Forex Daily Analysis for Monday, Aug 13
Quiet in Europe but US the US stock opening could change things
Not much action in Europe after the big moves seen on friday and with lack of data and no news from Banks or ECB officials it is likely to continue with US stocks being the joker for a spark in vols.
MAJOR HEADLINES – PREVIOUS SESSION
Data Bullets
- SW AMU Unemployment Rate July, out at 3.7% in line with exp.
- NO Retail Sales June, out at 4.7% vs 0.5% exp. YoY out at 11.9% vs 6.7% exp.
- UK Visible Trade Balance June, out at -£6266 vs -£6500 exp.
- CA Housing Starts July, out at 215.6K vs 223.5K exp.
- CA New Housing Price Index June, out at 0.7% vs 0.8% exp.
- US EIA Natural Gas Storage Change Aug 3, out at 42 vs 49 exp.
- JN Domestic CGPI July, out at 0.6% in line with exp. YoY out at 2.1% in line with exp.
- JN Industrial Production June, out at 1.3% vs 1.2% exp. YoY out at 1.1% vs 1.0% exp.
- JN Capacity Utilization June, out at 105.8 vs a prior reading of 105.0.
- JN Bankruptcies (YoY) July, out at 15.6% vs 6.7% exp.
- JN Consumer Confidence July, out at 44.6 vs 46.0 exp.
- JN Consumer Confidence July, out at 44.4 vs 46.0 exp.
THEMES TO WATCH – UPCOMING SESSION
The sub-prime story escalates!!!
Carry trades took another big hit Thursday as risk aversion came back with BNP Paribas announcing that three funds were temporarily suspending and payouts. Also ECB conducted an operation to supply liquidity to the money market. This is the first time it was announced in advance that it intended to allot 100% of the bids that it received for on day funding. The result was an injection of 94.84B with bids from 49 banks. Adding pressure to this fact was Countrywide Financial in the US down 12% in after hours after what it stated to be "unprecedented disruptions". This put more pressure on risky assets and if this is to continue we would expect further unwinding next week which includes commodities as well. But it is a big data week from both the UK and US, so things may change as we get into next week, but more surprise from major banks would certainty take the significance out of any data coming out next week.
From the Technical side
From a technical perspective EURUSD and GBPUSD is close to having the technical picture changed from bullish to bearish. A daily close below 1.3595 in EURUSD would give scope for further downside acceleration and a test of 1.3450-13500 area. Same goes for Cable a daily close below 2.0160 would target the 2.0010-20 area. For carry trades we look for daily close below 118.00 in USDJPY and 159.30 (200 day MA) in EURJPY would technically give scope for a more steep downside correction.
Overnight News Bullets
- FR Industrial Production MoM/YoY (JUN) out at -0.5%/-0.8%, while 0.4%/0.3% expected, 0.4%/-0.3% prior.
- FR Manufacturing Production MoM/YoY (JUN) out at -0.5%/-1.0%, while 0.6%/0.3% expected, 0.1%/-0.8% prior.
- NO CPI MoM/YoY (JUL) out at -0.3%/0.4%, while -0.2%/0.5% expected, -0.1%/0.4% prior.
- NO CPI Core MoM/YoY (JUL) out at -0.4%/1.4%, while -0.2%/1.5% expected, -0.1%/1.3% prior.
- NO Producer Prices incl. Oil MoM/YoY (JUL) out at 0.4%/-4.2%, while 1.2%/-3.4% expected, 2.0%/0.3% prior.
- EC Euro-Zone OECD Leading Indicator (JUN) out at 108.0, while 107.6 prior.
- CA Unemployment Rate (JUL) out at 6.0%, while 6.1% expected, 6.1% prior.
- CA Net Change in Employment (JUL) out at 11.3K, while 20.0K expected, 34.8K prior.
- US Import Price Index MoM/YoY (JUL) out at 1.5%/2.8%, while 1.0%/2.5% expected, 1.0%/2.3% prior.
- NZ Food Prices MoM (JUL) out at 1.2%, while 0% prior.
- JN GDP QoQ (2Q) out at 0.1%, while 0.2% expected, 0.8% prior.
- JN GDP Annualized (2Q) out at 0.5%, while 0.9% expected, 3.3% prior.
- JN GDP Nominal QoQ (2Q) out at 0.3%, while 0.2% expected, 0.5% prior.
- JN GDP Deflator YoY (2Q) out at -0.3%, while -0.4% expected, -0.3% prior.
- JN Current Account Total (JUN) out at JPY1520.3B, while JPY1609.5B expected, JPY2133.6B prior.
- JN Adjusted Current Account Total (JUN) out at JPY2046.7B, while JPY2186.2B expected, JPY2226.4B prior.
Market
- FX: JPY weaker, USD range bound. EUR stronger.
O/N Data Heat map:
| EU | US | JP | UK | SZ | AU | CA | NZ | NO | SE | FR |
| 0 | - | - | 0 | 0 | 0 | + | - | + | 0 | - |
Calendar
Today's Highlights:
Time (GMT) Region Release Consensus 08:30 UK PPI Input MoM/YoY (JUL) 0.7% / 1.4% 08:30 UK PPI Output MoM/YoY (JUL) 0.3% / 2.4% 08:30 UK PPI Output Core MoM/YoY (JUL) 0.2% / 2.2% 08:30 UK DCLG UK House Prices YoY (JUL) 11.1% 12:30 US Advance Retail Sales (JUL) 0.2% 12:30 US Retail Sales Less Autos (JUL) 0.4% 14:00 US Business Inventories (JUN) 0.4% 14:30 UK Leading Indicator Index MoM (JUN) Prior 0.1% 14:30 UK Coincidentt Indicator Index MoM (JUN) Prior 0.2% 22:45 NZ Retail Sales MoM (JUN) 0.4% 22:45 NZ Retail Sales Ex-Auto MoM (JUN) Prior 0.8% 22:45 NZ Retail Sales Ex-Inflation QoQ (2Q) 0.1% 23:50 JN Tertiary Industry Index MoM (JUN) -0.2%
This and Next Week’s Highlights:
Date Region Release 14 Aug AU NAB Business Confidence, 14 Aug GE GDP 14 Aug UK A string of CPI’s, a string of RPI’s 14 Aug EC Euro-Zone GDP, Euro-Zone Industrial Production 14 Aug US Trade Balance, a string of PPI’s, IBD/TIPP Economic Optimism, ABC Consumer Confidence 15 Aug AU Westpac Consumer Confidence, Wage Cost Index 15 Aug NO Trade Balance, Exports, Imports, Norwegian Interest Rates, 15 Aug UK Bank of England Minutes, Claimant Count Rate, Jobless Claims Change, Avg. Earnings inc./ex. Bonus, ILO Unemployment Rate, Manual Unit Wage Costs 15 Aug US MBA Mortgage Applications, a string of CPI’s, Consumer Price Index, Empire Manufacturing, Net Long-Term TIC Flows, Total NET TIC Flows, Industrial Production, Capacity Utilization, DOE US Crude Oil Inventories, NAHB Housing Market Index, 15 Aug CA New Motor Vehicle Sales, Manufacturing Shipments 15 Aug NZ ANZ-Business NZ PMI 15 Aug JN Net Stocks/bonds Investment
What's going on?
- Aussie finding renewed strength as RBA raises inflation forecast significantly, suggesting that 6.50% is not year end result to fighting inflation, with AUDNZD the biggest mover in the Asian trading session.
- Despite consensus calling for a lower Q2 GDP figure out of Japan, growth still manged to dissapoint at 0.1%, which leaves us a bit puzzled, to why JPY should go higher then for any other reason than risk aversion.
FX
| EUR | USD | JPY | GBP | CHF | AUD | CAD | NZD | NOK | SEK | PLN |
| + | 0 | - | 0 | 0 | + | + | 0 | 0 | 0 | 0 |
FX Trading Strategies
| Pair | Supp. | Resis. | Comments |
| EURUSD | 1.3610 | 1.3710 | Markets still very nervous, but central banks have brought back some stability. We buy the break of 1.3710, stop offer at 1.3685, targeting 1.3770 |
| AUDJPY | 98.60 | 102.30 | Buy the break of 100.57 bid, stop offer at 100.35, targeting 101.40 |
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