After a week driven by weaker USD, the week ahead is majorly based on GDP data and BoJ Governor Kuroda’s speech and the Fed Chair Janet Yellen Jackson Hall Symposium speech.
20 August, STO – Last week the market was driven by weaker USD driven by subdued Retail Sales and not encouraging July FOMC minutes as investors were pricing out odds for September Fed rate hike. While some analysts claimed last week’s USD weakness as the end of the USD dominance, it is likely that the week ahead will create a better direction for the Forex market ahead.
Into the week of August 22nd to 26th
Looking into the week of 22-26 August, traders can expect mix of technical and fundamental drivers creating the market movement. These technical and fundamental indicators will have direct impact on JPY, USD, GBP and CAD pairs as well as defining the direction of the crude oil trend.
BoJ Governor Kuroda’s speech: As USDJPY is testing the psychological 100.00 barrier, investors will be closely following Governor Kuroda’s speech at the Bank of Japan’s Fintech Forum. The biggest focus will be based on BoJ’s reaction on strengthening JPY. Given the usual focus of the BoJ based on weakening the JPY to create stronger momentum in the export based Japanese economy investors will be looking for hints on the following QE possibilities.
UK GDP: Scheduled Friday, 9:30 BST. This is the second estimate release for Q2 2016 before Brexit. Growth of 0.6% is expected to be confirmed with this release. However, bigger concerns stem from expectations of the Q3 estimate post-Brexit vote. Analysts expect mild UK recession.
US GDP: Scheduled Friday, 13:30 BST. While the preliminary Q2 2016 US GDP data was disappointing, analysts expect to see the data on Friday to be at 1.1% vs. 1.2% growth previously. The data is also expected to have an impact on the Fed rate hike commentary or decision-making as well.
Janet Yellen Jackson Hall speech: Fed chair Jannet Yellen is speaking at the Jackson Hall Symposium on Friday. Analysts expect Fed Chair Yellen to provide hints on Fed’s thinking as well as timing of the next Fed rate hike.
Technical FX analysis for GBPUSD
In the UK, post-Brexit data of Retail Sales data surprised the market, helping to alleviate some of the Brexit fears and in turn supporting the sterling.
Hence, GBPUSD has rebounded from a support at 1.288 and returned back into a sideway consolidation range bound by 1.3500 and 1.305 levels. From here, erratic price movement could be expected and technical opportunity will be with oscillators along with range indicators which will play an important role when trading.
Our support levels fall on 1.305 and 1.288 levels respectively. While resistances are at 1.320, 1.335 and 1.350 points accordingly. Based on the current market sentiment, GBP sellers are expected to get stronger between 1.3315 – 1.3500 level.
Technical FX analysis for USDCAD
The Canadian dollar led the bloc of commodity currencies as crude oil prices continued their grind higher. During the week ahead, USDCAD is expected to be driven by Wednesday’s US Crude Oil inventories announcement and Friday’s Jannet Yellen Jackson hall speech.
Technically, USDCAD showed signs of bullish correction on Friday reversing from 1.278 level and is expected to reach 1.298 – 1.3030 levels during the week ahead. From 1.30 level risk/reward will be skewed to the downside. Our major support levels are located at 1.285, 1.278, and 1.272. While resistance areas are expected at 1.292 and 1.298.
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