Focus: Interest Rates Of Europe, UK And Australia

After the disappointment as the GDP fell to 0.1% in the fourth quarter of 2012, the United States is facing this week some indications that might move the currency market. Among the most important macro data, we would highlight the non-manufacturing ISM on February 5th and the trade balance on February 8th. As for what concerns EUR/USD, we are waiting to know if the first week of February will confirm a return below 1.349, otherwise the view will be a bullish one with target 1.39.

The time of central banks

The week will conclude in Europe with the meeting of the most important central banks on February 7th: The Bank of England and the ECB. Before this, the data on producer prices in the euro zone (February 4th), retail sales and PMI services (February 5th), German factory orders (February 6th), German and English industrial production (February 7th) will be published.

Crucial moment for the Australian Dollar

It is going to be a week full of events for Australia. First of all, the trade balance on February 5th; on the same date, home prices will be published, but most of all, the RBA decision on interest rates, currently at 3%. Afterwards, on February 6th, retail sales and lastly, the unemployment on February 7th. The feeling we have at the moment is that the market is gradually abandoning the AUD theme and that, in perspective, a strong weakness could involve the oceanic currency.

Let’s look at two graphs that may provide some clear answers. The first one is the EUR/AUD one. We can notice an evident formalization of a bullish head and shoulder where the theoretical target turns out to be 1.41. In order to point to this target, the market will have to overcome the obstacle of 1.31. Above this resistance there will be many doubts about the opportunity of selling AUD.


The second graph, instead shows us the even more apparent structural weakness of the Aud. The comparison is in fact made with its cousin NZD. The cross AUD/NZD has in fact formalized a quite large bearish head and shoulder which started in 2010. The last break below the neck line 1.36 actually opens the door to much more substantial reductions that could push AUD/NZD down to 1.20 in the coming months. For this reason we open the following trade:


Selling Nok

Our consideration has a purely technical nature, but the January closure of EurNok actually formalizes a bullish engulfing pattern on a monthly scale. This event is to be added to the closure of a classical final diagonal wave 5. The 12 months moving average represents the last resistance before a bullish move that might rise up 7.70. For this reason, we open the following trade:


BRICS

Here are the macroeconomic indications coming from the emerging countries. China: Not Manufacturing PMI (government) February 3rd - Not Manufacturing PMI (HSBC)
February 5th - Inflation, trade balance and M2 (February 8th)
Brazil: Trade Balance (February 4th ) - Inflation (January 7th )
South Africa: vehicle sales (February 4th ) - Industrial production (February 7th )
Russia: inflation (February 5th )

LAST TRADES – COMMENT

There is not much to say on XAU/USD, still steady in its trading range. Unfortunately there has been a stop on the EUR/USD change that has overcome the resistance 1.349. Positive trend for EUR/TRY that is confirming our forecasts. Positive the entrance on GBP/AUD, while USD/MXN is still not so eventful.