Bernanke Speaks, Gold and the Aussie Could Move

Coming Up This Week

• Canadian GDP
• Fed Chairman Ben Bernanke Speaks

Ready or not it Bernanke time. We and the rest of the financial world have spent the week talking up Fed Chairman Ben Bernanke’s upcoming speech at the Jackson Hole Symposium. We are finally here, and as mentioned on Monday, it been a fairly choppy trading week as many Forex traders are on the sidelines or trimming their trading activities in prelude of the speech. Traders are hoping to hear from the Fed Chairman an update of whether the Fed is ready to apply further monetary stimulus at its upcoming FOMC Meeting. In the Fed’s previous meeting, they hinted to that fact, but doubts have risen of whether they actually will make changes. If Bernanke fails to give much clarity about the matter, we could see a fall in equities and the dollar rally.

Euro & Dollar See Strength Ahead of Jackson Hole

Coming Up This Week

• Preliminary US GDP
• US Pending Homes Sales
• Late Wedneday/Early Thursday – NBNZ Business Confidence and Australian Building Approvals

As expected, Forex traders continue to look ahead to Friday’s speech from Fed Chairman Ben Bernanke. As such, market moves have been muted. Although the gains have been small, it is worth noting that both the Euro and dollar are strengthening overall this week. As such, the dollar’s strength could be revealing low expectations that Bernanke’s will yield much new information about the Fed’s future actions. Also, the Euro’s strength could be an indication that Forex traders are becoming more comfortable with the rumored plans of monetary policy actions from the ECB.

Trading This Week - Jackson Hole Everywhere

Coming Up This Week

• Tuesday - US Consumer Confidence
• Wednesday – US Preliminary GDP
• Wednesday – Pending Homes Sales
• Early Thursday - NBNZ Business Confidence
• Thursday - Saturday – Jackson Hole Symposium
• Friday – Fed Chairman Ben Bernanke Speaks
• Saturday – ECB President Mario Draghi Speaks

It’s another week of trading. Last week featured some back and forth of potential Fed and ECB actions, which ultimately led to the Euro and global equities advancing. This week, the two central banks will stay in focus as Fed Chairman Bernanke is set to speak on Friday at the Jackson Hole Symposium, and will be followed by ECB President Draghi on Saturday. Analysts are split on whether the two central bank chiefs will shed any new light on their respective banks’ plans or not. Nonetheless, as the main news is back ended to the end of the week, it could lead to choppy market conditions.

Market Update: Traders Stuck in Doubt

Coming Up Today

• UK Revised GDP
• US Durable Goods

After the markets convinced themselves on Wednesday afternoon that the FOMC Minutes indicated a pending easing move from the FED and rallied, doubts have begun to emerge. Triggering the second thoughts was an appearance by St. Louis Fed President James Bullard where he stated “that U.S. data has been somewhat better since the July 31-August 1 Fed meeting.” Traders reacted by selling US equities yesterday, which triggered an overall move lower in riskier currencies. Of note, the Aussie continues to see selling pressure after Australian miners have been reporting gloomy forecasts. The news has raised expectations that the RBA will be forced to cut interest rates to compensate for the potential drop in economic growth from the country’s large mining sector.

Forex Update: EURUSD & GBPUSD Breakout

Coming Up Today

• CAD Retail Sales
• USD Existing Homes Sales
• FOMC Minutes

Coming up today, Forex traders will be focusing on the FOMC Minutes. A quick recap of the Fed’s actions; with the world expecting the central bank to go the way of QE3, they have held back on applying this strategy. This has been the even though they admit that unemployment is a problem and the EU’s financial problems are slowly effecting the US economy. Therefore, Forex traders will be looking for any clues whether any members in the Fed are starting to lean towards new stimulus. If not, than it could lead to weakness in equities which would be dollar bullish.

The Week Ahead, EURUSD In Focus

Coming Up This Week!!

• Tuesday RBA MPC Minutes (AUD)
• Wednesday US Existing Homes Sales (USD)
• Wednesday FOMC Meeting Minutes (USD)
• Thursday German & French Manufacturing PMI
• Thursday US New Homes Sales (USD)
• Friday UK Revised GDP (GBP)
• Friday US Durable Goods Orders (USD)
• Next Month… ECB Meeting, lots of speculation on what they will do

Market Update - EURUSD Rallies, AUDUSD Slips

Today’s News

• Canadian CPI
• University of Michigan Consumer Sentiment

The EURUSD firmed yesterday after German Chancellor Angela Merkel's reiterated her support for ECB President Mario Draghi's vow to do “whatever is necessary to save the Euro.” On the news, the EURUSD rallied from 1.2260 early yesterday to a current high of 1.2370. Interestingly though, the EU news spilled over to the global equity market which saw gains in prices. However, riskier currencies such as the Aussie and Kiwi have been trending lower. Elsewhere, the GBPUSD continues to hold above 1.5700 as it trades near its 1.5750 long term resistance.

Market Update: GBPUSD Seeing Support

Today’s News

• UK Claimant Change “Better Than Expected”
• UK MPC Minutes “No Changes”
• US CPI – Coming up at 8:30 EST

UK Claimant Change figures were better than expected this morning. Also, the Bank of England’s MPC Minutes revealed no changes from last month as all 9 members were in favor of leaving interest rates at 0.5%. On the news, the GBPUSD traded back towards the 1.5700 figure, holding currently just below. Coming up today, Forex traders will be awaiting US CPI figures. With the USDJPY finally gathering momentum as it nears 79.00 we could see additional momentum in the Forex pair after today’s CPI numbers. Also, a low reading could knock prices of Gold lower after they fell below 1600 again today.

UK In the Spotlight For Forex Traders

Coming Up This Week

• Tuesday-UK CPI
• Wednesday-UK MPC Minutes
• Wednesday-US CPI

The Olympics is over but Forex traders will continue to put their focus on England. This week we will see a slate of important economic events from the UK, starting with tomorrow’s CPI figures and then moving on to Wednesday’s Claimant Change and MPC Minutes data. All of this news occurs after last week’s Bank of England Inflation Report, where the central bank cut its 2012 growth forecast to 0.0%. The lack of much economic movement in the UK has affected trading in the GBPUSD which continues to be in a long term trading range without much follow through momentum.

Market Update: US Banks Told To Fend For Themselves

Coming Up Today

• UK PPI Input/Output
• Canadian Unemployment Rate
• US Import Prices

US regulators told five leading banks, which included BofA and Goldman Sachs to start preparing plans to prevent them from collapsing. The regulators are basically letting the banks know that they will have to fend for themselves and not to expect government help in the event of them experiencing financial problems. While the regulators weren’t specifically indicating that they believed a collapse was around the corner, the fact that they are out warning the US’s biggest banks has triggered a risk selling environment this morning. Charts to Watch

Market Update: BoE Report

Coming Up Today

• UK Inflation Report
• Bank of England’s Mervyn King Speaks
• Australia & New Zealand Employment Change (later tonight)

Risk selling is hitting the markets this morning. The question for traders is whether the rally that began after last Friday’s NFP has fizzled and we are back to worrying about the EU, or is the current weakness simply profit taking. Looking ahead, Forex traders will be focusing on today’s Bank of England Inflation Report. After seeing UK GDP falling by 0.7% in its latest Q2 report, consensus among traders is that the Bank of England will lower their growth forecasts to 0.0% for the year from their previous estimate of 0.8% growth in 2012. If they don’t take down their numbers, the BoE will need to offer a very convincing reason why they believe the second half will show improvements.  Charts to Watch  EURUSD: After a nice move higher, the EURUSD’s rally has hit resistance as it approached the 1.2400 figure. Currently, the pair has been consolidating between the 1.2330 and 1.2350 level. The current trading action suggests we could be seeing a potential breakout trade taking place if the EURUSD trades above 1.2400 resistance or falls below last week’s lows.  

 GBPUSD : Within a long term trading range of 1.5450 and 1.5750, the GBPUSD is also experiencing a short term range and has retraced back below 1.5600 after hitting a high of 1.5680 this week. As such, with momentum fading, the GBPUSD is vulnerable to a drop back below 1.5500 if today’s BoE report underwhelms.

 

Market Update: Will the US Keep the Risk Rally Going?

Coming Up This Week

• Tuesday: AUD Interest Rate Meeting
• Thursday: JPY BoJ Policy Report
• Friday: CAD Employment Change

For at least a day we are back to the “good US news” equals a falling dollar and everything else moving higher. This was seen during Friday’s Non Farm Payrolls figures which triggered an overall risk rally in the markets and completely reverse the sentiment from last Thursday’s ECB Interest Rate Meeting. The trading action seems to indicate that more than anything else (more than budget cuts and austerity), traders want to see economic growth. While one Non Farm Payroll report doesn’t indicate the US is roaring back, it does show that the three quarter growth of Q3&4 of 2011, and Q1 of 2012 isn’t completely reversing. As such, if US figures continue to beat expectations, they should keep the risk rally going.

Market Update: Non Farm Payrolls Loom

Coming Up Today

• UK Services PMI
• US Non Farm Payrolls
• US ISM Non -Manufacturing PMI

After Wednesday’s lack of a changes at the Fed’s FOMC Meeting, Forex traders are gearing up towards today’s Non Farm Payrolls report. The numbers come after ECB Chairman Mario Draghi shook up the Forex trading world yesterday by backtracking on his statement that the ECB “would do whatever it takes to preserve the Euro.” Draghi stated yesterday that the ECB would be proactive with its bond purchases. However he added that the German Bundesbank isn’t a big supporter of the initiative. The EURUSD plunged on the news falling to a low of 1.2130 compared to earlier highs of 1.2375. The drop caused massive confusion among trades who were initially buying the Euro on initial wire reports of the ECB extending its bond purchases. The initial spike was short lived as moments later Draghi clarified the ECB’s role.

Looking ahead, Forex traders continue to be watching Italian and Spanish yields which moved higher following the ECB’s meeting. Changes in yields are a barometer for trader’s sentiment towards the entire EU and have affected prices of the Euro. Also, the dollar will be in focus as a better than expected Non Farm Payrolls figure could extinguish any expectations that the Fed will act at its next meeting.

Forex Market Update: UK & US Data

Coming Up Today

• UK Manufacturing PMI
• US ISM Manufacturing PMI
• US ADP Employment Change
• FOMC Statement

We have a lot coming up today for Forex traders. Starting the day will be the UK’s Manufacturing PMI results. Remember, one of the week components to last week’s weak UK GDP results was manufacturing output. Therefore, expectations are probably not very high for today’s number.

Later in the day, US data will be dominating the headlines. First will be the ADP Employment data which is a precursor to Friday’s Non Farm Payrolls number. Followed by the afternoon’s FOMC Statement. Going into today’s Fed Meeting, Bernanke and Co. have been talking down another round of quantitative easing, even as they admit employment growth has been sluggish. As such, unless suddenly switch gears on their monetary policy approach, we can expect the Fed to remain in its “wait and see” pattern.