Market Overview

GBP: Inflation report and wage data in the spotlight this week.

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USD/CAD

  • The CAD weakened against the USD on Friday, hit by the jobs data. Canada's economy created a net 200 jobs last month vs. median forecast of 20k and our expectations at the level of 10k. The report showed a massive 59.7k drop in full time jobs and an increase in part time jobs by 60k. The jobs data are at the top of the priority list of the Bank of Canada.
  • Our current trading strategy for the USD/CAD is to buy at 1.0900 with the target near 1.1000.

Significant technical levels:

Resistance: 1.0985 (high Aug 8), 1.1007 (high May 2), 1.1023 (high Apr 23)

Support: 1.0949 (50% of 1.1279-1.0620), 1.0910 (low Aug 8), 1.0878 (100-dma)

EUR/JPY

  • Japanese Consumer Confidence Index rose for a third straight month in July. It amounted to 41.5 vs. 41.1 in June. The categories of the Consumer Perception Indices (seasonally adjusted series), which are comprised of the Consumer Confidence Index in July are as follows: Overall livelihood: 38.5 (up 0.1 from the previous month); Income growth: 39.1 (up 1.2 from the previous month); Employment: 48.7 (up 0.3 from the previous month); Willingness to buy durable goods: 39.6 (the same as the previous month).
  • The Bank of Japan issued a summary of its economic assessment. In the opinion of the central bank sluggish Asian demand and a shift in Japanese production overseas will continue to weigh on exports. The Bank of Japan also warned that while factory output is likely to rise moderately, production of automobiles and personal computers may remain weak due to soft demand.
  • The JPY retreated from Friday's highs as geopolitical tensions eased. In line with the strategy from our Friday's newsletter we went short on the EUR/JPY at the level of 136.70. The target is 135.80 and the stop-loss level is 137.25.

Significant technical levels:

Resistance: 137.13 ( high Aug 7), 137.24 (high Aug 6), 137.71 (high Auf 5)

Support: 135.73 (2014 low Aug 8), 135.00 (psychological level), 134.40 (low Nov 21)

EUR/GBP

  • The Bank of England will release its inflation report on Wednesday, August 13. However, wage figures (also scheduled for Wednesday) may prove even more influential than the inflation report. We a drop in average earnings of 0.1% in the three months to June compared to last year and our forecast is in line with market consensus. In our opinion we can see further dampening of expectations for interest rates' hikes that could have an impact on the GBP.
  • We have taken profit on our long position on the EUR/GBP with the target of 0.7995 (see our Friday's newsletter). In our opinion daily momentum remains positive and we are looking to get long again at 0.7950.

Significant technical levels:

Resistance: 0.7997 (high Aug 8), 0.8007 (high Jul 1), 0.8027 (high Jun 30)

Support: 0.7958 (hourly low Aug 8), 0.7937 (low Aug 8), 0.7925 (low Aug 7)

Growth Aces' current trading positions:

AUD/USD: short at 0.9330, target 0.9210, stop-loss 0.9315.

EUR/JPY: short at 136.70, target 135.50, stop-loss 137.25.

We encourage you to trade with us and subscribe to our daily fundamental macroeconomic analysis newsletter (http://growthaces.com) to read the full version of our analysis right away.

Thank you for reading.

Growth Aces

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

 

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