The Australian Gross Domestic Product (GDP) growth was relatively flat throughout the 2nd quarter of 2015 as global commodity prices remained severely depressed. The GDP result was well below expectations, indicating growth of 0.2% quarter- on-quarter in the wider economy. This represents the weakest period of growth since early 2013, and data from the third quarter is likely to follow the same path, when released in December.
The Federal Reserve (Fed) decision to hold off on raising rates last month and a disappointing September payrolls report appear to have given traders confidence that US policy makers won’t rush a rate hike. Minutes of their last meeting showed officials put off an increase because of growing risks, mainly from China, to their outlook for economic growth and inflation.
The AUDUSD rose 4.4% since the start of the month and plunged 9.5% year to date, plus is in well-established recovery phase. The currency rose last week with a wide range after a clear break of a four-week consolidation and closed in the green near the high of the week. The Stochastic is showing a bullish momentum although it is still below the 50 mid line.
Expecting an upward move to a weekly resistance at 0.7533 on a break above previous week high at 0.7344 (scenario 1) or wait for a retracement and bounce off a key level at 0.7234 (scenario 2).
Last week, the minutes pointed to an extremely cautious Federal Reserve (Fed) even before later economic data showed a sharp slowdown in hiring by US companies. Most investors however, thought the Fed’s first-rate hike in a decade should still come this year.
Overall, the Federal Open Market Committee (FOMC) still see risks to the downside for US real Gross Domestic Product (GDP) and inflation forecasts, with recent global growth and financial market developments worsening these downside risks.
The commodity since the beginning of the year fell more than 2.5% and is in a recovery since the beginning of October, trading above the 10 and 50-week moving averages. Last week gold rose with a narrow range and closed in the green near the high of the week. Stochastic is showing a strong bullish momentum and crossed above the 50 mid line.
Expecting an upward move to a key level at 1,227.12 on a break above a weekly resistance at 1,177.76 (scenario 1) or a bounce from a weekly resistance at 1,177.76 could push downward gold to a weekly resistance at 1,131.65 (scenario 2).
The US Federal Reserve (Fed) yet again postponed a hike in interest rates from near zero levels even after weeks of enthusiastic speculation about whether it was about time for the central bank to announce a rate hike.
This time around the developments in China, the world’s second largest economy, appeared to have influenced the decision in favour of maintaining a status-quo on low interest rates. 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.
The updated FOMC forecasts revealed that the Fed expects Gross Domestic Product (GDP) growth for 2015 to be 2.1%, up from the 1.9% it estimated in June. However, it lowered its 2016 forecasts to 2.3% from 2.5%. The unemployment rate forecasts for 2015 and 2016 were lowered by 0.3% each to 5% and 4.8%, respectively.
The S&P500 fell more than 0.5% since the start of the month and plunged more than 4.5% year to date settling in a bearish phase. The Index went back and forward without any clear direction with a wide range during the course of last week and closed in the red near the open of the week. The stochastic is showing bearish momentum and is below the 50 mid line.
Expecting downward move to a weekly support at 1,891.50 on a break below previous week low at 1,891.50 (scenario 1) or a bounce off the weekly resistance at 1,973.0 (scenario 2).
Usa500 is a CFD written over S&P 500 futures.
The Euro fell last week, after the European Central Bank (ECB) cut back its inflation and growth targets but implied it may expand its quantitative easing programme (QE).
The ECB revised Gross Domestic Product (GDP) growth for 2015 down to 1.4% from 1.5%. Meanwhile the growth target for 2016 dropped to 1.7% from 1.9% and the target for 2018 dropped to 1.8% from 2%.
The US dollar slipped last week under pressure from renewed uncertainty about the timing of the Federal Reserve’s (Fed) plan to raise ultra-low interest rates after mixed signals of US jobs data.
Since the start of the year the currency fell more than 6.5% and is still in an accumulation phase, 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 bearish momentum but is still above the 50 mid line.
Expecting an upward move to a weekly key resistance at 1.1534 on a bounce from an upward trend line at 1.1005 (scenario 1) or a break above the weekly resistance at 1.1534 could push the currency up to 1.2041 (scenario 2).
All eyes are turned to Jackson Hole, an annual symposium sponsored by the Federal Reserve Bank (Fed) that started last Friday. The symposium focuses on an important economic issue that faces US and world economies.
The Federal Reserve on Friday left the door open to a September interest rate hike even while several US central bank officials acknowledged that turmoil in financial markets, if prolonged, could delay the first policy tightening in nearly a decade. Although some top policymakers, said that the recent volatility in global markets could quickly ease and possibly pave the way for the US rate hike.
Brazil has slipped into recession, with the government reporting on Friday that the Gross Domestic Product (GDP) plunged 1.9% in the Q2 alone, deepening the gloom in the world’s 7 largest economy already battered by falling commodity prices, political crisis and a corruption scandal. Brazil is now in its biggest contraction for six years and with the 2015 slump forecast to extend in milder form through 2016, economists believe the country is headed for the longest recession since 1931.
Since the beginning of the year the USDBRL rallied more than 32.5% and is in a well-established bullish phase since late May. The currency rallied last week but could not sustain the upward momentum and gave some of its gains back to the market closing in the middle of the weekly range. The stochastic in showing an overbought market but even with the pair well into overbought territory, we should not fight the strong upward trend.
Expecting an upward move to a key level at 3.9626 on a break above previous week high at 3.6506 (scenario 1) or a break below previous week low at 3.4897 could trigger a sell-off to a weekly support at 3.3105 (scenario 2).
Economic growth in the Euro zone slowed in the second quarter as France stagnated and Italy lost momentum, held back by an uncertain global outlook that is even weakening investment in Germany.
According to official statistics released last week, the French economy stagnated in the second quarter after an encouraging 0.7% rise in gross domestic product (GDP) in the first quarter, with investment falling away although the Finance Minister claimed that the second biggest economy in the Euro zone was still on course to print 1% growth over the year as a whole.
In France, a jump in exports was not strong enough to offset the impact of weak consumer spending and growth came to a standstill after a strong first quarter.
The Index fell 1.74% since the start of the month and rose 17.1% year to date and is in a potential phase change from bullish to a warning phase. Last week, CAC40 plunged to close near the low of the week, on a wide range. The stochastic made a clear bearish divergence and is showing a bearish momentum although is above the 50 mid line.
Expecting a downward move to weekly key level at 4,800 (scenario 1) or even a move to a weekly support at 4,600 (scenario 2) on a break below a weekly resistance at 4,975.
Fra40 is a CFD written over CAC40 futures.
Euro zone finance ministers gave their final approval to lending Greece up to 86 billion euros after the parliament in Athens agreed to stiff conditions overnight. Assuming final approval this week by the German and some other national parliaments, an initial tranche of 26 billion euros would be approved by the European Stability Mechanism (ESM) this Wednesday.
Analyst expectations for gross domestic product (GDP) growth in Switzerland turned negative in July for the first time since February over heightened exchange rate uncertainty. But the expectations seem to have changed as the Swiss ZEW investor sentiment index rose by 11.3 points in August to 5.9 points. The Swiss franc has dropped nearly 5% since mid-July and touched a six-month low against the euro on last Tuesday.
The EURCHF is in an accumulation phase since the beginning of August breaking above the resistance zone established on February. The currency rallied last week but could not sustain the upward momentum and gave most of its gains back to the market, creating a potential shooting star pattern, but managed to close in the green above the open of the day. The stochastic in showing an extreme overbought market but even with the pair well into overbought territory, we should not fight the strong upward trend.
Expecting an upward move to a Fibonacci extension at 1.1285 on a break above previous week high at 1.0961 (scenario 1) or a break below the weekly resistance at 1.0620 could trigger a sell-off to a weekly support at 1.0367 (scenario 2).