Trading plan for August 5

Main events to watch on August 5 (Tuesday)

AUD: Trade Balance (1:30 GMT), RBA Rate Statement (4:30 GMT)
CNY: HSBC Services PMI (1:45 GMT)
EUR: Spanish Services PMI (7:15 GMT), Italian Services PMI (7:45 GMT), Retail Sales (9:00 GMT)
GBP: Services PMI (8:30 GMT)
USD: ISM Non-Manufacturing PMI, Factory Orders (14:00 GMT)

Trade ideas

EUR/USD is sitting in a tight range. Tomorrow’s data releases might make the single currency move more. In our view, there’s scope for a small increase before euro turns lower. Resistance is at $1.3450, $1.3485 and $1.3500. Support is at $1.3405/00 and $1.3475.

GBP/USD consolidated slightly above the $1.6800 mark on Monday following the last week’s sharp sell-off. July Construction PMI on Monday tapered off slightly from 64.6 in June to 64.4 in July, but held above the key 50 mark. It means that UK house-building accelerated last month at a fastest rate since November 2003. Watch the Services PMI on Tuesday – the figure is expected to improve. Given the optimistic forecasts and the short-term oversold market conditions, tomorrow we concede a short-term bullish recovery, but the $1.6950 mark will likely limit the upside for now. Next resistance lies at $1.7000 and $1.7030. This week the pound will have a couple of chances for a jump, but we review them as selling opportunities. Break below $1.6800 would open the way to $1.6700.

The 103.00 mark still remains a hard nut to crack for the USD/JPY buyers. There are no important releases on the Japan’s agenda on Tuesday, so all eyes on the US ISM Non-Manufacturing PMI (forecast – upbeat). USD/JPY has a chance to resume growth tomorrow. We are ready to buy the pair on a break above 103.10 with an initial target of 104.00. Supportliesat 102.30 and 102.00.  

AUD/USD will have a volatile morning: the meeting of the Reserve Bank of Australia always set the pair to action. The pair’s trying to return above the 100-day MA ($0.9325). A close above this point on Monday will be a positive sign and technical indicators allow a recovery to $0.9360 and $0.9370 (middle daily Bollinger). Still the pair approached short-term resistance line and Friday’s candle had long shadows both waits that indicates the market’s uncertainty. The RBA may try to say something dovish, but we expect support in the $0.9280 to hold for a time being.

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