Trading plan for August 8

 Key events to watch on Friday (Aug. 8)

JPY: Current Account (23:50 GMT on Thursday), Monetary Policy Statement, BOJ Press Conference (tent.)

AUD: RBA Monetary Policy Statement, Home Loans (1:30 GMT)

CNY: Trade Balance (tent.)

EUR: German Trade Balance (6:00 GMT), French Industrial Production (6:45 GMT)

GBP: Trade Balance (8:30 GMT)

CAD: Employment Change, Unemployment Rate (12:30 GMT)

USD: Prelim Nonfarm Productivity and Unit Labor Costs (12:30 GMT)

CNY: CPI, PPI (1:30 on Saturday)

Trade ideas

Mario Draghi has managed to make some moderate and skillfully worded comments. EUR/USD initially fell on the news about QE preparation, than rose on the ECB’s confidence about inflation, then slid again as Draghi said that the regulator does plan to conduct purchases of the asset-backed securities and that its diverges from the Fed’s. The daily 40-pip trading range of the pair can be described as narrow. The Ichimoku Cloud on H4 has once again acted as resistance around $1.3395. Yesterday’s daily bullish hammer candle wasn’t followed by the substantial correction up. This makes look for a decline to $1.3320 and $1.3295. The forecasts for the euro zone’s data due tomorrow are good. This gives euro room for consolidation in the $1.3390/30 area.

There was a sell-off in AUD/USD on a really nasty labor market data as the unemployment rate increased from 6.0% to 6.4%. Aussie is now trading on the support line connecting 2 July lows in the area of $0.9265/70. The decline was abrupt and the bulls may try for correction. Resistance will be at $0.9320 and $0.9350. We keep targeting $0.9220/00 in the weeks ahead. Asian session tommorow may also produce some sizeable moves. 

GBP/USD traded under bearish pressure on Thursday, but stayed above the Wednesday’s $1.6820 low until the end of the European session. As it was widely expected, the BoE meeting failed to bring any surprises as monetary policy was left unchanged. Cable is expected to trade under moderate bearish pressure until we get any clear policy signals from the BoE. Technical picture for the cable remains bearish with an active dead cross on the daily Ichimoku chart. Our base case scenario is a break below $1.6800 and a decline to $1.6700/6690. The upside remains capped by the $1.6880 resistance. Watch the UK trade balance on Friday.

USD/JPY bounced from 101.80 on Wednesday and gained some ground on Thursday. The Bank of Japan will announce its policy decision on Friday. There is some speculation that the Bank will express concerns about the weak Japanese exports tomorrow. That could increase speculation about additional BoJ easing and push USD/JPY higher. Next resistance lies at 103.00. However, technically, the market remains short-term bearish below 102.50. USD/JPY has already formed a number of daily candles with long shadows, what signals a high degree of market uncertainty.

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