• This week provided fairly positive economic data, as U.S. Personal income and consumption rose in July, the ISM manufacturing index surprised on the upside, and non-farm private payrolls were also stronger than expected.
• These data support our view that the U.S. recovery will remain on track, and that growth will continue at a relatively slow pace.
• In order to experience a relapse in economic growth, U.S. aggregate demand components would have to register contractions of a magnitude difficult to justify outside of a scenario characterized by a renewed severe shock.
• Drama has been growing ahead of next week’s BOC meeting. Investors are split on the likelihood of a follow-up 25 basis point rate hike.
• Regardless of whether the Bank hikes rates, this is likely to be the last for a while, as economic growth is falling short of the central bank’s expectations.
• Real GDP for Q2 came in at 2%, below the 2.5% consensus estimate and falling short of the Bank’s 3% forecast.
• Q2 data reinforced some of the growing vulnerabilities to the Canadian expansion, including slowing consumer spending, housing activity and export growth.
• We expect real GDP growth to come in closer to the 2% mark than the Bank’s 3% forecast in the second half of 2010 and first half of 2011.

UNITED STATES – FURTHER AWAY FROM THE CLIFF

We had some fairly positive data this week, starting with expansions in both personal income and consumption for the month of July. Then the Conference Board’s consumer confidence index surprised market expectations on the upside and the ISM manufacturing index also fared better than expected underpinned by a surprisingly strong reading in its employment sub-component, and to a lesser extent in prices paid. The latter should help to temper some of the recent talk on the possibility of the U.S. economy slipping into deflation.

This morning’s much anticipated August non-farm payroll report also showed a larger than consensus gain in private sector employment. While none of these indicators are at a level that would support an exuberant response, they do support our baseline view that the U.S. economic recovery remains on track, and will continue to gain ground at a relatively slow speed. By this we mean an annualized pace of GDP growth in the order of 1.8% in the second half of this year and moving to 2.3% next year.

For those who prefer to remain ardent believers that a double dip recession is in the offing, just take a pen and paper and write down the fundamental macroeconomic equation GDP = PC + GC + I + (X-M), namely gross domestic product equals the sum of private and government consumption, plus gross fixed investment plus net exports. Then run a very rudimentary arithmetic exercise: plug in very modest assumptions for each component and see what it would take for GDP to actually record another contraction for a couple of quarters. Say, for example, you assume government consumption declines at a 1% annual rate during Q3:2010 – Q3:2011; private consumption expands at a quarter of the speed it did on average during 1971 – 2009 (keep in mind this period includes three severe recessions), and do the same for net exports. In order to drive headline GDP into a double dip it would require a contraction in gross investments over this period. The problem with this view is that investment registered an average annual contraction of close to 11% during Q4:2006-Q4:2009, and to keep sinking it would imply an unprecedented destruction of the U.S. stock of private physical capital. If on the other hand you think that it’s more likely for consumption to lead the US economy into a double-dip, then it would take a sharp worsening of labor market conditions with an outright largescale loss in jobs. But, given the skeletal job market that currently exists and without identifying a trigger event to force renewed firing, it is difficult to argue for this outcome.

In other words, there are a continuum of outcomes in between a slow recovery and a double dip, and under reasonable trajectories – just reasonable, not even strong trajectories – of the main demand aggregates, growth in the domestic economy remains in positive territory. On the other hand, to get another leg down in economic activity, it would require a negative catalyst, marked by another major shock to drive economic expectations even lower than they are today to effect consumption and investments. Yes, there is still the threat of European sovereign debt running into financial troubles and the more remote possibility of a burst of China’s alleged real estate bubble, but those remain only risks and not the baseline scenario. Every time an economic indicator undershoots a little bit with respect to market expectations, doomsayers come out of the woodwork arguing for a double dip. However, the data continue to move us increasingly away from this possibility.

The key to this recovery will be patience, as it will proceed at a slower pace than any other in recent U.S. history, but this does not argue for a relapse in economic growth. (please see our recent publication: U.S. Recovery Is Tracking Traditional Experience After Financial Crisis Induced Recessions)

CANADA – ONE MORE PLAY THEN IT’S OFF TO THE SIDELINES

What better way to ring in the fall session of trading than a Bank of Canada (BOC) interest-rate decision replete with drama. Ahead of this Wednesday’s fixed announcement date, investors are deeply divided on whether the central bank will bump up its overnight rate by an additional 25 basis points, to 1.00%. Over the past few weeks, financial market expectations have oscillated with each twist and turn in the economic data. Despite being served up a disappointing Canadian GDP report for the second quarter, a barrage of stronger-than-anticipated U.S. figures – notably the ISM and jobs numbers for August – helped to propel the likelihood of a hike from 30% to just above 50% by week’s end. On the other hand, Bay Street analysts – including ourselves – have been near-unanimous in predicting an increase.

Even if the BOC ultimately pulls the trigger on Wednesday, it is likely to be the last rate hike for a while. For one, the recent string of positive U.S. data is more telling of an economy not slipping back into recession than one gaining significant traction. But more importantly, Canada’s weaker-than-expected 2.00% (annualized) reading on real GDP in Q2 – while certainly containing some bright spots – provided some strong signals of the growing vulnerabilities to growth at home.

On the plus side, a major contributor to Canadian secondquarter growth was business capital spending, which had been lagging behind so far in the recovery. On the flip side, a full 2 percentage points of growth alone was attributable to a sharp accumulation in inventories, which tend to provide only a temporary kick. Elsewhere, exports gains slowed, reflecting the ongoing U.S. challenges. And as a testament to the absence of pent-up demand of households, particularly for big-ticket items, personal consumption expenditure and homebuilding activity softened in Q2.

Surprisingly strength in job creation has helped to keep consumer spending well supported in recent months. However, this Friday’s employment report for August should provide some evidence that hiring is beginning to slow down in tandem with the broad economy. The headline number is expected to receive a boost from a rebound in educational services employment, which fell sharply in the prior month, partly due to a statistical quirk. However, excluding education, there was probably little net addition to jobs in August on the heels of a solid run in the spring and early summer.

The data indicate that Canada’s economy is gearing down more quickly than the BOC had envisaged in its July Monetary Policy Report (MPR). In that document, the Bank had not only projected real GDP growth of 3% in Q2, but it had expected that pace to be continued in the second half of 2010 and in 2011. Based on our estimates, it now appears that the profile is likely to be closer to 2%, increasing the downside risk to their core inflation forecast.

Accordingly, rather than continuing to embark on a string of rate hikes, the path ahead is likely to be drawn out. TD Economics is forecasting only four quarter-point hikes throughout 2011 beginning in Q1, taking the rate up to 2%, which is still effectively zero in real terms. Look for the communiqué accompanying Wednesday’s rate decision to signal a pause going forward.

U.S.: UPCOMING KEY ECONOMIC RELEASES

International Trade – July

• Release Date: September 9/10
• June Result: -$49.9B
• TD Forecast: $-47.0B
• Consensus: -47.3B

After three consecutive months of widening, the U.S. trade balance is set for a modest improvement in July. During the month, we expect the combination of a modest 0.7% M/M drop in the pace of imports along with a 1.1% M/M increase in exports to result in the trade deficit narrowing to $47.0B. The decline in imports will be a function of the diminished appetite for foreign goods resulting from the weakening pace of economic recovery along with the lagged impact of softer energy prices. On the other side of the ledger, the weak US dollar is expected to improve the competitiveness of US products globally, thereby providing a boost to exports during the month. Real trade is also expected to improve, suggesting that net trade will be a favourable source of support for economic activity during the month. In the months ahead, we expect the level of the deficit to return to its upward trajectory, as weakening global demand pushes exports lower.

CANADA: UPCOMING KEY ECONOMIC RELEASES

Bank of Canada Interest Rate Decision

• Release Date: September 8/10
• Current Rate: 0.75%
• TD Forecast: 1.00%
• Consensus: 1.00%

It has become an exceptionally close call, but we expect that the Bank of Canada will proceed with a 25 basis hike and take its overnight rate to an even 1.00% next week. While Q2 real GDP growth did fall short of the Bank’s forecast, the underlying details suggest that there is sufficient momentum in the domestic economy to warrant a further reduction in stimulus. Furthermore, real GDP growth continues to exceed the growth rate of potential output, which implies that what remains of the spare capacity created during the recession continues to be absorbed. While the international outlook has certainly darkened, our current tracking for 2010 US real GDP growth of 2.6% remains in the ballpark of the Bank’s 2.9% forecast. Looking beyond next week’s meeting, we feel that the balance of risk is tilted towards an extended pause through the first quarter of 2011. This will allow the Bank to gauge the response of the Fed to recent US weakness as well as to evaluate the various sources of domestic momentum within the Canadian economy.

Canadian Housing Starts – August

• Release Date: September 9/10
• July Result: 189.2K
• TD Forecast: 185.0K
• Consensus: 185.0K

The progressively smaller rate of decline in housing starts over the last three months is expected to continue in August, as starts are forecast to ease just modestly to 185K annualized units. Despite the recent fall in resale activity, building permits have held up reasonably well and the weather across the country was generally supportive of building activity in August. In terms of the composition of starts, single unit dwellings are forecast to stabilize following several months of sharp declines. Meanwhile, the evervolatile multiples component is forecast to remain flat following a sharp 13% increase in July. Taking a longer-term perspective, the housing market is expected to remain on the weak side over the second half of the year. The emergence of a better balance between buyers and sellers is anticipated to reduce the incentive of builders, which will allow starts to return to their demographically supported level.

Canadian International Trade – July

• Release Date: September 9/10
• June Result: -$1.1B
• TD Forecast: $-1.3B
• Consensus: -0.8B

Canada’s merchandise trade deficit is expected to widen further to $1.3B in July. While both exports and imports are likely to rebound from the decline observed in June, the forecasted 1.6% M/M increase in exports will lag the 2.0% increase in imports. While exports will benefit from a weaker trade-weighted Canadian dollar and a rebound in US imports of autos, lower commodity prices and a decline in US shipments of non-transportation goods will limit the magnitude of the increase. The forecasted strength in imports can be attributed to the momentum in business investment and an expected rise in retail sales. Once the impact of changing prices is taken into account, both real exports and imports are expected to increase, but on balance net exports will remain a drag on real GDP growth.

Canadian Employment – August

• Release Date: September 10/10
• July Result: -9.3K; unemployment rate 8.0%
• TD Forecast: 40K; unemployment rate 7.9%
• Consensus: 30K; unemployment rate 8.0%

After posting an unexpected decline in July, the Canadian labour market is forecast to rebound strongly in July, adding 40K new jobs. When paired with the modest expansion in the labour force, the jump in hiring is expected to pull the unemployment rate down by a tenth of a percent to 7.9%. A large part of the forecasted increase in employment is attributed to the partial unwinding of the 65K plunge in educational services employment. In recent years, this phenomenon has provided a lift to employment in either August or September. For the purpose of the forecast, we have split the difference but acknowledge that its impact will provide a significant boost to employment in one of the next two reports. Abstracting away from this temporary influence, a slower pace of overall job growth in the months ahead will reflect the moderation in economic growth over the second half of the year. Nevertheless, robust hiring intentions from both the Bank of Canada’s Business Outlook Survey and the IVEY PMI will limit the downside risk to the labour market.

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Today’s US session was one for those who enjoy watching paint dry. But tomorrow is NFP day and may be yet another day for a USD inflection point.

Today’s session was hardly one for the history books, though we did see fairly strong moves in NOK (in support of the interest rate spreads favoring the currency as we have noted in recent days) and in SEK off the back of the Riksbank interest rate hike and guidance. EURUSD and the other major USD pairs failed to follow up on yesterday’s exuberant move higher in respect of the upcoming US employment report and ISM non-manufacturing report tomorrow.

Nonfarm payroll expectations and reactions

Some have lowered expectations for US nonfarm payrolls due to the weak ADP release (soon we’ll be dropping the "private payrolls" figure, which remains the focus, once the rest of these pesky census workers are fired). The Saxo call (see a great report on the release here: is for a virtually unchanged figure versus a slightly more positive consensus. The market is already very short the USD, but risk is made a sharp comeback yesterday, which pushed the dollar lower. It feels like we’re in need of direction here after so many days of aimless trading in EURUSD and whippy trading in the more risk-correlated AUDUSD, but will we get any kind of resolution in tomorrow’s trading? It’s tough to build any conviction in this environment. For now, risk appetite measures are generally very complacent.

It is perhaps worth noting the reactions to the last three US employment reports.

July Report: the market sold the greenback very lightly after the July employment report on August 6 (in which private payrolls were out at +71k vs. +90k expected and the Jun. data was revised -50k lower). But that was at the tail-end of a weak move in the USD and that very day marked the low of the greenback against the Euro, the Aussie and other currencies. (EURUSD slid from 1.33+ to 1.25 in the subsequent two weeks.).

June Report: in the case of the June US employment report released on July 2, in which payrolls also fell short of expectations, though the unemployment rate improved to 9.5% instead of leaping to the 9.8% expected, the initial reaction was very modest, but the USD sold off heavily in a virtually straight line some days later as risk appetite continued to recover.

May Report: by far the most disappointing of the three reports (payrolls rose +41k vs. 180k expected) on , the release came in an environment of weak risk appetite and was released on June 4. It kicked off a brutal two day slide in the risk, which boosted the USD, but June 7 was the top for the greenback for the year.

Let’s not forget that the important ISM non-manufacturing survey is also up tomorrow. It has been largely stable since peaking out in March of this year despite other ugly data coming out of the US. An ugly deceleration is needed in this index if we are to believe that the US economy is really gathering downside momentum rather than simply flattish at the moment. Also – the biggest mover off the report tomorrow could be the treasury market and therefore the Japanese yen, which remains the highest beta currency out there.

Chart: AUDUSD

Here we simply market the three dates of the last nonfarm payroll reports on the AUDUSD chart. They have certainly come close to interesting inflection points on all three occasions and that may be the case yet again this time around despite the cynicism the market often heaps on this monthly number due to to the way it is calculated.

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Initial support at 1.3385 (March 31 low) followed by 1.3268 (Mar 26 low). Initial resistance is now located at 1.3591 (April 1 high) followed by 1.3627 (Mar 19 high)

Yen 94.25

Initial support is located at 93.68 (Apr 2 low) followed by 93.28 (Apr 1 low). Initial resistance is now at 95.06 (Aug 24 high) followed by 95.29 (Aug 18 High).

Pound 1.5265

Initial support at 1.5173 (Apr 1 low) followed by 1.5044 (Mar 31 low). Initial resistance is now at 1.5299 (Apr 1 high) followed by 1.5382 (Mar 17 high).

Australian Dollar 0.9190

Initial support at 0.9183 (Apr 2 low) followed by the 0.9150 (Apr 1 low). Initial resistance is now at 0.9225 (Apr 5 high) followed by 0.9250 (March 17 high).

Gold 1130

Initial support at 1111 (Apr 1 low) followed by 1101 (Mar 30 low). Initial resistance is now at 1133 (Mar 17 high) followed by 1145 (Mar 3 high).

Oil 86.40

Initial support at 86.00 (Intraday Support) followed by 85.00 (Intraday Support). Initial resistance is now at 88.00 (March high) followed by 90.00 (Intraday Resistance).

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EURUSD Outlook

The EURUSD made another indecisive movement yesterday, trapped in a range area of 1.4450 – 1.4600 as you can see on my h4 below, indicating consolidation but the scenario is more to the upside unless we have a break below 1.4450. The bias is neutral in nearest term. We will have some important news from the Euro zone and US today. While ECB likely to keep rate at 1%, traders focus will be more on the ECB press conference. An optimistic tone should support the Euro further while a negative tone may diminish Euro rally. US retail sales data is expected to be weak. Unless we have a significant positive surprise on retail sales numbers, the Dollar should remains under pressure. Break above 1.4600 should continue the bullish scenario targeting 1.4800 area.

GBPUSD Outlook

As I had expected, the GBPUSD continued its bullish momentum yesterday, topped at 1.6302 and closed at 1.6278. The bias should remains bullish testing the major trendline resistance (aqua), which is a potential strong resistance are at this phase. Break above the trendline resistance should trigger further bullish momentum towards 1.6430 in nearest term and 1.6700 in longer term. Immediate support at 1.6250. Break below that level should diminish the bullish momentum and lead us into no trading zone with potential further bearish momentum testing 1.6040 – 1.6113 support area.

USDJPY Outlook

The USDJPY was corrected higher yesterday. My bearish scenario is in serious threat, but it’s too early for a bullish scenario. The bias is neutral in nearest term but as long as price stay below 91.85 area the bearish scenario targeting 90.15 area should remains intact. Break above 91.85 should be seen as bearish failure. Immediate support at 91.00 area. Break below that area should trigger further bearish momentum and keep the bearish scenario intact.

USDCHF Outlook

The USDCHF made indecisive movement yesterday. On h4 chart below we can see that price still trapped in range area of 1.0143 – 1.0213. The bias remains neutral in nearest term but I still prefer a bearish scenario at this phase. Clear break below 1.0143/30 area should trigger further bearish momentum targeting 0.9917 area. On the other hand, break above 1.0213 area should diminish the bearish scenario testing 1.0280 area.

EURJPY Outlook

The EURJPY was corrected higher yesterday. On h4 chart below we can see that after break below the trendline support (red) price retreated higher near the trendline, which is often happen technically. The bias is neutral in nearest term but if price move back above the trendline, the bearish scenario is in serious threat, testing 133.77 resistance area. Break above that area should trigger further bullish scenario at least testing 134.36 area. Immediate support at 132.00 area. Break below that area should keep the bearish scenario intact.

GBPJPY Outlook

The GBPJPY had a bullish momentum yesterday. On daily chart below we can see that price rejected to move below the trendline support (blue) indicating the bullish scenario remains intact targeting 150.69 area. Immediate support at 148.50 area. Break below that area should lead us into no trading zone as direction would become unclear for me

AUDUSD Outlook

The AUDUSD had a bullish momentum yesterday. On h4 chart below ( I have made some adjustment to the bullish channel) we can see that price still move inside the bullish channel indicating the bullish scenario remains intact. However we seem to have a good resistance around 0.9325 area. We need a valid break above that area to continue the bullish scenario targeting 0.9404. Immediate support at 0.9200 area. Break below that area should be seen as serious threat to the bullish outlook.

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EURUSD Outlook

The EURUSD made indecisive movement yesterday. The bullish momentum after breakout from the previous range of 1.4250 – 1.4450 seems limited so far and looks like price is trying to make another choppy market. However, as long as price stay above 1.4450 area, the bullish scenario targeting 1.4600 should remains intact. Break below 1.4450 should be seen as potential bullish failure re-testing 1.4250 area once again.

GBPUSD Outlook

The GBPUSD had a bullish momentum yesterday. On daily chart below we can see that price has convincingly move above the bearish channel indicating potential bullish targeting 1.6250 area. Immediate support at 1.6113 area. Break below that area should lead us into no trading zone but only a movement below 1.6040 area could be seen as bullish failure and trigger further bearish scenario back towards 1.5900 – 1.5832 area

USDJPY Outlook

As I had expected, the USDJPY had a bearish momentum yesterday, bottomed at 90.73 and closed at 90.97. The bias remains bearish targeting 90.15 area. Immediate resistance at 91.50 – 91.85 area. Break above that area should lead us into no trading zone as direction would become unclear for me

USDCHF Outlook

The USDCHF didn’t make significant movement yesterday. On h4 chart below we can see that price trapped in a small range area of 1.0213 – 1.0143 area. As long as the bearish channel valid, I still prefer a bearish scenario at this phase and expecting a break below 1.0143/30 area to continue the bearish momentum targeting 0.9917 area. Until that happen, I think I will stand aside for now. A break above 1.0213 area should trigger further upside correction towards 1.0280 area.

EURJPY Outlook

The EURJPY had a significant bearish momentum yesterday, break below the trendline support area after made a false breakout, as you can see on my h4 chart below. This fact should be seen as bullish failure and potentially trigger further bearish pressure testing 131.30 area. Break below that area should trigger further bearish momentum targeting 130.00 area. Immediate resistance at 132.30 area. Break above that area should lead us into no trading zone in nearest term but I still prefer a bearish scenario at this phase

GBPJPY Outlook

The GBPJPY had a bearish momentum, bottomed at 146.65 and closed at 147.06. On daily chart below we can see that we are in critical technical phase as price is now struggling around the trendline support area. Consistent move below that trendline support should be seen as bullish failure and trigger further bearish momentum targeting 145.20 area. Immediate resistance at 147.70 area. Break above that area should keep the bullish scenario intact.

AUDUSD Outlook

The AUDUSD had a bearish momentum yesterday, bottomed at 0.9169 and closed at 0.9198. I think we are in critical technical phase now. On h4 chart below we can see that price slipped below the bullish channel indicating serious threat to the bullish scenario but price still move around 0.9228 – 0.9190 support area. We need consistent move below that area to confirm the bearish scenario towards 0.9100 – 0.9000 area. Immediate resistance at 0.9250. Break above that area should keep the bullish scenario targeting 0.9404 intact.

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EURUSD Outlook

As I had expected, the EURUSD had a bullish momentum yesterday after breakout from the range area, topped at 1.4555 and closed at 1.4513. However earlier today in Asian session price retreated lower, traded around 1.4490 at the time I wrote this comment, indicating limited bullish momentum so far. The bias is neutral in nearest term but the bullish scenario targeting 1.4600 remains intact as long as price stay above 1.4450 area. CCI just cross the 100 line down on h4 chart suggesting potential further downside pressure testing 1.4450. Break below that area should be seen as bullish failure and could trigger further bearish momentum back towards 1.4250 again

GBPUSD Outlook

The GBPUSD attempted to push higher yesterday, topped at 1.6192 but bullish momentum was limited as price closed lower at 1.6111 and now traded around 1.6098 at the time I wrote this comment. On daily chart below we can see that price is now still struggling around the upper line of the bearish channel. The bias is neutral in nearest term but another movement back inside the bearish channel should be seen as bullish failure and a false breakout situation which potentially trigger significant bearish momentum testing 1.5900 – 1.5832 area once again. Immediate support at 1.6040. Break below that area should trigger further bearish momentum. Initial resistance at 1.6200 – 1.6250 area. Break above that area should trigger further bullish scenario towards 1.6700 in long term point of view.

USDJPY Outlook

The USDJPY had a significant technical movement yesterday by break below the bullish channel, as you can see in my daily chart below. Like I said yesterday, this fact should be seen as bullish failure and could trigger further bearish momentum targeting 91.50 and 90.15 area. The bias is bearish in nearest term. Immediate resistance at 92.50. Break above that area should lead us into no trading zone as direction would become unclear for me.

USDCHF Outlook

The USDCHF continued its bearish momentum yesterday, bottomed at 1.0130 and closed at 1.0161. On h4 chart below we can see that bearish pressure found good support around 61.8 Fibo support at 1.0143 area. The bias is neutral in nearest term. I still prefer a bearish scenario at this phase but only break below 1.0143/30 area should be seen as bearish confirmation targeting 0.9917 area. Immediate resistance at 1.0213 followed by 1.0280 area. Break above that area should be seen as bearish failure testing 1.0500 area.

EURJPY Outlook

The EURJPY attempted to push higher yesterday, topped at 134.36 but closed significantly lower at 133.62 and now traded around 133.28 at the time I wrote this comment. On h4 chart below we can see that this was a case of a false breakout from 133.77 area which technically could trigger a bearish momentum testing the trendline support (red). Break below the trendline should be seen as bullish failure testing 131.30 area. Another movement above 133.77 area should trigger further upside momentum re-testing 134.36 area

GBPJPY Outlook

The GBPJPY attempted to push higher yesterday, slipped above the trendline resistance, topped at 149.58 but further bullish momentum was rejected as price closed lower at 148.36, back below the trendline resistance. This fact is a false breakout which usually trigger a downside pressure, testing the trendline support (blue) area. Break below the trendline support should be seen as bullish failure

AUDUSD Outlook

The AUDUSD failed to continue its bullish momentum yesterday. This fact should lead us into no trading zone but as long as the bullish channel valid, the bullish scenario targeting 0.9404 should remains intact. Immediate support at 0.9230 – 0.9191 area. Break below that area should be seen as a serious threat to the bullish scenario. Immediate resistance at 0.9324 (yesterday’s high). Break above that area should trigger further bullish momentum targeting 0.9404 area

FX Instructor LLC
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The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

EURUSD Outlook

The EURUSD made a significant movement this morning by break above range area. This fact should be seen as bullish confirmation at least targeting 1.4600 area before aim for 1.4800 area. Immediate support at 1.4450 area. Break below that area should lead us into no trading zone as direction would become unclear for me but could be considered as a false breakout and trigger further bearish momentum re-testing 1.4250 again. I think the situation is a little bit tricky now since I do not see convincing fundamental factors in Euro zone that can support the currency significantly at this phase. So make sure only use tight money management.

GBPUSD Outlook

The GBPUSD is at critical technical phase right now. As you can see in my daily chart below, price is now testing the bearish channel. As long as the bearish channel valid, the bearish scenario should remains intact especially if we have another movement back below 1.6040/00 area again today testing 1.5832 – 1.5900 area. However, a violation to the bearish channel should be seen as bearish failure and could start a new bullish scenario testing 1.6700 area. Immediate resistance at 1.6120/50 area. Break above that area should be seen as serious threat to the bearish scenario.

USDJPY Outlook

The USDJPY is in critical technical phase now. As you can see in my daily chart below price is now testing the bullish channel after failed to break above the trendline resistance (red). A valid break below the channel should be seen as bullish failure and could trigger significant bearish momentum targeting 91.50 and 90.15 area. Immediate resistance at 93.00. Break above that area should keep the bullish scenario targeting 94.50 intact

USDCHF Outlook

The USDCHF had a significant bearish momentum on Friday after worse than expected US NFP number. Technically, price now not only break below 1.0280 area (38.2% Fibo retracement), but has move below 50% Fibo retracement. So the bearish channel now is not only indicating a correction, but a potential bearish reversal testing 1.0143 area. Break below that area should trigger further bearish momentum back towards 0.9917 area

EURJPY Outlook

The EURJPY made indecisive movement on Friday, formed a Doji on daily chart. On h4 chart below we can see that the we have another upside pressure testing 133.77 key resistance area this morning. Consistent move above that area should confirm the bullish scenario targeting 135.40 area. Immediate support at 133.00 area. Break below that area should lead us into no trading zone but as long as price stay above the trendline support (red) I still prefer a bullish scenario

GBPJPY Outlook

The GBPJPY also made indecisive movement on Friday. On h4 chart below we can see that the battle now is between the trendline support (blue) and the trendline resistance (red). I prefer a bullish scenario and expecting breakout above the trendline resistance targeting 150.69 area. However the bias is neutral in nearest term. Immediate support at 148.00 area. Break below that area should trigger further bearish momentum testing the trendline support area and could be a serious threat to the bullish outlook.

AUDUSD Outlook

The AUDUSD had a significant bullish momentum on Friday. My technical bearish strategy on shooting star candlestick pattern was fail. This fact should continue the bullish scenario targeting 0.9404 area. Immediate support at 0.9250 area. Break below that area should lead us into no trading zone but as long as price move in the bullish channel I still prefer a bullish scenario at this phase.

FX Instructor LLC
www.fxinstructor.com

The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

EURUSD Outlook

The EURUSD attempted to push lower yesterday, bottomed at 1.4283 but closed higher at 1.4408. The pair still trapped in 1.4250 – 1.4450/80 area. Maybe we need a fundamental catalyst to lead us out from this choppy market and US NFP tomorrow is expected to do this job. While aggressive traders can continue to use range trading strategy to short around 1.4450/80 or to long around 1.4250 with tight stop loss, conservative traders wait until we have a clear break from the range area to make decision.

GBPUSD Outlook

The GBPUSD made indecisive movement yesterday. On h4 chart below we can see that price is moving in a triangle area indicating consolidation. The bias is neutral in nearest term but the fact that price so far still able to move below 1.6040/60 area should keep the bearish scenario intact with bearish target remains around 1.5832 area. Break above 1.6060 should be seen as a serious threat to the bearish outlook testing 1.6150 and 1.6250 area.

On fundamental side, beside interest rate decision (which is likely to stay at 0.5%), BoE will release its policy on quantitative easing program which is expected to stay at 200b pounds. While technical view remains bearish on this pair, Sterling may get some support as long as BoE keep the QE program as expected.

USDJPY Outlook

The USDJPY had a bullish momentum yesterday after corrected lower on Monday and Tuesday. On daily chart below we can see that price now back inside the bullish channel indicating bullish scenario remains intact. To continue the bullish scenario, price should be able to break above the major trendline support. We are in critical phase now. I am still in buy mode for this pair and expecting a breakout above the trendline to continue bullish scenario towards 94.50 even 97.75 area. Immediate support at 92.00. Break below that area should trigger further bearish momentum and lead us into no trading zone in nearest term

USDCHF Outlook

The USDCHF made significant bearish momentum yesterday, bottomed at 1.0248, closed at 1.0275 and traded around 1.0258 at the time I wrote this comment. This fact should provide more downside pressure for this pair testing 1.0215 support area. Break below that area should be seen as bullish scenario failure and change my outlook to a bearish targeting 1.0000 area. Immediate resistance at 1.0280. Break above that area should keep the bullish scenario intact.

EURJPY Outlook

The EURJPY had a significant bullish momentum yesterday, moved back above the trendline after rejected to move below 38.2 Fibo retracement support area indicating bullish scenario remains intact. The bias is bullish targeting 133.77 area. Break above 133.77 should trigger further bullish momentum towards 135.40 area. Immediate support at 132.60 area. Break below that area should lead us back into no trading zone as direction would become unclear for me.

GBPJPY Outlook

The GBPJPY had a bullish momentum yesterday, topped at 148.44 and closed at 147.85. On daily chart below we can see that the trendline support did good job preventing further bearish momentum, keep the bullish scenario intact. The bias is bullish in nearest term targeting 148.95 area. Immediate support at 147.30/50 area. Break below that area should lead us into no trading zone as direction would become unclear for me.

AUDUSD Outlook

The AUDUSD had a significant bullish momentum yesterday, topped at 0.9216, closed at 0.9196 and traded higher around 0.9250 at the time I wrote this comment. The bias is bullish in nearest term targeting 0.9292 area. Break above that area should lead us to a new bullish phase targeting 0.9404 area. Immediate support at 0.9190. Break below that area should lead us into no trading zone but I still prefer a bullish scenario at this phase.

FX Instructor LLC
www.fxinstructor.com

The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results