The fundamental news from last week all but cemented the Federal Reserve’s action. The August producer price index (PPI) slipped month-over-month, while the consumer price index (CPI) came in slightly higher than expected.
US equities rose at the end of the week, showing one of the best advances over a month, all on hopes of the interest rate cut next week. A 25 bps cut is now fully priced in; the only question remains whether the FED will go for 50 bps.
On the Asian currency market, the Australian dollar outperformed, hitting our designated target area against the New Zealand dollar, which we’ve observed since the last week of August. The pair has risen by over 4.8% since its April bottom, and has reached a yearly resistance level.
Another currency to keep an eye on is the Japanese yen. Owing to positive market developments and risk-off appetite, the yen has sunk against almost every currency, showing persistent weakness.
The week ahead will bring numerous fundamental news. Four different central banks will announce their policy rates, including the Bank of Japan, the Bank of Canada, the Bank of England, and most notably, the FED. The outcome of these meetings will dictate the forex macro environment for the following weeks.
Key News
- Tuesday: US- retail sales, CAD – CPI
- Wednesday: GBP – CPI, CAD – Rate decision, USD – Rate decision
- Thursday: NZD – GDP, AUD – Unemployment, GBP – Rate decision, USD – Unemployment
- Friday: JPY – Rate decision
Pairs In Focus
1.NZD JPY
This pair has been reversing through August, rising back to the key level of 88.180, from which it has been rejected mid-month. If it can overcome and comfortably close above, that is a bullish sign for a potential continuation.
NZD JPY daily chart, Source: Tradingview
The nearest upside is the highs from July, where it touched 89.050. The sentiment is 86% bearish, providing for an excellent contrarian opportunity.
2. GBP SGD
This pair has been running into strong resistance around 1.74. For a bullish signal, it would close comfortably above that number on a daily timeframe.
GBP SGD daily chart, Source: TradingView
A potential retest below, around 1.73850-900 ,would provide a good opportunity for a bullish continuation with an upside of over 100 pips.
Notes
- AUD NZD: Kept the bullish momentum and hit a fresh yearly high. Strong resistance is around 1.11800.
- AUD CAD: Broke resistance at 0.91300, and set a fresh yearly high. Next resistance is at 0.92600.
- AUD CHF: Tagged the upper channel of the range at 0.52900, which is the resistance. A conclusive break is needed to turn the bearish trend.
- AUD JPY: Rose to a fresh yearly high. Strong resistance sits at 99.150.
- AUD SGD: Tagged resistance at 0.85450 and rejected. The support is at 0.84900.
- CHF JPY: Rallied back above the key level of 185.030, indicating bullish continuation. The resistance above is at 186.055.
- CAD JPY: Temporarily bottomed at 106.200. A close above 107.170 will signal a potential for a new bullish run.
- EUR AUD: Dropped to tag the bearish trendline, creating a fresh low. Bearish momentum remains on cards.
- EUR/JPY: Retraced back above the key level of 172.500. Bullish trend remains intact.
- EUR NZD: Overall trend is bullish despite a short-term pullback. Price found some footing at 1.96 support.
- GBP AUD: Broke to the downside, creating a fresh 5-month low. Pullbacks are possible, but the overall trend is now bearish.
- GBP JPY: Broke above 200 with a fresh new high close at 200.190. Owing to double central bank decisions, price movement could be volatile and traders should remain vigilant with correlated forex pairs.
- GBP NZD: Broke support at 2.27800, retracing half the gains of the rally since late July. Next support is at 2.26450.
Disclaimer: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article’s contents. We provide research and promote forex trading in Singapore, and readers may use this data for information and educational purposes only.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
