BCR Weekly Outlook (7-13 January 2019)


Posted on: 2019-01-07 (Day) By BCR Weekly Outlook


 

Key Events for this week (07/01 – 11/01)

 

Time (GMT)

Country

Currency

Event

Previous

Forecast

 

Mon 07/01 15:00

USD

ISM Non-Manufacturing PMI

60.7

59.7

 

 

 

This forward-looking indicator for the services sector is usually published ahead of the Non-Farm Payrolls, and the late publication gives it its own spotlight. The gauge surprised with 60.7 points in November, above expectations and indicating robust growth. A slide is likely now.

Wed 09/01 15:00

CAD

BOC Interest Rate Decision

1.75%

1.75%

 

 

 

The Bank of Canada raised interest rates back in October and made it a “hawkish hike”. However, the Ottawa-based institution seemed more reluctant in its December meeting, stating that the economy can continue growing without further creating a lot of inflation.

Wed 09/01 19:00

USD

FOMC Meeting Minutes

--

--

 

 

 

The Fed raised interest rates in its last decision of 2018 but downgraded its projections for 2019 from three to two hikes. Was it a dovish hike? Markets thought otherwise as expectations stood on a deeper cut in forecasts. Moreover, Fed Chair Jerome Powell said the Fed will continue shrinking its balance sheet. Quantitative Tightening remains on “auto-pilot.” The minutes from that meeting will shed some light on the thinking of the central bank ahead of its meeting later this month.

Thu 10/01 12:30

EUR

ECB Meeting Minutes

--

--

 

 

 

The European Central Bank concluded 2018 by ending the QE program, as expected. ECB President Mario Draghi was slightly cautious in his comments about the economy, expressing concern about protectionism but maintaining the expectations for a rate hike in 2019. The minutes will provide further detail.

Fri 11/01 09:30

GBP

UK GDP

0.1%

0.1%

 

 

 

The UK economy grew at a modest pace of 0.1% in October after a remaining flat in the previous two months but enjoying an OK third quarter. We will now receive data for November when the UK and the EU reached a Brexit deal, an accord that remains in tatters at the moment.

Fri 11/01 13:30

USD

US Consumer Price Index (CPI)

2.2%

2.2%

 

 

 

Headline Consumer Price Index remained flat in November, as expected and due to falling oil prices. Core CPI advanced by 0.2%, also as expected, and pushed the annual figure back to 2.2%. We will now get the numbers for December and thus for the full year.

 

 

You May Always Concern U.S. Dollar and XAUUSD (GOLD)

 

U.S. Dollar Index (DXY)

 

Weekly OHLC              95.910             96.550             95.370             95.725

Weekly Gain/Loss       -0.19%

Key Resistance            97.700             98.000

Key Support                 95.462             94.000

 

The US Dollar had an unimpressive progress in the first week of 2019 and the US Dollar is weaker against most of major pairs as the rate hikes from US Federal have vaporized while mixed economic data and a neutral to dovish Fed Chairman Powell put downward pressure on the US Dollar. In the Daily chart, the major trend-line has broken, and it settled at 95.725. The broken trend-line will open more rooms to the South and it is expected to re-test the level of 95.462. Any breakouts at this level will catalyst the Bears to embolden and giving more pressure to the Bulls, it is likely opening the way to 94.00 handle. On the other hand, another attempt to the level of 97.70 – 98.00 will be considered as a fake trend-line breakout and it might be moving higher if the 98.00 handle is broken.

 

 

XAUUSD (Gold)

 

Weekly OHLC              1279.62           1298.35           1276.51           1284.85

Weekly Gain/Loss       0.41%

Key Resistance            1300.00           1350.00

Key Support                 1265.99           1243.46

 

Gold price was sliding after hitting nearly $1300 handle following a stronger than expected US Non-Farm Payroll report released on Friday and it ended up forming a Shooting Star in the weekly chart. The $1300 handle is a psychological level and at this point, the pullback is expected, and any drops will be the opportunity to Long and it might be pulled back to the fibo level at 127 ($1265.99) and 100 (1243.46), the level $1250 underneath will be supportive due to up trending channel that has been broken out of. Gold price stopped at the fibo level at 161.8 ($1294.90) and any breakthrough this level will open the way to 261.8 ($1377.99) especially if the Federal keeps bombarding the US dollar with Dovish outlooks. The other possible scenario, any break down below the $1243.46 level, there will be a chance for the price to drop back down to the $1200 level.

 

 

More Trading Opportunities

 

EURUSD

 

Weekly OHLC              1.14380           1.14962           1.13059           1.13946

Weekly Gain/Loss       -0.38%

Key Resistance            1.1500             1.1600

Key Support                 1.1200             1.1100

 

The Euro initially tried to rally during the week, but the Bears got invigorated at 1.15 handle since plenty of sellers lining up at this level. The EURUSD is currently trading inside a major retracement zone at below 1.15 and above 1.12 handles. Last week, the EURUSD settled at 1.13946. The main trend is down according to the Daily Chart as it remains below EMA200 and a trade through 1.1200 will negate the closing price reversal bottom and signal a resumption of the downtrend while a trade through 1.15 handle will change the trend to up. This pair is probably going to continue to go back and forth in a very tight range between now especially when it comes to the global economy and the Federal Reserve looks a bit uncertainty. The formation of a gigantic Head & Shoulder in the weekly chart may indicates that the Euro might be dumped soon but if its Neckline remains unbroken, the Euro would have a little air to breathe. The current situation might not give any significant movements for this pair and it probably continues to move between that range. Any breakthrough above 1.15 handle will open the way to the level of 1.1800.

 

 

GBPUSD

 

Weekly OHLC              1.26891           1.28143           1.24005           1.27252

Weekly Gain/Loss       0.28%

Key Resistance            1.2700             1.2800

Key Support                 1.2500             1.2200

 

The British pound continues to drift lower sliding through the 1.25 level and even formed a couple of bearish looking candlestick. There are a lot of fears of a hard Brexit going forward and the Cable will continue to see a lot of negativity because of Brexit and of course the lack of clarity when it comes to that situation. The Cable is currently settling at 1.27252 and if it manages to break below 1.25 level, then 1.22 handle will be next target by measuring the descending triangle pattern in weekly chart but it may take a while to hit that respective level as there will be plenty of chaotic headlines that may trigger the volatility between now and the end of March when the UK will officially leave the European Union. There is a lot of volatility ahead, and volatility typically deteriorates confidence, which should continue to put bearish pressure on this market.

 

 

AUDUSD

 

Weekly OHLC              0.70429           0.71239           0.67440           0.71171

Weekly Gain/Loss       1.05%

Key Resistance            0.73260           0.74994

Key Support                 0.68000           0.65000

 

The Australian dollar moved much lower during the “panic crash” due to Apple suffers its biggest single-day loss in 6 years after cutting revenue guidance. However, this pair obtained massive demand from the buyers below 0.68 handle and forming a massive hammer weekly candle while it has completed its cycle at the fibo level 261.8 (0.68255). There are two levels to monitor at this point, if the price manages to break down below the bottom of the hammer at 0.68225, perhaps the market will move even lower to the 0.65 handle while the argument on the possibility of moving to the North can’t be ignored based on the candlestick formation, the next fibo level to be monitored is at 161.8 (0.73260) since this level will determine the future movement of this pair, the price action should be eyed closely at this level and any strong rejection will indicate the possibility of this pair to re-test 261.8 (0.68255) once again. The other possible scenario, any solid breakthrough at 161.8 (0.73260) will open the way to the next fibo level at 127 (0.74994).