Forex News and Events
Swiss KOF indicator reached 3-year low
After a slight uptick in May, KOF leading indicator dropped to 89.66 in June, its lowest level since December 2011. The highly resilient Swiss economy is clearly feeling the consequences of a strong Swiss franc and the economic outlook does not look great. In addition, the Greek situation is also weighing on the Swiss franc, as investors shun risk and flee to safe-havens. Yesterday in Bern, the SNB declared that it had intervened in the currency market on Sunday night to stabilise the Swiss franc amid Greek deadlock. Thomas Jordan refused to give details about the scale of the intervention, but we believe it wasn’t a massive intervention, as the SNB has remained moderately active in the FX market lately. Indeed, sight deposits increased by a weekly average of CHF634mn during the month of June, compared to CHF1,368mn in May and CHF882mn in April. Despite the SNB’s willingness to reduce traders’ interest for Swiss franc by intervening in the foreign exchange market, the CHF will remain in demand as long as the long-term situation does not improve substantially in Eurozone, and we are not talking only about the Greek situation. We expect EUR/CHF to trade sideways and to remain within the 1.0250-1.05 range.
U.S. puts Iran under pressure
In Vienna, negotiations are taking place between Iran and the United States over a nuclear deal. International inspections of Iranian military facilities represent a major issue. John Kerry, U.S. Secretary of State, is looking to complete an agreement that would restrict Iran nuclear activity. The United States is growing impatient that Iran claims its nuclear program is only intended for peaceful purposes.
Thus, Iran must provide guarantees, and economic sanctions will be lowered and even removed. However, it may take up to ten years for international inspectors to make sure that Iran complies with their pledge. Therefore, Iran is putting all its effort into reducing this timeframe. In addition, Israel adds even more pressure stating that a nuclear deal would be irrelevant. In other words, Iran would still be a threat.
Earlier this month, following the OPEC meeting, Iran has reiterated that despite falling prices, it will sell more crude oil in case the sanctions are lifted. As a result, oil price has been pushed downside and we target the brent to reach $63 a barrel on the medium-term.
USD/JPY - Bearish Momentum Is Increasing
Today's Key Issues Country / GMT May Unemployment Rate, exp 11.10%, last 11.10% EUR / 09:00 Jun CPI Estimate YoY, exp 0.20% EUR / 09:00 Jun P CPI NIC incl. tobacco MoM, exp 0.10%, last 0.20%, rev 0.10% EUR / 09:00 Jun P CPI NIC incl. tobacco YoY, exp 0.10%, last 0.20%, rev 0.10% EUR / 09:00 Jun A CPI Core YoY, exp 0.80%, last 0.90% EUR / 09:00 Jun P CPI EU Harmonized MoM, exp 0.10%, last 0.20% EUR / 09:00 Jun P CPI EU Harmonized YoY, exp 0.20%, last 0.20% EUR / 09:00 May PPI MoM, last -0.30% EUR / 10:00 May PPI YoY, last -3.10% EUR / 10:00 May Fiscal Deficit INR Crore, last 127523 INR / 10:30 May Trade Balance Rand, exp -3.2B, last -2.5B ZAR / 12:00 May South Africa Budget, exp -21.75B, last -41.44B ZAR / 12:00 May PPI Manufacturing MoM, last 0.31% BRL / 12:00 May PPI Manufacturing YoY, last 5.63% BRL / 12:00 Apr GDP MoM, exp 0.10%, last -0.20% CAD / 12:30 Apr GDP YoY, exp 1.50%, last 1.50% CAD / 12:30 Jun ISM Milwaukee, last 47.7 USD / 13:00 Apr S&P/CS 20 City MoM SA, exp 0.80%, last 0.95% USD / 13:00 Apr S&P/CS Composite-20 YoY, exp 5.50%, last 5.04% USD / 13:00 Apr S&P/CaseShiller 20-City Index NSA, last 175.2 USD / 13:00 Apr S&P/Case-Shiller US HPI MoM, last 0.12% USD / 13:00 Apr S&P/Case-Shiller US HPI YoY, last 4.14% USD / 13:00 Apr S&P/Case-Shiller US HPI NSA, last 168.03 USD / 13:00 May Primary Budget Balance, exp -7.0B, last 13.4B BRL / 13:30 May Nominal Budget Balance, exp -55.3B, last 11.2B BRL / 13:30 May Net Debt % GDP, exp 33.80%, last 33.80% BRL / 13:30 Jun Chicago Purchasing Manager, exp 50, last 46.2 USD / 13:45 Jun Consumer Confidence Index, exp 97.4, last 95.4 USD / 14:00 May Eight Infrastructure Industries, last -0.40% INR / 22:00
The Risk Today
EUR/USD EUR/USD has decreased from the hourly resistance at 1.1278 (29/06/2015 high). Stronger resistance lies at 1.1436 (18/06/2015 high). Hourly support is given at 1.0868 (28/05/2015 low). We expect the pair to stabilize below 1.1100. In the longer term, the symmetrical triangle from 2010-2014 favors further weakness towards parity. As a result, we view the recent sideways moves as a pause in an underlying declining trend. Key supports can be found at 1.0504 (21/03/2003 low) and 1.0000 (psychological support). Break to the upside would suggest a test of resistance at 1.1534 (03/02/2015 reaction high).
GBP/USD GBP/USD is still trading between the hourly resistance at 1.5930 (18/06/2015 high) and 1.5626 (17/06/2015 low). We expect the pair to challenge the resistance at 1.5930. In the longer term, the technical structure looks like a recovery bottom whose maximum upside potential is given by the strong resistance at 1.6189 (Fibo 61% entrancement).
USD/JPY USD/JPY is consolidating below the support at 122.46 (10/06/2015 low). Hourly resistance can be found at 124.62 (10/06/2015). We expect to gain momentum to reach back the resistance at 124.62. Key resistance still lies at 135.15 (14-year high). A long-term bullish bias is favored as long as the strong support at 115.57 (16/12/2014 low) holds. A gradual rise towards the major resistance at 135.15 (01/02/2002 high) is favored. A key support can be found at 118.18 (16/02/2015 low).
USD/CHF USD/CHF is heading toward the hourly resistance at 0.9433 (05/06/2015 high). Stronger resistance can be found at 0.9573 (28/06/2015 high). Hourly support can be found at 0.9151 (18/06/2015 low). We expect the pair to test the resistance at 0.9503. In the long-term, there is no sign to suggest the end of the current downtrend after failure to break above 0.9448 and reinstate bullish trend. As a result, the current weakness is seen as a counter-trend move. Key support can be found at 0.8986 (30/01/2015 low).
