Last week the European Central Bank (ECB) released comments suggesting that more stimulus was needed to support the weakening Eurozone economy and that it was ‘clearly missing’ its target and posited that it was ‘obvious that additional sets of instruments were necessary’. Markets had already anticipated a move from the ECB to loosen policy further and these expectations were bolstered by these dovish remarks.
The US consumer price index (CPI) data still at 0.0%, wage growth weakening at 2.2% and the Philadelphia Fed index printed at -4.5 compared to market expectations of -2.0 turning the outcome clear as investors only now only see a rate rise from the US central bank in 2016.
Since the start of the year the currency fell more than 4.5% and is in a bullish phase since the start of September, trading above the 10-week moving average. Last week the EURUSD tried to rally with a narrow range but found enough resistance to give all its gains back to the market, closing in the red near the low of the week, creating a shooting star pattern. The stochastic is showing a bullish momentum and is above the 50 mid line.
Expecting a downward move to the base of the channel at 1.1142 on a bounce from a weekly resistance at 1.1534 (scenario 1) or a break above the weekly resistance at 1.1534 could push the currency up to another weekly resistance at 1.2041 (scenario 2).
Inflation slipped back to zero in August, narrowly avoiding a return to deflation as some economists had feared. The Office for National Statistics (ONS) said the Consumer Price Index (CPI), which measures the average cost of a basket of goods – stood at 0.0% in August, down from July’s 0.1%. Forecasts had suggested that Britain would see deflation for the second time this year after the biggest fall in oil prices since the start of the year.
Last week the announcement from the US Federal Reserve (Fed) that it will be maintaining its benchmark interest rate at its current record low was not entirely unexpected. However, the voting pattern of the policy makers did surprise investors, as did the tone of Fed Chair Janet Yellen’s press conference which followed.
The central bank has two more scheduled policy meetings this year, in late October and mid-December. Most analysts now expect a rate rise to come in December at the earliest.
Since the start of the year the currency rose more than 1.5% and changed phase last week from warning to a bullish phase. Last week the GBPUSD went back and forward without any clear direction with a narrow range but managed to close in the green near the open of the week. Stochastic is showing a slight bullish momentum although it is below the 50 mid line.
Expecting an upward move to a key level at 1.5930 on a break above previous week high at 1.5658 (scenario 1) or a break below a weekly resistance at 1.5483 could push the currency down to a key level at 1.5163 (scenario 2).
Last week the French Finance Minister said economic growth will accelerate in 2016 and the government will meet its pledges to reduce the Country’s budget deficit to 3.3% in 2016 and below 3% in 2017 from an expected 3.8% this year.
In August 2015, the Consumer Price Index (CPI) picked up 0.3% after a decrease by 0.4% in July. Seasonally adjusted, it fell back by 0.1% in August compared with July. Year-on-year, it remained stable, after a rise by 0.2% in July.
The Index fell 0.17% since the start of the month and rose 6.5% year to date and is in consolidating a well-defined distribution phase. Last week, CAC40 initially rose but found again enough resistance at the 50-week moving average giving back all its gains and closed in the red near the open of the week, with a narrow range. The stochastic is showing a bearish momentum and is below the 50 mid line.
Expecting a downward move to a key level at 4,225 on a break below previous week low at 4,483 (scenario 1) or a break above previous week high at 4,700.5 may push upward the Index to a weekly resistance at 4,975 (scenario 2).
Fra40 is a CFD written over CAC40 futures.
Gold prices dropped to the 2014 low of 1130.95 as the USD index strengthened after the data in the US showed core consumer price index (CPI) ticked higher in June increasing stakes of the first US interest rate hike in 2015.
The selling pressure strengthened after the official data in the US showed core CPI rose 1.8% year-on-year in June. Furthermore, the housing starts beat estimates and Building permits for single and multifamily properties, a gauge of future construction, climbed to an almost eight-year high.
The commodity since the beginning of the year fell more than 4.4% and turned into a bearish phase since mid-June, trading below the 10, 50 and the 200-week moving averages. Last week gold plunged and closed near the low of the week on a wide range week. Stochastic is showing an oversold market but even with the commodity well into oversold territory, we should not fight the strong downward trend.
Expecting a downward move to the descending triangle target at 915.35 on a break below the previous week low at 1,130.95 (scenario 1) or a break above the weekly support at 1,177.76 could push upward gold to a weekly key level at 1,238.14 (scenario 2).
UK inflation is expected to turn negative for the first time for 55 years this week.
The Consumer Price Index in April, will be released on Tuesday, which are expected to show that year-on-year the cost of living fell 0.1%, a measure of inflation that has only existed since 1989. However, government statisticians have developed comparable figures that show that the last time inflation turned negative was in March 1960.
Deflation in the short-term can provide a powerful stimulus to consumer and business investment spending levels, with all the positive economic wider impact that has. However, if deflation, like in Japan, continues it could delay spending as people could be more inclined to wait to buy durable goods next year in the knowledge that prices will fall even further.
Since the beginning of the year the FTSE 100 surged more than 7.5% and is in a bullish phase. Last week the Index initially fell but found enough support on 6,906.5 to turn around and closed in the middle of the weekly range above the 10 week moving average. Stochastic is showing an overbought market setting lower highs and price is making higher highs, signs that the upside may begin to get exhausted.
Expecting a downward move to year low at 6,277.5 on a break below weekly support at 6,810.5 (scenario 1).
UK100 is a CFD written over FTSE 100 futures.
China has collapsed in trade surplus, raising fears for UK and the global economy. Yesterday, data showed that China’s outgoing trade tumbled 15% last month, the biggest drop for more than a year and imports were also down, falling nearly 13%.
In the Canadian front low oil prices are threatening the health of its oil and gas sector, which in turn, is causing turmoil in Canada’s economy as a whole. The severe drop in oil prices has made the Canadian dollar one of the worst performing currencies in the world over the past year.
Today on the economic agenda from the UK we have the Consumer Price Index (CPI) in March that is estimated to stay unchanged at 1.2% and the Producer Price Index (PPI) in March is also estimated to stay unchanged at -1.8%.
On yesterday session the GBPCAD rose, bouncing off the daily support at 1.83985 and close near the high of the day. The pair is in a warning phase, trading below the 10 and 50 day moving average. The stochastic in showing an extreme oversold market and is showing some bullish momentum.
Expecting upward move to a key level at 1.89115 on a break above the 10-day moving average (scenario 1) or a break below daily support at 1.82352 could pull the pair down to year low at 1.7850 (scenario 2).
The combination of Yellen’s comments and worries over Greece’s long-awaited list of reforms is dragging down the Euro. But even after Greece finally turned over its long-awaited list of reforms didn’t automatically open up the free flow of funds from creditors and talks continues over this week.
Today on the economic agenda we have the retail sales in February from Germany that is expected to fall from 5.3% to 3.7% and the preliminary consumer price index from the Euro zone that is estimated to fall from 0.7% to 0.6% . On the other side of the Atlantic we will have from the U.S the consumer confidence in March that is estimated to fall from 96.4 to 96.0.
EURUSD fell on yesterday session with a narrow range day of 80 pips, creating an inside day and closed near the low of the day. The pair is still in a bearish phase and closed below the 10-day moving average. The stochastic is showing bearish momentum.
Expecting downward move to a Fibonacci level at 1.0680 on a break below previous day low at 1.0809 (scenario 1).