USD/CAD Weekly Fundamental Analysis for August 08-12, 2011

The USD/CAD pair rose back last week, as investors were concerned over the outlook for global growth amid signs economic growth is slowing down in the United States, while mounting fears from the European debt crisis boosted demand for lower yielding assets, which weighed down heavily on the CAD, as it boosted demand for the USD, and accordingly, the USD/CAD pair was able to gain momentum.

Moreover, crude oil prices dropped heavily last week, which also added further pressure on the CAD, and provided the USD/CAD pair with further bullish momentum to rise to the highest level since June.

Rising pessimism in global financial markets should put the CAD under more pressure over the coming period, where investors fear the U.S. economy is heading into a double dip recession, and since the United States is Canada’s largest trading partner, we should expect the Canadian economy to suffer deeply, and that should provide the USD/CAD pair with bullish momentum, unless of course the Fed announce a third round of quantitative easing, since it will put the USD under huge pressure, although this is unlikely.

Highlights for this week that will probably affect the USD/CAD pair’s direction are:

Monday August 08:

The week will start light with no data queued for release from both Canada and the United States which leaves the market volatility and choppy trading dominant ahead of the FOMC decision.

Tuesday August 09:

Canada will release the housing starts index for the month of July at 12:15 GMT, where housing starts are expected to ease to 193.2 thousand, compared with the prior estimate of 197.4 thousand back in June.

The main focus will be on the FOMC rate decision at 18:15 GMT, where the Federal Reserve is expected to keep the rate at their historical low of 0.0-0.25% and might not take more actions to support the fainting recovery, nevertheless, investors are bracing for a surprise after the unexpected moves from the SNB and the BoJ and followed by the ECB with expanding the special money operations to ease the market tension and the Fed might just do so.

Wednesday August 10:

From the U.S. the wholesale inventories index for June is due at 14:00 GMT and expected to ease to 1.0% following 1.8%.

At 18:00 GMT the Monthly Budget Statement for July is due with the deficit expected to widen to $140.0 billion from $43.1 billion.

Thursday August 11:

The ECB will release the monthly report at 08:00 GMT and will include the details of the special liquidity operations and the extension of the money operations that Trichet announced last week when the bank left rates steady at 1.50%.

Canada will release the new housing price index for the month of June at 12:30 GMT, where the new housing prices rose by 0.4% in May, while compared with a year earlier, the new housing price index rose by 1.9% back in May.

Canada will also release the international merchandise trade balance for the month of June, where the trade deficit is expected to widen to 1.0 billion CAD, compared with the prior deficit of 0.8 billion CAD.

The data from the United States will start as usual with the weekly jobless claims at 12:30 after they rose last week by 400 thousand.

Also at 12:30 GMT the trade balance for June is due and the deficit is expected to narrow to $47.5 billion from $50.2 billion.

Friday August 12:

The United States will end the week with a high note starting with the retail sales index for July at 12:30 GMT, which are expected with 0.4% rise following 0.1% and excluding autos with 0.2% rise after remaining unchanged in June and excluding auto and gas to hold steady with 0.2% rise.

The University of Michigan Confidence for August is due at 13:55 GMT, and expected with a slight drop to 63.2 from 63.7.

The business inventories index for June will follow at 14:00 GMT and expected to slow to 0.6% from 1.0% the previous month.

EUR/USD Weekly Fundamental Analysis for August 08-12, 2011

The EUR/USD ended another volatile week with more losses versus the dollar amid the prevailing jitters over the outlook for the recovery and the worsening debt crisis.

The yield on Italian and Spanish bonds continued to surge and the focus was on the weekend meetings between the euro area leaders as France and Germany are taking more preemptive steps in holding talks with Italy and Spain to ensure that the nations are safe from harm and speculation.

This week will again be about the speculation and the outlook for the recovery amid the tight ability of governments and central banks to maneuver. The fundamental load this week is light and the focus will mainly be on the FOMC rate decision and whether the Fed will take more action following those from the SNB, BoJ and extended money operations from the ECB to ease the market tension.

With the prevailing fear over the outlook for the recovery and the deepening debt crisis the volatility will extend again, especially as the lack of major fundamentals will leave the focus on the sentiment to drive the market movements and accordingly we expect heavy volatility to prevail this new week for the EUR/USD.

Other news from the euro area and the U.S. economy to affect the pair this week:

Monday August 08:

The week will start light with no data queued for release from both the euro area and the United States which leaves the market volatility and choppy trading dominant ahead of the FOMC decision.

Tuesday August 09:

Germany will start the day at 06:00 GMT with June trade figures, where the trade surplus is expected to narrow slightly to 14.0 billion from 14.8 billion as exports are expected with 1.0% drop following 4.3% rise and imports to drop 1.8% following 3.7% rise. The current account surplus on the other hand is expected to widen to 10.0 billion euros from 6.9 billion.

The main focus will be on the FOMC rate decision at 18:15 GMT where the Federal Reserve is expected to keep the rate at their historical low of 0.0-0.25% and might not take more actions to support the fainting recovery, nevertheless, investors are bracing for a surprise after the unexpected moves from the SNB and the BoJ and followed by the ECB with expanding the special money operations to ease the market tension and the Fed might just do so.

Wednesday August 10:

Germany will release the final estimate for the July consumer price index which is expected unrevised at 0.4% rise on the month and 2.4% on the year and in EU harmonized terms also to remain unrevised with 0.5% monthly gain and 2.6% on the year.

From the U.S. the wholesale inventories index for June is due at 14:00 GMT and expected to ease to 1.0% following 1.8%.

At 18:00 GMT the Monthly Budget Statement for July is due with the deficit expected to widen to $140.0 billion from $43.1 billion.

Thursday August 11:

The ECB will release the monthly report at 08:00 GMT and will include the details of the special liquidity operations and the extension of the money operations that Trichet announced last week when the bank left rates steady at 1.50%.

The data from the United States will start as usual with the weekly jobless claims at 12:30 after they rose last week to 400 thousand.

Also at 12:30 GMT the trade balance for June is due and the deficit is expected to narrow to $47.5 billion from $50.2 billion.

Friday August 12:

The euro area industrial production for June is due at 09:00 GMT and expected to remain steady on the month with 0.1% gain and to rise 4.5% on the year following 4.0%.

The United States will end the week with a high note starting with the retail sales index for July at 12:30 GMT which are expected with 0.4% rise following 0.1% and excluding autos with 0.2% rise after remaining unchanged in June and excluding auto and gas to hold steady with 0.2% rise.

The University of Michigan Confidence for August is due at 13:55 and expected with a slight drop to 63.2 from 63.7.

The business inventories index for June will follow at 14:00 GMT and expected to slow to 0.6% from 1.0% the previous month.

EUR/CHF Weekly Fundamental Analysis for August 08-12, 2011

The unexpected move from the Swiss National Bank did little to reverse the franc’s record versus the euro as the pair still ended last week with strong gains.

In an unexpected move last week, the Swiss National Bank cut the target range for the three month Libor Interbank rate to 0.00-0.25% from 0.00-0.75% and also said it will increase the supply of francs to the money market over the coming days.

The SNB said that the franc was “massively overvalued” and threatens the recovery amid rising downside pressure and worsening state of the economy. The SNB also said they will expand the sight deposits to 80 billion francs from 30 billion and add more measures if needed to support the recovery and prevent swissy from the extensive rally.

Still, the fear over the outlook for the recovery and the deepening debt crisis in the euro area kept swissy the favored for gains amid the dire outlook and the pessimistic sentiment.

This week the sentiment is to be the main pillar for the market as investors assess the effect of the moves from both the SNB and the ECB and the bonds buying if it was confirmed, which might ease the jitters and help the euro rise off its record lows powered by fears of another violent intervention.

Other news from the euro area and the Swiss economy to affect the pair this week:

Monday August 08:

The Swiss economy will start the week with the unemployment rate for July at 05:45 GMT and likely remained unchanged at 2.8% while in seasonally adjusted terms also to have held at 3.0%.

Tuesday August 09:

Switzerland will release the SECO Consumer Confidence for July at 05:45 GMT which is expected to decline to -5 from -1.

Wednesday August 10:

No data is queued from release from both nations, where the market sentiment will be the main focus for the pair amid a light fundamental week.

Thursday August 11:

The ECB will release the monthly report at 08:00 GMT and will include the details of the special liquidity operations and the extension of the money operations that Trichet announced last week when the bank left rates steady at 1.50%.

Friday August 12:

The euro area industrial production for June is due at 09:00 GMT and expected to remain steady on the month with 0.1% gain and to rise 4.5% on the year following 4.0%.

USD/JPY Daily Fundamental Analysis for August 08, 2011

The USD/JPY pair fluctuated last week sharply after the BOJ intervened in the FX market and sold the yen, as the Japanese currency retreated against most of its major counterparts due to the selling pressure from the BOJ.

On the other hand, the global stock markets dropped sharply on concerns about the outlook of the global economy recovery, where investors are looking for safer investments, which could bring the Japanese yen higher once again.

On Monday at 23:50 GMT (Sunday),Japanwill release the current account total for June, where the previous reading showed a surplus of 590.7 billion yen, while it’s expected to show a surplus of 652.8 billion yen.

The adjusted current account total for June is expected to show a surplus of 961.1 billion yen from the previous surplus of 391.0 billion. On the other hand, the trade balance for June is predicted to show a surplus of 113.1 billion from the prior deficit of 772.7 billion.

At 05:00 GMT, Japan will release the Eco Watchers Survey: Current for July, where the previous reading was 49.6 and expected to come at 50.0, while the Eco Watchers Survey: Outlook had a prior reading of 49.6.

USD/CAD Daily Fundamental Analysis for August 08, 2011

The USD/CAD pair extended its rise on Friday, as fears persisted in markets despite the better than expected jobs report from the United States, where U.S. employers added more than expected jobs in July, while Canada’s jobs report showed mixed results, as the change in employment came below expectations, while unemployment dropped unexpectedly in July.

Meanwhile, the Ivey PMI was released from Canada for the month of July, as the index showed contraction, which put negative pressure on the CAD, as economic activities seem to be easing in Canada as well, and accordingly, the USD was able to gain momentum against the CAD, pushing the USD/CAD pair to the upside.

Moreover, concerns from the European debt crisis continued to provide support for safe and lower yielding assets, which provided the USD with more bullish momentum.

Investors are most likely to remain focused on the prospects of slowing global growth next week, and that should keep the negative pressure on the CAD over the coming period, since investors will continue to target lower yielding assets, however, the USD/CAD pair might undergo a correction on Monday amid the lack of economic news from both countries, since the pair has risen sharply last week.

Monday August 08:

The week will start light with no data queued for release from both Canada and the United States which leaves the market volatility and choppy trading dominant ahead of the FOMC decision.

NZD/USD Daily Fundamental Analysis for August 08, 2011

The NZD/USD pair propped sharply last week, as demand increased on greenback as a low yielding currency due to concerns over the outlook, and the uncertainty about financial markets.

The New Zealand currency reached to the lowest level in two weeks against the U.S. dollar as Asian stock markets declined for the fourth day in a row, reducing demand for Kiwi.

Further, the New Zealand government noted that Kiwi reached the highest level that may be hurt the nation’s exporters, so they should find ways to curb the currency’s gain.

At the meantime, the New Zealand economy gives some signs of picking up as retail sales soared during the first quarter, adding that the economic recovery starts its rebounding curve.

Both countries won’t release any fundamentals on Monday leaving the movement on the back of the prevailing sentiment and affected by their performance mainly versus other currencies.

USD/CHF Daily Fundamental Analysis for August 8, 2011

As of 05:15 GMT, the Swiss economy will release its only data for the week which is unemployment for July with expectations referring to steadiness in the seasonally adjusted reading at 3.0%. On the other hand, the U.S.has no releases.

Data from Switzerland may not have a significant impact on the pair’s movements unless it comes out with a surprise. In general, the latest data from the Swiss economy is showing progress relative to other major economies which gained the franc additional strength and made it more favorable safe haven.

The outlook for the pair is predicted to be to bullish, especially after the SNB pledge to use all measures to curb the franc’s advance and as the measures adopted the previous week by the SNB are expected to have effect in the coming period, yet the franc may face some difficulties in depreciating as it will still have strong demand from investors seeking refuge.

GBP/USD Daily Fundamental Analysis for August 8, 2011

Both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data.

Still, there are some concerns in the market which may give some advance to the dollar as a safe haven, where eyes will be on the FOMC rate decision and inflation report from the U.K. which are supposed to provide guidance to both bank’s intention for the coming period amid the undergoing slowdown in both economies and worldwide.

EUR/USD Daily Fundamental Analysis for August 08, 2011

The EUR/USD will start the week on Monday with heavy volatility as the market continues to react to the nonfarm payrolls and the weekend meetings between euro area leaders to contain the debt crisis.

The volatility is high and the jitters over the outlook for the recovery and the worsening debt crisis keeps the bias evident towards haven assets with the yen and franc suffering the excessive rally and pressuring the central banks to move, while gold settles at its records high.

Trichet announced that the ECB will extend the liquidity provisions with the new six-month tender while expanding the current REFI operations till the end of the year to ease market jitters and rising tension. The president did not dispel the bond program and said it is ongoing and even news suggested the bank already bought Irish and Portuguese bonds, which Trichet hinted as a possibility and bonds surely moved higher opposed to the weak euro.

On Monday, the market will turn to assess its impact and see how it affected the market as the ECB releases their weekly bond buying and whether it remained dormant for the 19th week or indeed the ECB purchased bonds last week.

The week will start light with no data queued for release from both the euro area and the United States which leaves the market volatility and choppy trading dominant with the focus on slowing growth and deepening debt crisis ahead of the FOMC decision and the speculation on whether the Federal Reserve will act or not.

EUR/CHF Daily Fundamental Analysis for August 08, 2011

The EUR/CHF on Monday is expected to start a new volatile week after ending last week bearishly with a new historic high for swissy powered by rising haven demand as the SNB failed to strongly reverse the rally.

Investors will start the new week assessing the new fundamentals, especially as the U.S. nonfarm payrolls where not as weak as expected, yet remain with a slow pace of progress.

Investors will also focus on the progress in the euro area and whether the ECB action is starting to ease the jitters and whether the bond buying is true and if it calmed the market indeed. Also investors will assess the impact of the SNB’s move on swissy and the expanded supply of franc as the SNB steps up the efforts to weaken the currency to shelter the economic recovery.

The Swiss economy will start the week with the unemployment rate for July at 05:45 GMT and likely remained unchanged at 2.8% while in seasonally adjusted terms also to have held at 3.0%.

AUD/USD Daily Fundamental Analysis for August 08, 2011

The AUD/USD pair dropped to the lowest level in two months, as fears controlled the markets due to the uncertainty about the global economy recovery, which reduced demand for the higher yielding currencies.

The Australian dollar declined sharply against the greenback with the sluggish economic recovery outlook in Australia, adding that the Reserve Bank of Australia will leave the interest rates unchanged until the end of the year.

The fears are dominating the market movements as the European debt crisis is hurting the outlook for the global economic recovery, while investors are still worried about the European Central Bank’s inability to contain the crisis, dampening demand for higher yielding currencies.

We start the week with the Australian AUD TD securities inflation for July at 00:30 GMT, while June’s reading was flat at 0.0%. As for the annualized reading, it inclined by 2.9%.

Moreover, at 01:30 GMT Australia’s economy is to present the ANZ job advertisements for July, where the previous reading was 3.7%.

USD/JPY Technical Analysis for August 5, 2011

USD/JPY skyrocketed on Thursday, as the Bank of Japan intervened in the FX markets to stem the tide of Yen buying in the markets. We warned you over the last couple days that this could happen, so if you listened – you did quite well. Obviously, you can only buy this pair now. We encourage buying on dips for the time being, at least until we hit the 80 mark, which should be massive resistance. If we get above that area, then the trend could be up for a while.

USD/CHF Technical Analysis for August 5, 2011

The USD/CHF rose, and then fell as the markets around the world were rocked on Thursday. The 0.76 level looks like it is holding the pair up at the moment, so if that area gives way – we think it falls much farther. The trend is certainly down, so a breaking of that level wouldn’t be a surprise to us. The daily close below that level gets us short. Any and all rallies will also be sold.

USD/CAD Technical Analysis for August 5, 2011

The USD/CAD skyrocketed during Thursday trading as oil markets sold off. The CAD is highly sensitive to oil pricing, and as such we think that the pair could rise even more as we try to reach parity. The 0.98 – 0.99 areas should be some resistance, but will more than likely give way as the economies around the world will certainly need less and less oil to function. We like buying on dips, but much lower.

NZD/USD Technical Analysis for August 5, 2011

The NZD/USD fell hard on Thursday as the markets ran from anything risk related. The Kiwi dollar looks very vulnerable at this point as the 0.85 level gave way without a fight. The next major support level is just below at the 0.82 level, and it could produce a bounce. The truth is – these kinds of moves don’t happen as one-off movements, and the market should continue to fall. We sell rallies at this point.

GBP/USD Technical Analysis for August 5, 2011

GBP/USD fell precipitously on Thursday as traders found nothing but a wall of fear out there. The markets have turned decidedly bearish, and the Dollar is a bastion of safe haven trading. The jobs report us due out today, and could push this market around. If we can break below the 1.62 level – this market goes much farther down. We think the 1.65 level is going to be massive resistance, and sells could be done there.

EUR/USD Technical Analysis for August 5, 2011

The EUR/USD pair fell on Thursday as the trading community ran for the hills. The ECB basically said nothing at its conference call on Thursday, and that spooked the markets. The pair has taken a decidedly bearish turn, but the 1.40 area hasn’t been broken yet. If it is – we are massive sellers. Also of note, the debt crisis in Europe has gotten worse as bonds are being forced to pay higher yields. The pair is a sell only pair now and we will continue to sell rallies at this point.

EUR/CHF Technical Analysis for August 5, 2011

EUR/CHF fell again on Thursday as traders ran for cover in the markets. Fears of global slowdowns and recessions have sparked a massive selloff in all risk-related assets, and the EUR/CHF pair fell in unison. We still like selling this pair on rallies, and even on new lows. The trend is your friend, and it has been a great one for years. We never buy this pair, and certainly see nothing to change that anytime soon.

AUD/USD Technical Analysis for August 5, 2011

The AUD/USD pair fell apart on Thursday as traders ran from anything risk-related. The 1.05 area is starting to give way, and if they do – 1.02 will be in the cards almost right away. The pair is a risk-related one, as such will almost certainly fall whenever the stock markets do the same thing. If we find ourselves falling again, we are going to sell below 1.0400 or so.

USD/CAD Daily Fundamental Analysis for August 05, 2011

The USD/CAD pair rose back on Thursday after the Bank of Japan decided to intervene in markets to weaken the Yen, which provided the U.S. dollar with strong momentum against major currencies including the CAD, and that contributed in pushing the USD/CAD pair to the upside.

Moreover, concerns from the European debt crisis continued to provide support for safe and lower yielding assets, which provided the USD with more bullish momentum. Also, the ECB signaled it will start a six-month operation to inject liquidity in markets, which provided the USD with more strength to rise against the CAD.

The focus in markets will now turn to the outlook for growth, as recent signs suggest economic growth is slowing in both the United States and Canada, while traders will be eyeing U.S. and Canadian data from their respective labor markets, as the infamous jobs report is due on Friday, and traders will be eyeing the recent developments in the U.S. labor market, and if the data proves disappointing, we should expect the USD to gain more momentum and rise against the CAD.

Friday August 05:

Canada will release the jobs report for July at 11:00 GMT, where the net change in employment is expected to rise by 15.0K, compared with the prior estimate that showed Canadian employers added 28.4 thousand jobs back in June, while unemployment is expected to remain unchanged at 7.4%.

The United States will release the infamous jobs report for the month of July, where the Non-farm payrolls are expected to show that 85,000 jobs were added in July, compared with 18,000 added jobs back in June, while the unemployment rate is expected to remain unchanged at 9.2%.

At 14:00 GMT, Canada will release the Ivey Purchasing Managers index for the month of July, where seasonally adjusted Ivey PMI is expected to expand to 62.0, compared with the prior estimate of 59.9 back in June.