Trading plan for August 15
Key market drivers for August 15 (Friday)
GBP: Second Estimate GDP (8:30 GMT)
CAD: Manufacturing Sales (12:30 GMT)
USD: PPI, Empire State Manufacturing Index (12:30 GMT), Industrial Production (13:15 GMT), Prelim UoM Consumer Sentiment (13:55 GMT)
The long-awaited euro area’s GDP has led to a muted reaction from the market. It was a “sell-on-rumors-buy-on-fact” reaction, and EUR/USD returned up to $1.3400 from the daily lows below $1.3350. Euro remains in the sideways range and still has plenty scope to continue doing so before it reaches the downtrend line. The 20-day MA is declining (currently at $1.3418). Further resistance is at $1.3450 and finally $1.3470 where the sellers will surely re-emerge. Nothing is on the euro zone’s agenda tomorrow. In fact, French and German banks will be out for the bank holidays, so lower liquidity allows us to expect higher volatility. Data from the US will rule the day, and note that the forecasts aren’t very optimistic, so we expect EUR/USD to finish the week above $1.3320.
GBP/USD pulled below the $1.6700 support on Thursday. Negative effect from the dovish Bank of England on Wednesday persists. The BOE policymaker David Miles increased pressure on the cable on Thursday by saying the central bank feels no immediate pressure to raise interest rates. If you are still not in GBP shorts, you can jump into the train with a sell order on a break below $1.6650 (200-day MA). Next support is seen at $1.6540 and $1.6450. Our medium term target lies at $1.6300. The cable is oversold, but we expect the currency to stay below $1.6700 in the current environment. Watch the second estimate Q2 GDP release on Friday (8:30 GMT). The figure is expected to stay unchanged at +0.8% q/q.
USD/JPY attempted to push higher on Thursday, but was capped at 102.60. The market is not anymore impressed by the chaotic moves of the pair. However, we should note that the pair holds above the former 2014 resistance line and above the weekly Cloud. Support is seen at 102.30, 102.00 and 101.50. Friday focus will be on the US statistics as Japanese agenda is empty.
AUD/USD has managed to climb higher recoiling up from the 55-period average on H4 and getting inside the Cloud to test its upper limit. Aussie was supported by the general easing of concerns about Ukraine and good performance of the equity markets. Longer lower shadow of the daily candle allows some more upside (to $0.9350) as long as the pair’s trading above $0.9300.