Trading notes as the summer wanes
Often during the summer doldrums, the forex trading market flirts with psychologically important highs and lows. The traders remaining within the market take advantage of the Northern Hemisphere’s holiday-thinned volumes and higher volatility, pushing and testing support and resistance levels. By their nature, these significant highs and lows sometimes prove insupportable, unable to hold as other traders return from holidays and the market volumes deepen; however, sometimes these levels prove prophetic.
As the northern summer holidays of 2009 draw to their close, several currency pairs flirt with highs and lows for the year. With the global economy balanced between tentative recovery and a double dip, forex traders are testing the 1.7000 level for GBP/USD, 0.8450 for AUD/USD, 1.4435 for EUR/USD. The next few weeks should prove decisive for these levels.
Event risks for the week ahead include:
The U.K. NIESR GDP estimate for July, scheduled for release Wednesday, 5 August, 11:01 PM GMT (Canberra time Thursday, 6 August, 9:00 AM). This release is rather up in the air without a solid consensus behind any estimate; however, retail forex traders can expect a positive or mildly negative reading to be bullish for the pound, and any reading close to or worse than −0.4% to be bearish.
Australia’s change in employment and the jobless rate for July, scheduled for Thursday, 6 August, 1:30 AM GMT (Canberra time 11:30 AM). Markets are anticipating a loss of 18K jobs, in line with the previous loss of 21.4K, and with unemployment rising to 6.0%. If the China recovery story plays out and the actual numbers surprise to the upside, look for a surge in AUD crosses, particularly AUD/JPY and AUD/USD; if the numbers lean to the downside, look for risk aversion trading.
The BoE rate decision, to be released Thursday, 6 August, 11:00 AM GMT (9:00 PM Canberra time), followed 45 minutes later by the ECB rate decision. Neither central bank is expected to alter their rates; however, it’s possible for the BoE to increase the amount slated for their quantitative easing programme. Such a move would clearly be bearish for the pound, particularly EUR/GBP.
Finally, the U.S. change in employment and jobless rate for July, scheduled for Friday, 7 August, 12:30 PM GMT (10:30 PM Canberra time). Markets are anticipating a loss of “only” 328K jobs and a rise in the unemployment rate to 9.6%. Obviously there’s much downside risk to that estimate. This may prove one of those counterintuitive fundamentals: if the actual figure surprises to the upside, it should be bearish for USD crosses; but if it surprises to the downside, it can reignite the risk aversion trading rules and see safe-haven appreciation for USD, CHF, and JPY.
Two final notes: The U.S. Commodity Futures Trading Commission is threatening to investigate allegations of speculation within the crude oil market. Whether the allegations prove to be well-founded or otherwise, such an investigation in itself can drive down the commodity price, which could have an inverse (bullish) effect on USD.
Also, the SNB remains poised to intervene within the forex trading market should the Swiss franc appreciate strongly against EUR (approaching 1.5000) and possibly USD (below roughly 1.0600). Retail traders are advised to remain aware of these levels.
Trading notes as the summer wanes
Often during the summer doldrums, the forex trading market flirts with psychologically important highs and lows. The traders remaining within the market take advantage of the Northern Hemisphere’s holiday-thinned volumes and higher volatility, pushing and testing support and resistance levels. By their nature, these significant highs and lows sometimes prove insupportable, unable to hold as other traders return from holidays and the market volumes deepen; however, sometimes these levels prove prophetic.
As the northern summer holidays of 2009 draw to their close, several currency pairs flirt with highs and lows for the year. With the global economy balanced between tentative recovery and a double dip, forex traders are testing the 1.7000 level for GBP/USD, 0.8450 for AUD/USD, 1.4435 for EUR/USD. The next few weeks should prove decisive for these levels.
Event risks for the week ahead include:
The U.K. NIESR GDP estimate for July, scheduled for release Wednesday, 5 August, 11:01 PM GMT (Canberra time Thursday, 6 August, 9:00 AM). This release is rather up in the air without a solid consensus behind any estimate; however, retail forex traders can expect a positive or mildly negative reading to be bullish for the pound, and any reading close to or worse than −0.4% to be bearish.
Australia’s change in employment and the jobless rate for July, scheduled for Thursday, 6 August, 1:30 AM GMT (Canberra time 11:30 AM). Markets are anticipating a loss of 18K jobs, in line with the previous loss of 21.4K, and with unemployment rising to 6.0%. If the China recovery story plays out and the actual numbers surprise to the upside, look for a surge in AUD crosses, particularly AUD/JPY and AUD/USD; if the numbers lean to the downside, look for risk aversion trading.
The BoE rate decision, to be released Thursday, 6 August, 11:00 AM GMT (9:00 PM Canberra time), followed 45 minutes later by the ECB rate decision. Neither central bank is expected to alter their rates; however, it’s possible for the BoE to increase the amount slated for their quantitative easing programme. Such a move would clearly be bearish for the pound, particularly EUR/GBP.
Finally, the U.S. change in employment and jobless rate for July, scheduled for Friday, 7 August, 12:30 PM GMT (10:30 PM Canberra time). Markets are anticipating a loss of “only” 328K jobs and a rise in the unemployment rate to 9.6%. Obviously there’s much downside risk to that estimate. This may prove one of those counterintuitive fundamentals: if the actual figure surprises to the upside, it should be bearish for USD crosses; but if it surprises to the downside, it can reignite the risk aversion trading rules and see safe-haven appreciation for USD, CHF, and JPY.
Two final notes: The U.S. Commodity Futures Trading Commission is threatening to investigate allegations of speculation within the crude oil market. Whether the allegations prove to be well-founded or otherwise, such an investigation in itself can drive down the commodity price, which could have an inverse (bullish) effect on USD.
Also, the SNB remains poised to intervene within the forex trading market should the Swiss franc appreciate strongly against EUR (approaching 1.5000) and possibly USD (below roughly 1.0600). Retail traders are advised to remain aware of these levels.
