Last week was all about April’s US CPI data, which was 8.3% YoY vs 8.1% expected and 8.5% YoY in March. As the number was stronger than expected it stroked inflation fears in the US and led to extreme volatility across many asset classes, most particularly stock indices and the US Dollar.
The US Dollar forex market has remained strong throughout the week and reasserted its position yesterday with a sharp drop from the Euro and an increase in the continually higher Dollar Index. The Pound is also struggling to find support as has now become commonplace. For now, the day has started out much better on Wall Street though markets are still looking at some heavy weekly losses despite opening the day very strongly.
The coming week in the markets is likely to be more volatile as there are several data releases of high importance scheduled. Also, the focus turns to the consumer as a swathe of consumer related data will be released, including Retail Sales from China, the US, and the UK:
- On Monday the day starts with the Chinese yearly Retails sales. Later the EU will release its economic forecasts and later in the day the US will release the Empire State Manufacturing Index. Also, the UK Monetary Policy Report Hearings will be released.
- Tuesday starts with the Australian Monetary Policy Meeting Minutes. Later the US releases the monthly Retails sales.
- On Wednesday in the UK the yearly Consumer Price Index is due to be released and later the Canadian monthly Consumer Price Index is due to be released.
- Thursday starts with the Australian Employment Change and then the New Zealand’s Annual Budget Release. Later the US Philly Fed Manufacturing Index, Unemployment Claims and Existing Home Sales will be released.
- Friday will be quiet with only the UK monthly Retail Sales is scheduled to be released.
Major Currencies Performance and Signals
EUR/USD
The Euro was languishing at the end of Thursday’s trading session. The common currency was as low as it had been since the early part of 2017. We remain bearish.
FORECAST: SELL
Resistance: 1.0450, 1.0500, 1.0550
Support: 1.0400, 1.0350, 1.0300
GBP/USD
The British pound also dropped back to under 1.2200. The more negative than expected comments are not the sole cause of the struggle for the Pound though they certainly did not help. We remain bearish.
FORECAST: SELL
Resistance: 1.2300, 1.2350, 1.2400
Support: 1.2250, 1.2200, 1.2150
AUD/USD
The Australian Dollar remains under stress as global traders’ sentiment shifts more heavily towards a deeper slowdown in China, and potential stagflation issues elsewhere.
FORECAST: SELL
Resistance: 0.7000, 0.7050, 0.7100
Support: 0.6950, 0.6900, 0.6850
USD/JPY
The USD/JPY remains supported on the dips with Thursdays fall looking more corrective than a turn in investor sentiment. We are neutral on the USDJPY pair.
FORECAST: NEUTRAL
Resistance: 129.50. 130.00, 130.50
Support: 129.00, 128.50, 128.00
USD/CAD
The Loonie has fallen last week as well, and we expect the bearish trend to continue. Next week Canada will release a bunch of important numbers. We are bearish on the Loonie for next week.
FORECAST: SELL
Resistance1.2950, 1.3000, 1.3050
Support: : 1.2900, 1.2850, 1.2800
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