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The first half of the year ended with the Brexit, increasing volatility, and interest rates are incredibly low however the UK central bank hints an interest rate cut over the summer. The Federal Reserve (Fed) is holding the rise of its interest rates but for how long?
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Since the start of the year the currency rose 0.4% however this past week fell more than 1.5%.
Last week the USDJPY fell with a wide range and closed near the low of the week also managed to close below previous week low suggesting a strong bearish momentum, however the pair held above the 50 week moving average.
The Stochastic is displaying a bearish momentum and crossed below the 80 line giving a sell signal.
Last week the USDJPY is in a distribution phase and is trading above the two weekly moving averages 50 and 200 signaling that the uptrend is still in place.
Expecting a downward move to a weekly support at 118.837 on a break below previous week low at 120.579 (scenario 1) or a bounce from a weekly support at 120.579 could push the currency up to a weekly support at 121.840 (scenario 2).
The main drag on the British economic recovery is the weakness in UK manufacturing managers index (PMI) as the latest figures sunken last week, showing a drop to 51.5 in September, down from 51.6 in August. While remaining above the 50 threshold indicating growth, September’s PMI was only just above a two-year low hit in June.
At the end of last week the USD initially sank after an unexpectedly poor US jobs report suggested the Federal Reserve (Fed) may wait to raise interest rates until next year, but scraped back some of its losses.
Since the start of the year the currency fell more than 0.5% and is in a bearish phase since late of September. Last week the GBPUSD went back and forward without any clear direction with a narrow range but closed in the red near the open of the week. The currency is testing the lower channel line and the stochastic is showing a slight bearish momentum.
Expecting an upward move to a weekly resistance at 1.5483 on a break above previous week high at 1.5241 (scenario 1) or a break below previous week low at 1.51065 could push the currency down to year low at 1.4566 (scenario 2).
The Chinese demand for raw materials may not necessarily rebound as quickly as overall economic activity, which could be a problem for Australia. The recent devaluation of the Yuan has reduced the purchasing power of Chinese businesses and investors which may lead to further weakening of demand for Australian natural resources.
While the Federal Reserve maintained current interest rate levels, it is widely believed that it is a matter of time before the central bank begins to raise rates. The Reserve Bank of Australia, on the other hand, is forecast to lower the cash rate to 1.5% next year. The unemployment rate is expected to creep up to 6.5% by November, which could further pressure the Australian Dollar.
The AUDUSD fell 1.3% since the start of the month and plunged 13.1% year to date, plus is in well-established bearish phase. The currency fell last week with a wide range after a clear rejection of the 10-day moving average and closed in the red near the low of the week. The Stochastic is showing a bullish momentum and crossing above the 20 line indicating a buy signal although it is below the 50 mid line.
Expecting a downward move to a Fibonacci extension at 0.6190 on a break below a weekly support at 0.6896 (scenario 1) and a break above previous week high at 0.7197 may throw the pair to a weekly resistance at 0.7533 (scenario 2).
The European Union’s statistics office data showed last week, that euro zone’s trade surplus with the rest of the world jumped year-on-year in July as exports surged 7% while imports increased by only 1% because of much cheaper imported energy.
Inflation in the euro zone fell to 0.1% in August, revised data showed last week, in a sign that a dangerous spell of falling prices could be returning to Europe.
The euro zone suffered four months of deflation earlier this year and Fears of longer-term deflation persuaded the European Central Bank (ECB) to launch in March a huge monetary stimulus programme, to get inflation closer to its 2% target.
Last week in a closely watched news, the US Federal Reserve’s (Fed) decided not to raise short-term interest rates off record lows urging fresh concerns over the state of the global economy.
Since the start of the year the currency fell more than 5.0% and is in a bullish phase since the start of September, trading above the 10-week moving average. Last week the EURUSD went back and forward without any clear direction with a narrow range, closing in the red near the open of the week, creating a doji pattern. The stochastic is showing a slight bullish momentum and is trying to cross above the 50 mid line.
Expecting an upward move to the top of the trading channel at 1.1871 on a break above the weekly resistance at 1.1534 (scenario 1) or a bounce from the bottom of the trading channel at 1.1052 could push the currency up to a weekly resistance at 1.1534 (scenario 2).
The US Labour Department showed last the producer price index (PPI), which measures price changes before they reach the consumer, the final demand index moved down 0.8% for the 12 months ended in August, displaying the seventh straight 12-month decline.
The inflation picture is generally still very subdued with oil and gasoline prices falling and most other costs little changed, American consumers are enjoying mild inflation. The dollar has risen about 15% in value in the past year, which makes imports cheaper.
The Federal Reserve (Fed) has got a bit of a tough dilemma. The labour market is getting close to full employment and growth is quite solid but inflation is clearly below the Fed’s target, it will be a close call on whether the central bank will raise rates this week.
The Index rose 0.5% since the start of the month and fell 3.0% year to date, plus is in a well-defined bearish phase since late August. Russell 2000 rose with a narrow range last week and closed in the green near the high of the week, made a straight 2nd narrow week. The stochastic is showing bullish momentum although is below the 50 mid line.
Expecting an upward move to weekly resistance at 1,212 on a break above previous week high at 1,171.5 (scenario 1) or a break below previous week low at 1,131.4 could push the Index down to a weekly support at 1,078.7 (scenario 2).
UsaRus is a CFD written over Russell 2000 futures.
The Australian dollar, which has been struggling past weeks, strengthened on the back of thousands of new jobs created and on a falling 6.2% unemployment rate in August, as the economy continues to shift away from a massive resources investment boom.
Weaker US inflation and consumer sentiment have driven the Federal Reserve (Fed) to take a more cautious and dovish approach when considering the long-anticipated rate hike without ruling it out.
This week, the main event on the blackboard and the one that all markets have been waiting for is the FOMC meeting on the 17th September.
The expectations of a Fed rate hike is significantly lower as participants continue to cope with the imminent fears of a Chinese growth slowdown allied with inflation concerns may ultimately prove to be enough to convince the Fed to hold back taking any action despite the robust labour market in the US.
The AUDUSD fell 0.3% since the start of the month and plunged 12.2% year to date plus is in well-established bearish phase. The currency rallied last week with a narrow range and closed in the green near the high of the week, creating an inside week. The Stochastic is showing an oversold market setting higher lows and price is making lower lows, signs that the downside may begin to get exhausted.
Expecting an upward move to a weekly resistance at 0.7533 on a break above previous week high at 0.7099 (scenario 1) and a break below previous weekly low at 0.6913 may throw the pair to a weekly Fibonacci extension at 0.6190 (scenario 2).