Trading plan for August 14

Key market drivers for August 14 (Thursday)

NZD: Business NZ Manufacturing Index (22:30 GMT on Wed), Retail Sales (22:45 GMT on Wed)
Core Machinery Orders (23:50 GMT)
MI Inflation Expectations (1:00 GMT)
French Prelim GDP (5:30 GMT), German Prelim GDP (6:00 GMT), French Prelim Non-Farm Payrolls (6:45 GMT), PPI (7:15 GMT), ECB Monthly Bulletin (8:00 GMT), Final CPI, Flash GDP (9:00 GMT)
New Houses Price Index (12:30 GMT)
Unemployment Claims, Import Prices (12:30 GMT)

Trade ideas

EUR/USD went a bit lower on the decline in the euro area’s industrial production, but then jumped to the levels above $1.3400 as US retail sales were weaker than expected (we should blame lower auto and gasoline sales for that). The pair’s now above the H4 Ichimoku Cloud. Still the pair’s jump was a bit too quick. It has reached the upper edge of its recent trading range. With a bunch of important euro zone’s data on the agenda tomorrow, the odds are that the current growth won’t be sustainable, so a trade you may try is selling. Resistance lies at $1.3430, $1.3450 and $1.3475. Downside target lies at $1.3340 (lower Bollinger band on H4). A close below $1.3335 is needed for another leg down.

GBP/USD plummeted to the levels below $1.6700 on the dovish Bank of England Inflation report and press conference. Marc Carney made it very clear that it is too early to plan rate hikes as wage growth and productivity are much lower than previously expected. Labor market data confirmed the BoE view: we’ve seen employment increase, but a negative wage growth. Markets are bitterly disappointed as earlier rate increase now looks totally unrealistic. British pound will likely stay under bearish pressure. Fix below $1.6690 will open the way to $1.6500 and potentially to $1.6300 in the medium term. Resistance lies at $1.6810 and $1.6890. The second estimate Q2 GDP release on Friday moved into focus. The figure is expected to stay unchanged at +0.8% q/q. Any negative surprises will clearly intensify GBP sell-off.

USD/JPY had a volatile Wednesday, first pushing to 102.50 on downbeat Japanese GDP (-6.8% in Q2 vs. +6.1% in Q1) and then retreating to 102.30 on worse-than-expected US retail sales. The upside remains clearly limited for now, so we await another retest of the 102.00 support in the nearest future.

AUD/USD shot up: this was a natural reaction to the better data from Australia and worse data from the US. The pair now came to the obstacle in the form of the H4 Ichimoku Cloud and the recent downtrend resistance line. Next resistance is at $0.9350. Support is at $0.9290 and $0.9260. Aussie’s short-term prospects seem better than those of euro. EUR/AUD may test the recent lows in the 1.4355 area and levels below.  

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