Euro \ dollar: Results and Forex forecast for the week 07-11.03.2016.
Price dynamics of the pair EUR \ USD last week largely consistent with our expectations, although it has made some adjustments to our initial expectations. The forecast assumed - the completion of decrease in pair close to the current price levels, and then turn the course of the single European currency to rise to the established in the forecast target levels.
Indeed, after the opening of trading, EUR \ USD resumed its decline, the drivers of which were weak data on consumer inflation, published in the Eurozone, as well as market participants' disappointment with the results of the summit, "Big Twenty", which was convened to coordinate action to prevent the decline of the global economy. However, no concrete decisions were instead confined to the summit statement on the need for financial and structural support in the event of a further weakening of the global economy. Another negative factor for the euro has become a positive report on the US labor market, published by ADP agency efforts and expectations of the Fed's interest rate in 2016. However, in spite of the weak performance, the depreciation of the single European currency was rather limited, given that the majority of negative factors has long been taken into account in the price of the euro. Against this backdrop, the yield positive data on business activity in the euro area and in most of the leading regional economies was the catalyst for corrective recovery pair, which turned the course of the previous decline from the level of 1.0825 and started to actively grow. By the end of the week quotes the single European currency fell back from the lows reached almost 220 points and recorded a weekly maximum on the price level of 1.1043, which is close to EUR \ USD and ended the session.
Thus, on the basis of trading the pair has implemented three exchange rate target level of our expectations on the rise (1.0970; 1.0990; 1.1034) and retained the prospects for further growth of the single European currency.
In terms of fundamental factors: the end of last week, the euro began, finally, to recover losses, correcting the previous 4-week decrease in pair. Driver turn the single European currency was positive economic statistics from the euro area on business activity in the services sector and associate indices in both sectors. The February figures activity rose and exceeded market expectations, as the region as a whole, and in the leading economies of the euro area in particular. Additional support for the "bulls" and the euro had a positive dynamics of retail sales. In addition, on the eve of the meeting of the European Central Bank, from which the market expects further easing of monetary policy and an increase in financial incentives of the European economy, it became clear that most of the possible stimulus ECB action already priced in. And an increase in the monthly volume of financial investments, and an additional reduction of deposit rates and the extension of the financial incentives have long practiced by the market. Therefore, we do not expect the coming week significantly reduce the euro. On the contrary, our baseline scenario is the continuation of the corrective recovery couples.
With regard to technical factors: This week, the pair completed the course of corrective pullback from the previous growth and currency tested on reducing the key support level of 1.08, passing near the line of 3-month uptrend. Rigid resistance "bull" in the area stopped the decline and turned the course of the single European currency to rise. At the end of trading week closing level pairs was higher than the weekly and daily pivot points, reflecting the continuing impact of the rising trend in the price movement of the pair. Technical indicators on the weekly chart in connection with the previous decline in yield is still mixed indications, while a daily indicators are already signaling the upcoming rise. On the resumption of short-term correction after lifting warns us and wave structure of the pair. In addition, evidence of an increase in market interest in buying the single European currency, and we got on so-called indicator of demand, which is already the 2nd week signaled an increase in trading volumes for the purchase of the single currency.
The forecast of the euro against the dollar for the week 07-11.03.2016 assume - the completion of the current decline of quotations in price zone 1.0960 ÷ 1.0910, and then the reversal of the euro in the new growth to target levels: 1.1043; 1.1070; 1.11; 1.1130; 1.1150; 1.12 and higher to the price level of 1.1216.
GBP \ USD: The results and forecast for the week 07-11.03.2016.
Price dynamics pair pound \ dollar last week, is fully consistent with our forecast. The forecast assumed - the completion of the current decrease in pair and turning rate of the British currency to rise to the established target levels. In fact, it just happened! After opening the trading week the pair reversed course from the previous decline and began to grow. The initial driver of the currency rise was the performance of the Bank of England head Mark Carney at the Shanghai summit of "Big Twenty." In it he said that in contrast to other Central Bank, the Bank of England will not use negative interest rates in its monetary policy. This attitude of the market confirmed that the British regulator does not seek to weaken the national currency and, as a result, has caused an increased demand for the purchase of extremely oversold pound. As a result, the British currency reversed from its 7-year low of 1.3835 and started to recover previous losses. Another factor supporting the British currency was the decline of panic associated with possible withdrawal of Britain from the EU structure.And change the mood in relation to the pound was so significant that even the weak output in the UK index of business activity in the manufacturing industry, the construction sector and the service sector has been minimal since 2013, failed to stop the upward movement of the pair, and deploy it on the decline. Instead, pound \ dollar continued to rise and updated almost 2-week high at around 1.4247, while attaining all targets of our forecast (1.3916; 1.3952, 1.40, 1.4041, 1.4074, 1.41 and higher).
In terms of fundamental factors: At the end of last week, we can say that the risks of completing the downward movement of the pair and the turn of the British currency on an upward correction finally materialized. Pound has ceased to respond to the negative economic statistics, and given also that at the moment there and, moreover, is not expected significant new drivers to put pressure on the national currency exchange rate, we expect the correction pair recovery. Moreover, the basis for such dynamics, in our opinion, are the two factors: first - an extreme oversold; and the second - that the whole is already known and more negative potential has long been taken into account in the lower course of the British currency.
With regard to technical factors: a 5-day continuous growth of the pair pound \ dollar at the end of the trading was stopped near the significant resistance level of 1.4230. Factors British currency continued growth is still strong. At the base of reducing British currency on the weekly chart formed a candlestick patterns characteristic "bull" turn "absorption", which confirms the continuation of the upward trend. Daily indicators also signal an upward movement, confirming thereby the upcoming growth of the pair. In addition, the indicator "the MACD" on the weekly and daily timeframes shows "bullish" divergence, which also testifies to the preservation of the current upward trend. The same warning signals daily and weekly on-balance volume indicator OBV. And finally, the closing price of the pair for the week was higher than the weekly and daily pivot points, which is also indicative of the continuing influence of the upward momentum in the price movement of the pair. Thus, the overall technical picture is "bullish" on the nature of this pair.
At the same time, the indicator «Stochastic» on the daily and 4-hour timeframe is deep in overbought zone, which limits the upward movement of the pair, and warns of the likelihood of corrective pullback from the previous rise of the currency. The wave structure of the pair also suggests corrective decline.
This report Commodity Futures Trading Commission on the results of last week changed his testimony, an increase of total "clean" position on the sale of foreign currency, which warns of a possibly short-term change in the mood of the market and strengthening the "bearish" pressure on the pound.
Pound Dollar forecast for the week 07-11.03.2016: assume - the completion of the current rise in the price zone of 1.4270 ÷ 1.43 and the reversal of the British currency to decline towards the key support levels - 1.42;1.41 and 1.40.
However, if this "bulls" will be able to push the pound key resistance level of 1.43 and a foothold on it, followed by a further rise in price levels - 1.4360; 1.44 and 1.4430.
Next, we look for a reversal of the British currency to reduce to the above target levels.
Economic statistics next week.
What are the macro-economic indicators coming out next week, may be of interest to traders?
In macroeconomic statistics coming out next week, the following indicators can be identified:
The economic calendar Monday - will attract the attention of investors from Germany, the data on the volume of orders in industry in January; the volume of currency reserves - in Switzerland and indicator of economic confidence of investors in February -. Eurozone
significant interest will also cause the next meeting of finance ministers of the euro area and the EU leadership.
Among the other news of the day - Australia will report on the February index of business activity in the construction sector and the number of vacancies employment. Japan is to publish an index of leading and coincident economic indicators. And in the US statistics are presented - the indices of labor market conditions, and in January the volume of consumer credit. In addition, the US will be held an auction for the sale of 3- and 6-month bonds of public debt. On the same day, the performance of the Bank of Japan Haruhiko Kuroda and Fed Vice Chairman Stanley Fischer USA.
The economic calendar on Tuesday focus will attract investors - the resulting trade balance figures of China, including export and import volumes,
GDP volume growth for the 4th quarter in the euro area, including: gross fixed capital formation, changes in the volume of public spending and household consumption expenditure; German data on the volume of industrial production, as well as the meeting of the Ministerial Council - EU members. Considerable interest will cause the publication of the report of the Bank of England a special committee of the British Treasury and the performance of the Bank of England head Mark Carney.
Among other indicators - New Zealand will present data on changes in the volume of manufacturing shipments and the indicator of manufacturing activity in the 4th quarter of 2015. Australia to unveil the February index of business confidence and conditions for business development. Japan will release the trade balance for January;general and adjusted (adjusted for seasonal factors) the balance of the current account; GDP volume growth for the 4th quarter and year on year; the dynamics of consumer and commercial costs; February change in bank lending volumes; indicator of consumer confidence, as well as indicators of the current economic situation and economic prospects. UK publishes the February retail sales monitor. Switzerland is to publish an index of consumer prices in February and the unemployment rate (the previous figure - 3.4%). In France, there are data on the balance of foreign trade and the total balance of the state budget in January. And in Canada will be published data on the volume of building permits issued and the number of bookmarks of new foundations for the construction of housing.
On the economic calendar, the environment at the center of investors' attention will be decision of the Bank of Canada and the Reserve Bank of New Zealand's key interest rates and the accompanying statement to the solutions. The changes are not expected, betting regulations will remain the same: Canadian dollar - 0.5%;
New Zealand dollar - 2.5%. In addition, the Protocol will be published monetary policy and held a press conference of the Reserve Bank of New Zealand. Significant attention of the market will cause British data on industrial production and the production of the processing industry in January, as well as the assessment of GDP growth in volumes in the last three months, including reporting.
Among the other indicators - Australia will present data on the volume of mortgage and commercial lending.Japan will report on changes in the volume of orders for equipment for February. And in the US will be published - the index of mortgage lending in March; changes in the wholesale trade volume and the volume of stocks at the warehouses of wholesale trade in January, as well as data on stocks of gasoline, crude oil and distillate - from the US Department of Energy.
The economic calendar Thursday - the focus of the market would be the decision of the European Central Bank's main interest rate, the rate on the deposit, as well as the accompanying statement to the decision. Immediately after the announcement of the outcome of the meeting held a press conference of the President of the European Central Bank Mario Draghi.
As always, a significant investor attention on this day to cause the publication of the US weekly report on the number of initial applications for unemployment benefits, as well as a monthly report on the execution of the federal budget.
Among other news - Australia is to publish the March expectations for consumer price inflation. China publishes indices of consumer prices and producer prices for February. Japan will present the March data on the volume of foreign investments in the country's economy and the volume of capital invested abroad. UK is to publish a report on changes in house prices according to the Royal Institution of Chartered Surveyors. France will report on changes in the January volume of industrial production and the production of the processing industry, as well as changes in the number of people employed in the non-agricultural sector of the economy. Germany will submit a final balance of foreign trade indicators, including export and import volumes, as well as the balance of the current account for January. Italy will release the unemployment rate for the 4th quarter. Canada has come - in January the price index for housing in the primary real estate market and the capacity utilization rate for the 4th quarter of last year. On the same day, a statement by the head of the Reserve Bank of New Zealand Graeme Wheeler.
In Friday's economic calendar, investors will attract a significant publication in the UK - the final figures of foreign trade; the total balance of trade; . changes in the volume of construction and the poll results in respect of the expected inflation rate for the 1st quarter of this year,
no less interest will also cause the publication in Germany and Spain - February consumer price indices; Italy - changes the volume of industrial production in January.
In other news - New Zealand will present the February index of business activity in the manufacturing sector.Japan is to publish an index of business conditions for large manufacturers for the 1st quarter of this year.Canada will submit a report on the February labor, including data on the number of employees; unemployment (previous rate - 7.2%) and the proportion of the economically active population. And statistics from the US will be published February index of export prices and import prices. On the same day will be held on the speech of the Bank of Canada Stephen Poloz.