Trading plan for July 16

By FX BAZOOKA analytical team

Important data for tomorrow:

AUD: Chinese GDP & Industrial Production (02:00 GMT)

GBP: Claimant Count Change, Unemployment Rate (08:30 GMT)

CAD: Manufacturing Sales (12:30 GMT), BOC Meeting (14:00 GMT), BOC Press Conference (15:15 GMT)

USD: PPI (12:30 GMT), Fed Yellen’s testimony (14:00 GMT)

Trade ideas

EUR/USD will be driven primarily by the news from America. On Tuesday trading has become more volatile. The pair was winging up and down on lower-than-expected data from the euro area and then from the US and after that ahead of Janet Yellen’s testimony. The range for the pair is $1.3640/$1.3570. The bulls seem weaker, but there are still many buyers at the bottom of this range. Further support is at $1.3550. Investors still don’t put much belief into Mario Draghi’s promises of easing. At the same time, the Fed is being evasive either. In this situation of uncertainty traders are afraid to make bets on breakthrough down.

GBP/USD soared by more than one figure on Tuesday, approaching the recent 6-year highs of $1.7190. High UK inflation figure (+1.9% y/y vs. 1.6% expected) revived the market expectations for sooner BoE rate hike and supported the British currency. At the same time, the BoE Governor Mark Carney sounded very cautious, saying the regulator “was not yet sure when would the rates start to rise, as that would be dependent on economic data”. Wednesday will be another critical day for the cable as UK will release labor market data. May unemployment rate is expected to decline from 6.6% to 6.5%, what could support the GBP. Claimant count is forecasted to contract by 27.1K in June (prior: 27.4K). The pair is now supported by the $1.7100 mark. Next resistance for the cable lies at $1.7190/7200, $1.7220 and $1.7300.

USD/JPY gained some ground late Tuesday, testing 101.60. The BOJ policy meeting didn’t bring much volatility to the markets as the bank didn’t show any interest in adding monetary stimulus into the economy. The Fed’s Yellen testimonies are a potential market-moving factor both on Tuesday and on Wednesday. A more hawkish tone could push the pair to 102.30 and 102.80. However, if Yellen maintains the recent lightly dovish stance, USD/JPY is likely to slip back to the 101.00 support.

AUD/USD did test lower levels easing to Thursday’s minimum at $0.9360. Resistance is at $0.9385, $0.9400 and $0.9412. Support is at $0.9360, $0.9340 and $0.9320. The minutes of the Reserve Bank of Australia’s meeting turned out to be neutral. We would use Aussie’s advance to sell the pair. The height of the entry level will depend on the incoming data from the US and China.

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