Monday, 15 September 2014

Week 38 trading stubs, FED FOMC and Scottish independence vote ahead

Recap

Anticipated strength of JPY worked out only in cross with AUD, only due to the fact that AUD was the weakest of all major currencies last week. Crosses like EUR/JPY, CHF/JPY where bearish patterns were posted last week got blown ruthlessly, looking at the USD/JPY cross the question remains how far this pair can go north before having some sort of breather. Coming week will not lack of market moving events like FOMC minutes with FED rates announcement followed by Yellen's speech likely to move USD pairs. Swiss National Bank (SNB) will be releasing their quarterly rates on Thursday and finally Scottish independence referendum to be started on the same day with results to be expected early morning Friday.

Weekly Currency Board


AUD
Neutral
No positions
USD
Bearish
Short USD/CHD, Long EUR/USD and GBP/USD
EUR
Bullish
Longs EUR/NZD and EUR/USD
NZD
Bearish
Short NZD/CHF, Long EUR/NZD and GBP/NZD
GBP
Bullish
Long GBP/NZD, and GBP/USD
CHF
Bullish
Shorts USD/CHF and NZD/CHF
JPY
Neutral
No positions
CAD
Neutral
No positions

Prime Risk Events (UTC time) 

Monday

US industrial and manufacturing production (August), 2.15pm: Both data points for August are expected to weaken, indicating a slight slump in activity during the month. Market to watch: US dollar crosses

Tuesday

UK CPI (August), 9.30am: Having hit 1.6% in July, the YoY rate is expected to hold steady, with the MoM rate moving from -0.3% to 0.4%. Market to watch: GBP/USD, EUR/GBP
German ZEW (Sept), 10am: The economic sentiment index is expected to rise to 31.67, from 23.7 in August. Market to watch: DAX, EUR/USD, EUR/GBP

Wednesday

UK unemployment data, weekly earnings data (July, August): The claimant count is forecast to drop by 30,000 in August, with the July unemployment rate dropping to 6.3% from 6.4%. Average weekly earnings are expected to rise, to 0.7% excluding bonuses, from 0.6% in June. Market to watch: GBP/USD, EUR/GBP
Bank of England minutes (September): The crucial element to watch here will be the voting pattern, which was 7-2 in the last meeting to maintain rates and QE unchanged. Market to watch: GBP/USD, EUR/GBP
Eurozone CPI (August, final), 10am: The final reading for August is expected to edge back to 0.3% YoY. Market to watch: EUR/USD, EUR/GBP
US CPI (August), 1.30pm: Price growth in the US is expected to be 1.9% YoY in August, from 2% in July, while core CPI is expected to drop back to 1.85% from 1.9%. Market to watch: US dollar crosses
Federal Open Market Committee decision (September), 7pm: A surge in the US dollar, to its highest level in a year, has been driven by concerns that the Federal Reserve may have to raise rates at a faster than anticipated rate. The meeting is unlikely to see any change in policy, but the accompanying press conference could reveal whether the committee has begun to alter its assessment of the situation. Market to watch: all major indices and currency crosses

Thursday

Scottish referendum voting begins: The Scottish people go to the polls today to decide on the independence referendum. Current polls (as of Friday 12 September) have suggested the ‘No’ vote still has a slight lead, but the large number of undecided still means the result is too close to call.  Market to watch: FTSE 100, FTSE 250, GBP/USD, EUR/GBP
UK retail sales (August), 9.30am: The YoY figure is forecast to accelerate to 4.8% from 3.4%, while the MoM figure is expected to be 0.3%, compared to 0.5% last month. Market to watch: GBP/USD, EUR/GBP
US initial jobless claims, housing starts & building permits (August), 1.30pm: Jobless claims jumped to 315K last week, while housing starts and building permits are expected to see a drop of 4.4% and 0.4% MoM respectively. Market to watch: US indices, dollar crosses
Philadelphia Fed index (September), 3pm: The index is expected to produce a reading of 23.3 for the month, down from 28 last month. Market to watch: US indices, dollar crosses

Friday

Scottish referendum results announced: The results are expected to emerge during the early morning. Market to watch: FTSE 100, FTSE 250, GBP/USD, EUR/GBP
Eurozone sovereign ratings updated: Major ratings agencies are expected to announce revisions to their ratings, and the particular one to watch will be France, whose economic situation continues to deteriorate. Market to watch: EuroStoxx 50, CAC40, DAX, EUR/USD, EUR/GBP
Canadian CPI (August), 1.30pm: The July reading was 2.1% YoY and -0.2% MoM, while the August figures are expected to be 2% and 0.5% respectively. Market to watch: USD/CAD
US leading indicators (August), 3pm: The leading index is a combination of various indicators designed to signal possible changes in the direction of economic activity. The figure is expected to be 0.4% in August, from 0.9% a month earlier. Market to watch: US indices, dollar crosses

 EUR/USD

In terms of the setups, bullish BAT pattern on EUR/USD remains to be completed @1.2616's level, see the chart below. 




 USD/CHF

The completion of this bearish pattern is likely to be correlated to the previous one.  




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