USD/CAD Forecast Jan. 16, 2012, Fundamental Analysis

USD/CAD Forecast Jan. 16, 2012, Fundamental Analysis
USD/CAD Forecast Jan. 16, 2012, Fundamental Analysis
The USD/CAD pair inclined as the USD gained strength after markets turned pessimistic on reports came out lately showing that S&P will move forward with euro area downgrades with French TV saying that the nation lost its top credit rating.

Knowing that investors moved towards low yielding assets with European stocks snapping the gains. The news reports suggested that Standard & Poor’s is set to downgrade the credit rating of several euro zone nations according to government sources, and that overshadowed the upbeat Uni. of Michigan Confidence index.

The USD/CAD pair could still rise if pessimism continues to dominate markets, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Monday January 16:

Canada will have no data released on Monday, noting that Monday will be holiday for US economy as January 16 is Martin Luther King Day, so eyes will be focused on Europe and the crisis that could cause any change in trading.

AUD/USD Forecast Jan. 16, 2012, Fundamental Analysis

AUD/USD Forecast Jan. 16, 2012, Fundamental Analysis
AUD/USD Forecast Jan. 16, 2012, Fundamental Analysis
The AUD/USD pair soared last week after the US dollar dropped against other majors, nevertheless, the losses returned for the pair with the sentiment reversal on Friday as news reports said that S&P downgraded France according to government sources.

The current week has important data from the Australian economy, where the unemployment rate is expected to hold steady at 5.3% and any change in the employment sector will be faced by a strong reacted from the Aussie, as it could affect the next decision from the RBA.

Also the Chinese economy will release its GDP data for the fourth quarter during the week, where the growth data will have its toll on the AUD/USD pair since China is number one trade partner for Australia.

On Monday at 00:30 GMT, Australian will issue the Home Loans for November, where the previous reading was 0.7% and it’s expected to come at 1.0%.

USD/JPY Weekly Forecast Jan. 16-20, 2012, Fundamental Analysis

USD/JPY Weekly Forecast Jan. 16-20, 2012, Fundamental Analysis
USD/JPY Weekly Forecast Jan. 16-20, 2012, Fundamental Analysis
The USD/JPY pair retreated last week near its lowest level in three months, where the FX market fluctuated last week due to the instable data about the U.S. economy in addition to the ongoing concerns regarding the EU debt crisis.

The Japanese yen was able to reach to its highest level in eleven years against the euro due to the lower demand on the euro as a result of the current crisis, while the euro advanced in a correction movement which may not be able to continue during the upcoming weeks with renewed downgrade fears.

On the other hand, the greenback fluctuated between gains and losses against most of its major counterparts, depending on the U.S. economic fundamentals which reflected a moderate recovery in the manufacturing sector and drop in the holiday’s season demand.

The current market sentiment is focused on the EU debt crisis developments, and whether the economic fundamentals about major economies came strong or pessimistic, the effect on the financial market is temporary.

Thus, the latest developments regarding the EU debt crisis are forcing us to predict a continuation for the risk aversion scenario in the financial market, which mean more demand for the yen and the dollar against other major currencies, and in contrast more support for the yen against the greenback.

Major highlights for this week that will affect the USD/JPY pair’s trading:

Monday January 16:

On Monday at 23:50 GMT (Sunday), the Japanese economy will issue the Machine Orders for November, where the previous reading was –6.9% and expected to come at 5.1%, while the annual Machine Orders had a prior reading of 1.5% and expected at 3.8%.

Tuesday December 17:

On Tuesday at 23:50 GMT (Monday), Japan will release the Tertiary Industry Index for November, where it’s expected to come at –0.4% compare to the previous reading of 0.6%.

The U.S. Empire Manufacturing for January will be released at 13:30 GMT, where the previous reading was 9.53 and expected to come at 10.50.

Wednesday December 18:

On Wednesday at 04:30 GMT, Japan will issue the Industrial Production for November, where the previous reading was –2.6% while the annual reading had a prior reading of –4.0%.

On the other hand, the Japanese Capacity Utilization for November had a prior reading of 4.1%.

At 13:30 GMT, the U.S. economy will release the Producer Price Index for December, where the prior reading was 0.3% and expected to come at 0.1%, on the other hand the annual Producer Price Index had a prior reading of 5.7% and it’s expected to come at 5.1%.

The Total Net TIC Flows for November will be released at 14:00 GMT, with a previous reading of -$48.8 billion, while the Net Long-term TIC Flows had a previous reading of $4.8 billion.

The U.S. Industrial Production for December will be released at 14:15 GMT, and expected at 0.5% after 0.2% drop. The Capacity Utilization for December had a prior reading of 77.8% with expectations to rise to 78.1%.

Thursday December 19:

On Thursday at 13:30 GMT, the U.S. economy will release the Consumer Price Index for December, where the prior reading was 0.0% and it’s expected to come at 0.1%. The annual CPI had a prior reading of 3.4% and expected to come at 3.1%.

The Housing Starts for December will be released also at 13:30 GMT, where the previous reading was up by 9.3% at 685 thousand, and expected to remain unchanged at 685 thousand. The U.S. Building Permits are expected with 0.7% drop to 675 thousand from the prior reading of 681 thousand.

The weekly initial claims are also due at the same time, where the number of people filing for first-time claims for the state unemployment insurance increased to 399 thousand last week.

Friday December 20:

On Friday at 04:30 GMT, the Japanese economy will release the All Industry Activity Index for November, where the prior reading was 0.80% and expected to come at –0.9%.

At 05:00 GMT, Japan will issue the Coincident Index for November, where the previous reading was 90.3; on the other hand the Leading Index for November had a prior reading of 92.9.

The U.S. economy will issue the Existing Home Sales for December, where the previous was at 4.42 million and expected to rise 3.7% to 4.65 million.

EUR/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis

EUR/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis
EUR/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis
The pair fluctuated heavily in the past week and the main focus was surely the SNB after Hildebrand’s unexpected resignation.

His resignation left the market pondering how strong the SNB would be and the commitment to fight the franc’s appreciation, despite assurances that the bank is ready and strong to fight the crisis. The fear though was highlighted after Finance Minister Eveline Widmer-Schlumpf said on Wednesday the process of finding a successor could take until May which is till now supporting franc gains as investors assess if the SNB is vulnerable to test its cap.

More volatility is expected for the franc this week as eyes are still on any movement or comments from the SNB as investors test their waters and their defense to their set cap against the euro and the currency’s appreciation.

Data is heavier on U.S. grounds with inflation and industrial data flowing our way. The sentiment has been generally improving over the U.S. economic state and outlook and more figures this week with help support that expectation, especially as they are expected with gains. We still see the volatility likely with Europe still the predominant focus and concern and steers the sentiment accordingly, we saw some signs of stability last week after successful bond auctions and commitment from leaders to move forward which was confirmed by the ECB yet we need more from Europe to ensure that this unwinding in here to stay and not just a temporary relapse in the sentiment, where if that is seen surely the downside pressure will be evident on the U.S. dollar.

The franc was generally strong last week with the dollar held at bay

The release of the data this week will be as follows:

Monday January 16:

The Swiss economy will start the week at 08:15 GMT with the Producer & Import Prices for December after the 0.8% drop recorded the previous month and 2.4% decline on the year,

Tuesday January 17:

The United States, the day will start at 13:30 with the January Empire Manufacturing index which is expected with improvement to 10.50 from 9.53.

Wednesday January 18:

The Swiss economy will release the Credit Suisse ZEW Expectations Survey for January, where the previous month it was at -72.0.

As for the United States a busy day starts at 13:30 GMT with the Producer Price Index for December where it is expected to ease on the month to 0.1% after 0.3% and on the year expected at 5.1% from 5.7%; excluding food and energy the index is expected steady at 0.1% and on the year to slow to 2.8% after 2.9%.

At 14:00 GMT the TIC flows for November are due after the total Net TIC Flows in October declined in October with total selling of $48.8 billion.

At 14:15 GMT the December Industrial Production index is expected with 0.5% rebound from the previous month’s 0.2% drop and capacity utilization to tick higher to 78.1% from 77.8%.

Thursday January 19:

The U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16, where they will be available at 13:30 GMT. At 14:45 GMT, Chicago purchasing manager is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The U.S. will start the data at 13:30 GMT with the Inflation Report. The CPI index is expected with 0.1% rise on the month after holding unchanged the previous month and on the year to slow to 3.1% after 3.4%. Excluding food and energy the index is expected with 0.1% rise on the month after 0.2% gain and on the year to hold at 2.2%.

December Housing Starts index is also due the same time and expected flat at 685,000 while Building Permits are expected with 0.7% drop to 675,000 from 681,000.

As for the Jobless Claims for the week ending in January 14 it is also due at 13:30 GMT as usual after last week they rose 24,000 to 399,000 last week.

As for the Philadelphia Fed Index for January the index is due 15:00 GMT and expected to improve slightly to 11.0 from 10.3.

Friday January 20:

The United States is set to end the week with the Existing Home Sales for the month of December at 13:00 GMT where they are expected to extend the gain with 5.2% to 4.65 million from 4.42 million.

NZD/USD Weekly Forecast Jan. 16-20, 2012, Fundamental Analysis

NZD/USD Weekly Forecast Jan. 16-20, 2012, Fundamental Analysis
NZD/USD Weekly Forecast Jan. 16-20, 2012, Fundamental Analysis
The NZD/USD pair advanced last week to its highest level in two months, as the New Zealand dollar was the biggest winner between other major currencies, where the US dollar has lost some ground against other major currencies.

The New Zealand dollar gained more momentum against the greenback on the back of the fluctuations in the U.S. economic situations, which reduced demand for the greenback and opened the way for more gains for the New Zealand dollar.

The ongoing debt crisis in the euro-zone dominated the market sentiment and again pressured kiwi to the downside with the end of the week, where the current move in the NZD/USD pair could be a correction, since the main trend still to the downside.

Also the Chinese economy will release its GDP data for the fourth quarter during the week, where the growth data will have its toll on the NZD/USD pair since China is number one trade partner for New Zealand.

Major highlights for this week that will affect the NZD/USD pair’s trading:

Monday January 16:

On Monday, the New Zealand economy will release the REINZ Housing Price Index for December, where the previous reading was 3304.3, while the REINZ Housing Price Index had a prior reading of 1.1%.

Tuesday December 17:

The U.S. Empire Manufacturing for January will be released at 13:30 GMT, where the previous reading was 9.53 and expected to come at 10.50.

Wednesday December 18:

At 13:30 GMT, the U.S. economy will release the Producer Price Index for December, where the prior reading was 0.3% and expected to come at 0.1%, on the other hand the annual Producer Price Index had a prior reading of 5.7% and it’s expected to come at 5.1%.

The Total Net TIC Flows for November will be released at 14:00 GMT, with a previous reading of -$48.8 billion, while the Net Long-term TIC Flows had a previous reading of $4.8 billion.

The U.S. Industrial Production for December will be released at 14:15 GMT, and expected at 0.5% after 0.2% drop. The Capacity Utilization for December had a prior reading of 77.8% with expectations to rise to 78.1%.

Thursday December 19:

On Thursday at 21:45 GMT (Wednesday), New Zealand will release the Consumer Prices Index for the fourth quarter, where it’s expected to come at 0.4% in line with the previous quarter.

The annual Consumer Prices Index for the fourth quarter is expected to come at 2.6% from the prior reading of 4.6%.

At 00:00 GMT, the ANZ Consumer Confidence Index will be released, with a prior reading of 108.4.

On Thursday at 13:30 GMT, the U.S. economy will release the Consumer Price Index for December, where the prior reading was 0.0% and it’s expected to come at 0.1%. The annual CPI had a prior reading of 3.4% and expected to come at 3.1%.

The Housing Starts for December will be released also at 13:30 GMT, where the previous reading was up by 9.3% at 685 thousand, and expected to remain unchanged at 685 thousand. The U.S. Building Permits are expected with 0.7% drop to 675 thousand from the prior reading of 681 thousand.

The weekly initial claims are also due at the same time, where the number of people filing for first-time claims for the state unemployment insurance increased to 399 thousand last week.

Friday December 20:

The U.S. economy will issue the Existing Home Sales for December, where the previous was at 4.42 million and expected to rise 3.7% to 4.65 million.

GBP/USD Forecast Jan. 16-20, 2012, Fundamental Analysis

GBP/USD Forecast Jan. 16-20, 2012, Fundamental Analysis
GBP/USD Forecast Jan. 16-20, 2012, Fundamental Analysis
The pound ended the week on bearish terms versus the dollar despite the generally upbeat sentiment and eased woes over the outlook for the global economy and the debt crisis as the U.K. data generally remained downbeat and the BoE maintained the steady policy which also kept sterling without strong support.

Investors were expecting the BoE to hold the monetary policy unchanged and indeed the MPC opted to see the effect on the economy and developments in the sentiment and the debt crisis giving the time for the APF expansion to end which is expected in February which by then the new Inflation Report with the growth and outlook projections will help in providing clarity for policy markers.

This week the focus will be on the heavy data from the Kingdom and the United States with the inflation figures from both nations. Also the UK jobs report and retail sales are a key element to assess the state of the fragile economy as jobs continue to contract while sales are expected to have held against the odds with the discounts and the holiday season shopping.

The eyes will also be on the euro area and more auctions scheduled for this week and U.S. earnings as the overall market sentiment will also influence the movement and define the dollar status versus the pound. We see the chances for the pound to gain on good data shall the sentiment remain positive and risk appetite hold, as otherwise the pound will likely resume its bearish footsteps versus the dollar.

The release of the data this week will be as follows:

Monday January 16:

Both economies do not have fundamentals queued for release and the movement will be based on the market sentiment.

Tuesday January 17:

The United Kingdom is set to start the day with the Inflation Report for December at 09:30 GMT. UK CPI is expected with 0.4% rise on the month after 0.2% and on the year to slow further to 4.2% from 4.8% a comforting sign to the BoE and to markets to bet on more quantitative easing. Core CPI inflation is expected to slow as well to 3.0% from 3.2%.

The RPI Index is expected with 0.4% gain on the month after 0.2% and on the year to slow to 4.8% from 5.2% and excluding mortgage payments to slow to 4.9% from 5.3%.

As for the United States, the day will start at 13:30 with the January Empire Manufacturing index which is expected with improvement to 10.50 from 9.53.

Wednesday January 18:

The UK Jobs report for December will be the focus at 09:30 GMT. The economy is expected to have lost another 10,000 jobs after 3,000 thousand the previous month and the claimant count rate to hold at 5.0%. The ILO Unemployment rate for the three months to November is expected to hold at 8.3% while the average weekly earnings to hold at an annual 2.0% while excluding bonuses to tick slightly higher to 1.9% from 1.8%.

As for the United States a busy day starts at 13:30 GMT with the Producer Price Index for December where it is expected to ease on the month to 0.1% after 0.3% and on the year expected at 5.1% from 5.7%; excluding food and energy the index is expected steady at 0.1% and on the year to slow to 2.8% after 2.9%.

At 14:00 GMT the TIC flows for November are due after the total Net TIC Flows in October declined in October with total selling of $48.8 billion.

At 14:15 GMT the December Industrial Production index is expected with 0.5% rebound from the previous month’s 0.2% drop and capacity utilization to tick higher to 78.1% from 77.8%.

Thursday January 19:

The U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16, where they will be available at 13:30 GMT. At 14:45 GMT, Chicago purchasing manager is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The U.S. will start the data at 13:30 GMT with the Inflation Report. The CPI index is expected with 0.1% rise on the month after holding unchanged the previous month and on the year to slow to 3.1% after 3.4%. Excluding food and energy the index is expected with 0.1% rise on the month after 0.2% gain and on the year to hold at 2.2%.

December Housing Starts index is also due the same time and expected flat at 685,000 while Building Permits are expected with 0.7% drop to 675,000 from 681,000.

As for the Jobless Claims for the week ending in January 14 it is also due at 13:30 GMT as usual after last week they rose 24,000 to 399,000 last week.

As for the Philadelphia Fed Index for January the index is due 15:00 GMT and expected to improve slightly to 11.0 from 10.3.

Friday January 20:

The United Kingdom is set to end the week with December retail sales at 09:30 GMT to see the impact of the holiday season on Sales. Retail Sales excluding auto fuel are expected with 0.6% rebound on the month following 0.7% decline.

The United States is set to end the week with the Existing Home Sales for the month of December at 13:00 GMT where they are expected to extend the gain with 5.2% to 4.65 million from 4.42 million.

EUR/USD Forecast Jan. 16-20, 2012, Fundamental Analysis

EUR/USD Forecast Jan. 16-20, 2012, Fundamental Analysis
EUR/USD Forecast Jan. 16-20, 2012, Fundamental Analysis
The EUR/USD fluctuated heavily to the end of last week after gains across the week on eased woes that seemingly ran out of steam to the end of the week after renewed warnings from rating agencies for imminent downgrades.

The euro was attempting to hold the gains this week and the sentiment started to improve with jitters easing over the outlook after successful debt auctions last week and a steady policy from the ECB with no clear reference for more easing alongside assurances from Draghi that the liquidity measures and helping markets with tentative signs of stability.

Nevertheless, all the hopes came to halt with the end of the week with rating agencies again raising the heat. Already throughout the week comments from Fitch were generally targeting the risk that Italy faces and the likely rating cut and that was reiterated by S&P on Friday that sent markets frantically lower and also the euro.

This week the weak data flow from the euro area will leave the focus on the debt crisis with more auctions and eyes on rating agencies, especially after Fitch earlier said that the review might be concluded around January 15 and with S&P’s warning investors will remain sensitive to any comments and eyes the auctions closely with Spain, France, Portugal and Greece heading to the market.

From the U.S. front heavy data is awaited yet generally we expect good industrial and housing data and if the sentiment remains fragile and good figures are provided from the U.S. the attempts for the euro to stabilize last week will be dethroned and the bearishness will take hold once again assuring that it was only false attempts as unless the euro stabilizes this week higher then we can surely say the bearishness is back.

The release of the data this week will be as follows:

Monday January 16:

Both economies do not have fundamentals queued for release and the movement will be based on the market sentiment.

Auctions:

10:00 GMT Slovakia sells bills

10:30 GMT Netherlands sell bills

14:00 GMT France to sells bills

Tuesday January 17:

The euro area will start the data at 10:00 GMT with the December inflation figures, where the CPI index is expected with 0.4% rise on the month after 0.1% gain and on the year to confirm the flash estimate and fall to 2.8% from 3.0% while core CPI inflation to hold at 1.6%.

At the same time we have the ZEW Economic Sentiment for January to see if there is any improvement from December’s -54.1.

Germany will also release the ZEW Survey for January at 10:00 GMT as the Current Situation index is expected to fall to 24.5 from 26.8 while the Economic Sentiment Index is expected to improve to -49.8 from -53.8.

As for the United States, the day will start at 13:30 with the January Empire Manufacturing index which is expected with improvement to 10.50 from 9.53.

Auctions:

09:30 GMT Spain sells bills

10:00 GMT Greece sells bills

10:30 GMT Belgium sells bills

Wednesday January 18:

The euro area Construction Output for November is due at 10:00 GMT after it dropped 1.4% in October and on the year was down 2.8%.

As for the United States a busy day starts at 13:30 GMT with the Producer Price Index for December where it is expected to ease on the month to 0.1% after 0.3% and on the year expected at 5.1% from 5.7%; excluding food and energy the index is expected steady at 0.1% and on the year to slow to 2.8% after 2.9%.

At 14:00 GMT the TIC flows for November are due after the total Net TIC Flows in October declined in October with total selling of $48.8 billion.

At 14:15 GMT the December Industrial Production index is expected with 0.5% rebound from the previous month’s 0.2% drop and capacity utilization to tick higher to 78.1% from 77.8%.

Auctions:

10:15 GMT Germany sells bills

10:30 GMT Portugal sells bills

10:30 GMT Belgium sells bills

Thursday January 19:

The ECB will release the monthly report for January at 09:00 GMT. At the same time we have the Current Account for November which is likely to improve from the previous recorded 7.5 billion euro deficit in October after the reported huge trade surplus on the back of exports gains.

The U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16, where they will be available at 13:30 GMT. At 14:45 GMT, Chicago purchasing manager is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The U.S. will start the data at 13:30 GMT with the Inflation Report. The CPI index is expected with 0.1% rise on the month after holding unchanged the previous month and on the year to slow to 3.1% after 3.4%. Excluding food and energy the index is expected with 0.1% rise on the month after 0.2% gain and on the year to hold at 2.2%.

December Housing Starts index is also due the same time and expected flat at 685,000 while Building Permits are expected with 0.7% drop to 675,000 from 681,000.

As for the Jobless Claims for the week ending in January 14 it is also due at 13:30 GMT as usual after last week they rose 24,000 to 399,000 last week.

As for the Philadelphia Fed Index for January the index is due 15:00 GMT and expected to improve slightly to 11.0 from 10.3.

Auctions:

09:30 GMT Spain sells bills

Friday January 20:

Germany is due to release the Producer Price Index report for December at 07:00 GMT which is expected to hold at 0.1% rise on the month and on the year ease to 4.6% from 5.2%.

The United States is set to end the week with the Existing Home Sales for the month of December at 13:00 GMT where they are expected to extend the gain with 5.2% to 4.65 million from 4.42 million.

USD/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis

USD/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis
USD/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis
The pair fluctuated heavily in the past week and the main focus was surely the SNB after Hildebrand’s unexpected resignation.

His resignation left the market pondering how strong the SNB would be and the commitment to fight the franc’s appreciation, despite assurances that the bank is ready and strong to fight the crisis. The fear though was highlighted after Finance Minister Eveline Widmer-Schlumpf said on Wednesday the process of finding a successor could take until May which is till now supporting franc gains as investors assess if the SNB is vulnerable to test its cap.

More volatility is expected for the franc this week as eyes are still on any movement or comments from the SNB as investors test their waters and their defense to their set cap against the euro and the currency’s appreciation.

Data is heavier on U.S. grounds with inflation and industrial data flowing our way. The sentiment has been generally improving over the U.S. economic state and outlook and more figures this week with help support that expectation, especially as they are expected with gains. We still see the volatility likely with Europe still the predominant focus and concern and steers the sentiment accordingly, we saw some signs of stability last week after successful bond auctions and commitment from leaders to move forward which was confirmed by the ECB yet we need more from Europe to ensure that this unwinding in here to stay and not just a temporary relapse in the sentiment, where if that is seen surely the downside pressure will be evident on the U.S. dollar.

The franc was generally strong last week with the dollar held at bay

The release of the data this week will be as follows:

Monday January 16:

The Swiss economy will start the week at 08:15 GMT with the Producer & Import Prices for December after the 0.8% drop recorded the previous month and 2.4% decline on the year,

Tuesday January 17:

The euro area will start the data at 10:00 GMT with the December inflation figures, where the CPI index is expected with 0.4% rise on the month after 0.1% gain and on the year to confirm the flash estimate and fall to 2.8% from 3.0% while core CPI inflation to hold at 1.6%.

Wednesday January 18:

The Swiss economy will release the Credit Suisse ZEW Expectations Survey for January, where the previous month it was at -72.0.

The euro area Construction Output for November is due at 10:00 GMT after it dropped 1.4% in October and on the year was down 2.8%.

Thursday January 19:

The ECB will release the monthly report for January at 09:00 GMT. At the same time we have the Current Account for November which is likely to improve from the previous recorded 7.5 billion euro deficit in October after the reported huge trade surplus on the back of exports gains.

Friday January 20:

Both economies do not have fundamentals queued for release and the movement will be based on the market sentiment.

AUD/USD Weekly Forecast Jan. 16-20, 2012, Fundamental Analysis

AUD/USD Weekly Forecast Jan. 16-20, 2012, Fundamental Analysis
AUD/USD Weekly Forecast Jan. 16-20, 2012, Fundamental Analysis
The AUD/USD pair soared last week near its highest level in two months, where the Aussie used the US dollar confusion to record more gains despite the latest weak data from the Australian economy.

The US dollar lost some ground against the Aussie and other major currencies due to the instability in the economic sectors in the U.S., which helped the higher-yielding currencies to cover some of its previous losses.

On the other hand, the pessimistic data from the Australian economy did not affect the Aussie’s trading, as the Australian currency was oversold against the greenback and needed to correct its movements to the upside. Nevertheless, with renewed fears over the euro outlook and the debt crisis on Friday on downgrade fears the market reversed and risk aversion is likely to be again the dominant pressure on the pair.

The current week hold important data from the Australian economy, where the unemployment rate is expected steady at 5.3% and any change in the employment sector will be faced by a strong reaction from Aussie, as it could affect the next decision from the RBA.

Also the Chinese economy will release the GDP data for the fourth quarter during the week, where the growth data will have its toll on the AUD/USD pair since China is number one trade partner for Australia.

Major highlights for this week that will affect the AUD/USD pair’s trading:

Monday January 16:

On Monday at 00:30 GMT, Australian will issue the Home Loans for November, where the previous reading was 0.7% and it’s expected to come at 1.0%.

Tuesday December 17:

The U.S. Empire Manufacturing for January will be released at 13:30 GMT, where the previous reading was 9.53 and expected to come at 10.50.

Wednesday December 18:

On Wednesday at 23:30 GMT (Tuesday), the Australian economy will release the Westpac Leading Index for November, where the prior reading was 0.1%.

At 13:30 GMT, the U.S. economy will release the Producer Price Index for December, where the prior reading was 0.3% and expected to come at 0.1%, on the other hand the annual Producer Price Index had a prior reading of 5.7% and it’s expected to come at 5.1%.

The Total Net TIC Flows for November will be released at 14:00 GMT, with a previous reading of -$48.8 billion, while the Net Long-term TIC Flows had a previous reading of $4.8 billion.

The U.S. Industrial Production for December will be released at 14:15 GMT, and expected at 0.5% after 0.2% drop. The Capacity Utilization for December had a prior reading of 77.8% with expectations to rise to 78.1%.

Thursday December 19:

On Thursday at 00:30 GMT, Australia will release the Employment Change for December where the prior reading was –6.3 thousand and it’s expected to come at 10.0 thousand.

On the other hand, the Unemployment Rate for December is expected to hold at 5.3%.

On Thursday at 13:30 GMT, the U.S. economy will release the Consumer Price Index for December, where the prior reading was 0.0% and it’s expected to come at 0.1%. The annual CPI had a prior reading of 3.4% and expected to come at 3.1%.

The Housing Starts for December will be released also at 13:30 GMT, where the previous reading was up by 9.3% at 685 thousand, and expected to remain unchanged at 685 thousand. The U.S. Building Permits are expected with 0.7% drop to 675 thousand from the prior reading of 681 thousand.

The weekly initial claims are also due at the same time, where the number of people filing for first-time claims for the state unemployment insurance increased to 399 thousand last week.

Friday December 20:

On Friday at 00:30 GMT, the Australian will release the Import Price Index for the fourth quarter, where its expected to come at 0.6% higher than the prior flat reading. The Export Price Index is expected to come at –2.0% after 4.0% rise.

The U.S. economy will issue the Existing Home Sales for December, where the previous was at 4.42 million and expected to rise 3.7% to 4.65 million.

Crude Oil Forecast January 16-20, 2012, Fundamental Analysis

Crude Oil Forecast January 16-20, 2012, Fundamental Analysis
Crude Oil Forecast January 16-20, 2012, Fundamental Analysis
Crude oil prices fell sharply last week, as the strength of the U.S. dollar in addition to rising volatility in markets over the past period pushed investors away from higher yielding and risky assets, where the U.S. dollar gained huge momentum amid rising concerns over the outlook for global growth on signs of slowing economic activities in major economies around the world.

Nevertheless, all the hopes came to halt with the end of the week with rating agencies again raising the heat. Already throughout the week comments from Fitch were generally targeting the risk that Italy faces and the likely rating cut and that was reiterated by S&P on Friday that sent markets frantically lower.

This week the weak data flow from the euro area will leave the focus on the debt crisis with more auctions and eyes on rating agencies, especially after Fitch earlier said that the review might be concluded around January 15 and with S&P’s warning investors will remain sensitive to any comments and eyes the auctions closely with Spain, France, Portugal and Greece heading to the market.

From the U.S. front heavy data is awaited yet generally we expect good industrial and housing data and if the sentiment remains fragile and good figures are provided from the U.S. the attempts for the euro to stabilize last week will be dethroned and the bearishness will take hold once again assuring that it was only false attempts as unless the euro stabilizes this week higher then we can surely say the bearishness is back.

We need to track the debt sales this week as well with eyes on Italy, France, Greece and Portugal as the yields and demand will be closely observed. The euro area lacks major fundamentals yet the debt crisis developments and any comments from leaders will be watched.

Our overall outlook for crude oil prices is somewhat neutral with a downside tendency, as the outlook for global growth is worsening due to mounting concerns from Europe and the fact that major economies around the globe are still weak, and that should put negative pressure on crude oil prices. Nonetheless, if the outlook for global growth improves, crude oil prices are likely to rise in that case.

Highlights for this week that will probably affect Crude Oil direction are:

Monday January 16:

Both economies do not have fundamentals queued for release and the movement will be based on the market sentiment.

Auctions:

10:00 GMT Slovakia sells bills

10:30 GMT Netherlands sell bills

14:00 GMT France to sells bills

Tuesday January 17:

As for the United States, the day will start at 13:30 with the January Empire Manufacturing index which is expected with improvement to 10.50 from 9.53.

Auctions:

09:30 GMT Spain sells bills

10:00 GMT Greece sells bills

10:30 GMT Belgium sells bills

Wednesday January 18:

As for the United States a busy day starts at 13:30 GMT with the Producer Price Index for December where it is expected to ease on the month to 0.1% after 0.3% and on the year expected at 5.1% from 5.7%; excluding food and energy the index is expected steady at 0.1% and on the year to slow to 2.8% after 2.9%.

At 14:00 GMT the TIC flows for November are due after the total Net TIC Flows in October declined in October with total selling of $48.8 billion.

At 14:15 GMT the December Industrial Production index is expected with 0.5% rebound from the previous month’s 0.2% drop and capacity utilization to tick higher to 78.1% from 77.8%.

Auctions:

10:15 GMT Germany sells bills

10:30 GMT Portugal sells bills

10:30 GMT Belgium sells bills

Thursday January 19:

The U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16, where they will be available at 13:30 GMT. At 14:45 GMT, Chicago purchasing manger is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The U.S. will start the data at 13:30 GMT with the Inflation Report. The CPI index is expected with 0.1% rise on the month after holding unchanged the previous month and on the year to slow to 3.1% after 3.4%. Excluding food and energy the index is expected with 0.1% rise on the month after 0.2% gain and on the year to hold at 2.2%.

December Housing Starts index is also due the same time and expected flat at 685,000 while Building Permits are expected with 0.7% drop to 675,000 from 681,000.

As for the Jobless Claims for the week ending in January 14 it is also due at 13:30 GMT as usual after last week they rose 24,000 to 399,000 last week.

As for the Philadelphia Fed Index for January the index is due 15:00 GMT and expected to improve slightly to 11.0 from 10.3.

At 16:00 GMT, the EIA report for crude oil inventories will be released for the week ending January 13, where last week crude oil inventories increased by 5.0 million barrels.

Auctions:

09:30 GMT Spain sells bills

Friday January 20:

The United States is set to end the week with the Existing Home Sales for the month of December at 13:00 GMT where they are expected to extend the gain with 5.2% to 4.65 million from 4.42 million.

Gold Weekly Forecast January 16-20, 2012, Fundamental Analysis

Gold Weekly Forecast January16-20, 2012, Fundamental Analysis
Gold Weekly Forecast January16-20, 2012, Fundamental Analysis
Gold prices gained last week, rising volatility in markets over the past period pushed investors away from higher yielding and risky assets amid rising concerns over the outlook for global growth on signs of slowing economic activities in major economies around the world.

Nevertheless, all the hopes came to halt with the end of the week with rating agencies again raising the heat. Already throughout the week comments from Fitch were generally targeting the risk that Italy faces and the likely rating cut and that was reiterated by S&P on Friday that sent markets frantically lower.

This week the weak data flow from the euro area will leave the focus on the debt crisis with more auctions and eyes on rating agencies, especially after Fitch earlier said that the review might be concluded around January 15 and with S&P’s warning investors will remain sensitive to any comments and eyes the auctions closely with Spain, France, Portugal and Greece heading to the market.

From the U.S. front heavy data is awaited yet generally we expect good industrial and housing data and if the sentiment remains fragile and good figures are provided from the U.S. the attempts for the euro to stabilize last week will be dethroned and the bearishness will take hold once again assuring that it was only false attempts as unless the euro stabilizes this week higher then we can surely say the bearishness is back.

We need to track the debt sales this week as well with eyes on Italy, France, Greece and Portugal as the yields and demand will be closely observed. The euro area lacks major fundamentals yet the debt crisis developments and any comments from leaders will be watched.

We continue to expect that gold prices will rise over the coming period, however, we also expect volatility to continue to dominate gold prices over the short term, as despite the recent improvement in overall conditions, yet risks are still threatening the progress of improvement, especially as the outlook for global economies remains full of uncertainty. We also expect Europe to continue to dominate the headlines next week.

Natural Gas Forecast January 16-20, 2012, Fundamental Analysis

Natural Gas Forecast January 16-20, 2012, Fundamental Analysis
Natural Gas Forecast January 16-20, 2012, Fundamental Analysis
Natural gas prices fell last week, as warmer than expected weather conditions boosted speculations of falling demand for natural gas as a heating fuel. While the EIA report showed natural gas inventories decreased by 95 billion cubic feet, above estimates of a decrease by 89 billion cubic feet. Nonetheless, natural gas prices closed the week lower.

Traders will be focused on the weather forecasts, as warm weather conditions are expected to weigh down on demand for natural gas, and that could push prices lower since demand for the heating fuel would decrease accordingly.

Highlights for this week that will probably affect the Natural Gas direction are:

Thursday January 19:

At 15:30 GMT, The EIA will release the weekly natural gas storage change for the week ending January 06, where the prior report showed that natural gas inventories decreased by 95 billion cubic feet.

USD/CAD Forecast January 16-20, 2012, Fundamental Analysis

USD/CAD Forecast January 16-20, 2012, Fundamental Analysis
USD/CAD Forecast January 16-20, 2012, Fundamental Analysis
The USD/CAD pair rallied to the upside at the end of last week, as the U.S. dollar strengthened on mounting fears the European debt crisis is worsening, on eased woes that seemingly ran out of steam to the end of the week after renewed warnings from rating agencies for imminent downgrades.

Nevertheless, all the hopes came to halt with the end of the week with rating agencies again raising the heat. Already throughout the week comments from Fitch were generally targeting the risk that Italy faces and the likely rating cut and that was reiterated by S&P on Friday that sent markets frantically lower.

This week the weak data flow from the euro area will leave the focus on the debt crisis with more auctions and eyes on rating agencies, especially after Fitch earlier said that the review might be concluded around January 15 and with S&P’s warning investors will remain sensitive to any comments and eyes the auctions closely with Spain, France, Portugal and Greece heading to the market.

From the U.S. front heavy data is awaited yet generally we expect good industrial and housing data and if the sentiment remains fragile and good figures are provided from the U.S. the attempts for the euro to stabilize last week will be dethroned and the bearishness will take hold once again assuring that it was only false attempts as unless the euro stabilizes this week higher then we can surely say the bearishness is back.

We need to track the debt sales this week as well with eyes on Italy, France, Greece and Portugal as the yields and demand will be closely observed. The euro area lacks major fundamentals yet the debt crisis developments and any comments from leaders will be watched.

The high level of uncertainty in markets could provide the USD/CAD pair with more bullish momentum, where traders will be eyeing developments in France, Italy and Spain, and accordingly, we should expect Europe to dominate the pair’s movement next week. Nonetheless, if optimism spreads through markets, the USD/CAD pair will decline, as demand for higher yielding assets is likely to rise in that case, and that should provide the Canadian dollar with flow.

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

Monday January 16:

Both economies do not have fundamentals queued for release and the movement will be based on the market sentiment.

Auctions:

10:00 GMT Slovakia sells bills

10:30 GMT Netherlands sell bills

14:00 GMT France to sells bills

Tuesday January 17:

As for the United States, the day will start at 13:30 with the January Empire Manufacturing index which is expected with improvement to 10.50 from 9.53.

Auctions:

09:30 GMT Spain sells bills

10:00 GMT Greece sells bills

10:30 GMT Belgium sells bills

Wednesday January 18:

As for the United States a busy day starts at 13:30 GMT with the Producer Price Index for December where it is expected to ease on the month to 0.1% after 0.3% and on the year expected at 5.1% from 5.7%; excluding food and energy the index is expected steady at 0.1% and on the year to slow to 2.8% after 2.9%.

At 14:00 GMT the TIC flows for November are due after the total Net TIC Flows in October declined in October with total selling of $48.8 billion.

At 14:15 GMT the December Industrial Production index is expected with 0.5% rebound from the previous month’s 0.2% drop and capacity utilization to tick higher to 78.1% from 77.8%.

Auctions:

10:15 GMT Germany sells bills

10:30 GMT Portugal sells bills

10:30 GMT Belgium sells bills

Thursday January 19:

The U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16, where they will be available at 13:30 GMT. At 14:45 GMT, Chicago purchasing manger is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The U.S. will start the data at 13:30 GMT with the Inflation Report. The CPI index is expected with 0.1% rise on the month after holding unchanged the previous month and on the year to slow to 3.1% after 3.4%. Excluding food and energy the index is expected with 0.1% rise on the month after 0.2% gain and on the year to hold at 2.2%.

December Housing Starts index is also due the same time and expected flat at 685,000 while Building Permits are expected with 0.7% drop to 675,000 from 681,000.

As for the Jobless Claims for the week ending in January 14 it is also due at 13:30 GMT as usual after last week they rose 24,000 to 399,000 last week.

As for the Philadelphia Fed Index for January the index is due 15:00 GMT and expected to improve slightly to 11.0 from 10.3.

Auctions:

09:30 GMT Spain sells bills

Friday January 20:

The United States is set to end the week with the Existing Home Sales for the month of December at 13:00 GMT where they are expected to extend the gain with 5.2% to 4.65 million from 4.42 million.

EUR/CHF Fundamental Analysis January 16, 2012, Forecast

Economic Event

Jan. 16

03:15

CHF

PPI (MoM)

 

Historical

Highest: 1.5193 CHF on 10 Oct 2009.

Average: 1.3271 CHF over this period.

Lowest: 1.026 CHF on 10 Aug 2011.

The CHF move is likely a reaction by the market to test “the will” of the SNB without a leader in place. The EURCHF has been moving down since SNBs Hildebrands resignation as SNB head after the scandal from his wife’s questionable currency trades. The pair moved below the 1.2100 level today which is getting closer and closer to the 1.2000 pegged floor. This is also the lowest level since September 20th. Leader or no leader I have to think that the central bank will operate as expected and support the level they set.

Support:              1.216

Resistance:         1.2085

Trend:                   Flat/Sideways

 

Not much action was expected today, but with the fall of the euro against all currencies we see the CHF moving up against the Euro.

The market closed at 2012 Jan 13 7:35 GMT 1.2182

Monday we should see the CHF surge against the Euro in early morning trading as the euro continues to drop of the downgrades announced by S&P

GBP/USD Fundamental Analysis January 16, 2012, Forecast

Economic Events

Jan. 16

19:01

GBP

Nationwide Consumer Confidence

 

Highest: 1.681 USD on 17 Nov 2009.

Average: 1.5807 USD over this period.

Lowest: 1.4321 USD on 19 May 2010.

Rule:

GBP/USD: While the ranges are wider (and so should stops be), the lines are rather distinctive, especially towards the borders of the long term wide range. This pair makes for good trades, with the new austerity program implemented in the UK, the GBP is moving more on Fundementals now. Easy to trade against the USD.

Support:              1.549

Resistance:         1.5325

Current Trend: flat / sideways

At the close of London markets 2012 Jan 13 7:39 GMT  the GBP is trading 1.53903

News this week effecting the Sterling

The latest announcements by U.K. officials referred that the outlook for the British economy will depend on the latest developments in the euro area, thus the pound is expected to be affected by euro zone news and data.

The Italian Treasury sold 9 billion euros of 179-day bills, where the demand increased to 1.7 times, compared to 1.47 times in the last auction while the borrowing cost retreated to 3.251% from the previous auction’s rate of 6.504%. Also, 2013 bills were sold for 1.733 billion euros with a yield of 4.853% from the prior auction’s rate of 7.814%.

On Thursday, the U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16 at 13:30 GMT. At 14:45 GMT, Chicago purchasing manager is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The data is expected to affect the pair’s movements yet eyes will be on the selling of 2014, 2018, 2021 and 2022 bills by the Italian Treasury, especially the 10-year notes which recorded a yield of nearly 7% in the last auction, a rate which triggered the ask for a bailout by Greece and Portugal.

With mounting expectations the BoE will add to stimulus as early as in 2012, the pound remains under pressure from expected oversupply.

This just announced, S&P has officially notified the French government of a downgrade and will be contacting other EU governments.

This move will add support to the Sterling and help push it up against its foreign counterparts. We should see a strong opening Monday.

USD/CHF Fundamental Analysis January 16, 2012, Forecast

Economic Events

Jan. 16

03:15

CHF

PPI (MoM)

 

Historical

Highest: 1.1664 CHF on 07 Jun 2010.

Average: 0.9699 CHF over this period.

Lowest: 0.7224 CHF on 09 Aug 2011.

Rules:

USD/CHF: The pair tends to break to an all-time low, then range back to the previous low. The ranges are very distinct. A break to the upside will likely meet another previous low. Pair are reliable.

The late breaking story affecting the currency markets is the S&P potential downgrades of many european countries including France. Towards the closing of the European Markets, a spokesman, said that France had been notified of a downgrade, but no details have been given and no verification.

The Swiss Franc should remain strong against all EU currencies, and there should be upswing in the USD as more investors move to safe haven currencies.

Right now, we are looking at points of support at 93.65 and resistance at 95.00. With a downward trend.

The USD/CHF is at,  2012 Jan 13 7:36 GMT 094.159 at the close of the european session.

EUR/GBP Fundamental Analysis January 16, 2012, Forecast

Economic Events

Jan. 16

02:00

EUR

German WPI (MoM)

 

04:00

EUR

Italian Trade Balance

 

19:01

GBP

Nationwide Consumer Confidence

Highest: 1.2336 EUR on 29 Jun 2010.

Average: 1.1548 EUR over this period.

Lowest: 1.0686 EUR on 13 Oct 2009.

Rule:

EUR/GBP: The cross tends to move in ranges, with relatively clear barriers. The narrower ranges made it somewhat harder, but it seems to return to wider ranges. The GBP is does not seem to move in response to the EUR as directly currently. The UK austerity program vs. The EU debt crisis seems to have them moving in opposing distances. They are developing new trading personalities and there is a good deal of profit to be made trading this pair. They can be volatile.

Resistance :                        .839

Support:                              .8325

EUR/GBP             2012 Jan 13 7:33 GMT     .83616

The euro continues to drop against the sterling. A lot is based on the S&P downgrade rumors. 

EUR/USD Fundamental Analysis January 16, 2012, Forecast

Economic Events

Jan. 16

02:00

EUR

German WPI (MoM)

 

04:00

EUR

Italian Trade Balance

 

Background:

Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.

The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.

Trading comprises of careful market studying, strategizing, planning and executing the plan in a timely manner. This is entirely different to scalping which is resorted to by many a trader on a regular basis. These traders are often clueless as to the market situation and just use this as a type of defense mechanism to compensate for the general lack of information and knowledge. The EUR/USD is a currency pair that certainly offers a lot of currencies trading opportunities if handled correctly.

Highest: 1.5091 USD on 03 Dec 2009.

Average: 1.3709 USD over this period.

Lowest: 1.19 USD on 07 Jun 2010.

EUR/USD started the year with a nice rise but met resistance at the 1.3060 was all downhill from there.

1.3085 was the top border of a very narrow range that characterized the pair towards the end of 2011. It also provided support back in December 2010 and had a pivotal role.

The round number of 1.30 is psychologically important and also worked as some support. After the breakdown, it was shattered. The relatively new low of 1.2945 is still important, and now as clear resistance. If market rumors turn to reality, these points of support and resistance will be trampled by panic.

Today’s rumors or soon to be truths, about downgrades by S&P have pushed the euro down. As European ma

Next week, this point will be of great importance as the Euro continues to sink 1.2520is another support line, before the round number of 1.24, which was of importance a long time ago.

1.2330  and 1.2144 are two points that we are reaching quickly, more discussion will be added if the Euro continues its drop on Monday.

Todays rumors or soon to be truths, about downgrades by S&P have pushed the euro down. As European markets close, we find the euro at 1.2679

Monday morning should find the euro strong against the dollar, as shortsellers exit the market driving up the price of the euro. Depending on the outcome of the s&P reports, the euro may continue to sink throughout the day, but an early morning spike is probable.

NZD/USD Fundamental Analysis January 16, 2012 Forecast

The New Zealand Dollar fell against the USD yesterday following an up and down day of trading for the Kiwi. The day opened at a rate of 0.7967, the NZD traded sideways for the majority of Asia’s session with local equities and commodity trades offering very little support for the Nations Currency.

The kiwi did manage some upside movement reaching an overnight high of 0.7980 against the greenback after a brief rally proved to be short lived following the release of US retail sales

The retails sales report disappointed the market with a reading of 0.1 percent against a forecasted estimate of 0.3.

This morning the New Zealand Dollar open slightly weaker currently buying 79.40 US Cents and despite debt fears being slightly reduced across the Euro-Zone overnight the NZD has continued to run into resistance around the 80 US Cents Level.

As with the ANZ, there is no reason to see any fluctuation in the currency over the weekend and not economic data is expected. Monday, the kiwi is expected to trade in range of 0.7900 – 0.7990

 

AUD/USD Fundamental Analysis January 16, 2012 Forecast

The Australian Dollar opened slowly without much action, but came to life late in the afternoon session reaching a high of 1.0377 against the greenback. Pushing the positive risk flows into the ANZ was the Chinese Inflationary Data released which came in just above forecast however speculation has continued to mount that the Chinese Government will at some stage seek to ease policy to help spur growth.

Giving back its earlier gains against the US Dollar as it entered foreign session, weak US data in the form of Unemployment claims and Retail Sales managed to erode some of the earlier optimism as the Australian Dollar managed open and close at the same level, around 20 basis points higher at a rate of 1.0331.

The US session and the EU are expected to be quiet on Friday without much news or data. Markets and currencies should continue to trade with little change and low volume.

Expect a range today of 1.0280 – 1.0380 with little activity in the early week