Eyes on today German ZEW data and U.S. Building Permits. The focus for this week is, on the one hand, the Fed's policy meeting of tomorrow and, on the other hand, ECB President Draghi’s speeches scheduled next days.
Markets are now pricing in a more than 50 percent chance of a Fed hike by the end of the year, up from only around a 40 percent chance less than a week ago.
During his last ECB Press Conference, President Draghi said that growth forecasts for the Eurozone will keep on the good pace though inflation is doing worse than expected. Growth projections were made considering EUR/USD at1.18 level (the current or higher levels are considered due to excessive volatility and this is considered to be slowing down CPI measures) and in October some clearer actions will be taken in order to push inflation upwards (possibly by monitoring EUR/USD and reducing overshooting in EUR currency levels).
Increasing wages (under solid Employment Change figures) and improving Trade Balance are the latest good news for the EUR.
The greenback regained strength after Paul Ryan (U.S. House of Representatives Speaker) said that a tax plan is set to be released next days and after Trump succeeded to raise the debt ceiling.
On the other hand, last U.S. industrial and manufacturing production unexpectedly fell in August and U.S. producer price inflation increased less than expected. In addition, the U.S. Commerce Department said last retail sales change was surprisingly negative.
If 1.1856 will be clearly violated then we see room down to the next Support area (1.176). In the opposite case, 1.20 area will be definitely violated and we see room up to 1.21 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 2012:
Weekly Trend: Overbought
1st Resistance: 1.1990
2nd Resistance: 1.2080
1st Support: 1.1856
2nd Support: 1.1756
EUR
Recent Facts:
7th of May, French Elections
Centrist pro-EU Macron Won French Elections
12th of May, German GDP (Preliminary release)
As Expected
16th of May, Eurozone GDP (Preliminary release) + Trade Balance + ZEW Economic Sentiment
Better than Expected
17th of May, Eurozone CPI
As Expected
23rd of May, German Manufacturing PMI
Better than Expected
30th of May, German CPI (Preliminary release)
Worse than Expected
31st of May, German Unemployment Change + Eurozone CPI (Preliminary)
German Unemployment Change better than Expected (for the 8th time in a row), Eurozone CPI Worse than Expected
1st of June, German Manufacturing PMI
Slightly Better than Expected
8th of June, GDP, Interest Rate Decision + ECB Press Conference
GDP Better than Expected, ECB moving closer to an exit from its stimulus program
13th of June, French Non-Farm Payrolls
Better than Expected
13th of June, German Zew Economic Sentiment
Worse than Expected
23rd of June,
German Manufacturing PMI Better than Expected
German Services PMI Worse than Expected
Eurozone Manufacturing PMI Better than Expected
Eurozone Services PMI Worse than Expected
26th of June, German Ifo Business Climate
Better than Expected
29th of June, German CPI
Better than Expected
30th of June, German Unemployment Change + Eurozone CPI
German Unemployment Change Better than Expected, Eurozone CPI higher than Expected
3rd of July, German Manufacturing PMI
Better than Expected
5th of July, French Services PMI + German Services PMI + Eurozone Retail Sales
Better than Expected
18th of July, German ZEW Economic Sentiment
Worse than Expected
24th of July, German Manufacturing PMI + Eurozone Manufacturing PMI + Eurozone Services PMI
Worse than Expected
28th of July, German CPI
Better than Expected
31st of July, Eurozone CPI (Preliminary) + Unemployment Rate
Eurozone CPI (Preliminary) as Expected, Unemployment Rate Better than Expected
1st of August, German Manufacturing PMI + Unemployment Change
Worse than Expected
15th of August, German GDP (Preliminary release)
Worse than Expected
17th of August, Eurozone CPI
As Expected
22nd of August, German ZEW Economic Sentiment
Worse than Expected
23rd of August, German Manufacturing PMI
Better than Expected
25th of August, German Ifo Business Climate
Better than Expected
31st of August, German Unemployment + CPI (Preliminary release)
German Unemployment Worse than Expected, CPI Better than Expected
1st of September, Manufacturing PMI
Worse than Expected
7th of September, ECB Press Conference
Draghi said that growth projections were made considering EURUSD @1.18 level (the current or higher levels are considered due to excessive volatility and this is considered to be slowing down CPI measures) and in October some clearer actions will be taken in order to push inflation upwards (possibly by monitoring EURUSD and reducing overshooting in EUR currency levels).
13th of September, Eurozone Employment Change
Better than Expected
15th of September, Eurozone Wages, Trade Balance
Better than Expected
18th of September: Eurozone CPI
As Expected
Eyes on today release: German ZEW Economic Sentiment, German ZEW current conditions
USD
Recent Facts:
13th of June, Producer Price Index
Core PPI (ex food and energy) Better than Expected
14th of June, CPI + Retail Sales
Worse than Expected
14th of June, FOMC Interest Rates Decision + Statement
Interest Rate hike as Expected (to 1.25%)
23rd of June, Manufacturing PMI
Worse than Expected
26th of June, Durable Goods Orders
Worse than Expected
28th of June, Pending Home Sales
Worse than Expected
29th of June, U.S. GDP + U.S. Job Market
GDP Better than Expected, Job claims slightly worse than expected
3rd of July, ISM Manufacturing PMI
Better than Expected
5th of July, FOMC Minute Meeting
U.S. Federal Reserve members insisted that expectations are that inflation will rise to 2% target in 2019
6th of July, ADP Nonfarm Employment Change + ISM Non-Manufacturing PMI
ADP Nonfarm Worse than Expected, ISM Non-Manufacturing Better than Expected
7th of July, Nonfarm Payrolls + Unemployment Change
Nonfarm Payrolls Better than Expected, Unemployment Change Worse than Expected
13th of July, PPI
Better than Expected
14th of July, U.S. Core Retail + U.S. CPI
Worse than Expected
20th of July, Philadelphia Fed Manufacturing Index
Worse than Expected
25th of July, Conference Board Consumer Confidence
Better than Expected
27th of July, Core Durable Goods Orders
Worse than Expected
28th of July, U.S. GDP (Preliminary release)
As Expected
1st of August, ISM Manufacturing PMI
Slightly Worse than Expected
2nd of August, ADP Nonfarm Employment Change
Worse than Expected
3rd of August, ISM Non-Manufacturing PMI
Worse than Expected (at the lowest since October 2016)
4th of August, Nonfarm Payrolls + Unemployment Rate
Job Market Better than Expected
8th of August, Job Openings
Better than Expected
10th of August, PPI
Worse than Expected
11th of August, U.S. CPI
Worse than Expected
15th of August, U.S. Core Retail Sales
Better than Expected
23rd of August, Manufacturing PMI and New Home Sales
Worse than Expected
29th of August, CB Consumer Confidence
Better than Expected
30th of August, ADP Nonfarm Employment Change + GDP
ADP Nonfarm Employment Change Better than Expected, GDP relevantly better than expected
1st of September, U.S. Nonfarm Payrolls + Unemployment rate
Worse than Expected
1st of September, ISM Manufacturing
Better than Expected
6th of September, ISM Non-Manufacturing PMI
Worse than Expected
13th of September, PPI
Worse than Expected
15th of September, Retail Sales
Worse than Expected
15th of September, Manufacturing Production + Industrial Production
Worse than Expected
Eyes on today release: Building Permits
Last Carney’s speech was about monetary policy that may have to "move in order to stand still" due to possibility that global equilibrium interest rates are rising. De-integration effects of Brexit are likely to be inflationary but any rate hikes are expected to be gradual and limited.
He added that any loss of trade openness with EU after Brexit is unlikely to be immediately compensated by ties with new partners.
The Fed is seen likely to announce a plan to start shrinking its balance sheet. Markets are now pricing in a more than 50 percent chance of a Fed hike by the end of the year, up from only around a 40 percent chance less than a week ago. The dollar rose following strong gains in U.S. treasury yields amid rising expectations that the Federal Reserve will reaffirm its plan to hike rates at least once this year.
Brexit slowing negotiations (the fourth round of Brexit negotiations, scheduled for September 25, nears and the volume of complaints coming from the financial services sector regarding the lack of progress is growing), terroristic attacks and upcoming German elections are undermining the volatile bullish stamina of the GBP.
As we previously wrote, 1.36 is a definitive very strong Resistance as GBP is overbought: 1.3460 under test and now eyes on USD.
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: 1.3610
2nd Resistance: 1.3670
1st Support: 1.3460
2nd Support: 1.3362
GBP
Recent Facts:
11th of May, UK Manufacturing Production + Trade Balance + BoE Interest Rate Decision
Manufacturing Production + 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
16th of May, UK CPI (Inflation data)
Higher than Expected
17th of May, UK Job Market
Worse than Expected
18th of May, Retail Sales
Better than Expected
25th of May, GDP (Preliminary)
Worse than Expected
1st of June, UK Manufacturing PMI
Slightly Better than Expected
2nd of June, Construction PMI
Better than Expected (Highest level since February 2016)
5th of June, UK Services PMI
Worse than Expected
8th of June, UK General Elections
British Prime Minister Theresa May's Conservative Party lost its parliamentary majority in a general election, throwing the country's politics into turmoil and potentially disrupting Brexit negotiations.
9th of June, industrial production + manufacturing production
Worse than Expected
13th of June, UK CPI
Higher than Expected
14th of June, UK Job Market
Claimant Count Change Better than Expected, Average Earnings Index Worse than Expected
15th of June, Retail Sales
Retail Sales Worse than Expected,
20th of June, BoE Gov Carney Speech
Carney ruled out imminent rate hikes, warning of weak wage growth and a likely hit to incomes as Britain prepares to leave the European Union.
30th of June, GDP
UK GDP as Expected, with improving Current Account
3rd of July, UK Manufacturing PMI
Worse than Expected
4th of July, Construction PMI
Slightly Worse than Expected
5th of July, Services PMI
Slightly Worse than Expected
7th of July, Manufacturing Production
Worse than Expected
12th of July, UK Job Market
Better than Expected
18th of July, CPI
Worse than Expected
20th of July, UK Retail Sales
Better than Expected
26th of July, UK GDP release (Preliminary)
As Expected
1st of August, Manufacturing PMI
Better than Expected
2nd of August, Construction PMI
Worse than Expected (at the lowest since October 2016)
3rd of August, Services PMI
Better than Expected
10th of August, Manufacturing Production
As Expected
15th of August, UK CPI
Worse than Expected
16th of August, UK Job Market
Better than Expected
17th of August, Retail Sales
Better than Expected
24th of August, GDP (Preliminary release)
UK GDP (Preliminary release) as expected but Business Investment (Preliminary release) Worse than Expected
1st of September, Manufacturing PMI
Better than Expected
4th of September, Construction PMI
Worse than Expected
5th of September, Services PMI
Worse than Expected
8th of September, Trade Balance and Manufacturing Production
Better than Expected
12th of September, CPI
Higher than Expected
13th of September, Job Market
Better than Expected
14th of September, BoE Meeting Minutes
The BoE’s monetary policy committee voted 7-to-2 to leave interest rates at their current record low of 0.25% following its policy meeting but the bank said in its rate statement that the economy is looking slightly, so an interest rate hike move is likely “over the coming months” if the economy performs broadly in line with officials’ expectations
18th of September, Governor Carney Speech at IMF headquarter
De-integration effects of Brexit are likely to be inflationary but any rate hikes are expected to be gradual and limited
USD
Recent Facts:
See above.
Australia reported its house price index for the second quarter jumped 1.9%, compared with a 1.1% gain seen. The Reserve Bank of Australia repeated that monetary policy is expected steady for "some time" in the minutes of its September rate review.
The Fed is seen likely to announce a plan to start shrinking its balance sheet. Markets are now pricing in a more than 50 percent chance of a Fed hike by the end of the year, up from only around a 40 percent chance less than a week ago.
Australia reported improved job market and interestingly good home loans data for July, but Trade Balance and Retail Sales worse than expected, and GDP on the downbeat too.
Last Australian Manufacturing Index was better than expected and private new capital expenditure for the second quarter jumped 0.8%, well above a 0.3% gain seen. Also Building Approvals and Construction Work Done better than expected.
On the other hand, last U.S. industrial and manufacturing production unexpectedly fell in August and U.S. producer price inflation increased less than expected. In addition, the U.S. Commerce Department said last retail sales change was surprisingly negative.
As we wrote previously, a re-test in area 0.798 will lead down to the main Support in area 0.792.
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: 0.8034
2nd Resistance: 0.8130
1st Support: 0.7916
2nd Support: 0.7828
AUD
Recent Facts:
4th of May, Australia New Home Sales + Trade Balance
Worse than Expected
9th of May, Australia Retail Sales
Worse than Expected
18th of May, Australia Employment Change
Better than Expected
24th of May, Australia Construction Work Done
Worse than Expected
24th of May, Moody’s Credit Rating on China
Moody's Investors Service downgraded China's credit rating to A1 from Aa3, changing its outlook to stable from negative
25th of May, OPEC Meeting
OPEC decided to extend production cuts by nine months to March 2018
30th of May, Building Approvals + Private House Approvals
Better than Expected
1st of June, Australia Retail Sales
Better than Expected
6th of June, Reserve Bank Of Australia Interest Rate Decision and Statement
In the last meeting, the Reserve Bank of Australia held Interest Rates at 1.5% as expected, reporting that the current account’s deficit widened
7th of June, Australia GDP
Better than Expected
15th of June, Australia Employment Change
Better than Expected (3rd month in a row)
29th of June, HIA New Home Sales
Better than Expected
4th of July, Retail Sales
Better than Expected
4th of July, Reserve Bank of Australia Interest Rate Decision
RBA holds Rates at 1.5%
6th of July, Australia Trade Balance
Better than Expected
11th of July, Home Loans + NAB Business Confidence
Home Loans Worse than Expected, NAB Business Confidence Better than Expected
12th of July, Westpac Consumer Sentiment
Better than Expected
20th of July, Employment Change + Unemployment Rate
Employment Change Worse than Expected, Unemployment Rate as Expected
25th of July, CPI + RBA Governor Lowe Speech
Worse than Expected
3rd of August, Trade Balance
Worse than Expected
4th of August, Australia Retail Sales
Better than Expected
9th of August, Westpac Consumer Sentiment + Home Loans
Worse than Expected
17th of August, Employment Change
Better than Expected but Full Employment Change negative
30th of August, Australia Building Approvals + Construction Work Done
Better than Expected
1st of September, AIG Manufacturing Index
Better than Expected
6th of September, Australia GDP
Worse than Expected
7th of September, Trade Balance + Retail Sales
Worse than Expected
14th of September, Employment Change
Better than Expected
19th of September, House Price Index
Higher than Expected
USD
Recent Facts:
See above.