Forex Trading Signal for 19th August 2013

                                                                                


Japan (Tokyo)                               United Kingdon (London)                        USA (New York)

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EUR/USD

 Down Trend :

 (1) SELL

E/P: 1.33345

T/P: 1.32800

S/L: 1.33700

GBP/USD

Down Trend:

(1) SELL

E/P: 1.56250

T/P: 1.55800

S/L: 1.56600

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USD/JPY Outlook August 19-23

USD/JPY had a relatively quiet week and showed little change at the end of the week. The pair closed the week slightly higher, at 97.51. The upcoming week has a very light schedule, with just three releases. Here’s an outlook for the Japanese events and an updated technical analysis for USD/JPY.

Japanese releases did not impress last week, as Preliminary GDP missed the estimate and Core Machinery Orders posted a decline. In the US, Employment Claims looked sharp, but manufacturing numbers were weak and the week ended on a sour note as consumer sentiment data slumped.

USD/JPY daily chart with support and resistance lines on it. Click to enlarge: 

1. Trade Balance: Sunday, 23:50. Trade Balance is directly linked to currency demand, since foreigners must purchase yen to buy Japanese exports. The indicator continues to post monthly deficits, although the August figure of -0.60 trillion yen was the lowest deficit since September 2012.
2. All Industries Activity: Tuesday, 4:30. This indicator looks at the change in total value of goods and services purchased by businesses. The services portion of the indicator was released earlier this month in the Tertiary Activity Industry indicator, so this release has minor significance.
3. Jackson Hole Symposium: Thursday-Saturday. The Jackson Hole Symposium in Wyoming is an important economic conference attended by central bankers, finance ministers, financial market participants and academics from around the world. With speculation that the Fed could taper QE as early as September, the conference could be prove to be a market-mover and will be carefully monitored by analysts.

*All times are GMT

USD/JPY Technical Analysis

USD/JPY started the week at 97.19. The pair touched a high of 98.68 and then lost ground, dropping to a low of 97.04. USD/JPY moved higher and closed the week at 97.51, as the resistance line of 97.80 (discussed last week) remained intact at the end of the week.

Live chart of USD/JPY:

Technical lines from top to bottom

We begin with resistance at 102.50. This was a key resistance line in late May but has been quiet since that time.

101.44 was the post-crisis high seen in April 2009, and has not been tested since mid-July. 100.85 was busy in July as the dollar pushed above the 100 level.

The significant 100 level saw a lot of activity in July. It has strengthened as a resistance line as the pair trades at lower levels.

98.90 held firm as the pair moved higher early in the week. 97.80 was quite busy in June and in late July and is currently providing weak resistance.

96.71 has reverted back to a support role. This line could face pressure if the yen flexes some muscle.

The next support level is at the round number of 95, which was last tested in mid-June.

93.79 marked the low point of a rally by the dollar which started in mid-June and saw the pair climb to the mid-101 range in July.

92.86 saw action in early March and again in early April. The latter date marked the low point of a yen rally which saw USD/JPY climb very close to the 100 level.

The final support line for now is 90.90. This line has remained intact since late January.

I am bullish on USD/JPY

Fundamental data out of both the US and Japan was not all that strong. However, if US employment numbers continue to improve, speculation will increase about QE tapering, which is a dollar-positive event. The Federal Reserve hasn’t hinted at any imminent moves, but the markets are looking for some action on this front as early as September.

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Forex - GBP/USD weekly outlook: August 19 - 23

The pound ended the week close to two-month highs against the dollar on Friday after employment and retail sales data out of the U.K. boosted the outlook for the economic recovery.

GBP/USD dipped 0.05% against the dollar to close at 1.5624 on Friday, down from session highs of 1.5655, the highest since June 19 and ended the week 1.09% higher.

Cable is likely to find support at 1.5564, the low of June 18 and resistance at 1.5735.

The dollar edged higher against sterling on Friday after the University of Michigan said its consumer sentiment index fell from a six-year high of 85.1 in July to 80.0 in August. Economists had expected the index to tick up to 85.5.

Separate reports showed that U.S. housing starts rose less-than-expected in July and building permits also fell short of expectations last month.

The data came amid ongoing speculation over how soon the Federal Reserve will start to phase out its bond buying program. Fed Chairman Ben Bernanke has said that the decision to begin tapering the bank’s USD85 billion-a-month asset purchase program will depend on whether economic data is strong enough.

Expectations that the Fed may begin tapering as soon as September were boosted on Thursday after the Department of Labor said the number of people who filed for unemployment assistance in the U.S. fell to the lowest level since January 2008 last week, dropping by 15,000 to 320,000. 

The pound remained broadly supported after data showed that U.K. jobless claims fell more than expected in July, while retail sales rose strongly.

Official data on Wednesday showed that the U.K. unemployment rate remained unchanged at 7.8% in June, in line with expectations. The number of people claiming unemployment benefits fell by 29,200 in July, better than expectations for a decline of 15,000.

Separately, the minutes of the Bank of England’s July meeting showed that the decision to provide forward guidance on future rate increases was not unanimous.

Monetary Policy Committee member Martin Weale wanted tougher measures to ensure that the pledge to hold rates at record lows did not lead to a pickup in inflation, but said he accepted the principles of forward guidance.

The minutes showed that policymakers voted unanimously in favor of keeping the bank rate steady at 0.5% and the asset purchase program unchanged at GBP375 billion.

Data on Thursday showed that U.K. retail sales climbed 1.1% in July, beating expectations for a 0.6% gain and were 3% higher from a year earlier, as sunnier summer weather boosted sales of food, alcohol, clothing and outdoor items.

Sterling also ended the week higher against the single currency, withEUR/GBP dropping 0.81% to settle at 0.8530.

In the week ahead, investors will be looking ahead to Wednesday’s minutes of the Federal Reserve’s most recent meeting, while U.S. data on initial jobless claims and the housing sector will also be closely watched. 

The U.K. is to produce revised data on second quarter growth.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday and Tuesday as there are no relevant events on these days.

Wednesday, August 21

The U.K. is to release a report on public sector net borrowing, as well as private sector data on industrial order expectations.

The U.S. is to publish private sector data on existing home sales, a leading indicator of economic health. In addition the Federal Reserve is to publish the minutes of its most recent policy setting meeting.

Thursday, August 22

The U.S. is to release the weekly government report on initial jobless claims.

Friday, August 23

The U.K. is to release revised data on second quarter gross domestic product, as well as private sector data on mortgage approvals.

The U.S. is to round up the week with data on new home sales, a leading indicator of economic health.

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