29/07/2019
IMPORTANT DISCLAIMER
The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
EURUSD
Last Thursday, the important day for ECB, there was no change at Interest Rates but without getting into details, Mr. Draghi anticipated that there will be more easing in the European Union. Also Mr. Draghi mentioned that there was no discussion for cutting rates and the current rates will remain at least until the first half of 2020. Earlier last Thursday, there were some news regarding the German economy that was quite disappointing. More specifically, the German IFO Expectations announced to be 92.2 while the prediction was 94.0. This week the most crucial event is the FOMC Rate Decision on Wednesday where a rate cut of 25 bps or even 50 bps is expected. All these events and expectations created a very volatile environment for EURUSD last week. The first three days were quite bearish but on Thursday the instrument was really very uncertain with a day high at 1.1187 and a day low at 1.1101. Friday was bearish again confirming that the traders’ outlook for the European economy is negative. We will not open any positions until Wednesday (FOMC) but after that, if price falls significantly below 1.11, we will take some low-risk sell positions. Correspondingly, we will try some low-risk buy positions above 1.12. Besides FOMC on Wednesday other announcement that may increase volatility on EURUSD are the German CPI on Tuesday, the Eurozone Unemployment Rate and GDP on Wednesday, the US Manufacturing and Employment ISM on Thursday and Non-Farm Payrolls on Friday.
GBPUSD
The bearish direction of GBPUSD confirmed last week. We took the 1st target of 1.2410, we couldn’t take the second target at 1.2350 last week, but we took it early this morning. Fundamentally speaking, Boris Johnson Prime Minister for Great Britain and a hard Brexit is now more possible than ever. The growth of US GDP, announced on last Friday, boosted USD and lead GBPUSD even lower. Now our sell positions, target 1.2280but we must keep in mind that any unexpected statements of the new PM may be a reason for GBPUSD to earn hundreds of pips if only this statement relieves and comforts the markets regarding Brexit. The 2+ years low of the price combined with the FOMC Rate Decision on Wednesday may be good reasons for a bullish reaction. Our Machine Learning models do not confirm such a reaction yet but, in a week, full of news, nothing is impossible. Besides the US economy news and FOMC that have been mentioned at the EURUSD section, there’s the Consumer Credit & Mortgage Approvals on Monday, the Consumer Confidence early on Tuesday, the BoE Rates and the Inflation Report on Thursday following my Mr. Carney speech and the Construction PMI on Friday.
USDJPY
Our Machine Learning models that gave a bullish reaction for USDJPY, despite the technical analysis downtrend, was more than correct! All days were bullish and both of our targets (108.20 and 108.50-108.70) were taken. Now the big test for the pair is the price of 109 and this is what we will follow. Our buy positionswill have a target at the price area of 109.80 but only if there’s a breakout of 109. Even so, we are very sceptical and hesitant this week, not only because of FOMC Rate Decision but because of Bank of Japan Rate Decision early on Tuesday. Therefore, our positions will be low-risk. Other Japanese economy news include Retail Trade on Monday, Industrial Production on Tuesday (after BoJ Rate Decision) and the Minutes of June Policy Meeting on Friday.
EURJPY
The bullish reaction that we had estimated last week, finally took place on Thursday, after ECB announcements. This was not enough though and the negative outlook for EUR prevailed and the pair closed at 120.90 last week. It’s obvious that this trend dominates and a bearish trend is very possible. Of course, we must keep in mind that the Bank of Japan Rate Decision this Tuesday may turn the pair upside down with unpredictable reactions, even if the forecasts do not show rate cut. We’ll favour sell and low-risk positions this week, trusting the EUR weakness, targeting the area of 120.50. Since it’s a tight target, if we take the profit, we’ll stay out for the rest of the week, waiting for the market vibration to calm down.
EURGBP
EURGBP obviously affected from ECB announcement last week and the followed volatility moved the pair below 0.89. Last Thursday and Friday though were quite bullish, driving EURGBP back to its main uptrend and the week closed at 0.8985. A break-out of 0.90 will confirm the return of bulls and we’ll still target 0.9060 and 0.9090. It seems that the UK problems regarding Brexit are more important and serious than the weakness of EUR and this fact will lead the pair higher. We will start considering a trend reversal, only below 0.8770. The important news for the current week is the and the UK Consumer Credit & Mortgage Approvals on Monday, the German CPI on Tuesday, the Eurozone Unemployment Rate and GDP on Wednesday the UK Consumer Confidence on Tuesday, the BoE Rates and the Inflation Report on Thursday following my Mr. Carney speech and the UK Construction PMI on Friday.
USDCAD
A trend reversal for USDCAD took place last week. Pair took more than 110 pips but our Machine Learning models show that there’s a strong probability for a bearish trend again. We’ll favour two main scenarios this week. We’ll take short positions targeting 1.3130 and 1.3080 but if price crosses over 1.32, we’ll favour long positions looking for profit at the price area of 1.3270 and 1.3330. Regarding the Canadian economy the important news of the week is the Canadian GDP announcement on Wednesday and the Manufacturing PMI on Thursday. If the Canadian GDP is not far away from the predicted value if 1.3%, the dominating events will come from USD and the FOMC Rate Decision.
USDCHF
Last week we stayed out but USDCHF had a strong bullish movement and it closed at 0.9935. We believe that there’s enough fuel for reaching the area of 1:1 again but our long positions will exit earlier at the price area of 0.8990, avoiding getting into troubles with the serious resistance of 1:1. The KOF Leading Indicator on Tuesday, the SNB releases for Q2 2019 Currency Allocations on Wednesday and the CPI & PMI on Friday are the important news for the week, regarding the Swiss economy but these news are not strong enough to affect USDCHF more than the US news and most importantly the FOMC Rates Decision on Wednesday.
AUDUSD
Strong USD caused a sell-off for AUDUSD last week (more than 1.8%). The reversal of the pair, started earlier than we expected since the Chinese news that affect it a lot, lately are no good at all. This reversal is confirmed by our Machine Learning models as well. We must keep in mind though that resistances of 0.69 and 0.6850 are not easy to break. Our sell positions will activate a few pips below 0.69 and the target will be at the resistance of 0.6850. Quite quiet week for Australian economy since there’s only the Building Approvals on Tuesday and the CPI on Wednesday but if the Chinese Composite and Manufacturing PMI are below expectations, then a stronger bearish movement is even more possible.
SP500
The uptrend returned for SP500, the 3,000 points was an easy resistance and the Index closed even higher at the area of 3,022 points. The outlook is definitely bullish and but again we’ll stay out, mainly for two reasons. First of all, these levels are extremely high and bearish reactions are possible enough and secondly the upcoming storm from FOMC Rate Decision on Wednesday, brings a lot of uncertainty to the US markets.
DAX30
A very volatile and uncertain week passed by for DAX30. The first three days were bullish but Thursday was heavily bearish. Friday was kind of consolidative and this blurry situation keeps us away from trading this Index. There are some possibilities though for a downtrend if the barrage of the bad news for German economy will be continued. GfK Consumer Confidence & CPI on Tuesday, Retail Sales and Unemployment Rate on Wednesday, Manufacturing PMI on Thursday are the news for the German economy that may affect DAX30. So finally, even the technical landscape is not clear, we’ll take some small short positions, targeting the price area of 12,220 points.
FTSE100
Even if the first four days of last week were quite consolidative for FTSE100 with an idea of a light downtrend, Friday was extremely bullish. Our Machine Learning models show uptrend movement and we will trust it by opening long positions. 7,690 points is our taking profit price area.
Gold
Last week, had days with different and opposite daily trends. Monday and Tuesday were bearish, Wednesday was bullish, Thursday was bearish and Friday bullish again. The main trend was slightly bearish though but the range was tight. Since Gold has a very strong negative correlation with USD and the upcoming FOMC Rate Decision this Wednesday and NFPs on Friday will cause a volatility explosion, we’d better stay out this week. If the FED is dovish and the markets digest the idea that rates will be low for some time, we may see a strong bullish trend for Gold. On the other hand, it’s obvious that the US strategy and intentions pursue a weak USD and it is necessary for Gold since it is a USD denominated instrument.
US Oil
Last week, US Oil into the range $55.33 – $57.62 but the important fact is that it closed only $0.13 lower than the week’s open. Last week some traders took some opportunistic long trades, counted to the fact that the UK – Iran conflict may be generalized. The point is that there’s a clear uncertaint outlook for the instrument, so we’re looking for fundamental reasons that will be combined to our Machine Learning algorithms in order to make a decision for the current week. Besides the US economy news this week (mostly Rate Decision and NFPs) that will definitely increase volatility, the Middle East tension may seriously subside this week and this will lead to a bearish movement for US Oil. Our short positions will target $54.50.
