Forex Crunch

British Pound Outlook - June 29 - July 3 2009
Canadian Dollar Outlook - June 29 - July 3 2009
Forex Weekly Outlook - June 29 - July 3 2009

British Pound Outlook - June 29 - July 3 2009

Posted: 27 Jun 2009 10:00 PM PDT

The British Pound stuck to its range for another week, failing to breach the magical 1.6660 line. This week’s key British events: Nationwide HPI, Current Account, Manufacturing PMI, Services PMI and American Non-Farm Payrolls could well shake the Pound. Here’s an outlook for this week’s 5 key events in the British Pound + a technical analysis for GBP/USD.

Nationwide HPI: It’s published on Tuesday at 6:00 GMT, after being delayed from last week. Although not the first house price index, this is an accurate one. The British real estate sector has skyrocketed during the good years, and plunged in this crisis, accelerating the recession. After rising by 1.2% last month, it’s expected to turn negative again, and fall by 0.4%.
Current Account: Britain’s current account usually shows a deficit, and the first quarter of 2009 isn’t different. At least it’s expected to squeeze down, and this might help the Pound. The deficit is predicted to fall from 7.6 to 6.5 billion. It’s published on Tuesday at 8:30 GMT.
Manufacturing PMI: Purchasing Manager’s Index shows future expectations for the manufacturing sector. A figure below 50 means contraction. The figure has been below 50 for over a year, but has advanced in the last three months. Also now, it’s predicted to rise from 45.4 to 46.3. This will surely shake the Pound. Published on Wednesday at 11:30 GMT.
Non-Farm Payrolls: On the first week of the month, the king of forex cannot be avoided…This super-major American figure shakes the whole world. After a surprise last time, when “only” 345K jobs were lost, NFP is predicted to take one step backwords and show a fall of 375K jobs. Strong movements are expected also in the British Pound. It’s published this week on Thursday at 12:30 GMT.
Services PMI: The complementary figure for Manufacturing PMI is in the services PMI. Here, the purchasing managers show a more positive attitude in the survey. Services PMI surprised last month by jumping above the 50 line, hitting 51.7. This good momentum is expected to continue, by staying at the same score. Published on Friday at 8:30 GMT.

GBP/USD Technical Analysis

The British Pound continued its range trading last week, and it certainly marked the borders: it fell as low as 1.62, and went as high as 1.66, alittle lower than the major resistance line of 1.6660. This can be seen in the graph below:

GBP/USD Technical Analysis

This range trading has been going on for three weeks. The Pound fails to cross the major resistance line of 1.6660 which was a peak at the end of October. Looking down, 1.62 isn’t that strong - it was formed in the last weeks, but seems serious.

Non-Farm Payrolls could temporarily move GBP/USD below or above this range during the release. Naturally, surprising British releases or another huge surprise in NFP could make the pair break this range for the long term.

After closing the week at 1.6517, the Pound is close to the high end of the range, but anything can happen…

Have a great week!

For further reading:

Canadian Dollar Outlook - June 29 - July 3 2009

Posted: 27 Jun 2009 06:00 PM PDT

USD/CAD went up this week and broke a significant resistance line, before erasing most of its gains. The Canadian dollar will move this week on Canadian GDP, American Non-Farm Payrolls and more Canadian figures. Here’s an outlook for the Canadian dollar, on the turn of the third quarter.

Here are the main events for USD/CAD:

Canadian GDP: Recession appears to be long lasting in Canada. Canada is unique in publishing GBP on a monthly basis. On Tuesday at 12:30 GMT, the monthly Gross Domestic Product for April will be released. Also this time, it’s predicted to fall, by 0.1%. This figure could surprise since the second quarter was better than the first.
RMPI: The Raw Materials Price Index is a very important figure in Canada’s commodity oriented economy. So the price index gives a good idea of where the economy is going. After falling last month, prices are on the rise - RMPI is predicted to rise by 2% this time.
Non-Farm Payrolls: The king of forex impacts all the currencies, and USD/CAD is no exception. After a surprise last time, NFP is predicted to make a small retreat, and fall back to a loss of 375K jobs from -345K). In previous months, the figure showed a loss of above 500K. After last week’s surprise, anything can happen. So, technical barriers might be erased after the release and then respected again. Due to the American Independence Day, NFP is published on Thursday this time. The hour didn’t change: 12:30 GMT.

There are other important American releases this week. I singled out the NFP for its great importance. The loonie will shake also on CB Consumer Confidence on Tuesday, ADP Non-Farm Employment Change, ISM Manufacturing PMI and Pending Home Sales on Wednesday.

Another note: Canadian banks will be closed on July 1st, Canadian independence day.

Canadian Dollar Technical Outlook

It took USD/CAD a very long time to break the 1.1470 resistance line that I’ve mentioned over and over again. It happened last Monday as the pair went from 1.13 to 1.1550. This was the end of the resistance line. This critical point was a resistance line and a support line in the past.

After breaking the line, it was shattered on Tuesday and Wednesday. The loonie went through it all the time. USD/CAD reached the highs of 1.1637 and fell as low as 1.1420.

Technical analysis for USD/CAD now moves to an uptrend channel. It can be seen in the graph below:

canadian dollar usd cad uptrend channel

This shows that the direction of the Canadian dollar is down. At the closing price of 1.1426, USD/CAD is in the middle of the uptrend channel. The upcoming week’s events will move the pair within the range.

Around the Non-Farm Payrolls publication, the loonie will escape the channel, but this will probably be only temporary. If NFP or the Canadian GDP are very far from expectations, this channel can be really escaped, not falsely.

The Canadian dollar is an interesting pair, though not too easy…

Another technical outlook for the loonie is available on James Chen’s blog.

For a broad look on the week’s events, check out the Forex Weekly Outlook.

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Forex Weekly Outlook - June 29 - July 3 2009

Posted: 27 Jun 2009 02:00 PM PDT

The king of forex - Non-Farm Payrolls, is published early - on Thursday. There are lots of other major figures in the start of the third quarter: ISM Manufacturing PMI, interest rate decision in Europe, Tankan Manufacturing Index in Japan and a big bulk of data from Britain. Let’s see what’s on the menu this week:

Sunday, June 28th: Yup, there are a few notable releases on Sunday (GMT). In New Zealand, Building Consents are a major indicator for the country’s economy. Also note the kiwi Trade Balance.

In Japan, Prelim Industrial Production is expected to rise by 6.9%, after rising last month by 5.9%, The first quarter was devastating, with drops above 9% each time. Japanese Retail Sales are predicted to fall again, this time by 2.7%.

Monday, June 29th: British Nationwide HPI still hasn’t been published. It might happen Monday, and it’s expected to fall by 0.4%.

Also in Britain, Net Lending to Individuals, Mortgage Approvals and GfK Consumer Confidence are released.

In Japan, Household Spending is predicted to fall once again by 1.3%. The Unemployment Rate is expected to rise to 5.2%. Despite an ill economy, the Japanese job market is ok.

Tuesday, June 30th: Japanese Average Cash Earnings are predicted to fall again, and so are Housing Starts. New Zealand’s NBNZ Business Confidence is an excellent gauge for the economy.

In Switzerland, UBS Consumption Indicator might take the hot air out of USD/CHF, after the SNB intervention.

In Europe, German Retail Sales are expected to drop by 0.1%. The more interesting figure in Germany is the Unemployment Change which is predicted to rise to 40K. Later in Europe, CPI Flash Estimate will show more deflation, dropping by 0.2%.

In Britain, the Current Account is predicted to show a deficit of 5.9 billion, smaller than last time. Final GDP in Britain is predicted to be worse than the early release, and fall by 2.2%.

The Canadain dollar probably won’t enjoy the monthly GDP release - more contraction is predicted.

American figures start kicking in, with Chicago PMI an the CB Consumer Confidence which are both predicted to rise.

Japan’s major indicator this week is the Tankan Manufacturing Index which is predicted to improve, maybe helping the Yen.

Wednesday, July 1st: Australia provides a strong start to the new month, with Building Approvals and Retail Sales, which are both expected to rise nicely.

In Britain, Halifax HPI might be published today. What’s more certain is the British Manufacturing PMI, which is expected to advance to 46.1, still less than 50.

American ADP Non-Farm Employment Change will be a preview to the Non-Farm Payrolls on Friday. It’s expected to improve to a drop of only 410K.

ISM Manufacturing PMI is predicted to advance again, to 44.1. Pending Home Sales are predicted to continue rising, this time by 1.1%.

Thursday, July 2nd: Australia’s Trade Balance is expected to remain negative, but almost even. How will commodity prices affect Australia?

British Construction PMI will shake the Pound, in the absence of the interest rate decision.

But in Europe, there still is a rate decision: Jean-Claude Trichet is expected to leave the Minimum Bid Rate unchanged at 1%. He’ll later explain about the monetary policy and Quantitative Easing at the ECB Press Conference, but a bigger event will overshadow his words.

Non-Farm Payrolls is expected to retreat to a loss of 375K jobs. Yup, due to the American Independence Day, NFP is published on Thursday. After last month’s big surprise, estimations are for a small fall.

Unemployment Rate is predicted to rise to 9.6%. Obama “promised” a rate above 10% this year. It’s getting very close. This early release overshadows also the weekly Unemployment Claims, which aren’t expected change much.

Also in the US: Average Hourly Earnings are expected to rise by 0.1%, and also Factory Orders are predicted to advance - by 0.2%.

Friday, July 3rd: With a holiday in the US, forex trading will be quite thin. In Switzerland, CPI is predicted to remain unchanged. Boring…

In Britain, Services PMI is expected to remain above the 50 mark. This complements the Manufacturing PMI from Wednesday.

European Retail Sales are the last figure released on this short Friday, but they could sure move the EUR/USD. Expectations are for a fall of 0.1%, after last month’s rise.

That’s it. Next week, I’m going on a holiday, so there won’t be daily outlooks…

May you be profitable!