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Major currency pairs on a turning point on an event-packed week, will trends continue or fade out?
MORNING BRIEF
Major currency pairs had a quiet last day of the week on Friday as we had no significant changes in their technical outlooks. The Euro missed the chance to gain even more against the Dollar as the data that came in on Friday were rather mixed. German Retail Sales missed expectations and dropped 0.8% cutting Euro’s momentum for higher levels. The Euro-zone Inflation did print a bit higher than estimated but at that point there was little appetite to drive the European currency higher. The Pound also had a quiet Friday hovering around the 1.6350 mark but as Asian markets opened for business last night it popped above 1.6400. This week ahead of us is packed with significant news events that will ultimately determine whether the uptrends we’ve seen on the Euro and the Cable will continue or come to a halt. Several PMI reports are expected, the Euro-zone’s GDP is scheduled for Wednesday followed by the Rate Decisions on Thursday and of course the all-important NFP figures on Friday. Overall we have much to discuss this week but today we only have a couple of PMI reports scheduled for release and the ISM Manufacturing Index coming in later.
Several PMI reports today and the ISM Manufacturing on the docket
As this week starts we’ve got a couple of interesting Purchasing Manager Indices reports coming in early this morning. The German, Euro-zone’s and British PMI reports are scheduled for release from 9.00 until 9.30 today and a stable printing is expected for all of them. We’d like to see whether this conservative optimism among executives across the Europe region will be confirmed and how it will reflect on the Euro and the Cable. Both currency pairs have showed amazing strength all week printing new highs and extending their gains against the Dollar. But this week, with important news expected from the Central Banks and key employment and GDP data also scheduled for release, these trends could stop or even reverse. The day will close with the ISM Manufacturing Index being released at 15.00 and a slow-down is eyed here. We believe that any reaction to these events on the majors’ technicals will be limited as the most important events are down the road.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
8.55 |
EUR |
German PMI Manufacturing |
Medium |
52.5 |
52.5 |
|
8.55 |
EUR |
Euro-zone’s PMI Manufacturing |
Medium |
51.5 |
51.5 |
|
9.30 |
GBP |
British PMI Manufacturing |
Medium |
56.1 |
56 |
|
15.00 |
USD |
ISM Manufacturing |
High |
55.1 |
56.4 |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
The Euro remained pretty much unchanged on Friday and continued to trade near the 1.3600 area. Our entry just above the 1.3615 mark got triggered and we’re now committed into this trade but the currency didn’t have much steam to climb higher. If you consider that the German Retail Sales missed expectations and the Euro didn’t drop as much it could be a sign of resilience for the European currency. Anyhow, this remains to be seen today but since the currency didn’t have much strength to go higher we’d like to slightly modify our stops today to avoid more losses than we’d need to endure to get out. So, we will move our stops from below 1.3550 to the 1.3570 mark, just below the recent low and wait to see whether the week starts on a positive note for the currency. The PMI reports scheduled for early this morning could be the spark needed to spur the next swing higher or lower. So, to sum up: we’re long from 1.3620, stops are placed at the 1.3570 mark and we have targets at the 1.3645 and 1.3690 levels. Note that target #2 is slightly modified too, down to 1.3690 from the 1.3700 previously issued.
GBP/USD
The Pound unfortunately hit our stops at the breakeven price on Friday closing out the remaining 50% of our long trade. We had no losses on this trade but the pair found new strength and moved higher to reach our second target after we’ve been closed out which is purely unlucky. Anyhow, this swing higher concluded our trade suggestion even though we were unfortunate to miss out on half of it so we need to stand aside for now and see what’s next. We’d prefer a moderate retreat for the currency today in order to have the chance to rejoin the trend towards higher levels but at this point the technical setup to re-enter is just not there. We will remain patient and let the market move until we find the right setup to jump right back in.
FTSE 100
No significant changes for the FTSE 100 for yet another day on Friday as the index remained above the 6,640 points area. Since the broader trading setup we’ve detected last week doesn’t seem to come into play we need to adjust our plans accordingly. We will modify our trade, bring our stops and limits closer and focus on a smaller technical setup within the larger one. So, we’ll bring our stops lower, just a few points above the 6,681 points high and this brings our targets closer so that they now lay at the 6,615 and 6,575 points areas. Major indices around the world are hitting new highs again and again but the FTSE doesn’t follow which makes us confident on our short trade.
Gold
Gold remained trapped in this broader range on Friday and we’d like it move out of it prior to taking a trade. Please note that we’ve modified our scenarios a bit. Our long scenario remains as it is: we like a long entry just above the $1,258 mark with targets at the $1,272 and $1,296 areas and a stop placed below the $1,234 low. However, we’ve readjusted our short trade and we now want to enter short just below the $1,234 mark, place a stop just above the $1,258 area and target the $1,220 and $1,196 price tags. Gold seems to be in a confirmed sideways movement and this called for the readjustment of our short suggestion.
The above charts have been created using FXCM’s Trading Station platform.
STOCK MARKET FOCUS
[Restricted Content] Plc.
The Alpesh Patel Value/Growth filter has indicated [Restricted Content] Plc as our stock of the day.
Company Information: [Restricted Content]
Created using Sharescope Pro
[Restricted Content] Plc has been rated a 9 out 10 in our Value/Growth rating and gets an A Grade rating on our Bullish Momentum meter. The P/E ratio is medium suggesting that the stock might be fairly priced but Turnover is up year on year suggesting good growth and Earnings are also up supporting the growth potential. From a technical standpoint, the MACD indicator has been turning upwards on the weekly chart above pointing towards higher levels. A breakout above recent highs will accelerate demand for the stock and send it even higher. The recommended holding period for a stock of this type is 6-12 months.
Important Information
The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.
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