So yeah as predicted by yours truly, Mr. Euro danced all the way to our target at 1.345 against Ms. USA and made us them pips.
On fundamental news, the Bank of England reset the market’s hawkish expectations yesterday when minutes from this month’s meeting showed the nine member panel once again voted to keep rates where they are. On top of this, the Bank voiced concerns about wage growth remaining stagnant and also fears that the global economy might be on the cusp of slowing back down. The news led to a short, sharp decline in the Pound as it caught investors off guard.
Over in the land of Mr. Euro, there has been growing backlash over the lack of punishment dished out towards Russia. The motives for not pressing further have become increasingly clear and it comes down to not wanting to bit the hand that feeds you (even if that hand hits your friends from time to time) The Telegraph point out that sanctions on Russia could actually be the straw that breaks the European recovery. They tell the story better than we do, so do have a read if you get a moment.
In the US, president Obama is also facing some home grown problems, with the IMF saying that US growth this year is likely to be just 1.7%, as it struggles to regain ground that it lost in the first quarter. The news puts the timeline back for full employment in the US to 2018 and the report also highlights the changes that the US needs to make in immigration, infrastructure spending and its tax system to sustain growth levels of more than 2% with an ageing population.
The IMF also sees the Federal Reserve raising rates at a gentler pace than the Fed themselves do. They both agree that the middle of next year will see the first rate rise, but thereafter the Fed believes they will be able to get things back to normal a lot quicker than the IMF do.
One country not messing around with low interest rates is New Zealand. The central bank made its fourth rate hike of 2014 overnight, but has now said that it expects to hold at 3.5% for a while as that should keep inflation bang in the middle of their 1-3% target, whilst the economy continues to grow at upwards of 3.5% per annum. Despite the hike, the Kiwi slipped to its lowest level for six weeks on the news that this could be the last hike for a while. The rate rise was already priced in and the market had hoped to hear that they would keep looking at higher rates.
China has been the bearer of good news overnight, with HSBC’s manufacturing index beating expectations, which tempered comments from Moody’s that the Chinese housing market remains their biggest downside risk. Shanghai’s leading share index rallied almost 1.5%.
Today we look at retail sales from the UK as well as German manufacturing and services data, followed by the European composite numbers for both sectors. We’re not expecting particularly impressive numbers from Europe and see more downside risk than upside potential for the single currency over the course of the session.
Intraday Forex Technical Levels
EUR/USD Intraday: technical rebound in a bearish trend.
Invest Diva likes: Long positions above 1.3435 with targets @ 1.35 & 1.353 in extension.
If pair goes nuts: Below 1.3435 look for further downside with 1.34 & 1.338 as targets.
What’s up on the forex dance floor: The RSI is bullish and calls for further upside.
Supports and resistances:
1.355
1.353
1.35
1.3478 Last
1.3435
1.34
1.338
GBP/USD Intraday: key resistance at 1.705.
Invest Diva likes: Short positions below 1.705 with targets @ 1.6995 & 1.696 in extension.
If pair goes nuts: Above 1.705 look for further upside with 1.7085 & 1.7115 as targets.
What’s up on the forex dance floor: As long as 1.705 is resistance, look for choppy price action with a bearish bias.
Supports and resistances:
1.7115
1.7085
1.705
1.702 Last
1.6995
1.696
1.692
USD/JPY Intraday: supported by a rising trend line.
Invest Diva likes: Long positions above 101.4 with targets @ 101.8 & 102 in extension.
If pair goes nuts: Below 101.4 look for further downside with 101.15 & 101.05 as targets.
What’s up on the forex dance floor: The RSI advocates for further upside.
Supports and resistances:
102.2
102
101.8
101.6345 Last
101.4
101.15
101.05
USD/CHF Intraday: bullish bias above 0.9.
Invest Diva likes: Long positions above 0.9 with targets @ 0.904 & 0.9075 in extension.
If pair goes nuts: Below 0.9 look for further downside with 0.8965 & 0.8935 as targets.
What’s up on the forex dance floor: A support base at 0.9 has formed and has allowed for a temporary stabilisation.
Supports and resistances:
0.91
0.9075
0.904
0.9016 Last
0.9
0.8965
0.8935
NZD/USD Intraday: the downside prevails.
Invest Diva likes: Short positions below 0.8635 with targets @ 0.853 & 0.849 in extension.
If pair goes nuts: Above 0.8635 look for further upside with 0.8665 & 0.871 as targets.
What’s up on the forex dance floor: The RSI is mixed with a bearish bias.
Supports and resistances:
0.871
0.8665
0.8635
0.8591 Last
0.853
0.849
0.8475
AUD/USD Intraday: the upside prevails.
Invest Diva likes: Long positions above 0.942 with targets @ 0.9485 & 0.9505 in extension.
If pair goes nuts: Below 0.942 look for further downside with 0.938 & 0.9355 as targets.
What’s up on the forex dance floor: The RSI is supported by a bullish trend line.
Supports and resistances:
0.954
0.9505
0.9485
0.9442 Last
0.942
0.938
0.9355
USD/CAD Intraday: caution.
Invest Diva likes: Long positions above 1.0695 with targets @ 1.0795 & 1.0825 in extension.
If pair goes nuts: Below 1.0695 look for further downside with 1.0655 & 1.0625 as targets.
What’s up on the forex dance floor: The RSI is mixed with a bullish bias. Key technical indicators are bullish but the pair is shaping a declining channel, caution.
Supports and resistances:
1.0855
1.0825
1.0795
1.0724 Last
1.0695
1.0655
1.0625
US Index Outlook
S&P500
Long positions above 1959 with targets @ 1992 & 1997 in extension.
Alternative scenario: Below 1959 look for further downside with 1942 & 1937 as targets.
Dow Jones
Long positions above 16900 with targets @ 17130 & 17190 in extension.
Alternative scenario: Below 16900 look for further downside with 16830 & 16725 as targets.
Nasdaq 100
Long positions above 3935 with targets @ 3998 & 4017 in extension.
Alternative scenario: Below 3935 look for further downside with 3909 & 3883 as targets.
Russell 2000
Long positions above 1135 with targets @ 1165 & 1176 in extension.
Alternative scenario: Below 1135 look for further downside with 1123 & 1112 as targets.
xoxo,
Kiana
