A busy schedule fundamentally this week will keep traders on their toes as continuation is sought to confirm the beginnings of the new dollar rally into September. Friday’s Non-Farms Employment Change and Unemployment Rate will likely be the main focus of the week, with this reading perhaps the most critical data release to determine the taper schedule.A significant stumble here could cause concern at the Fed. We also have the G20 meeting on Thursday and Friday although Syria will likely be the focus of this meeting. Better than expected Chinese PMIs gave the Australian dollar a boost at the market open in Asia with further Chinese data this week likely to add to this sentiment, however with the RBA rate statement on Tuesday, this bullishness could be short lived as further doveish comments could sink any rallies for the time being. Monday will likely be quite thin volume with a US bank holiday.
This week my data focus is on:
Monday September 2 12:50am JPY Capital Spending 2:30am AUD Building Approvals m/m 2:45am CNY HSBC Final Manufacturing PMI 8:15am EUR Spanish Manufacturing PMI 8:30am CHF SVME PMI 8:45am EUR Italian Manufacturing PMI 9:30am GBP Manufacturing PMI
Tuesday September 3 2:00am CNY Non-Manufacturing PMI 2:30am AUD Retail Sales m/m 2:30am JPY Average Cash Earnings y/y 5:30am AUD RBA Rate Statement 6:45am CHF GDP q/q 9:30am GBP Construction PMI 3:00pm USD ISM Manufacturing PMI
Wednesday September 4 2:30am AUD GDP q/q 8:15am EUR Spanish Services PMI 8:45am EUR Italian Services PMI 9:30am GBP Services PMI 10:00am EUR Retail Sales m/m 1:30pm USD Trade Balance
Thursday September 5 G20 Meetings TBA JPY Monetary Policy Statement TBA JPY BOJ Press Conference 2:30am AUD Trade Balance 11:00am EUR German Factory Orders m/m 1:15pm USD ADP Non-Farm Employment Change 1:30pm EUR ECB Press Conference 1:30pm USD Unemployment Claims 1:30pm USD Revised Nonfarm Productivity q/q 3:00pm USD ISM Non-Manufacturing PMI 3:00pm USD Factory Orders m/m
Friday September 6 G20 Meetings 7:00am EUR German Trade Balance 8:15am CHF CPI m/m 9:30am GBP Manufacturing Production m/m 9:30am GBP Consumer Inflation Expectations 9:30am GBP Trade Balance 11:00am EUR German Industrial Production m/m 1:00pm USD FOMC Member Evans Speaks 1:30pm USD Non-Farm Employment Change 1:30pm USD Unemployment Rate 3:00pm GBP NIESR GDP Estimate 6:30pm USD FOMC Member George Speaks
All times are London time (GMT+1)
USD% Index
Last week’s breakout to a fresh high sees the US dollar rally for the time being and the formation of a bullish channel, with traders looking to build long positions ahead of the FOMC meeting later this month. Friday’s critical labour market data will likely see more volatility than usual since this is the final NFP before the FOMC meeting and the fed will has all along said that this data release will be critical information in the decision making process, If we see a drop to retest the broken resistance turned support at approximately EURUSD 1.3281 this may provide a great chance to buy dollars for the new trend, however, we could just as easily see a push through to higher resistance levels, given the market’s desire to own dollars right now. I am bullish USD%
USD% Index Resistance (EURUSD support): EURUSD 1.3195. 1.3135 USD% Index Support (EURUSD support): EURUSD 1.3227, 1.3281
EUR% Index
The EUR% index fell heavily in the second half of last week to break out into a fresh bearish channel. Sharp profit taking from Fib Expansion support at EURUSD 1.3169 could extend into a retracement, but given the conditions, fading any retracements higher still seems a preferable strategy for now with key resistance at 1.3278 and nearby 1.3294 I am bearish EUR%
EUR% Index Resistance: EURUSD 1.3279, 1.3294, 1.3378 EUR% Index Support: EURUSD 1.3200, 1.3169, 1.3090
JPY% Index
The JPY% index rejected major bearish resistance last week and looks poised for further drops on continued dollar strength. A gap lower on the open will likely be filled fairly quickly, but Thursday’s BOJ Monetary Policy Statement and Friday’s US labour market data will likely keep things from rallying too much from fear of doveish comments from the BOJ dampening yen buying sentiment and bullish dollar sentiment impacting heavily on the yen. Friday was a definite down day for the Nikkei, which was not really reflected in the performance of USDJPY indicating good buying pressure aside from stock related speculationI am bearish JPY%
JPY% Index Resistance (USDJPY Support): USDJPY 97.43, 96.76 JPY% Index Support (USDJPY Resistance): USDJPY 98.50, 99.19, 99.16, 100.00
USDJPY Trade Positioning
I am long from 97.21 and I’ve added to this from 98.00 with stops below 97.5
GBP% Index
Still showing amazing strength given the overall sentiment elsewhere in the market, the pound is still within a wide bullish channel and still putting up a good fight against a strong dollar, perhaps aided by significant EURGBP selling. We have consumer inflation expectations released later in the week which could impact the pound, with a weak print here pushing the pound down due to a slight perceived reduction in the risk of B.O.E. stimulus withdrawal. I am bearish GBP% although will wait for a proper signal before jumping short
GBP% Index Resistance: GBPUSD 1.5525, 1.5532, 1.5619 GBP% Index Support: GBPUSD 1.5423, 1.5400, 1.4272
AUD% Index
With good Chinese data this weekend and HSBC PMI data more likely than not to support it, we could see some early strength before sellers enter ahead of the RBA meeting, with the central bank governor openly calling the Aussie overpriced and speculation regarding a further rate cut on traders minds. I am short term bullish, medium term bearish AUD% although will likely skip short term longs for the time being
AUD% Index Resistance: AUDUSD 0.8911, 0.9034, 0.9082 AUD% Index Support: AUDUSD 0.8844, 0.8641
CHF% index
The normally orderly CHF% index chart is looking rather scrappy at the moment likely caused by the sensitivity to taper speculation, with taper positive data from the US jostling against shock taper negative data in recent weeks. that said we are just about broken to the downside of bullish trend and may likely see a continuation of bearish sentiment for the CHF% index, with a retest of broken support turned resistance a likely good selling point (long at USDCHF 0.9277). I am bearish CHF% although currently prefer Euro shorts
CHF% Index Resistance (USDCHF support): USDCHF 0.9277, 0.9250, 0.9221 CHF% Index Support (USDCHF resistance): USDCHF 0.9336, 0.9353, 0.9400
