Forex - GBP/USD up during the Asian session

The British Pound was higher against the U.S. Dollar on Sunday.

GBP/USD was trading at 1.5512, up 0.04% at time of writing.

The pair was likely to find support at 1.5429, Wednesday’s low, and resistance at 1.5592, Tuesday’s high.

Meanwhile, the British Pound was up against the Euro and the Japanese Yen, with EUR/GBP shedding 0.18% to hit 0.8511 and GBP/JPY rising 0.28% to hit 152.59.

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Forex - USD/JPY up in Asian trade

The U.S. Dollar was higher against the Japanese Yen on Sunday.

USD/JPY was trading at 98.31, up 0.19% at time of writing.

The pair was likely to find support at 96.82, Tuesday’s low, and resistance at 98.52, Thursday’s high.

Meanwhile, the U.S. Dollar was up against the Euro and down against the British Pound, with EUR/USD shedding 0.05% to hit 1.3212 andGBP/USD rising 0.06% to hit 1.5516.

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Forex - EUR/USD down during the Asian session

The Euro was lower against the U.S. Dollar on Sunday.

EUR/USD was trading at 1.3212, down 0.05% at time of writing.

The pair was likely to find support at 1.3174, Friday’s low, and resistance at 1.3398, Wednesday’s high.

Meanwhile, the Euro was down against the British Pound and up against the Japanese Yen, with EUR/GBP shedding 0.18% to hit 0.8511 andEUR/JPY rising 0.22% to hit 130.01.

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USD/JPY Outlook September 2-6

The USD/JPY dropped sharply early in the week, but recovered most of these losses. The pair closed just above the 98 line, at 98.12. This week is fairly quiet, highlighted by the BOJ Monetary Policy Statement. Here’s an outlook for the Japanese events and an updated technical analysis for USD/JPY.

The yen got a boost as Japanese inflation numbers met expectations. In the US, manufacturing and housing numbers were weak, but GDP and employment numbers were solid.

Updates:

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

1. Capital Spending: Sunday, 23:50. This indicator measures the value of new capital spending by businesses, and its release every quarter magnifies its impact. The indicator has posted declines over the past two quarters and the downward trend is expected to continue, with an estimate of a -2% decline for Q2.
2. Monetary Base: Monday, 23:50. Monetary Base continues to rise, although the past two releases have fallen short of their estimates. The markets are expecting another rise in the indicator, with the estimate standing at 41.3%.
3. Average Cash Earnings: Tuesday, 1:30. Average Cash Earnings is an important gauge of consumer spending, which is a critical component of economic growth. The indicator rose just 0.1% in the previous release, but the markets are expecting a sharp gain of 0.8% in the August release.
4. 10-year Bond Auction: Tuesday, 3:45. Yields on 10-year bonds have not shown much movement in recent releases, with the average yield for the previous release coming in at 0.80%. No substantial change is expected in the yield of the upcoming auction.
5. BOJ Monetary Policy Statement: Thursday, Tentative. This is the key event of the week. The monetary policy statement contains the outcome of the BOJ’s decision on interest rates and may offer clues as to future monetary policy. A press conference will follow.
6. BOJ Monthly Report: Friday, 5:00. The monthly report contains an analysis of current and future economic conditions, but is a minor release and is unlikely to have a strong impact on USD/JPY.

USD/JPY Technical Analysis

USD/JPY started the week at 98.72. The pair touched a high of 98.84, but then dropped sharply to 96.82. The pair then recovered, closing the week at 98.12 as support at 97.80 (discussed last week) remains intact.

Live chart of USD/JPY:

Technical lines from top to bottom

We start with resistance at the round number of 104. This line was a key line in May 2008. At that time, USD/JPY was in the midst of a rally which saw the pair climb as high as 110.

102.50 was an important 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. With the pair losing some ground, this line has some breathing room.

98.90 was breached last week but remained intact at week’s end as a resistance line. It could be tested by the pair early in the week.

97.80 is providing support to USD/JPY. This line was quite busy in June and in late July and held firm this week as the pair dropped sharply.

96.71 is the next support line. This is followed by the round number of 95, a psychologically significant line. It continues to provide support and 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.

I am bullish on USD/JPY

The markets continue to speculate that the Federal Reserve could pull the trigger on QE tapering as early as September, and such talk is bullish for the dollar. Japanese inflation indicators were solid last week, indicating that the Japanese economy is responding to Abenomics. Analysts will be paying close attention as the BOJ releases a policy statement, and this event could be the market-mover of the week.

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GBP/USD Outlook September 2-6

GBP/USD: posted modest losses during the week but was down less than a cent at the closing bell. The pair closed the week just shy of the 1.55 line, at 1.5491. This week’s market-movers includes PMIs and the Official Bank Rate. Here is an outlook of the events and an updated technical analysis for GBP/USD.

UK releases were uneventful, while the US had a mixed week. Solid GDP and employment numbers out of the US helped the dollar post modest gains against the pound.

GBP/USD graph with support and resistance lines on it. Click to enlarge: 

1. Manufacturing PMI: Monday, 8:30. PMI releases are considered market-movers, and we will see three PMI releases during the week. Manufacturing PMI kicks off the week. The index has shown steady improvement and has posted three straight readings above the 50- point level. The upward trend is expected to continue, with an estimate of 55.2 points.
2. BRC Retail Sales Monitor: Monday, 23:01. This indicator measure retail sales at stores which are part of the British Retail Consortium. The August reading came in at 2.2%, its best showing since March. The markets will be hoping for another healthy gain in the September release.
3. Construction PMI: Tuesday, 8:30. Construction PMI has looked sharp and jumped from 51.0 in July to 57.0 in August, boosting the British pound. The markets are expecting another strong gain, with an estimate of 58.4 points. Will the indicator meet or beat this rosy prediction?
4. BRC Shop Price Index: Tuesday, 23:01. This indicator measures inflation at BRC shops. The indicator has posted three straight declines and came in at -0.5% last month. The markets will be hoping for a gain in the upcoming release.
5. Halifax HPI: Wednesday, 4th-7th. This housing inflation index provides a snapshot of the health of the UK housing sector. The index has been rising and posted a solid gain of 0.9% last month, way above the estimate of 0.3%.
6. Services PMI: Wednesday, 8:30. Services PMI is on the move and jumped to an outstanding 60.2 points last month. The markets are expecting another strong release, with an estimate of 59.8 points.
7. BOE Asset Purchase Facility: Thursday, 11:00. In his first public appearance as BOE governor last week, Mark Carney stated that the BOE would not hesitate to raise stimulus if needed. However, no change is expected in the current level of 375 billion pounds, which has not changed since June 2012.
8. BOE Official Bank Rate: Thursday, 11:00. The key interest rate has been pegged at 0.50% since early 2009 and no change is expected in the upcoming release.
9. Manufacturing Production: Friday, 8:30. After posting to consecutive declines, the key indicator rebounded sharply, with a healthy 1.9% gain in August. The  markets are expecting a smaller rise in the upcoming release, with an estimate of 0.4%. If the indicator fails to reach the estimate, we could see the pound lose ground.
10. Consumer Inflation Expectations: Friday, 8:30. This indicator has been very steady, and has posted to straight readings of 3.6%. The markets are not expecting any substantial movement in the September release.
11. Trade Balance: Friday, 8:30. Trade Balance has shown some improvement, with the deficits shrinking for the most part in recent months. The August release of -8.1 billion pounds was the smallest deficit since September 2012. The markets are expecting little change in the upcoming release, with an estimate of -8.2 billion pounds.
12. NIESR GDP Estimate: Friday, 14:00. This indicator is released each month, and helps analysts track the all-important GDP indicator, which is released every quarter. The indicator has been posted solid gains recently, and came in at 0.7% in August.

Live chart of GBP/USD:

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5579. The pair climbed to high of 1.5612 but then dropped sharply, falling to a low of 1.5482. GBP/USD closed the week at 1.5491, as support at 1.5484 (discussed last week) held firm.

Technical lines from top to bottom:

We start with resistance at the round number of 1.60, a key psychological barrier. This line was last tested in mid-January, when the pound went on a sharp slide that saw it fall below the 1.49 line.

1.5944 saw a lot of activity in November 2012 and this past January.

1.5832 was busy in late January and has remained in place as a resistance line since February. 1.5752 was last breached in June, marking the peak of a rally by the pound which started in May.

1.5648 saw a lot of activity in June and continues to provide resistance. This line was breached as the pair moved higher early in the week, but remained intact at the end of the week.

1.5550 saw action in mid-June, as GBP/USD pushed past this line and climbed as high as the mid-1.5750 range. It was breached for the second straight week, but remained intact at the end of the week.

1.5484 continues to  provide support to GBP/USD. was last breached in June, as the pound went on a sharp skid that saw it drop below the 1.49 line. This line held firm this week as the pair lost ground and dripped below the 1.55 line.

1.5350 saw some action in the first week in August, when the pound started a rally that saw it climb above the 1.57 line.

1.5258 is the next line of support. 1.5196 saw action in mid-July and again in the first week of August.

1.5110 was busy in July but has had a quiet August as the pair continues to trade at higher levels.

1.5000 is the final support level for now. It is a critical support line, and has remained in place since early July.

I am bearish on GBP/USD.

The US Federal Reserve hasn’t given many clues as to when it might begin QE tapering, but speculation is increasing that the Fed could make a move in September. A well, market sentiment remains positive about the US economy, so the dollar could post further gains against the pound this week.

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Forex - EUR/USD weekly outlook: September 2 - 6

The euro eased back from five-week lows against the dollar on Friday but still ended the week lower as concerns over a possible U.S. military intervention in Syria underpinned dollar demand.

EUR/USD fell to lows of 1.3174, the lowest since July 25 before paring back some losses to settle at 1.3218, 0.17% lower for the day and ending the week down 1.19%.

The pair is likely to find support at 1.3172, Friday’s low and resistance at 1.3300.

The dollar remained supported amid concerns over prospects for a U.S. led military intervention against Syria, following accusations the government used chemical weapons against civilians.

Meanwhile, data on Friday showed that U.S. consumer sentiment was lower in August, pulling back from July’s six-year high. The final reading of the University of Michigan's consumer sentiment index slipped to 82.1 from a final reading of 85.1 in July. 

The report came one day after official data showed that U.S. second quarter growth was revised sharply higher, indicating that the economic recovery is on track.

The Commerce Department said gross domestic product expanded at an annual rate of 2.5% in the three months to June, above expectations for growth of 2.2% and up from a preliminary estimate of 1.7%.

The upbeat data reinforced the view that the Federal Reserve could start phasing out stimulus measures as soon as next month.

The euro came under pressure after official data on Friday showed the number of unemployed people in the euro zone fell by 15,000 in July, but the unemployment rate remained unchanged at a record high 12.1%.

The traditional safe haven yen was stronger against the euro on Friday, with EUR/JPY falling  to lows of 129.31, the lowest since August 20 before trimming losses to settle at 129.73, 0.33% lower for the day and extending the week’s losses to 1.33%.

In the week ahead, markets in the U.S. are to remain closed on Monday for the Labor Day holiday. Investors will be closely watching Friday’s key U.S. nonfarm payrolls report, amid ongoing speculation over when the Fed will start to unwind stimulus measures.

Sentiment on the euro is likely to remain fragile ahead of Thursday’s European Central Bank policy meeting.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, September 2

Markets in the U.S. are to remain closed for the Labor Day holiday.

Tuesday, September 3

In the euro zone, Spain is to release official data on the change in the number of people unemployed, a leading indicator of economic health.

Later in the day, the Institute of Supply Management is to release data on manufacturing activity in the U.S., a leading indicator of economic health.

Wednesday, September 4

The euro zone is to release official data on retail sales, while Spain and Italy are to release reports on service sector activity.

The U.S. is to release data on the trade balance, the difference in value between imports and exports.

Thursday, September 5

In the euro zone, Spain and France are to hold auctions of 10-year government bonds. Germany is to publish government data on factory orders, a leading indicator of production.

The ECB is to announce its benchmark interest rate. The announcement is to be followed by what will be a closely watched press conference with President Mario Draghi.

The U.S. is to release the ADP nonfarm payrolls report on private sector job creation, as well as the weekly government report on initial jobless claims.

Later Thursday, the ISM is to release data on non-manufacturing activity in the U.S., a leading indicator of economic health.

Friday, September 6

Germany is to release official data on the trade balance and industrial production.

The U.S. is to round up the week with closely watched government data on nonfarm payrolls and the unemployment rate, as well as data on average hourly earnings. 

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Forex - Weekly outlook: September 2 - 6

The dollar ended the week broadly higher against the other major currencies on Friday, but was lower against the yen as the prospects for a U.S. military strike against Syria bolstered safe haven demand.

Concerns over a possible U.S. military intervention mounted after U.S. Secretary of State John Kerry said Friday that the U. S. would punish Syrian President Bashar al-Assad for a "brutal and flagrant" chemical weapons attack that killed nearly 1,500 people in Damascus.

The euro fell to five-week lows against the dollar, with EUR/USD hitting session lows of 1.3174, before paring back some losses to settle at 1.3218, 0.17% lower for the day and ending the week down 1.19%.

The euro came under pressure after official data on Friday showed the number of unemployed people in the euro zone fell by 15,000 in July, but the unemployment rate remained unchanged at a record high 12.1%.

The traditional safe haven yen strengthened against the dollar and the euro on Friday, with USD/JPY falling as low as 97.87, before settling at 98.16, down 0.22% for the day and ending the week 0.15% lower.

EUR/JPY fell to lows of 129.31, the lowest since August 20 before paring back some losses to settle at 129.73, 0.33% lower for the day and extending the week’s losses to 1.33%.

In the U.S., data on Friday showed that U.S. consumer sentiment was lower in August, pulling back from July’s six-year high. The final reading of the University of Michigan's consumer sentiment index slipped to 82.1 from a final reading of 85.1 in July. 

The report came one day after official data showed that U.S. second quarter growth was revised sharply higher, indicating that the economic recovery is on track.

The Commerce Department said gross domestic product expanded at an annual rate of 2.5% in the three months to June, above expectations for growth of 2.2% and up from a preliminary estimate of 1.7%.

The upbeat data reinforced the view that the Federal Reserve could start phasing out stimulus measures as soon as next month.

The pound was little changed against the dollar on Friday but ended the week 0.49% lower at 1.5506. The dollar also ended the week higher against the Swiss franc, with USD/CHF advancing 0.86% to settle at 0.9300.

In the week ahead, markets in the U.S. are to remain closed on Monday for the Labor Day holiday. Investors will be closely watching Friday’s key U.S. nonfarm payrolls report, amid ongoing speculation over when the Fed will start to unwind stimulus measures.

Sentiment on the euro is likely to remain fragile ahead of Thursday’s European Central Bank policy meeting. Interest rate decisions by the Bank of Japan, the Bank of England, the Reserve Bank of Australia and the Bank of Canada will also be in focus.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, September 2

Japan is to release data on capital spending. China is to release revised data on manufacturing activity. Australia is to publish data on building approvals, a leading indicator of future construction sector activity.

The U.K. is to produce data on manufacturing activity, a leading economic indicator, while Switzerland is to publish its SVME PMI.

Markets in the U.S. and Canada are to remain closed for the Labor Day holiday.

Tuesday, September 3

The RBA is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

Australia is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity, as well as a report on the current account.

Japan is to publish data on average cash earnings, which is closely linked to consumer spending.

In the euro zone, Spain is to release official data on the change in the number of people unemployed, a leading indicator of economic health.

Elsewhere in Europe, Switzerland is to publish data on second quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic health.

The U.K. is to produce data on construction activity, an important economic indicator.

Later in the day, the Institute of Supply Management is to release data on manufacturing activity in the U.S., a leading indicator of economic health.

Wednesday, September 4

Australia is to release data on second quarter GDP, the broadest indicator of economic activity and the leading measure of the economy’s health.

The euro zone is to release official data on retail sales, while Spain and Italy are to release reports on service sector activity.

The U.K. is also to release data on service sector activity, a leading indicator of economic health.

Both the U.S. and Canada are to release data on the trade balance, the difference in value between imports and exports.

Later Wednesday, the BoC is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

Thursday, September 5

Australia is to release official data on the trade balance.

The BoJ is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The rate announcement is to be followed by a press conference.

In the euro zone, Spain and France are to hold auctions of 10-year government bonds. Germany is to publish government data on factory orders, a leading indicator of production.

The ECB is to announce its benchmark interest rate. The announcement is to be followed by what will be a closely watched press conference with President Mario Draghi.

In addition, the BoE is to announce its benchmark interest rate.

The U.S. is to release the ADP nonfarm payrolls report on private sector job creation, as well as the weekly government report on initial jobless claims.

Later Thursday, the ISM is to release data on non-manufacturing activity in the U.S., a leading indicator of economic health.

Friday, September 6

Germany is to release official data on the trade balance and industrial production.

The Swiss National Bank is to release data on foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets. Meanwhile, Switzerland is to produce government data on consumer price inflation, which accounts for a majority of overall inflation.

The U.K. is to publish data on manufacturing production, consumer inflation expectations and the trade balance.

Canada is to release official data on the change in the number of people employed and the unemployment rate. In addition, Canada is to publish its Ivey PMI.

The U.S. is to round up the week with closely watched government data on nonfarm payrolls and the unemployment rate, as well as data on average hourly earnings. 

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China manufacturing PMI rises more-than-expected

Manufacturing activity in China rose more-than-expected last month, official data showed on Thursday.

In a report, China Logistics Information Center said that Chinese Manufacturing PMI rose to an annual rate of 51.0, from 50.3 in the preceding month.

Analysts had expected Chinese Manufacturing PMI to rise to 50.6 last month.

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