Trading plan for August 13
Key market drivers for August 13 (Wednsday)
AUD: China’s Industrial Production (05:30 GMT), Westpac Consumer Sentiment (00:30 GMT), Wage Price Index (01:30 GMT)
GBP: Labor market data (08:30 GMT), BOE Gov Carney Speaks & BOE Inflation Report (09:30 GMT)
EUR: Industrial Production (09:00 GMT)
USD: Core Retail Sales & Retail Sales (12:30 GMT)
NZD: Retail Sales (22:45 GMT)
In line with our expectations EUR/USD slid close to the recent lows testing levels below $1.3340. Euro’s decline accelerated after German ZEW economic sentiment index came below forecasts, at the lowest level since Dec. 2012 of 8.6. Euro has started to base and as data due tomorrow have better forecasts – economists expect an increase in the region’s July industrial production – the bulls might be able to correct up to $1.3380 (middle Bollinger band on H4). Sell orders will re-emerge in the $1.3400/20 as the market’s expectations ahead of the euro zone’s GDPs on Thursday aren’t very bright.
GBP/USD recovered from the 2-month daily low of $1.6750 in the European trade ahead of the UK data releases on Wednesday (8:30 GMT). Unemployment is expected to have decreased by almost 30K in July, while the unemployment rate – to have lowered from 6.5% to 6.4% in June. At the same time, Average Earnings Index is expected to have moved into the negative territory, what would be a downbeat factor for GBP. Later in the day (9:30 GMT), the Bank of England will release its quarterly inflation report and hold a press conference. We’ll be carefully watching the regulator’s rhetoric to get any information on the rate hike terms. We stay bearish on GBP/USD, targeting the $1.6690 area in the coming days. Resistance lies at $1.6800/10 and $1.6890/6900.
AUD/USD keeps fluctuating around $0.9265 waiting for some movers. Good NAB business confidence wasn’t enough to bring the pair out of the recent ranges. The current formation may be rather a flag (a close below $0.9250 is needed to activate this bearish pattern; a conservative target will be at $0.9210) or an ascending triangle (a close above $0.9285 will be a good sign; however, it’s a downtrend and buying will be difficult as we see resistance at $0.9297, $0.9315 and $0.9330 – any of these may cap Aussie). There’s a scope for recovery to the resistance mentioned above, but it would be wiser to use these recoveries for selling. The release of China’s industrial production data should bring some life into the pair (a slight decline in the indicator’s growth pace is expected).
USD/JPY spiked to 102.30 on Tuesday as geopolitical tensions eased a little, reviving market demand for risk. However, the upside remains limited: price gravitates to the upper border of the long-term triangle. As for the fundamental news flow, Japan is scheduled to release its preliminary Q2 GDP at 23:50 GMT (Tuesday night). Consensus forecast looks worrisome: -1.7% vs. + 1.6% in Q1. If the dismal suspicions are confirmed, expectations for additional BOJ QE will rocket, pushing USD/JPY higher. Japan will also release Monetary Policy Meeting Minutes at 23:50 GMT. Resistance lies at 102.30 and 103.00, while support – at 102.00, 101.50 and 101.00.