Forex Advisor

Intraday

The dollar traded higher against all but two of its G10 counterparts during the European morning Friday. The biggest losers were NOK, AUD and CAD in that order, while the sole winner was JPY. The greenback remained virtually unchanged only against NZD.
In a particularly light calendar day, the only noteworthy indicator we get is Canada’s CPI for July, due out later in the European afternoon. The forecast is for the headline rate to have declined, while the core rate is expected to have remained unchanged. This suggests that fluctuations in the prices of volatile items such as food and energy may be the cause of a potential slowdown in the headline CPI. We see the risks surrounding the core rate as skewed to the downside as well though, given that the Price index of the Ivey PMI for July declined somewhat but remained safely within expansionary territory. Following very soft employment data for July, a slowdown in inflation could cause BoC officials to adopt a somewhat not-so-optimistic tone at their upcoming meeting in early September. Combined with an oil rally that seems to be losing momentum so far today, this could curb some of CAD’s recent gains.
USD/CAD reversed some of its recent losses during the European morning Friday, after it hit support at 1.2760 (S1). Nevertheless, the rate is still trading below the medium-term upside support line taken from the lows of the 23rd of June, and below the well-tested round figure of 1.3000 (R3). This keeps the short-term trend negative, in my view. However, I would like to see a decisive dip below the 1.2760 (S1) obstacle before getting confident on larger bearish extensions. Something like that is possible to open the way for our next support area of 1.2700 (S2). A reason I believe it is not the best time to follow that short-term downtrend though, is the Canadian CPI data to be released later the day. Expectations are for a soft report, which could cause USD/CAD to rebound above 1.2850 (R1) and perhaps challenge the 1.2920 (R2) zone. Switching to the daily chart, I would like to see the pair breaking below the 1.2650 (S3) level to trust that the longer-term downtrend is back in force. Therefore, I prefer to take the sidelines with regards to the broader picture.
Support: 1.2760 (S1), 1.2700 (S2), 1.2650 (S3)
Resistance: 1.2850 (R1), 1.2920 (R2), 1.3000 (R3)

Intraday

The dollar traded lower or unchanged against all but one of its G10 peers during the European morning Thursday. It was lower against GBP, SEK, CHF, NOK and CAD in that order, while it was higher only versus JPY. The greenback remained virtually unchanged against EUR, NZD and AUD.
UK retail sales skyrocketed in July, despite any uncertainty the “Brexit” referendum may have caused. Retail sales rebounded to +1.4% mom from -0.9% mom previously, far exceeding the forecast of a minor rise to 0.2% mom. The core rate, which excludes auto fuel, rose to 1.5% mom from -0.9% mom, beating expectations of +0.4% mom. The British pound surged on the news and continued higher in the following minutes. Considering that there are no major UK indicators next week aside from Q2 GDP data, we believe that this positive sentiment could keep fueling sterling demand for a while. However, although these stellar gains dispelled some concerns that consumer confidence would take a direct hit from the referendum uncertainty, we would not jump to any conclusions about overall demand just yet. Admittedly, part of the acceleration may be due to seasonal factors and the weaker pound that may have encouraged foreigners to spend. We doubt this heralds an extended period of strong consumer demand, and we see the risks surrounding retail sales in coming months as tilted to the downside. This was also acknowledged by the BoE’s latest Inflation Report, where the MPC judged that private domestic demand growth is likely to slow over the coming year.
EUR/GBP plunged following the strong rebound of the UK retail sales, breaking below the support-turned-into-resistance line of 0.8650 (R1). The decline was halted at the crossroad of the 0.8580 (S1) support line and the uptrend line taken from the lows of the 24th of June. A break below that key territory could carry larger bearish implications and perhaps challenge our next support, the psychological 0.8500 (S2) barrier. Our momentum studies support the case for a continuation of the decline. The RSI fell below its 50 line and approaches the 30 zone, while the MACD, although positive has crossed below its trigger line and could fall below zero anytime soon. Switching to the daily chart though, I still see a longer-term uptrend. I would treat any short-term declines that stay limited above the 0.8500 (S2) support level as corrective moves of the 24th of June – 16th of August advance.
Support: 0.8580 (S1), 0.8500 (S2), 0.8440 (S2)
Resistance: 0.8650 (R1), 0.8730 (R2), 0.8770 (R3)

“Hawkish” Fed talk boosts the dollar | 17/08/16 • “Hawkish” Fed talk boosts the dollar After being weak for most of the European day yesterday, the dollar rallied despite disappointing CPI data for July, following some “hawkish” remarks from NY Fed President William Dudley. The Fed official said that we are edging closer to the time to raise rate...

Intraday

The dollar traded virtually unchanged against most of its G10 counterparts during the European morning Friday. It was lower only against NZD, EUR, and JPY in that order.
In the absence of any major data releases thus far, investors are likely to keep their attention fixed on the US jobs report for July due out later in the day. Nonfarm payrolls are expected to have risen by 180k, lower than June’s astonishing gain of 287k, though a solid reading overall. The encouraging ADP report for July and the relatively low initial jobless claims throughout the month, both support a robust NFP print today. The unemployment rate is expected to have declined to 4.8% from 4.9%, while average hourly earnings are forecast to have accelerated on a monthly basis, something that would keep the yearly rate unchanged. The forecasts point to a month of strong employment gains overall, which could reverse some of the dollar’s recent losses.
At the same time, we also get Canada’s jobs data for July. The unemployment rate is expected to have ticked up and the net change in employment to have turned positive. We suspect that the tick-up in the unemployment rate may be due to a rebound in the labor force participation rate, something that would be positive news for the Loonie. Considering that the Canadian jobs report is released at the same time as the US report, the initial reaction on USD/CAD could be primarily due to the latter. In case of a solid US release, USD/CAD could spike higher.
USD/CAD traded somewhat lower during the European morning Friday after it hit resistance at 1.3035 (R1). Nevertheless, the rate is still trading above the well-tested round figure of 1.3000 (S1). The short-term trend appears to be negative, but given that the rate remains above the 1.3000 (S1) zone and also above the medium-term upside support line taken from the low of the 3rd of May, I would take the sidelines for now. I would like to see a decisive dip below those key support obstacles before getting confident on larger bearish extensions. Something like that is possible to open the way for our next support area of 1.2930 (S2). Another reason, I believe it is not the best time to follow that short-term downtrend is the US employment report, due out later in the day. Expectations are for a strong report, which could cause USD/CAD to rebound above 1.3035 (R1) and perhaps challenge the 1.3090 (R2) zone. Switching to the daily chart, I see that the pair is back within the triangle pattern that has been containing the price action since the 5th of April. Therefore, I prefer to take the sidelines with regards to the broader picture as well.
Support: 1.3000 (S1), 1.2930 (S2), 1.2860 (S3)
Resistance: 1.3035 (R1), 1.3090 (R2), 1.3140 (R3)