Daily Forex Analysis: EUR/USD: Next Important Data Scheduled For August 7

GROWTHACES.COM Forex Trading Strategies

Taken Positions

EUR/USD: short at 1.1080, target 1.0810, stop-loss moved to 1.1020, risk factor *

USD/JPY: long at 123.70, target 125.80, stop-loss 122.90, risk factor *

USD/CHF: long at 0.9560, target 0.9810, stop-loss moved to 0.9600, risk factor *

USD/CAD: long at 1.2935, target 1.3095, stop-loss moved to 1.2995, risk factor *

NZD/USD: short at 0.6660, target 0.6405, stop-loss moved to 0.6590, risk factor *

EUR/GBP: short at 0.7145, target 0.6905, stop-loss moved to 0.7090, risk factor **

Pending Orders

AUD/USD: sell at 0.7340, target 0.7205, stop-loss 0.7390, risk factor *

EUR/CHF: buy at 1.0495, target 1.0795, stop-loss 1.0380, risk factor *

GBP/JPY: buy at 192.60, target 196.40, stop-loss 191.30, risk factor **

AUD/NZD: buy at 1.0940, target 1.1300, stop-loss 1.0860, risk factor **

 

EUR/USD: Next Important Data Scheduled For August 7

(short for 1.0810)

• The US Commerce Department said GDP expanded at 2.3% annual rate in the second quarter. The reading was below the median forecast for 2.6% growth. However, first-quarter GDP, previously reported to have shrunk at a 0.2% pace, was revised up to show it rising at a 0.6%. The revision to first-quarter growth reflected steps taken by the government to refine the seasonal adjustment for some components of GDP.
• A measure of private domestic demand, which excludes trade, inventories and government expenditures, increased at a 2.5% in the second quarter after rising at a 2.0% pace at the start of the year. Consumer spending, which accounts for more than two-thirds of US economic activity, grew at a 2.9% rate from a downwardly revised 1.8% pace in the first quarter. The saving rate fell to 4.8% from 5.2%. Growth in the second quarter was boosted by consumer spending as households used higher purchasing power coming from cheaper gasoline in late 2014 and early this year. The strengthening labor market also encouraged consumers to go shopping.
• Business spending on structures fell at a 1.6% rate after stumbling 7.4% at the start of the year. Investment on equipment fell at a 4.1% rate.
• Spending on mining exploration, wells and shafts plunged at a 68.2% rate, the largest decline since the second quarter of 1986. This category dropped at a 44.5% pace in the first quarter. But there are signs that the energy spending rout might be nearing an end. Data last Friday showed US energy firms added 21 oil rigs last week, marking the third increase over the past 33 weeks.
• Exports rebounded in the second quarter, despite a strong USD, while imports rose moderately. That left a smaller trade deficit that added 0.13 percentage point to GDP growth, in line with our expectations.

• Though the GDP numbers were mixed, with second-quarter growth coming in a little weaker than expected but with first-quarter growth revised upwards, expectations of a September rate hike probably marginally firmed up. The market will be waiting for next-week US non-farm payroll figures (August 7). A separate report yesterday showed first-time applications for state unemployment benefits increased 12k last week to a seasonally adjusted 267k. However, claims remained not too far from their cycle lows.
• Euro zone inflation was unchanged in July at 0.2% yoy. The flash estimate matched market expectations. Excluding energy and unprocessed food – what the European Central Bank calls core inflation – prices were up 0.9% from 0.8% in June. Energy prices were 5.6% lower yoy, a steeper decline than in June. Unprocessed food increased by 1.3% in July, down from 1.9% a month earlier.
• Eurozone inflation is likely to remain well below the ECB’s target of “below but close to 2%” for some time yet, but we expect a significant acceleration of the inflation rate in the fourth quarter. That could spur expectations that the ECB will complete its QE programme sooner, which should strengthen the EUR later this year.
• Eurostat also reported on Friday that euro zone unemployment was 11.1% for the third consecutive month in June, with the lowest rate of 4.7% in Germany.
• The EUR/USD fell after yesterday’s US GDP data, but the data were not strong enough and the drop was short-lived. The EUR/USD is recovering today. Breaking above the 1.0990 and close above this level could be a threat to our short position. We have lowered the stop-loss to 1.1020 to lock in profit, but have raised the objective of our position to 1.0810, which is just ahead of the 1.0808 July 20 low.

Significant technical analysis’ levels:

Resistance: 1.0989 (session high Jul 30), 1.1084 (high Jul 29), 1.1099 (high Jul 28)

Support: 1.0894 (low Jul 30), 1.0869 (low Jul 22), 1.0812 (low Jul 21)

 

USD/JPY Failed To Break Above 124.57

(long for 125.80)

• Japan’s core consumer prices rose 0.1% yoy in June. The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the US, rose 0.6% yoy.
• Japan’s jobless rate in June rose from the previous month to 3.4%. The median market forecast was for 3.3%.
• Japanese household spending fell 2.0% yoy in June in price-adjusted real terms. The result compared with the median estimate of a 1.7% increase.
• The soft spending figures, used to calculate GDP, reinforced views the economy probably contracted in the second quarter. The government blamed rainy weather for deterring shoppers, but weak demand for cars and housing suggest the rising cost of living is denting appetite for big-ticket items. It also cast doubt on the BOJ’s rosy scenario betting that a tightening job market will nudge up wages and boost consumption, helping achieve its price target by around September next year.
• The Bank of Japan has signaled it feels no need to expand stimulus now, stressing that it will look through the effect of last year’s oil rout that is mainly behind the slowdown in inflation. But some investors still believe it may be forced to act later this year if consumption fails to pick up. We do not expect any further easing steps from the central bank.
• The USD/JPY stopped at 124.58 but failed to break above this resistance level (76.4% fibo of 125.86-120.41 June/July fall) after yesterday’s US GDP data. We do not change our bullish position, but we need a daily close above this resistance level to keep the upside hopes alive.

Significant technical analysis’ levels:

Resistance: 124.58 (high Jul 30), 124.63 (high Jun 10), 124.74 (high Jun 9)

Support: 123.88 (low Jul 30), 123.33 (low Jul 29), 123.07 (low Jul 28)