secretary, told the Sunday Times newspaper that “intransigence” by EU officials “is pushing us towards no deal.” He put the chance of Britain crashing out without a deal at 60 percent, CNBC reported. The recent set of mixed PMI releases also weighing on the pound. UK manufacturing sector starts 3Q on the softer footing, and Service sector growth slips to a three-month low. Besides Construction activity accelerated at the fastest pace since May 2017.

Data review:
• July Manufacturing PMI fell to 54.0, three-month low down from 54.3 in June
• July Services PMI fell to 53.5 from 55.1 in June
• July Construction PMI sharply up to 55.8 from 53.1, fastest rise since May 2017
• The MPC delivered unanimous hike 25bp but unchanged the inflation report

Week ahead:
Following the unanimous hike, we are more focusing on the first estimate of the Q2 GDP. We expect prelim Q2 GDP to print 0.4% vs 0.2% earlier and GDP on MoM basis to print at 0.3% vs 0.2%.

TECHNICAL OVERVIEW​

EURGBP was quiet last week within the recent ranges with no significant technical developments. The euro cross manages to keep last week’s gains and is now trading at the key resistance zone 0.8935-0.8960. Looking ahead the euro calendar is quiet besides the UK Q2 GDP is the catalyst for the cross this week. A daily close above 0.8970 could rally further to 0.9030 and 0.9050 its 61.8% fib reaction. Supports are at 0.8880 and 0.8840 its weekly pivotal.

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[KeyToMarketsUK]

KTM FX Daily: AUDCAD strategy

ION ORE vs OIL

AUDCAD gave an hourly bullish break and rallied to five-day high. We forecast the cross is titled to limited downside risk. The erosion of the 0.9630-0.9660 threshold is highly encouraging all the more so as the daily volatility tends to increase markedly and as the daily studies are bullish.

Especially the RSI run through the descending trendline, and we expect the price will follow soon. Finally, the cross ready to satisfy the conditional uptrend to 0.9740 and 0.9780 if recovery back above 0.9700 level. Supports are at 0.9660 and 0.9630.

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[KeyToMarketsUK]

KTM FX: EURNZD forecast. Cruising through thresholds

EURNZD: ECB June meeting=RBNZ August meeting

At June’s ECB meeting the rate hike timing factor triggered the tremors, sent EURSUD to 1.1560 down nearly 2.0%. Fast forwarding to today’s RBNZ meeting, NZD tumbles after RBNZ delay rate hike for another year. At the time of writing NZD down more than a percent across the board.

The cross just has been run through the higher end of the descending wedge pattern and finally breach the early July high too. The erosion of these is highly encouraging us to focus on Dec 2017 high seems to be at 1.7479. A weekly close above the barrier 1.7479 rounded to 1.7500 would be needed to initiate further pronounced recovery to 1.770 and 1.780 in the coming weeks.

The 200MAs on the monthly chart spread between 1.7730 and 1.8000 levels. The supports are finds at 1.73301.7230 and 1.7120.

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[KeyToMarketsUK]

KTM FX: NZDUSD forecast update. Flying below a safe altitude

• August MPS review was ultra-dovish. RBNZ delay rate hike for another year
• Held OCR unchanged for a 22nd month in a row at 1.75%
• Growth risk biased toward a cut

In June, we forecasted the NZDUSD cycle bottom to be placed either in June or July around 0.6650. That time, we assumed that RBNZ remains OCR at 1.75% through 2019.
While in August meeting the forward guidance was more dovish than expected; as a result, NZD tumbles nearly 2.00% across the board. The lower cycle is going longer than we expected.

Two reasons for NZD weakness: The Reserve Bank delay rate hike for another year, and downgraded the growth outlook are the key concerns for the investors to sell NZD.

First, the Reserve Bank revised GDP outlook in the near-term quarterly growth from 0.8% to 0.5%. In the statement, Orr said, “The recent moderation in growth could last longer. Low business confidence can affect employment and investment decisions.”. Also said, “The risks to the growth outlook are to the downside.”

Second, the rate hike is delay for another year to Q3 2020. Delaying rate hike should leave NZD unfavorable. The Reserve bank said “The direction of our next OCR move could be up or down” post the August review the risk of “rate cut” has been increasing.

On top of these, the US-China trade war has been pricing in NZD. The Reserve bank acknowledged the impact on announced tariffs to NZ activity is expected to be limited. However, highlighted the risk “An intensification of existing trade tensions is currently the biggest downside risk for global economic activity.” The Reserve Bank also noted “Around 20 percent of New Zealand’s exports go to China and around 10 percent go to the United States. There could be additional spillovers to New Zealand through other countries in Asia, which have close trading links with China.”

On the domestic data front:

New Zealand economy was expanded by 0.5% in the Q1 2018, eased slightly after growth of 0.6% in the past two quarters. On an annual basis, the economy grew by 2.7%. Since Q1 2017 the economic momentum has been cooling, and we believe it is still not out of the wounds.

In the June 2018 quarter, the unemployment rate rose to 4.5 percent (up 0.1 percentage points) and the underutilisation rate rose to 12.0 percent (up 0.1 percentage points).
The CPI rose 0.4 percent in the June 2018 quarter compared with the March 2018 quarter.

FX reaction: Horrible start to the second half

The Kiwi dollar plummeting against most trade currencies, with NZDUSD dropped to 0.6600 overnight and AUDNZD outperformed, reached a high at 1.1175 (our forecast is 1.1100).

The cross NZDUSD is finally ready to depreciate further to 0.6550 and 0.6500-0.6470 initially, and in case of intensification of existing trade tensions could cut deeper to 0.6250-0.6200 it’s 161.8fe. Resistances seem to be at 0.6680, 0.6760 and 0.6820. We presume that there is a limited scope for NZDUSD to rise.

Revise Forecast: We push our forecast to 0.6500-0.6460. Selling NZD into corrective rallies.

AUDNZD: The relentless NZD selling has pushed the cross AUDNZD to 1.1175, completed its 100.0fe or A-B-C structure target (1.0650-1.09918-1.08410). In the near-term, resistance seems to be at 1.1200 its 200EA. Turning to higher time frames (weekly) the A-B-C structure is pointing to 1.1400 levels. Noting that, earlier triple top placed between 1.1300-1.1330. On the monthly chart, 200MA seems to be at 1.1570.

Please read the full article in our KTM blog.

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[KeyToMarketsUK]

KTM FX Weekly: The broader financial markets mood is cautious. Global economic calend

• IP for China, EA, and the US
• Retail sales for China, US, and the UK
• Labor market update for UK and Aussie
• CPI for UK, EA, and Canada

Headline risk remains on EM currencies, US-China trade war news and renew Turkey currency crisis news are the key drivers. The risk-off bias of the market typically favors JPY against MXN and ZAR. Besides, JPY crosses are under immense pressure as Turkey tensions detreated the traders’ confidence.

Traders should focus heavily on China data releases and Aussie labor market update in Asian-Pacific zone, besides UK related data risk events in Europe accompanying by US 3Q data releases. Escalating US-China Trade tensions and “No-deal” headlines have been remaining higher since past few weeks.

Asia:
China IP and Aussie labor market update are the key risk events investors will focus. In June Australia economy created 50,900. The Reserve bank said last week in the August meeting “Employment growth continues to be faster than growth in the working-age population. A further gradual decline in the unemployment rate is expected over the next couple of years to around 5 percent.” Whereas the central bank raises the concerns on wage growth “Wages growth remains low. This is likely to continue for a while yet, although the improvement in the economy should see some lift in wages growth over time.”

The Aussie traders are also remaining focus on the offshore headlines, i.e., escalating US-China trade tensions.

Europe:
It was quiet in the European data front, whereas the single currency hit by the Turkey crisis. The week ahead update to EA GDP and UK labor market update, CPI and Retail sales are the key risk event to the pound. We could see wild swings around the UK data releases. UK political risk and no-deal factors have dominated the price action in GBP in the past few days, and we expect the GBP is pricing the negatives.
The week ahead external factors will drive the euro, especially Turkey crisis.

US:
The dollar index (KTM: DXY) settled above the two-month range last Friday on the back of geopolitical concerns. The dollar dominion over the EM currencies extends this morning with TRY and ZAR dropped nearly 10% each. The week ahead we are actively focusing on July IP and Retail sales (Wed).

JPY crosses are under immense pressure as Turkey currency crisis spillover across the financial markets. In Asia, global equity markets are under pressure this morning with Hongkong, Malaysia, and Japan down 1.5% each, India down by 0.8% and the US futures are down by 0.60%.

As we forecasted in today’s morning note ZARJPY beaten down heavily.

With the currency crisis in Turkey, we expect the JPY remain elevated in the coming days, especially against the EM currencies MXN and ZAR. Read the full article on our KTM blog.

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[KeyToMarketsUK]

KTM EURUSD Weekly: Emotional roller coaster

A wild move in the EM currencies continues to migrate investors to safe havens.

The depth of Turkish Lira sell-off has raised the safe-haven demand for JPY, CHF, and USD. FX market and Global equity markets remained panicky at the start of the week with TRY and ZAR down another 10.00% each in early Asia bid on Monday. With the European bank’s exposure to Turkey, the EURUSD finally closed below the critical support levels.

Eur/crosses outlook: EURUSD holds the 200MA (Weekly), EURJPY pauses at the weekly pivotal 125.00, EURGBP rejected at the parallel resistance 0.9030 last week, down towards 20MA and EURCHF weekly pivotal finds between 1.1250-1.1200.

The week ahead: It was quiet in the European data front, whereas the single currency hit by the Turkey crisis. The week ahead update to EA GDP is the risk event we are watching, whereas we expect external factors will drive the euro, especially Turkey crisis.

FX Overview​

EURUSD has tested the 200MA (Weekly) on Monday’s Asia session and held as the day progress. However, we would be concerned if the price could not push and hold above 1.1535 over this week. The major was quiet during the European session with no significant moves, and the pair manages to keep the Asian low. A recovery back above 1.1535 still seems complicated, watch out instead for a new pull back to 1.1350-1.1300 support zone.

Weekly pivotal: 1.1350-1.1300 with resistance seems to be at 1.1430 above this 1.1500 exists.

Intra-week: Since the H4 oscillator has picked up and as the RSI study volatility has stabilized, the rally anticipated to the 1.1500 which was an earlier support now turned like a critical resistance, if well above Monday’s high.

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[KeyToMarketsUK]

KTM FX Daily: Wednesday FX focus

Sell-off in EM currencies paused overnight with TRY strengthen 8% and ZAR and MXN strengthen 1.30% each. The UST 10yr is firmer at 2.89%, and the dollar index (KTM: USDX) continued to settle above 96.00 and closed at a 14-month high.

Turning to commodities, Gold and Silver manage to hold Monday’s low 1191$ and 14.96$ respectively. Besides, Brent oil down nearly a percent. Overall another weeknight for commodities.

Elsewhere, Bitcoin fell to 5855$ but held the parallel support zone finds between 5630-5766$. Ethereum drifted to 243$, tested the 200EA (weekly).

Data review:

The German economy continues to grow in the 2Q 2018. The GDP rose 0.5% on the previous quarter;
UK unemployment rate fell to 4.0%; it has not been lower since December 1974 to February 1975;
Average weekly earnings increased by 2.4% including bonuses;
GDP rose by 0.4% in the EA during the 2Q of 2018;
The ZEW Indicator of Economic Sentiment for Germany recorded an increase of 11.0 points in August 2018 and now stands at minus 13.7 point.

What’s on today?

Data wise today’s Asian-pacific region main focus will be on the release of the Australia Q2 Wage Price Index. Moving to Europe UK CPI is the GBP key data risk event to watch out. Turning to the US, Retail sales and IP grabs the attention.

Australia Wage Index: We expect the index to pick up at 0.6% q/q. “Wages growth remains low. This is likely to continue for a while yet, although the improvement in the economy should see some lift in wages growth over time.” RBA Governor Lowe said on August policy review meeting;

UK CPI: We forecast 2.5% for headline CPI y/y vs 2.4%. In July, UK inflation stays at 2.4% from May 2018;

US Retail sales: We expect July Retail sales seen at 0.1% vs 0.5% last month.

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[KeyToMarketsUK]

KTM Commodity daily: More vibrations, worst than ever

Gold fell below the 61.8% fib reaction
Copper settle below 200ma (Weekly)
Brent marching towards 200MA
Silver@ 2017 July low

Commodities continue to weaken overnight beside the dollar index (KTM: DXY) was flattish at a 14-month high, and pause the rally at the 161.8% Fe (93.16-95.25-93.40).

Gold tumbled 1.70% overnight and hit a low of 1161$ (11.0am AEST) this morning. The price of yellow metal plunged to the lowest level Since Jan 2017 with down for a ninth week out of ten Since June high. The 1160$ and 1156$ levels are in focus for me this morning.

For Platinum, we are waiting for 735$-700$ in the coming days (KTM target).

Copper, Platinum, and Palladium are under severe led by weaker Chinese July economic data. China’s IP, fixed-asset investment, and retail sales were printed lower than expected. Overnight these metal pack down by 4.00%, 5.0% and 7.0% each and extend the losses in very thin liquidity in this during Asia session by 0.50%, 1.30%, and 1.10% each.

For Copper, we are waiting for 2.50$-2.40$

It is important to always keep in mind the risks involved in trading with leveraged instruments.

Have a question? Let us help!

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[KeyToMarketsUK]

KTM FX Daily: EURNOK strategy. Norges Bank-No rate hike signal in September

EURNOk rose from 9.5856 to 9.6550, up 0.70% backed by Norges Bank policy review.

As expected, Norges Bank’s Executive Board has decided to keep the key rate unchanged at 0.50%. According to the Executive Board’s assessment, the recovery in the Norwegian economy appears to continue in line with the picture presented in June. The underlying inflation is lower than the inflation target, but the driving forces indicate that it will gradually increase.

“The outlook and the risk picture did not seem to change significantly since the previous monetary policy report,” said central bank chief Øystein Olsen. We consider the policy review is in line with the market expectations.

In yesterday’s meeting, there were no clues for the September rate hike. Back in the June interim meeting, the Central bank indicated that the first rate hike would be in September.

Øystein Olsen, Governor of the Central Bank, said: “The outlook for the Norwegian economy indicates that it will soon be correct to raise the key rate.” Olsen also said, “As we look at the outlook and the risk picture, the key rate will most probably be set up in September this year.”

FX overview​

We tweeted technical short-term bullish forecast on the cross EURNOK following the double top pattern breakout. The price comfortably settles above the double top price pattern, as we expected.

The erosion of the 9.6210 thresholds is highly encouraging, on top of this the daily oscillator is remaining bullish. Based on these facts, we expect the cross sounds finally ready to test the resistances seems at 9.6850, 9.7000 and 9.7230. A break of these barriers would be needed to initiate the final move to 9.7475-9.7600 its 61.8% fib reaction.
The supports are at 9.5930 and 9.4900.

The flip side, selling pressure will remain strong if the cross close below 9.4890 with a new leg down to 9.3850 and 9.2200 in the coming weeks. The September rate hike will be the key driver to NOK bulls.

Upcoming Norges Bank meeting due on Sep 20 at 10.00am local time, followed by the Press conference at 10.30am.

Forecast: The Central Banks policy divergences favors selling on the rise strategy into the Norges September policy meeting. Thus, we forecast the cross EURNOK will face heavy-duty selling pressure at resistance levels (above) aiming at 9.5000, 9.3800 and 9.2000 in the coming months.

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[KeyToMarketsUK]

KTM FX Weekly: Traders should focus heavily on August preliminary PMIs. Global econom

RBA, FOMC and ECB meeting minutes
Flash PMIS for Japan, US, and EZ
Retail sales for NZ and Canada

Dollar rejected at 161.1fe last week, EURUSD held its major support at 1.1300, USDJPY held the 61.8% fib reaction, AUDUSD, and NZDUSD rose for the second day in a row.

The week ahead, August preliminary PMIs will be the will be the primary risk event is due. These surveys will reveal the economic condition in mid through the 3Q. RBA, FOMC and ECB meeting minutes are the other notable events for the week. Other data releases for the week include Retail sales for NZ and Canada accompanied by NZ Trade Balance. Besides, in the US we have durable goods due Friday. In Japan, our focus will be on the inflation report.

We don’t expect any new policy clues from RBA, ECB and FOMC minutes. Noting that, Trump’s 25% tariff rate on imports from China will come into effect on August 23rd.

News:

Kazem Gharib Abadi, Permanent Representative of Iran to the International Atomic Energy Agency (IAEA), will meet with OPEC Secretary General Barkindo and will tell Barkindo that ” Iran as an OPEC member, its oil exports, and production quotas cannot be deprived.” (Iranian media IRNA, Iranian Ministry of Oil website Shana), Wallstreetcn reported.

After the market hours on Friday, Turkey was downgraded by two major credit rating agencies. This morning USDTRY down 0.60%.

Checkout the KTM blog for downgrade news.

With the DXY near-term top (161.8fe of 93.16-95.25-93.40), we expect G10 currencies (especially AUD, CAD, and EUR against the USD) continue to rebound from its recent lows. We also assume further rallies anticipated for the euro crosses EURCHF and EURNOK.

Read the AUDUSD, EURUSD, EURCHF, and EURNOK forecasts in our blog

Chart of the week: USDCAD.

The cross-price action and the underlying study RSI has been capped. We expect further weakness is anticipated to 1.3000 and 1.2950 and even lower to 1.2850. Weekly pivotal finds at 1.3050 with resistance have seemed at 1.3120 and 1.3175.

Trade: Sell at 1.3120 stop loss slight above 1.3175 targets 1.3000 and 1.2950. The selling pressure accelerates once it closes below 1.3050.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM FX Weekly: EURGBP cruising into a new week with the Brexit headlines

The start of the week was a little quiet until President Trump one again accuses China and EU of currency manipulation, and he also criticizes the Fed to raise interest rates.
It was a quiet one for GBP overnight, mild bias higher against AUD, CAD, and USD by 0.30% each. However, the EURGBP remain neutral.
Brexit headlines and Political concerns are still pricing on the GBP. The week ahead, it will be quiet regarding economic data wise.

Data review:
UK unemployment rate dropped to 4.0%; it has not been lower since December 1974 to February 1975 (43 years);
Wage growth increased by 2.7% excluding bonuses, and by 2.4% including bonuses;
CPI 12-month rate was 2.5% in July 2018, up from 2.4% in June 2018;
In July 2018, retail sales increased by 0.7% when compared with the previous month, recovering from a decrease of 0.5% in June 2018

Data Preview:

The week ahead, it will be quiet regarding economic data wise. We are more focusing on Brexit headlines volatility. Brexit secretary will travel to Brussels on Tuesday to meet EU’s chief negotiator Michel Barnier to speed up the pace of Brexit talks.

FX overview​

The GBP has been capped in the past few weeks, regardless of the better unemployment rate and retail sales data out last week. GBP experience massive landslide in the past few weeks as the probability of a “no-deal” Brexit is on the toll. The GBP sentiment has pushed to an extreme bearish level since Oct 2016.

UK political risk and no-deal factors have dominated the price action in GBP in the past few days, and we expect the GBP is nearly priced in the negatives.
Looking at the EURGBP technical landscape, the price pattern behavior has not changed since last week.

Last week’s forecast: The euro cross traced out a near-term price top near 0.9030 in 2017-2018 via the formation of a double top pattern. The daily studies RSI and oscillator have been shifted bearish. The shift in sentiment indicates that rallies to resistance at 0.8970-0.9030 should attract selling interest, with substantial support finds at 0.8935, 0.8900 and 0.8840. Below here, the focus will move down to 0.8770 and 0.8730-0.8700. Confidence in a top will increases below 0.8895.

Potential threats remain between 0.9030-0.9080. We look to capitalize on these developments by suing moves to 0.9030-0.9070 as a selling opportunity, with a take profit at 0.8850. To limit the risk use, stop above 0.9080 on a weekly closing basis. A bullish break would see further run to 0.9130.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM FX Daily: EURUSD strategy update2

The USD has strengthened modestly on the Asia session overall, regains lost ground overnight.

The US dollar well bids in this Asian session against the G10 currencies. The euro added 0.45% to sell for 1.1550, erased overnight gains this morning.
Market participants are focusing US-China Trade talks. Trump’s 25% tariff rate on imports from China will come into effect on August 23rd 12.00am EDT.

Data wise, it is quiet regarding economic data in the Asian session. When it comes to Europe, August preliminary PMIs on the schedule. These surveys will reveal the economic condition in mid through the 3Q.

July Flash PMI survey data indicated that the Eurozone economy starts the third quarter on a softer footing. According to flash reading “Eurozone Composite PMI fell to 54.3 from 54.9 in June. The latest reading was the second weakest since November 2016, only narrowly beating May’s recent low.” IHS Markit reported.

In case of easing trade tensions between the world’s two largest economies US and China, global risk sentiment should further improve. EURJPY and EURCHF relatively exposed to risk sentiment.

FX overview​

EURUSD is likely to find the support between 1.1530-1.1500 levels, currently trading at 1.1560. The price has surged more than 2.5% from last week’s low but would still need to rose another 1.20% to erase all of the monthly losses and is necessary to rose more another 2.0% to erases all the YTD losses.
The two-day technical landscape has turned neutral. Especially last weeks “Doji morning star” candle pattern and RSI divergence developments have pushed the weekly bar higher to 1.1610 from 1.1500.

Ahead of today’s PMI surveys (EA and US) pivotal intraday spread between 1.1530-1.1490 below here 1.1445 and 1.1390 exists. From Jan-Feb high’s the euro completed the 5wave decline.

Read EURUSD strategy in our blog

We expect the current rally has completed the impulse wave a. Now we are retracing back, marked as wave b either 1.1530-1.1490 or 1.1400-1.1370. Finally, another impulse wave c we forecast at either 1.1700 or 1.1780 its 38.2% fib reaction.

Beyond today, there will be focus annual Jackson Hole Symposium(Fri).

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[KeyToMarketsUK]

KTM FX Daily: USDJPY park the brake at the 50.0% fib reaction

USDJPY manages to hold the 38.2% fib reaction (104.60-113.17 rally) earlier this week. Since the daily oscillator has picked up and as the daily volatility has stabilized, further rally is anticipated if the condition is satisfied.

Condition: USDJPY sounds finally to retest the resistances seems between the 50.0% fib reaction (113.17-109.77 fall) and 111.65 prior swing low. A break above this barrier would be needed to initiate a more pronounced recovery to 111.90 and 112.30.

Else: Could retrace back to the supports are at 111.00 and 110.50.

Into the Friday US session, market participants shifted focus to Jackson’s Hole economic conference.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (Aug 27-31)

• US Q2GDP, Canada GDP
• German Ifo Business climate and EA CPI

The week ahead, the second release of Q2GDP will be the primary risk data release. Besides, the German Ifo business climate and CPI numbers come from EA. Turning to Asia-Pacific, ANZ Business Confidence and Aussie Private Capital Expenditure will be in focus accompanied by China Manufacturing PMI.

We expect Q2GDP growth (second estimate) to revise down to 4.0% from 4.1%. The recent Flash U.S PMI suggested Private sector output growth loses momentum in August. “Some of the slowdown can be attributed to supply shortages: jobs growth in manufacturing and services is being restricted by a lack of available workers, while factories are also constrained by a lack of raw materials, sometimes blamed on ‘panic-buying’ of safety stocks as well as a lack of transportation to ship goods around” Chris Williamson, Chief Business Economist at IHS Markit said.

In the EA, inflation is expected to be steady at 2.1%. The EA annual inflation rate was 2.1% in July 2018, up from 2.0% in June 2018.

In China, traders will focus on official PMIs.

As we noted in last week’s article, G10 currencies strengthened against the dollar with EUR up by 1.60%, GBP up 0.8% and AUD up 0.20%.
Besides, on a weekly basis JPY crosses elevated as the risk sentiment improved, with EURJPY up by 2.30%, followed by CHFJPY 2.0%, GBPJPY 1.50%, CADJPY and AUDJPY up 0.90% each and USDJPY up 0.70% respectively.

Chart of the week: EURUSD. Buy the dip
Bullish H&S spotted on EURUSD. The erosion of the 1.1625-1.1630 thresholds is highly encouraging. A break of these would be needed to initiate a more pronounced recovery to our target 1.1770.

Weekly range: 1.1770-1.1500
The weekly range has been run higher from 1.1300-1.1550 to 1.1500-1.1630 last week. Currently, the bar has run further higher to 1.1500-1.1790.
Weekly pivotal finds between 1.1530-1.1490 vs 1.1350-1.1300 last week.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.​

 

[KeyToMarketsUK]

KTM FX Daily: EURUSD strategy update

• The return of USD weakness, which should allow G10 FX to perform better continuation from the last week.
• Fed Chair Powell’s speech at Jackson Hole sparkled the bullish bets on the euro
• We continue to expect more euro gains in the near-term
• The last week’s change in EURUSD saw the biggest move since Feb 2018. We are maintaining an upward trajectory back towards the target; we set last week.

Data review:
• Flash EZ Manufacturing PMI at 54.6 from 55.1 in July, 21-month low
• Flash EZ Services PMI Activity Index at 54.4 from 54.2 in July, 2-month high
• The ifo Index rose to 103.8 points in August after 101.7 points in July. Business confidence in German firms has improved noticeably, according to Ifo Institute.

Data preview:
Wednesday we have US Q2 GDP, and Friday has EA CPI flash estimate. We expect Q2GDP growth (second estimate) to revise down to 4.0% from 4.1%. The recent Flash U.S PMI suggested Private sector output growth loses momentum in August.
Besides, in the EA, inflation is expected to be steady at 2.1%. The EA annual inflation rate was 2.1% in July 2018, up from 2.0% in June 2018.

FX Overview​

EURUSD has rebounded nearly 3.5% from mid-August low and just has been completed our first target, we set the other week. The combination of two technical factors supported the euro for past two weeks, i.e., RSI divergence and Doji Morning Star. Besides the dollar index (KTM: USDX) lost 50MA and moving to our target, we set yesterday.

Supports are at 1.1650, 1.1590 and 1.1530.

Forecast: We remain BULLISH as we continue to study the action. As we forecasted last week, the price gave a bullish close above the neckline. As per the given pattern, we revise the price target to 1.1850 from 1.1790.

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[KeyToMarketsUK]

KTM FX Daily: USDCHF strategy. Near-term downside may be limited

USDCHF may be running into an area of support defined by the following:

Back to the 17-month descending trendline
Retested and held the 200MA at 0.9740
Earlier swing low finds at 0.9735 coincide with 200EA(weekly)
The 14MA (monthly) finds at 0.9720, coincides with 38.2% fib reaction
On the H4, the A-B-C corrective structure of 0.9980-0.9800-0.9865 pointing to 0.9690.

In addition, the daily RSI study is at 30.00. An RSI study of 30 or below indicates an oversold condition. Whereas, the other underlying indicators RVI study is remaining bearish.

Based on the above information, we expect USDCHF near-term downside may be limited 0.9745-0.9690.

If the price respects the support zone, we could expect a decent rally to 0.9860,0.9900 and 0.9980. The erosion of the 0.9800 is highly encouraging the bulls. A break of this would be needed to initiate a more pronounced recovery to 0.9860 and to 0.9960.

Else caution will be ordered; if the pair does not rebound on these last levels 0.9700-0.9690, this would point a new downward wave towards 0.9630-0.9600 and 0.9525-0.9500 it’s 61.8% fib reaction.

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[KeyToMarketsUK]

KTM FX Daily: AUDNZD trade strategy

• GBP spikes are more than a percent on the latest positive Brexit headlines.
• AUD weaken further on the back of the news of Westpac to raise mortgage rates.
• US GDP increased at an annual rate of 4.2% in the Q22018.

G10 Block: Pound is the winner with 1.15%, followed by CHF 0.50%. Besides AUD lost 0.50% and JPY lost 0.40% overnight.

Commodities: Oil prices on top gear, up by 2.0%. Upside pressure remains on
Palladium up 2.5% and Platinum up 1.00%.

Crypto: Bitcoin down a percent but settles above 7k.

Review:
The 1-day change in GBPUSD was the most significant move since Mar 2018. The latest positive Brexit headlines are supportive to the pound overnight. Brexit negotiator Michel Barnier said The EU is prepared to offer Britain a trade deal unlike any it has ever offered another country, The Guardian reported.
“We are prepared to offer a partnership with Britain such as has never been with any other third country,” the negotiator told reporters following a meeting with the German foreign minister in Berlin.

The Australian dollar is down by 0.50% against USD on the news, Westpac to raise its variable home loan rates. It is the first bank to raise mortgage rates by 14bps to 5.38%.
“This is a difficult decision. Any time we are affecting people’s cost of living, it is something that we take very seriously, but we borrow the money to fund people’s home loans, and the cost has gone up,” Westpac CEO Mr. Brian Hartzer said, News.com.AU reported.

The dollar index was little down 0.15%. GDP increased at an annual rate of 4.2% in the 2Q of 2018, according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.2%.

What’s on today?
NZ Business Confidence and Aussie Private Capital Expenditure come out this morning in Asia-Pacific. We are focusing on AUDNZD.
In Europe, Prelim CPI for Germany and Spain comes out, not a market mover though. Turning to the US, the calendar is empty. CAD responds to the GDP data.

FX overview​

AUDNZD: Two-day forecast

Selling pressure remains very strong, a descending channel is still in evidence in the daily chart, while the daily studies RSI and the oscillator are staying bearish. Under these, conditions a recovery back above 1.10 seems difficult. Watch out instead for a further pullback towards 1.0770-1.0750 levels its 61.8% fib reaction.
Ahead of today’s data events, 1.0840-1.0830 is pivotal its 50.0% fib reaction. A break and sustain below here needed to retrace further.

Resistance seems to be at 1.0900, 1.0950 and 1.0990-1.1000.

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[KeyToMarketsUK]

KTM FX Daily: Selling pressure remains strong on AUDUSD

Selling pressure remains very strong, this week AUD down range between 1.75%-0.05% against most-traded currencies.

On the final day of the month, the AUD declines 0.20% against the GBP and CHF and 0.15% against USD and JPY (11.10AM AEST).

The Chinese August PMI data just has been hit the wires; we understand the manufacturing industry continued a steady expansion. China’s Federation of Logistics and Purchasing and the National Bureau of Statistics Service Industry Research Center released that, August Official Manufacturing PMI was 51.3 a slight increase of 0.1 percentage point from July.

• August manufacturing PMI was 51.3 expected to be at 51 vs. 51.2
• Non-manufacturing PMI was 54.2 expected to be at 53.8 vs. 54.

Week ahead: Caution is creeping into the market as market participants are focusing on a how the new round of US tariffs on $200billion worth of Chinese goods could change the Yuan and Aussie dollar landscape.

In anticipation of RBA to leave the interest rates changed at 1.50% in next week’s meeting, we forecast the AUDUSD will remain between 0.7200-0.7380 levels.

In addition, next week’s 2Q GDP will be the key risk event along with the US tariffs headlines.

FX: Selling pressure remains strong, a descending channel is still in evidence in the daily chart.

Markets have become overly bearish on AUD after Westpac Bank raise the variable home loan rates. It is the first bank to raise mortgage rates by 14bps to 5.38%.

Supports are at 0.7240 and 0.7200. Below here, 0.7160-0.7140 its earlier swing lows and 0.7100 exists its 78.6 fib reaction of 0.6825-0.8135 rally. Note that the 161.8 fe of the A-B-C corrective structure pointing to 0.7130. Overall, between 0.7200-0.7100 the top-tier support grabs the eyeballs. Resistance seems to be at 0.7315 and 0.7365-0.7385.

If the cross manages to hold the 0.7200 levels, we could expect a short-term recovery to 0.7315 and 0.7350 levels. The erosion of the thresholds 0.7365 its 50MA is highly encouraging the sellers to square-off.

FX positioning: Month-end flows to be strong USD selling across the board, FX Strategist Jennifer Hau at Credit Agricole reported in a note to clients

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (Sep 03-07)

• Central bank meetings for RBA and BOC
• PMI surveys for UK, EA, and the US
• 2Q GDP data for EZ and Australia
• US non-farm payrolls

The weak head, August PMI data, and US non-farm payrolls are the highlights. It seems economic data should drive the FX technical landscape in the G10 block.

Turning to the central bank meetings, we expect the RBA and BOC to leave the interest rates unchanged. We also hope the AUD and CAD titled to the downside risk ahead of the monetary policy and economic data risk.

Macroeconomic event highlights are 2Q GDP for EZ and Australia. Besides, August PMI surveys will gauge the trade war damage. Finally, the week is going to end with the US non-farm payrolls. We expect the data from the US continue to show a healthy labor market. We also expect unemployment to remain steady at 2.8% YoY basis, the unemployment rate likely to decline to 3.9% and the payroll gain above 200k. We are more focusing on wage growth.
Payroll numbers increased at the slowest pace since June 2017, IHS Markit reported.

This morning Australia August retail sales and China August Manufacturing PMI data hit the wires. Turning to Europe today, August PMI data is the catalyst for EURUSD. Elsewhere, the Public holiday in the US makes the silent start to a heavy duty week.

• Australian retail turnover was relatively unchanged (0.0 percent) in July 2018, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures.
• China’s August manufacturing PMI printed at 50.6; a 14-month low is expected to be 50.7 vs. 50.8.

Caution is creeping into the market as market participants are focusing on a how the new round of US tariffs on $200billion worth of Chinese goods could change the Yuan and Aussie dollar landscape.

Chart of the week: AUDUSD
Please read the technical forecast on KTM blog

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[KeyToMarketsUK]

KTM FX Weekly: EURUSD maintains a near-term top, enters a consolidation phase

The weak head, August PMI data, and US non-farm payrolls are the highlights. Concern over Italy’s fiscal plan and August non-farm payrolls are the catalysts for EURSUD.

Euro traders are monitoring closely to Italy’s political leaders meeting on Tuesday for initial talks on the budget deficit.

According to the latest estimates by the European Commission, Italy’s budget balance would be around -1.7% GDP this year and stabilize at that level in 2019 without any policy changes. Given the loss of economic momentum, these estimates would probably have to be revised to closer to -2.0%, ABN Amro economists reported.

Data review:

EA annual inflation is expected to be 2.0% in August 2018, down from 2.1% in July 2018, according to a flash estimate from Eurostat;
Spain Manufacturing PMI up to 53.00 from 52.9 in July;
Italian Manufacturing PMI weakens to 50.0 from 51.5 in July;
Germany Manufacturing PMI falls in August to 55.9 down from 56.9 in July;
EZ Manufacturing PMI unchanged at 54.6 (Flash: 54.6, July Final: 55.1).

Data preview:

Looking through the EZ risk factors, Italy is gathering the steam over the budget deficit. We understand that Italy’s manufacturing sector eased towards stagnation during August.

“Unless we see a pick-up in demand – be it from at home or abroad – the recent trends in the data raise the spectre of the sector tipping into technical recession during the second half of 2018,” Paul Smith, Economics Director at IHS Markit said.

Italian and Germany 10-year bonds rose on Monday on concern about the government’s fiscal plan. The spread between Italian 10-year bonds and similarly dated German bunds has traded near its widest in five years in recent sessions, Bloomberg reported.

EURUSD to re-correlate with the 10y BTP-Bund spread and leave room for downside in the single currency on any negative surprise, Barclays reported in a note to clients.

Data risk: We expect the data from the US continue to show a healthy labor market. We also expect unemployment to remain steady at 2.8% YoY basis, the unemployment rate likely to decline to 3.9% and the payroll gain above 200k. We are more focusing on wage growth.

Payroll numbers increased at the slowest pace since June 2017, IHS Markit reported.

FX Overview​

Weekly pivotal finds at 1.1550 below here 1.1530 and 1.1500 exists. A break below the support zone 1.1530-1.1500 would erase our earlier bullish EURUSD view. In this case, 1.1450 is the initial destination or EURSUD.

The EURUSD enters into a consolidation phase. For intraday, a level to watch is 1.1585 below here 1.1550, and 1.1530-1.1500 exists. Last week the price has tested and held the resistance 1.1745.

Ahead of the macroeconomic data risk 1.1530-1.1500 is an exciting place to watch carefully. A break below this support zone would erase our earlier bullish EURUSD view.

Bulls will regain the intraday strength only above 1.1630. In this case, 1.1650 and 1.1690/1.1700 are the immediate targets, followed by 1.1730 and 1.1770.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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