jpy Archives - Profit Forex Signals

July 28, 2018

PFXS news for week ahead (July 30th – August 3rd)

On Monday, in the European session, Germany’s preliminary HICP rate for July will be released. The rate is forecasted to remain unchanged at +2.1% yoy if compared to previous month’s preliminary and final reading. Should the actual rate meet the forecast we could see the common currency getting some support as the rate remaining at the same high levels could be good news for the ECB. The rate could support comments made by president Draghi in his press conference after the last interest rate decision announcement and
have a positive influence to the overall inflation rate of the Euro-zone.

On Tuesday, during the Asian session we get BoJ’s interest rate decision. The bank is widely expected to remain on hold at -0.10%, as currently JPY OIS imply a probability for such a scenario of 98.61%, making it more or less an open and shut case. Hence the market’s attention is expected to turn to the accompanying statement. Despite the inflation rate being unchanged at +0.7% yoy, we would not expect a further downgrading of the bank’s expectations after it’s last policy meeting. However some further development regarding JGB’s could be possible. There is lots of ink being spilled on whether the bank will tweak it’s policy in the upcoming session while at the same time other analysts see the case for the bank to do absolutely nothing as any policy tweak could be misinterpreted as a step towards policy normalization. Also we would like to mention that recent lukewarm financial releases could blur the picture even further. Should there be a neutral to dovish accompanying statement we could see the JPY weakening as expectations for a possible tweak in t’s monetary policy may not be realized, however we would also like to point out that the last policy meeting which produced similar results had little effect on JPY.

In the European session we get France’s and Euro-zone’s preliminary inflation rates for July. The rates are forecasted to accelerate for France to +2.4% yoy if compared to previous reading of +2.3% yoy while to remain unchanged for the Euro-zone at +2.0% yoy. Should the actual rates meet the forecasts we could see the common currency getting some support as the rates are already at the ECB’s target which could be considered as satisfactory by some analysts and well in line with recent comments for a gradual acceleration.

On Wednesday, in the American session we get the US ISM Mfg PMI for July. The PMI is forecasted to drop to 59.8 if compared to previous reading of 60.2.
Should the forecast be realized we could see the greenback weakening as the drop could be perceived by the market as a bearish signal. It should be noted though that the indicator’s readings remain at rather high levels and the market may tolerate the drop. Late in the US session, the FOMC interest rate decision will be released. The bank is widely expected to remain on hold at +2.00% and Fed’s Funds Futures imply currently a possibility for the bank to remain on hold at 97.4%. Hence, market focus may turn to the accompanying statement. With the inflation being at rather high levels, the GDP growth rate latest release being also high and the unemployment rate being at rather low levels, the bank may be enabled to produce a neutral to hawkish statement paving the way for the next rate hike. We could see some elements implicitly supporting the 2018 four rate hike path argumentation and in such a case the greenback could get some support.

On Thursday, in the European session, BoE will announce its interest rate decision. The bank is expected to hike rates by 25 basis points reaching +0.75%, if compared to current rate of 0.50%. Currently, GBP OIS support such a scenario as they imply a probability for the bank to hike rates of 79.9%. With the inflation rate currently being at 2.4% which is higher than the bank’s target and unemployment being at rather low levels, the bank could hike rates indeed. However the low GDP growth rate and a potential messy Brexit coming up, could advise cautiousness on behalf of the bank. It may be the case though that the two could be combined in a dovish hike were the bank would hike rates but issue a dovish accompanying statement. The possibility of the bank remaining on hold, could cause the pound to free fall as current expectations of a rate hike are still high despite the recent negative Brexit developments.

On Friday, in the European session we get UK’s Services PMI for July. The PMI is forecasted to drop and reach as low as 54.6 if compared to previous reading of 55.1. Should the actual reading meet the forecast we could see the pound weakening as the drop is substantial and would mark a turning point to the indicators previous ascending results. However it should be noted that such a reading would still constitute a rather high reading for the particular indicator in recent results.

In the American session we get the US employment report for July. The report contains the Non-Farm Payrolls figure which is forecasted to drop as low as 195 k, if compared to previous reading of 213 k, the Average earnings growth rate which is forecasted to remain unchanged at +2.7% yoy and the unemployment rate which is forecasted to drop to 3.9% if compared to previous reading of 4.0%.

Should the actual readings meet the forecast we could see a rather strong employment report for the US. Despite the drop of the NFP figure we see the case for the high average earnings growth rate and the drop of the unemployment rate to provide a picture of a rather tight labor market, which could provide some support for the USD.

July 25, 2018

Trump meets with EU’s Juncker

US president Trump is to meet with European Commission President Juncker, later today in Washington. The meeting is expected to focus on the US tariffs on steel and aluminium as well as their extension to European cars. The main aim of president Juncker is expected to be a de-escalation of the trade tensions between the two large economies. Analysts state that a potential escalation could hurt the risk sentiment of the market for USD, not only against EUR but against JPY as well.

EUR/USD remained in a sideways movement, as analysed yesterday, well between the boundaries of the 1.1745 resistance line and the 1.1640 support line. We could see some relatively increased volatility on the pair today should the Trump-Juncker meeting display progress, however currently we retain our sideways bias. Technically, it would be evident to note that the RSI indicator in the 4 hour chart remained near the reading of 50, implying an indecisive market. Should the bulls lead the charge in the pair’s direction we could see it breaking the 1.1745 resistance line and aim for the 1.1830 resistance hurdle. Should on the other hand the bears be in the driver’s seat, we could see the pair breaking the 1.1640 support line and aim for the 1.1580 support barrier.

July 23, 2018

PFXS news for week ahead (July 23rd -27th)

On Monday, in the American session we get the Canadian Whole Sale Sales for May. The previous reading release in June was at 0.1%. Any reading above that figure should be taken as good news for the CAD while on the opposite any reading below could be taken as negative and could hurt the Loonie. Later in the American session we get US Existing Home Sales for June. The rate is forecasted to increase and reach 5.44 M compared to previous reading of 5.43 M while the Existing Home Sales are expected to increase to +0.5% mom from previous reading of -0.4% mom.

Should the actual rates meet the forecast we could see the USD caught in mixed financial data, as it would indicate the monthly rate increased but the overall reading has a minor decrease in home sales for June. Please be advised that Existing Home Sales are a very important indication of a healthy economic outlook.

On Tuesday, we get a number of PMI’s from Asia and Europe. Early in the Asian session, the Japanese Manufacturing PMI for July is to be released. The rate has no forecast at the moment, however, the previous reading was at 53.0. A higher figure than the one previously released could be taken as positive for the JPY.

In the European session we get Germany’s, France’s and Euro-zone’s preliminary PMI’s for July. Please note all European PMI’s are set to drop and should the actual readings meet the forecast we could see the common currency weakening as such readings could be regarded as a continuation of Euro-zone’s lukewarm to negative financial indicators. Please note, on the same day the EU Finance Ministers Meeting will take place but the start time is undisclosed.

On Wednesday, in the Asian session we get Australia’s inflation data for June. The quarterly CPI rate is forecasted to accelerate and reach +0.5% yoy compared to previous reading of +0.4% yoy as well as the yearly CPI rate which is forecasted to reach +2.2% yoy compared to previous reading of +1.9% yoy.

Should the actual rates meet the forecasts we could see the Aussie strengthening. We would also like to stress the fact that in the previous week Australian labour market report came out impressively strong for June. It was noted that with the labour supply still growing, less upward pressure was applied on wages and inflation so Reserve Bank of Australia is not expected to rate hike anytime soon.

In the European session we get German Ifo Business Climate Index for June. The rate is forecasted to drop at 101.5 from previous release 101.8. Should the actual rates meet the forecast we could see the common currency weakening somewhat, though it must be noted that due to the small decrease the market could perceive it as a muted event. However, any greater reading both negative and positive could create volatility for the EUR.

In the US session we get the US New Home Sales rate for June. The US New Home Sales rate is forecasted to drop and reach 0.670 M compared to previous reading of 0.689 M. Should the outcome be the same with the forecast, the greenback could weaken. However, the difference is not so significant, so the reaction could be rather minor.

On Thursday, in the European session, ECB will announce its interest rate decision. The bank is widely expected to remain on hold at 0.00%, as EUR OIS imply a probability for the bank to remain on hold at 97.61%. If the interest rate decision comes out as expected, we could see the market’s attention shifting to the accompanying statement and the following press conference. Should there be any signs of the bank starting to unwind its QE program as suggested by ECB officials previously, we could see the common currency gaining ground. Please be advised that the interest rate decision and the following press conference may leverage volatility on EUR crosses. It is expected that the asset purchases could end this year, as announced, and the market doesn’t expect an update on the policy path until March.

In the US session, we get the US New Home Sales for June. The forecast implies in increase to +2.5% from a previous count of -0.4%. Please be advised the USD could strengthen on the release of the news, should the forecast be realized.

On Friday, early in the European session we get UK’s Nationwide HPI readings for July. The UK’s yearly Nationwide HPI rate previous reading of +2.0 % yoy while the monthly Nationwide HPI headline CPI rate’s last reading was +0.5% mom.

Should the release exceed the previous readings, we may see the GBP gaining some momentum. However, most of the attention in the UK is placed on the Brexit as it is turning out to be a very difficult topic to deal with. The UK remains divided on how the matter should be dealt with and so Cable has been kept down lately.

In the American session we get the US GDP rate for July. This is the most significant event for the day and the US GDP rate is forecasted to accelerate to +4.1% qoq compared to previous reading of +2.0% qoq. Should the headline rate’s actual reading meet the forecast and the US GDP rate accelerate as well, we could see the greenback getting some support. In addition and regarding the US, during the past week Powell said the Fed will continue to slowly raise interest rates for now’ in order to keep inflation near target amid a robust conditions in the U.S. labour market.