Forex Daily Analysis - Tuesday, Sep 4th

Range Bound day Expected

As the US and Canadian market are closed today, we expect the market participants positioning for the upcoming rate announcements from Australia , Canada , the ECB and the UK .

Overnight News Bullets

  • SZ SVME-PMI (Aug) out at 65.1 vs. 62.0 expected. Prior at 63.0.
  • E-Z PMI Manufacturing (Aug F) out at 54.3 vs. 54.2 expected. Prior at 54.2.
  • UK PMI Manufacturing (Aug) out at 56.3 vs. 55.0 expected. Prior at 55.9.
  • IT Budget Balance (Aug) out at -2.7B vs. 4.1B prior.
  • JN Monetary Base YoY (Aug) out at 0.7% vs. -2.3% prior.
  • AU GDP QoQ/YoY (2Q) out at 0.9%/4.3% vs. 0.5%/3.7% expected. Prior at 1.6%/3.8%.

Market

  • FX: Very range bound due to US close. AUD gains on positive GDP. AUDUSD testing 50% fibo (0.887-0.767) at 0.8270.

O/N Data Heat map:

EU US JP UK SZ AU CA NZ NO SE FR
+ + + +


Calendar

Today's Highlights:

Time (GMT) Region Release Consensus
07:00 NO Norway PMI (AUG) 63.0
09:00 EC Euro-Zone PPI MoM/YoY (JUL) 0.1% / 1.7%
09:00 EC Euro-Zone GDP QoQ/YoY (2Q) 0.3% / 2.5%
14:00 US ISM Manufacturing (AUG) 53.0
14:00 US ISM Prices Paid (AUG) 63.0
14:00 US Construction Spending MoM (JUL) 0%

US Total Vehicle Sales / Domestic Vehicle Sales (AUG) 15.7M / 11.9M
23:01 UK Nationwide Consumer Confidence (AUG) 94
23:30 AU RBA Cash Target (SEP) 6.50%
23:30 AU AiG Performance of Services Index (AUG) Prior 56.0

This and Next Week’s Highlights:

Date Region Release
5 Sep EC PMI Composite, Euro-Zone Retail Sales
5 Sep UK BRC August Shop Price Index
5 Sep US MBA Mortgage Applications, Challenger Job Cuts, ADP Employment Change, Pending Home Sales, Fed’s Beige Book
5 Sep CA Bank of Canada Rate
5 Sep JN MOF Foreign Net Bonds/Stocks investment
6 Sep AU Employment change, Unemployment Rate
6 Sep SZ Unemployment Rate
6 Sep JN Machine Tool Orders. Official Reserve Assets
6 Sep SW Industrial Production, Industrial Orders, Activity Index Level
6 Sep NO Economic Forecast
6 Sep UK Industrial Production, Manufacturing Production, BoE Announces Rates, NIESR GDP Estimate
6 Sep GE Factory Orders
6 Sep EC ECB Announces Interest Rates,
6 Sep US Nonfarm Productivity, Unit Labor Costs, Initial Jobless Claims, Continuing Claims, ISM Non-manufacturing, DOE U.S. Crude Oil Inventories, ICSC Chain Store Sales
6 Sep CA Building Permits, Ivey Purchasing Managers Index


What's going on?

  • Very quiet session yesterday due to labor market day in the US and Canada. However we expect the week to be far from quiet as expectations are mixed with regards to ECB rates on Thursday – we still think they’ll go to 4.25 pct., supporting a higher EUR.
  • The fundamental case for the USD is still weak, but the ongoing worries in the credit market keep demand for USD well fed. ISM figures to be key today.
  • Australian GDP surprised to the upside following the general bullish trend of the current year.

FX

MAJOR HEADLINES – PREVIOUS SESSION

Z Consumer Confidence (Aug) out at -3 vs. -2 expected. Industrial Confidence (Aug) out at 5 vs. 4 expected. Business Climate Indicator out at 1.41 vs. 1.30 expected. Economic Confidence out at 110 vs. 110.3 expected. Services Confidence out at 20 as expected.

  • E-Z Unemployment Rate (Jul) out at 6.9% as expected.
  • E-Z CPI Estimate YoY (Aug) out at 1.8% as expected.
  • UK GfK Consumer Confidence Survey (Aug) out at -4 vs. -7 expected.
  • US Personal Income (Jul) out at 0.5% vs. 0.3% expected.
  • US Personal Spending (Jul) out at 0.4% vs. 0.3% expected.
  • US PCE Deflator YoY (Jul) out at 2.1% as expected.
  • US PCE Core MoM/YoY (Jul) out at 0.1%/1.9% vs. 0.2%/2.0% expected.
  • CA GDP MoM (Jun) out at 0.2% vs. 0.0% expected. Quarterly figure annualized at 3.4% vs. 2.8% expected.
  • US Chicago PMI (Aug) out at 53.8 vs. 53.0 expected.
  • US Factory Orders (Jul) out at 3.7% vs. 3.3% expected.
  • US U. of Michigan (Aug F) out at 83.4 vs. 82.5 expected.
  • US Baker Hughes Rig Count out at 1829 vs. 1816 prior.
  • AU AiG Performance (Aug) out at 52.4 vs. 57.4 prior.
  • AU TD Securities Inflation MoM/YoY (Jul) out at 0.5%/2.9% vs. 0.6%/3.0% prior.
  • AU Building Approvals MoM (Jul) out at 0.4% vs. -2.0% expected.
  • AU Company profit QoQ (2Q) out at 1.4% vs. 2.0% expected. '

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    THEMES TO WATCH – UPCOMING SESSION

    Rates, rates, rates...

    Fed chairman Bernanke did add any significant information to the market on Friday's symposium in Jackson Hole, Wyoming. Bernanke told that the Fed will act if necessary and will do what is needed to prevent the credit problems from escalating. The USD sold off ahead of the symposium as rumours in the market that Bernanke would cut the discount rate once again dominated the picture. Also the fundamental data released from the US supported a weaker USD. The PCE Core figures came out below expectations sending the USD offered ahead of the speech by Bernanke. EURUSD rallied on the figures and broke above 1.3710, but as Bernanke did not reveal any softening of the Fed rhetorics with regards to rates, USD went bid and took EURUSD to close at 1.3630. The pair tried higher this morning, but was capped at 1.3655. With no data out today, we expect the range 1.36-1.37 to be in play. During the week, as we have ISM-indicdes and the monthly job report from the US as well as the important rate announcement from the ECB on Thursday, we believe the fundamental case is for a weaker USD as we still think that the ECB will go to 4.25 pct. USDJPY tested resistance at 116.60 on Friday and we look for a test of this intra-week as we believe the JPY will go weaker from here as the data does not support a higher JPY or even an initiation of a rate hiking cycle from the Bank of Japan as inflation still is running negative.

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    EUR USD JPY GBP CHF AUD CAD NZD NOK SEK PLN
    - - + + + +

    FX Trading Strategies

    Pair Supp. Resis. Comments
    EURCHF 1.6320 1.6530 With the market expecting an unchanged rate from the ECB on Thursday as well as stronger-than-expected SZ GDP YoY, we prefer the downside in EURCHF. We have placed an order to sell the break of 1.6449 offer, targeting 1.64, stop bid at 1.6470

    Risk warning : ForexWebTrader shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Forexwebtrader that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated.

    • Posted by izone.net

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    FOREX : Foreign Exchange Market

    FOREX is a word play on the term Foreign Exchange Market. It is a market for buying and selling of currencies from all over the world. Certainly, such transactions are bound to be voluminous. It is just an estimate that there are about transactions of $1.5 trillion USD on a daily basis in the FOREX. Now just compare this with the paltry $300 billion USD a day transactions for the US Treasury Bond and the $100 billion a day transactions for the US Stock Exchange.

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