Analytical forecasts from EXNESS

[EXNESS]

Forecast for the week of June 16-20

 

Next week the most important event for the financial markets will be the US Federal Reserve's decision regarding monetary policy. It is expected that the program of purchasing QE3 assets will again be reduced by 10 billion dollars with the improvement of a number of important macroeconomic indicators in the United States in Q2 2014. At the beginning of the week we will receive May's information regarding manufacturing output and consumer inflation in the United States. The first of these indicators may grow by 0.4% (m/m) in the reporting period, reflecting a strengthening of the real sector of the US economy. As in April, the annual growth rate of consumer inflation in the United States will probably remain at 2.0%. If it exceeds this level, the US Federal Reserve will be forced in the mid-term to increase the key interest rate. Considering the gradual tightening of monetary and credit policy in the US and the loosening of monetary policy in the Eurozone, we cannot rule out the possibility that the EUR/USD pair will break through the 1.3500 mark.

 

The Bank of Japan's monthly economic report, which analyzes the activity and movement of the Japanese economy, will be released on Monday. In view of the recent tax hike on sales in the country, the report may indicate a decrease in consumer spending by Japanese households in Q2 2014, thus applying pressure to the Japanese currency. The USD/JPY pair's June high of 102.75 will likely be tested this week.

 

From Tuesday to Thursday a wide range of macroeconomic statistics about Great Britain (consumer inflation, minutes from the meeting of the Bank of England, retail sales) will be published. Last week the pound's growth was driven by Governor of the Bank of England Mark Carney's comments regarding the possibility of raising interest rates in the country sooner than market participants had expected. After the pound's small correction to its support level of 1.6920, last week's high in the neighborhood of 1.7000 will likely be tested again.

 

On Thursday the Swiss National Bank will release its decision regarding the key interest rate. The rate is expected to remain unchanged in the range of 0.00-0.25%. We note that, given the euro's decline in the forex market, the Swiss central bank's maintenance of the level 1.2000 for the EUR/CHF pair may require the national regulator to intervene in the franc's weakening exchange rate. According to our estimates, the USD/CHF pair may exceed the key resistance level of 0.9035 by the end of the week.

 

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[EXNESS]

Forecast for the week of June 23-27

 

 

In the upcoming week significant macroeconomic statistics about the world's largest economies will be published, which will help assess the level of the G7 nation's central banks' willingness to curtail asset purchase programs.

 

On Monday, June 23 we will receive the June statistics for business activity indices in China, the Eurozone, and the United States. It is expected that the business activity index from HSBC for China's manufacturing sector in the reporting period will come right up against the critical mark of 50.0 points, at 49.7 points, which will probably help support the "Aussie" and "Kiwi" commodity currencies. Over the course of the week the AUD/USD pair may test its April high of 0.9450, while NZD/USD may test its May high of 0.8775.

 

In the middle of the week the final estimate of US GDP for Q1 2014 will be published. In this period the US economy may have contracted by 1.7% (QoQ), which, in the view of the IMF, would be caused by an unusually cold winter, reduced reserves in the country, and weak external demand for American products. We note that the IMF estimates the annual growth rate of US GDP in 2014 at 2.0%, while the US Federal Reserve puts the figure at 2.1-2.3%, lower than previous forecasts of 2.8-3.0%. The US dollar's weakness on the forex market may allow the EUR/USD pair to climb to 1.3650.

This week the Bank of England will release reports on the state of the nation's credit market and financial stability. These reports will shed light on inflationary expectations for the British economy. It is expected that on Friday the final estimate of Great Britain's GDP for Q1 2014 will remain unchanged at +0.8% (QoQ). Moreover, the decrease of the deficit in the nation's balance of payments in the same period from 22.4 billion to 17.1 billion will probably give the pound an additional impetus to grow. Over the course of the week the GBP/USD pair may test 1.7050-1.7100.

 

On June 27 a large block of macroeconomic statistics on Japan will be released. In particular, in May Japan's basic consumer price index is expected to increase from 3.2% (YoY) to 3.4% (YoY), which is consistent with the ultrasoft monetary and credit policy currently being implemented by the nation's Central Bank. The USD/JPY pair will likely continue to meet near 102.30.

[EXNESS]

Forecast for the week 30.06.2014 - 04.07.2014

 

The most important macroeconomic events will occur next week on Thursday before Independence Day in the United States, when the June data on the U.S. labor market will be published, as well as the ECB's decision on key interest rate. After the recent decline in the lending interest rate from 0.25% to 0.15%, the ECB is likely to refrain from further easing of the monetary policy in the euro zone. We believe that the European regulator will want to better analyze the positive developments in the euro zone’s real economy sector after the expansion of the money supply. In the EURUSD pair, a consolidation in the range of 1,3600-1,3700 is expected during the coming week.

 

Publication of the June data on the labor market in the United States is unlikely to change the timing of closing up of the QE3 program, given the reduction in GDP of the world's largest economy in the 1^st quarter of 2014 by 2.9% (q. / q.). The Japanese currency against the U.S. dollar will be supported not only by the fall in yields of U.S. treasuries by 50 bp since the beginning of the year (in 10-year bonds), but also by the expectations of growth of business activity indices of Tankan, Japan’s largest manufacturer in the 2^nd quarter. 2014. During the week, the USDJPY pair may experience the 2014 low around the 100.80 mark.

 

Next week, the commercial commodity currencies will be in awe as they track the PMI indices for the month of June on the 2nd largest energy consumer in the world - the U.S. and China. Particular attention will be riveted to the Australian dollar - July 1, Reserve Bank of Australia will publish its decision on the key interest rate. It is expected that the rate will remain unchanged at 2.50%. On Wednesday, July 2, the May statistics on Australia's trade balance will be released against which the AUDUSD pair may be consolidated above the resistance level of 0.9460.

[EXNESS]

Forecast for the week of July 14, 2014 - July 18, 2014

 

For currency market players, the end of last week was marked by sharp growth in the USD/CAD pair amidst the publication of weak statistics for the Canadian labor market in June. This week the "Loonie" will probably test 1.0750 and 1.0800, considering the low probability that the Bank of Canada will raise the nation's key interest rate from its current level of 1.0%.

 

On Tuesday, July, 15 the British currency may break out of its two-week range of 1.7100-1.7175, sliding to 1.7050 if Great Britain's published inflation figures for June are weak. Meanwhile, the British pound's possible correction is worth using to open long positions in the expectation that Great Britain's labor market statistics, which will be published on Wednesday, will be strong.

 

The euro may experience the usual pressure this week from figures on industrial production, inflation, and the balance of payments in the Eurozone. In particular, if the region's current consumer inflation level remains at 0.5% (y/y) and the anticipated drop in industrial production remains at 1.2% (m/m), the euro may close below the support level of 1.3575 by the end of the week.

 

The behavior of the USD/JPY pair will be determined by a variety of macroeconomic statistics for the United States and Japan. If on Tuesday the Bank of Japan continues its ultra-soft monetary policy, we may see the USD/JPY pair climb to 101.70.

 

On Wednesday, June 16, figures from China may bolster the "Aussie" exchange rate, allowing the Australian dollar to test 0.9420. It is expected that in Q2 2014 the world's second largest economy will maintain GDP growth at 7.4% (y/y), accelerating its industrial production growth rate from 8.8% (y/y) to 9.0% (y/y).

[EXNESS]

Forecast for the week July 21, 2014 - July 25, 2014

 

Financial market players will remember last week for its drastic aggravation of the world's geopolitical situation, which led to a sell off of global stock indices and currencies of developing economies.

 

This week pay attention to the statistics for housing sales in the US in the primary and secondary markets for the month of June. The problems in the US housing market that caused the global financial crisis have still not allowed the US Federal Reserve to begin a cycle of raising interest rates. Moreover, the US consumer price index's jump above the 2.1% mark (y/y) in June may cause substantial growth of the world's reserve currency on the forex market. Regarding the USD/JPY pair, after it tests the 101.00 mark, we expect it to rise to the level of 101.70.

 

The British pound may exhibit considerable volatility on June 23 when the Bank of England's minutes are published. If at the July 10th meeting of the Central Bank just one of the 9 members of the Bank of England's Monetary Policy Committee expressed his or her opposition to the current soft monetary policy in the country, then we may expect to see the pound climb right up to the level of 1.717.

 

On Thursday, July 24 information will be published on the Eurozone's business activity indices in manufacturing and services. We do not rule out a decrease in these figures given the continuing military actions in Ukraine. The IMF has already announced the negative impact that events in Ukraine have on the European region. Given a breakthrough of the support level of 1.3475, the EUR/USD pair may drop to the 1.3400 mark by the end of the week.

 

Additionally, the Reserve Bank of New Zealand will announce on Thursday its decision regarding the nation's key interest rate. If the rate rises by 25 bps to 3.50% annually, the NZDUSD pair may test the 0.8800 mark.

[EXNESS]

Forecast for the week 04.08.2014 - 08.08.2014

 

According to last week's results, it became known about the July deceleration of business activity in the industrial sectors of the eurozone, Britain, Japan, which is probably due to the introduction of sanctions against Russia by these countries.

 

This week a meeting of the Reserve Bank of Australia, the ECB and the Bank of England was held. It is expected that the regulators will keep key interest rates at the levels of 2.50%, 0.15% and 0.50%, respectively. The data on the labor market in Australia may put pressure on the Aussie on Thursday, which may cause the Australian to test the 0.9250 mark. The single European currency could once again come down to the 1.3365 level, if the statistics on industrial output in the 3 largest eurozone economies - Germany, France and Italy, as well as the June data on retail sales in the euro zone will be worse than expected. In the case of the projected decline from 2.3% to 1.5% in annual growth rates of industrial production in the UK, the pound may be testing the 1.6750 mark.

 

During the week, the USD/JPY pair is likely to continue to consolidate itself in the range of 102.20 -103.00 against the background of the weak July data for the labor market in the United States, which has intensified the uncertainty of the time-frame for increasing the key interest rates in this country.

[EXNESS]

Forecast for the week August 11, 2014 - August 15, 2014

 

In the near future we expect a number of macroeconomic parameters in the Eurozone to deteriorate after the Russian Federation introduces retaliatory sanctions on the EU. This week watch the final estimate of the consumer price index in the Eurozone for the month of July. CPI is expected to be 0.4% (y/y) for the reporting period, reflecting the development of deflationary processes in the Eurozone. Furthermore, the Euro may experience pressure from the likely slowdown of GDP growth rates in the Eurozone in Q2 2014 from 0.9% (y/y) to 0.7% (y/y), and of industrial production from 0.5% (y/y) to 0.1% (y/y). We do not rule out the possibility that the Euro may fall to the level of 1.3300 by the end of the week.

 

This week the British currency will account for unemployment figures and the Bank of England's quarterly report about inflation in the country. We don't anticipate any changes to the previous estimate of Great Britain's GDP for Q2 2014. We believe that, by the end of the week, the pound will test this summer's lows in the region of the 1.6700 mark.

 

The USD/JPY pair will probably continue to consolidate in the range of 101.50-102.50. The world's reserve currency may be bolstered by July's figures for industrial production and retail sales in the US, while the yen may receive support from information about Japan's GDP for Q2 2014, and the ongoing geopolitical conflicts in Iraq and Ukraine.

[EXNESS]

Forecast for the week August 18, 2014 - August 22, 2014

 

 

This week, attention should be paid to the publication of the minutes from the last US Federal Reserve meeting, as well as the meeting of representatives of central banks and leading economists at the annual symposium at Jackson Hole. At the time, Ben Bernanke and Alan Greenspan used the annual meeting in Wyoming as a platform for important announcements. This year, a possible comment made by Janet Yellen concerning the terms of increase in key interest rates in the United States, may trigger the curtailing of the carry trade operations in global financial markets.

 

Tuesday to Thursday, the July statistics on consumer inflation, as well as the data on home sales in the United States will be released. Against the background of the expected consolidation of the world's reserve currency, we do not exclude the EURUSD pair falling to the support level of 1.3335.

 

In the light of the soft statements coming from the Bank of England, involving an interest rate rise in the UK, only in Q1 of 2015, on Tuesday, buyers of the British currency will be closely monitoring the inflation rates in the country, especially the consumer price index. On Wednesday and Thursday, the volatility of the pound strengthened against the background of the release of the Bank of England's August meeting minutes, as well as the July data on retail sales in the UK. During the week, a consolidation of the pound range 1.6650-1.6750 is expected.

 

August 21 will be a landmark day for the commodity currencies. On this day, HSBC and Markit will submit a preliminary report for this month on the index of business activity in China's manufacturing sector. In the case of the growth rate above 52 p., the AUD / USD and NZD / USD pairs are likely to test the levels of 0.9370 and 0.8550, respectively.

[EXNESS]

Forecast for the week of 08.25.2014-08.29.2014

 

 

Last week's speech by J. Yellen at Jackson Hole provided substantial support to the world's reserve currency in the FOREX market. The Chairman of the Federal Reserve said that in the event of a further improvement in the US labor market or a more rapid rise in inflation, an increase in the federal funds rate may happen sooner than it is expected by the FOMC now.

 

This week, pay attention to the August CPI in the euro zone. According to a number of forecasts, annual growth for this indicator can slow from 0.4% to 0.1%, which would require the ECB to further expand monetary stimulus in the euro zone. By the end of the week the EUR/USD pair may be reduced to the level of 1.3100

 

On Tuesday, British currency buyers will closely monitor the statistics on the number of permits issued for mortgage lending in the UK. In case of a July decrease of this index below 43.3 thousand, the pound may test the level of 1.6500. On the same day an unpleasant surprise lies in wait for buyers of the Kiwi. In case of the projected decline from 247 million to (-475 million) of New Zealand's trade balance in July, the NZDUSD pair risks falling back to its 0.8350 low of last week.

 

The USDJPY pair may rise to the level of 105.00 if the 104.20 high is renewed. American currency can be helped by data on the number of new home sales and the volume of orders for durable goods in the United States. We believe that the second estimate of the US GDP for the 2nd quarter of 2014 published on Thursday will not cause significant resonance in dollar assets.

[EXNESS]

Forecast for the week of 09.01.2014 – 09.05. 2014

 

Last week the unified European currency dropped by 1 figure, which facilitated a slowing of the consumer price index in the Eurozone from 0.4% (y/y) to 0.3% (y/y), and an acceleration of GDP growth rates in the US in Q2 2014 to 4.2% (q/q). Last year the growth of the interest differential between 10-year US and German bonds from 92 basis points to 145 basis points triggered the gradual flow of capital from the Old World to the New World.

 

On Tuesday, the AUD/USD pair, which has not experienced special problems due to the Russian sanctions restricting exports of Australian food into the Russian Federation, will test the level of 0.9370 because Australia's key lending rate will likely be preserved at 2.50%.

 

This week market participants will pay close attention to the meeting of the ECB, where the key interest rate in the Eurozone is expected to be retained at 0.15%. However, Mario Draghi's subsequent soft rhetoric may throw the euro below the 1.3100 mark.

 

On Thursday, the Bank of England and its European counterpart will apparently refrain from changing the key interest rate, leaving it at 0.50%. Nevertheless, the British currency seems to continue to be under pressure amid August's likely slowdown of the business activity index in Great Britain's industrial and service sectors. The pound is in danger of dropping to last week's low of 1.6535.

 

Buyers of the USD/JPY pair await another gift on Friday: data on US employment and unemployment. The expected growth of NFPR by 200,000 given a drop in unemployment from 6.2% to 6.1% will likely support dollar-denominated assets. We expect the USD/JPY pair to continue to grow to the level of 104.50-105.00;