Forex Technical and Fundamental Analysis for August 29, 2011

EUR/USD Technical Analysis for August 29, 2011

The EUR/USD pairclosed the day on Friday knocking on the door of the 1.45 resistance level, and as such – looks very bullish at the moment. However, this level has repelled the bulls several times, and as such, we need to see a close above it to get excited about taking a long position in this market. Until then, we are not willing to get involved as it only takes a bit of bad news to send this pair straight back down. We aren’t sellers yet, but would be if we get an exhaustive candle in this neighbourhood. Either way, this market is worth watching on Monday, as it looks like it could break out of this area finally.

EUR/USD Daily Fundamental Analysis for August 29, 2011

The EUR/USD continues to fluctuate heavily with the prevailing tension and pressure in the market from the worsening growth outlook and deepening debt crisis in the euro area and slowing growth. The lack of major data is queued for release on Monday from the euro area as the week starts with the focus on the sentiment and on the debt crisis. Eyes will surely be on the meeting scheduled on Monday at the EU Parliament to discuss the debt crisis with Rehn, Juncker and Trichet expected to attend the meeting. Investors will be waiting for any comments which will increase the volatility and fluctuations and accordingly might affect the pair with investors still pricing a worsening outlook with slowing growth amid the fiscal challenges which will restrict nations from reaching the target. The week will start with a light load from the euro area with the flash CPI estimate from Germany for August, where inflation probably remained flat in EU-harmonized terms following 0.5% rise and on the year to have eased to 2.5% from 2.6%. The United States will start the week with the personal income report for July at 12:30 where income is expected with a rise to 0.3% following 0.1% and spending to rebound with 0.4% following 0.2% drop. The Core PCE is expected to rise by 0.2% following 0.1% and on the year to 1.4% following 1.3%. At 14:00 GMT the US will release the pending home sales for July which are expected with 0.3% drop following the 2.4% rally the previous month.

AUD/USD Technical Analysis for August 29, 2011

The AUD/USD pair rose on Friday as traders bought risk-related assets after the Bernanke speech at Jackson Hole. The lack of need for more QE in the US gave a lot of traders hope for more economic growth. Technically, a close above 1.05 is a good sign for the bullishness of this pair, but one should note that the 1.06 level has been the top of this resistance level, and it didn’t get broken. Until we break above the 1.06 level on a close, we are a little gun shy about buying the Aussie. However, it looks strong enough that we certainly won’t sell it. We buy above 1.06 if and when we get there.

AUD/USD Daily Fundamental Analysis for August 29, 2011

The Australian dollar has witnessed some upside movement vs. majors after the consumer price index for the quarter through June increased more than expectations, increasing speculation that the RBA won’t cut interest rates during the next meeting. The expectations indicate that the RBA has no choice and it must lift or leave its official cash rate because of the inflationary risks that are going to hurt the economic recovery. The Australian economy is still in a foggy phase, increasing investors’ fear about the economic recovery in the second half of this year, supporting the Australian dollar to reverse its movement to the downside. On Monday, Australia will release the new home sales index for July at 01:00 GMT, which has a medium impact on the market movements, while the previous reading dropped by 8.7% in June. TheU.S.economy will release the personal income for July at 12:30 GMT, where the previous reading was 0.1% and it is expected to come at 0.3%. On the other hand, the personal spending is expected to show a rise of 0.5% from the previous fall of 0.2%. The Core PCE is expected to rise by 0.2% following 0.1%, while the annual reading is expected to come at 1.4% from the previous of 1.3%. At 14:00 GMT, the U.S. economy will release the pending home sales for July, where the previous reading was 2.4% and expected to come at 0.0%, while the annual pending home sales had a previous reading of 17.3%.

EUR/CHF Technical Analysis for August 29, 2011

The EUR/CHF pairrose on Friday, and finally took the 1.15 level as it has been so resistive recently – it must be thought of as a significant move. The 1.18 level is up next, and by the look of the daily candle, this looks like the pair wants to go there. On a pullback and supportive candle near the 1.15 level, we would be aggressive buyers in this market. We are no longer selling this pair at the moment, although we know the trend overall is still down.

EUR/CHF Daily Fundamental Analysis for August 29, 2011

The EUR/CHF will start the week with volatility amid the lack of data from the euro area and Switzerland leaving the focus again on the debt crisis with the expected meeting. No major data is queued for release on Monday as the week starts with the focus on the sentiment and on the debt crisis. Eyes will surely be on the meeting scheduled on Monday at the EU Parliament to discuss the debt crisis with Rehn, Juncker and Trichet expected to attend the meeting. Investors will be waiting for any comments which will increase the volatility and fluctuations and accordingly might affect the pair with investors still pricing a worsening outlook with slowing growth amid the fiscal challenges which will restrict nations from reaching the target. Renewed pessimism and fear over the outlook for debt laden nations will ignite the reversal in the sentiment and the unwinding of fear seen for the past three weeks and open the door for the pair to move south once again.

NZD/USD Technical Analysis for August 29, 2011

The NZD/USD pair rose rapidly on Friday as the Fed announced that no more QE was needed to facilitate growth in the US presently. This started a rush to risk-related currencies such as the Kiwi dollar. The day ended with a very bullish and long green candle, but also stopped just at the overhead resistance area that has stopped this pair in the 0.84 neighbourhood. In reality, we are not willing to buy until we break above the 0.85 level on the daily close. Shorting isn’t possible though, as we would have to see a close below 0.80 level in order to think the pair is going to fall for any significant amount.

NZD/USD Daily Fundamental Analysis for August 29, 2011

The New Zealand rallied against the greenback as the nation will continue to benefit from China’s growth through dairy exports. On the other hand, the Kiwi will incline against the majors, as the labour market in New Zealand is rebounded supporting economic growth. Moreover, the outlook for NZ economy improved as New Zealand’s economy has the ability to exit from the hurdle phase after the February quake, as the nation has a lot of resources that help the economy rebound once again this quarter, boosting demand for the NZ dollar. On Monday, at 22:45 GMT (Sunday), New Zealand will start the week with building permits for July after it dropped by 1.4% in June. TheU.S.economy will release the personal income for July at 12:30 GMT, where the previous reading was 0.1% and it is expected to come at 0.3%. On the other hand, the personal spending is expected to show a rise of 0.5% from the previous fall of 0.2%. The Core PCE is expected to rise by 0.2% following 0.1%, while the annual reading is expected to come at 1.4% from the previous of 1.3%. At 14:00 GMT, the U.S. economy will release the pending home sales for July, where the previous reading was 2.4% and expected to come at 0.0%, while the annual pending home sales had a previous reading of 17.3%.

USD/JPY Technical Analysis for August 29, 2011

USD/JPYfell hard during the Friday session as traders piled into the Yen. The USD in general fell in value around the world as Bernanke stated in his Jackson Hole press conference that the US economy didn’t warrant any more stimulus and actually seemed to have changed the outlook to slightly positive. Also, he did mention that the Congress and Administration were responsible for growing jobs and fostering a better business environment in the US. Because of this, it is possible that traders bought the Yen as a sign of a lack of faith in the US Congress. The Bank of Japan is willing to step in and support this pair, and as such – we still do not sell it. The pair gave us a little bit of hope for longs Thursday, but that has since been dashed. We are staying out of this market at the moment.

USD/JPY Daily Fundamental Analysis for August 29, 2011

The USD/JPY pair ended last week after heavy volatility after investors shifted their investments to the greenback, as Moody’s downgraded Japan’s credit rating to Aa3. Market participants reduced demand for the Japanese yen, after the latest credit rating downgrade for Japan by Moody’s Investors Service to Aa3, where investors saw that the greenback is safer than the yen at this time. Threats of another intervention from the Bank of Japan in the FX markets increased the pair’s volatility, even after the better than expected GDP for Japan which refueled some hope for the Japanese economy. On Monday, the U.S. economy will release the personal income for July at 12:30 GMT, where the previous reading was 0.1% and it is expected to come at 0.3%. On the other hand, the personal spending is expected to show a rise of 0.5% from the previous fall of 0.2%. The Core PCE is expected to rise by 0.2% following 0.1%, while the annual reading is expected to come at 1.4% from the previous of 1.3%. At 14:00 GMT, the U.S. economy will release the pending home sales for July, where the previous reading was 2.4% and expected to come at 0.0%, while the annual pending home sales had a previous reading of 17.3%.

GBP/USD Technical Analysis for August 29, 2011

The GBP/USD pair fell again on Friday, but managed a reversal in the middle of the session after the Federal Reserve Chairman said in his speech that the US didn’t need more QE, and this started a surge of buying for risk-related assets such as the Pound. The pair formed a hammer on the daily chart, and as a result looks like a bounce is coming. The breaking of the highs on Friday is a buying signal – but it should be noted that the 1.65 level up ahead has been very resistive. A breaking of the Friday low is a very bearish sign and is able to be shorted.

GBP/USD Daily Fundamental Analysis for August 29, 2011

The pair showed decline on Thursday trading as a downbeatU.K.consume confidence report pushed the pair to the downside. U.K. consumer confidence for July slipped by two points to 49 from 51 recorded in June, adding to concerns that recovery is losing momentum. Yet, the dollar is expected to remain under pressure till the delivery of Bernanke’s speech on Friday as speculations increased that the Fed Chairman would announce third round of stimulus to boost the sputtered growth. On Friday, the week ends with the release the most awaited data from both economies which is GDP for the second quarter. As of 08:30 GMT, U.K. GDP is predicted to remain unrevised at 0.2% on the quarter and 0.7% on the year. In the U.S., GDP annualized for the first second is predicted to be downwardly revised at 1.1% from 1.3%. At 13:55 GMT,null will show a rise to 56.0 in August from 54.9 in July, according to median forecasts.

USD/CAD Technical Analysis for August 29, 2011

The USD/CAD pair fell on Friday as traders reacted to the news that the Fed wasn’t necessarily going forward with anymore easing as the economy in the US didn’t need it. It also stated that the tools are still there, and they would use them if needed. This essentially backstops risk, and as such – the CAD got a bid. However, we are still caught between the 0.98 and 1.000 levels, and we feel that these are two levels that have to give way before we can place any significant trade on. In the mean time, we wait.

USD/CAD Daily Fundamental Analysis for August 29, 2011

The USD/CAD pair extended its losses on Friday after the U.S. reported growth in the second quarter that came below median estimates, which also raised concerns over the outlook for growth in Canada, since the United States is Canada’s largest trading partner. Moreover, the Fed’s Chairman signaled the Fed won’t embark on further monetary easing for the time being, but Bernanke signaled the Fed will act as needed if conditions warrant more stimulus measures. Traders will be focused on Monday at the U.S. income report, which is expected to show that personal income and spending remained moderate amid weak economic conditions, and we expect the USD/CAD pair to rise back on Monday. Monday August 29: The United States will start the week with the personal income report for July at 12:30 where income is expected with a rise to 0.3% following 0.1% and spending to rebound with 0.4% following 0.2% drop. The Core PCE is expected to rise by 0.2% following 0.1% and on the year to 1.4% following 1.3%. At 14:00 GMT the US will release the pending home sales for July which are expected with 0.3% drop following the 2.4% rally the previous month.

USD/CHF Technical Analysis for August 29, 2011

The USD/CHF pairfinally managed to break above the 0.80 level on Friday, and is closing about 70 pips above that line. This area has been very resistive over the last several sessions, and represents a serious piercing of a serious area. The pair looks like it wants to pullback and if it does – we will be watching if the 0.80 level is going to serve as support. If and when that happens – this becomes a massive buy signal as we run to 0.83, 0.85, and 0.90 in the future. The trend is still down, so expect any move upward to be choppy. However, the recent action in this pair suggests that we may be seeing a serious move build up.

USD/CHF Daily Fundamental Analysis for August 29, 2011

On Thursday, the dollar showed some volatility against the Swiss franc in narrow range trading as investors’ eyes are on the awaited speech by Bernanke on Friday where he is expected to announce a third round of stimulus to boost recovery. Yet, the dollar is expected to remain under pressure till the delivery of Bernanke’s speech, where an announcement of QE3 would affect the dollar negatively due to the expected oversupply resulting from the printing process. Fundamentals from theU.S.showed that initial jobless claims for the week ended August 19 rose to 417,000 from 412,000 a week before. On Friday, the week ends with the release KOF Swiss leading indicator which is estimated to retreat to 1.85 in August from 2.04 a month earlier. In theU.S., the main highlight of the week will be onU.S.growth data due at 12:30 GMT. GDP annualized for the first second is predicted to be downwardly revised at 1.1% from 1.3%. At 13:55 GMT,UniversityofMichiganconfidence will show a rise to 56.0 in August from 54.9 in July, according to median forecasts. Despite the importance ofU.S.data, more attention is predicted to be given to Bernanke’s speech as it will provide an outlook for the economy in the coming period.

 

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