Last week was rather a tightly traded ranged week with the market mostly holding on for the release of Nonfarm Payroll Report on Friday. Although the perception was overall positive, USD still remained weaker on summary approaching yearly low against other majors. However, with ECB and BOE (plus other major central banks) expressing reluctance in making their next moves, USD was able to consolidate some its weakness and showed a sign of comeback after NFP on Friday.
For the week, the DJIA ended with 1.2% in gain, S&P with 0.2% plus, but Nasdaq dropped a measly 0.4% as traders begin to balance their portfolio away from tech. Overall the market sentiment was positive as we start the week, as traders will be focusing on the upcoming CPI release in the U.S. on Friday, which may or may not change current sentiment, especially if we were to get a strong surprise.
EURUSD: Honestly, with ECB remaining rather bullish and the fact we could see some asset purchases reducing before the end of the year, EUR is definitely expected to continue its upward trend. I would be looking to buy on dip, and as it is right now, I consider 1.1650 area to be good entries.
GBPUSD: Brexit or not, GBP is definitely recovering, just look at where it is right now (1.3025) and where it was 4 months ago (1.2170). Considering that despite recent CPI and other economic indicators portraying a lukewarm recovery, BOE is still moving ahead with talks on rate hikes, at least according to Carney. So the moral of the story is simple, BOE was more tolerate towards inflation (up to 3.5% y/y CPI reading). but not anymore. I got a feeling that as soon as CPI goes over 3% (it is 2.6% y/y now), BOE will take some action, whether it is just commenting or verbal intervention, they will do something… So it is clear, buy GBP on dip. and it will be ideal around 1.2850 if GBPUSD drops that low.
USDJPY: One of the most puzzling pair is the USDJPY because in my mind we should see 120 by now… but with the USD taking a dive, JPY has gained over 500 pips, although it still remained in range. I would not recommend a SELL trade for the pair, but a LONG entry around the low end, perhaps the 109 ~ 109.50 area.
USDCAD: CAD has been gaining but consolidated about 200 pips from the low. I believe there is still more room for it to go so if we see 1.2750 ~ 1.2900 area, I would sell the pair unless crude prices start to tumble sharply, and in that case, I would stay out.
USDCHF: I would stay out.
AUDUSD: There seems a lot of support on the AUD lately. However, it has consolidated so we could see another chance to go LONG and I am looking around below 0.7800 for long entries…
NZDUSD: 0.7300 might be a good entry to go LONG on the pair. NZD is expected to continue its ascension as both fundamental and technical support this currency to appreciate.
Of course, all of the above are my personal opinion. Market could change on a dime, so always pay attention to the news.
Forex Weekly Outlook August 7 ~ 11, 2017
August 7, 2017 by Leave a Comment