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IFR: the chance to buy AUD/NZD

Analysts at IFR Markets underline that AUD/NZD has visited trend line support so far and recoiled up managing to close yesterday above 50/200-day MAs around 1.2890. Today the pair revisited yesterday minimums.

The specialists recommend buying Aussie at the current levels. According to IFR, the pair has completed the 3-wave correction from July maximums and is now to resume its advance and break above 1.3050.



Chart. Daily AUD/NZD

GBP/USD: technical & fundamental

British pound is moving up versus the greenback. GBP/USD has left the daily Ichimoku Cloud last week and crossed 200- and 100-day MAs bottom-up – now these lines and the top of consolidation range around $1.5750 play the role of support for sterling.

For the last 2 days the pair is trading in a narrow range of $1.5840/10 ahead of the Fed’s meeting in Jackson Hole. Any hints from Ben Bernanke on further stimulus would hit US dollar pushing GBP/USD to 3-month maximum at 1.5912 reached last week.

Analysts at Morgan Stanley expect GBP/USD to strengthen in the near-term to $1.6050. The specialists, however, claim that the medium-term outlook is negative due to concerns about UK economic weakness. Britain is still in recession, so the Bank of England may do more QE later in the year.

There’s strong resistance for sterling around $1.6000 (top of the weekly Ichimoku Cloud, downtrend resistance line connecting highs of 2011 and 2012). In addition, investors may be selling sterling versus euro ahead of the ECB meeting next week.



Chart. Daily GBP/USD




Chart. H1 GBP/USD

EUR/USD: failure is a matter of time

EUR/USD keeps moving sideways in the $1.2575/20 area. At the same time, such calm won’t obviously last long. The closest support is provided by the 100-hour MA at $1.2528, while the closest resistance is created by the very short-term resistance line around $1.2568. There’s more resistance at $1.2587 (100-day MA), $1.2592 (23.2% Fibo retracement of 2012 decline). Support also lies at $1.2500, $1.2475, $1.2435, $1.2385 (50-day MA).

UBS: “There is still scope for upside in the near-term. A break above 1.2595 would open the way to 1.2664/95.”

Commerzbank: The medium term outlook for EUR/USD will remain bearish as long as it’s trading below $1.2740 (June maximums). If euro drops below the uptrend support around $1.2382, its decline will accelerate.

Societe Generale: “Recession and more monetary accommodation isn't a recipe for a turnaround, so further weakness is just a matter of time.”



Chart. Daily EUR/USD

August 31: forex news



Demand for safe havens flared as Spanish Prime Minister Mariano Rajoy delayed seeking a sovereign bailout for his country. Moody’s Investors Service said its review of Spain’s debt rating (Baa3) will continue through September and reiterated the risk of a possible downgrade.

USD/JPY has tested today support line at 78.38 yen. Yen held its weekly gain even after a report showed that core CPI fell by 0.3% y/y in July, while industrial production unexpectedly declined in the same period increasing the odds of more easing from the BOJ.

AUD/USD closed below 200-day MA at $1.0308 yesterday, so did NZD/USD (0.7986). USD/CAD is trading on the upside around 0.9925. Canada’s GDP is released at 12:30 GMT.

EUR/USD returned to $1.2500 after testing this week resistance around $1.2575 earlier this week. In Europe watch for German retail sales at 06:00 GMT, Italian unemployment 8:00 GMT and flash EU CPI and unemployment rate at 09:00 GMT. Later in the US Chicago PMI is released at 13:45 GMT.

All eyes are focused on Ben Bernanke’s speech titled “Monetary policy since the crisis” at 14:00 GMT at the Fed’s symposium in Jackson Hole. The speculation about whether the Fed’s chief will announce more easing continues; the greenback is supported.

The Day of Ben or Big Ben Day

This day has finally come. Remember last year when we were also counting days to Jackson Hole and Bernanke neither ruled out further stimulus, nor signaled an impending move? Well, there certainly is the risk that Bernanke will be vague this year as well saying that the Fed is actively considering another round of monetary easing, but stopping short of signaling another bond-buying program is imminent.

Analysts at BNP Paribas and JPMorgan claim that as the last FOMC meeting minutes were dovish – many of the FOMC admitted the need of action in the absence of the substantial and sustainable economic recovery – it would be difficult for Bernanke to sound firmer, because this would be considered as pre-emptive action on his part of the FOMC next meeting on September 12-13.

Stock markets will be disappointed in case of the lack of concrete detail on the likely course of action as they have gained so far on the expectations of intervention from both the Fed and the ECB.

According to Reuters’ poll released yesterday, only 44% of investors surveyed expect the Fed to announce QE3 in September, down from 70% in July.



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Gaitame: levels for AUD on the downside

Analysts at Gaitame.com Research Institute think that AUD/USD may drop in September to the minimal level since the end of June.

Aussie closed yesterday below the 200-day MA of $1.0315. The specialists say that if the pair slides below $1.0219 (38.2% retracement of the advance from June to August), it will get vulnerable for a slide to $1.0098 (50% retracement).



Chart. Daily AUD/USD

USD/CHF: technical picture

USD/CHF is consolidating between 0.9260 and 0.9550 after a powerful decline made at the start of last week when the pair’s trading range shifted about 150 pips lower.

If US dollar manages to rise above 0.9635 (this week’s high), it will be able to get to 0.9660 (August 22 maximum, June 29 high). This level and the 50-day MA at 0.9696 will provide a considerable resistance. Only the break above this level will mean that the decline from July highs is over.

Support for the greenback lies at 0.9550/38 (100-day MA, last week’s minimum). Below these levels the descending trend will be confirmed and the pair will be poised for a decline to 0.9460. Area of 0.9420 will likely provide grounds for a correction back to 0.9550. Moreover, there’s a 200-day MA nearby, 0.9388.

EUR/USD close to 8-week highs

EUR/USD rose to 100-day MA at $1.2582, but then declined as the sell orders clustered in the $1.2580/00 area come into play.

According to flash estimates released today, euro zone’s CPI edged up to 2.6% in August (cons.: 2.5%; prev.: 2.4%). Euro zone unemployment rate remained unchanged in July at 11.3%.

Euro increased ahead of Ben Bernanke’s speech in Jackson Hole. US dollar weakened against all but two of its 16 major counterparts after Atlanta Fed President Dennis Lockhart said that US central bank has a tough decision on whether to add further stimulus to promote a stronger economic recovery.

Still…

"We're not expecting him (Bernanke) to announce that QE would start any time soon," Christian Schulz, senior economist at Berenberg Bank. "We expect him to announce that the Fed stands ready to act if things deteriorate but there's no sign of that at the moment. Those people who are betting on QE to start imminently will be disappointed and, yes, that would mean that markets would turn south.”



Daily EUR/USD

Market talk: Buba's Weidmann may resign

There’s talk of Bundesbank President Jens Weidmann’s potential resignation.

It’s a common knowledge that Weidmann has negative attitude towards the ECB’s bond purchase program as he sees it “too close to state financing via the money press.”

To satisfy Bundesbank, the ECB President Mario Draghi might have to put a lot of conditions in the program risking diminishing its impact considerably. A Bundesbank spokesman declined to comment on a report in the Bild newspaper.

Weidmann told Der Spiegel on Sunday: “I can do my task best if I stay in office. I want to work to ensure that the euro is just as hard as the mark was.” We think the odds are that Weidmann won’t give up keeping pressuring Draghi.



Chris Ratcliffe/Bloomberg

Bernanke didn't rule out more QE

The Fed’s Chairman Ben Bernanke made the case for further monetary stimulus at his speech in Jackson Hole on Friday.

Bernanke said that high unemployment was a “grave concern” and that further bond purchases under quantitative easing remained an option. The Chairman defended the central bank’s $2.3 trillion in bond purchases since 2008, estimating they helped to create more than 2 million jobs.

According to consensus forecast, US economy will add fewer jobs in August than in July (cons.: 121K; prev.: 163K). The economists expect US jobless rate to remain at 8.3%.
The next Fed’s meeting will take place soon – on September 12 and 13.

Bernanke finds himself under severe political pressure: if the Federal Reserve announces further stimulus, Republicans could accuse Bernanke of interfering in politic; if it doesn’t, Democrats could reproach him for standing by at a time of 8.3% unemployment.

The Dow Jones Industrial Average added 90.13 points to 13090.84 after rebounding from an initial pullback. Gold prices rose to 5-month maximum of $1,684.60 an ounce. The greenback weakened versus the majority of its counterparts.



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