Week of Volatility: Busy Economic Calendar and Things to Pay Attention

Week of Volatility: Busy Economic Calendar and Things to Pay Attention

A busy week and risk of high volatility are waiting for us.

First, let’s try to list the important data calendar and potential impacts roughly.

Monday:

• Relatively quiet day. Mario Draghi speaks at 16:00 GMT

Tuesday:

• JPY Tokyo Core CPI GMT 00:30
• GBP Nationwide HPI GMT 08:00
• USD Pending Home Sales and Consumer Confidece GMT 15:00

Wednesday:

• JPY Retail Sales   GMT 00.50
• AUD New Home Sales and CPI GMT  01:30
• EUR French GDP Spanish CPI and German Unemployment Change GMT 09:55
• EUR German CPI GMT 12:00
• USD ADP Nonfarm, GDP, GDP Price Index  GMT 13:30
• CAD BoC Interest Rate Decision GMT 15:00
• USD FED Interest Rate Decision GMT 19:00

Thursday:

• CHY Chinese PMI GMT 02:00 – AUD, Commodities –
• JPY BoJ Monetary Policy Statement  GMT 04:00
• EUR German Retail Sales, Spanish GDP  GMT 08:00
• EUR CPI and Core CPI   GDP GMT 11:00
• USD PCE Price Index, Personal Spendings   GMT 13:30
• CAD GDP GMT 13:30
• AUD AIG Manufacturing Index   GMT: 23:0

Friday:

• AUD PPI   GMT 01:00
• CHY Caixin Manufacturing PMI   GMT 02:00
• GBP Manufacturing PMI  GMT 10:30
• USD NFP, Avarage Hourly Earnings, Unemployment Rate GMT 13:30
• USD ISM Manufacturing PMI GMT 15:30

In addition to important data releases, the Brexit and US-China trade talks are also likely to cause volatility during the week.

I will post my charts and technical trade setups later. A quick overvieew of main instruments:

EURUSD

• We have resold the pair at 1.11800. The price reached our second target level. Near term bullish trend line has almost been broken.
• FED’s 25 bp rate cut is already price in.
• NFP and EU CPI will be the determining factor of the near-term direction.
• The upside is capped by SMA200 Daily at 1.1200-1.12300.
• We keep our longer-term forecast unchanged. Closing below 1.08800 will send the pair 1.07500 and 1.06800.

GBPUSD 

• Every optimistic development in Brexit will be priced in GBP aggressively positive.
• GBP is still cheap and the only USD alternative currency to invest in. Bank of England Governor Mark Carney said Britain’s planned Brexit deal would help the country’s economy, but “almost existential” worries about global trade wars might prevent the BoE from raising interest rates. So the Boe is likely to keep the interest rates unchanged. On the other hand, Sir Jon Cunliffe, Member of the Monetary Policy Committee, said that keeping interest rates low for a long time would challenge financial stability.
• The near term bullish trend would remain unchanged as long the Cable holds above 1.27000.
• A weekly closing above 1.31800 will shift the medium-term trend to bullish.
• Once the GBP Index closes above 131.500, GBPUSD will test 1.34400, 1.36800 and 1.39200. ( Our Year-End Forecast was 1.3800-1.4000 )

GBO Index BXY failed to end the week above 129. Sterling rally will start as soon as it makes a weekly closing above 130.500.

EURGBP 

• The best and easy pair to trade and make money.
• No chance for Euro against GBP.
• From 0.93200 t0 0.85800. And the real bearish game has not started yet.
• The measured moved target of the pair is 0.85200.
• Break below 0.85200 will accelerate the sell-off. Targets are 0.84300, 0.83000, 0,81800 and 0.80600.  – BXY’s closing above 131500 will start the fresh sell-off –

GBPJPY

Another GBP cross which is worth to focus on.

We bought the Dragon at 131.500. The pair justified us and broke the neckline of the gigantic Cup & Handle pattern. The structural target of the pattern is 145.200. Our longer-term targets are 146.800, 150.00 and 153.200.

AUDUSD

• AUD CPI and Chinese PMIs may impact the Aussie this week.
• AUD strengthened due to trade war optimism. However, the upside is capped.
• RBA is likely to keep dovish monetary policy unchanged medium term.
• Bearish pressure remains as long as the pair stays below 0.69000.
• We have resold the pair at 0.68680 last week. We plan to add short at the breakout of the trend line. 0.67700 is the key support. The bearish move will be accelerated by the breakout of the support. Our medium-term targets are 0.67130 and 0.66900.
• A worse than expected NFP may change the bearish picture. But we need to see a weekly closing above 0.69000 and it is too early to speak about.

XAUUSD Gold:

Critical week for Gold.

• Money does not go the safe havens
• Easing monetary policies of the Central Banks were supposed to support the Gold prices.
• I prefer buying XAUEUR instead of XAUUSD.
• Gold must break and close above 1531 in order to continue its bullish move.
• Friday we have sold XAUUSD at 1519. Depending on the Trade Wars developments and US Macro Economic data, we may see the prices testing 1524-1530 levels.
• The medium-term direction will be determined by the 1. Upward breakout of 1532 – In this case, the targets are 1545 1555 1580 –  2. Downward breakout of 1490 – Targets are 1482 1475 1465 1440 –

We will update all interactive live charts and send entry notifications as usual.

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