Market Analysis: 15 September, 2016

Market Analysis: 15 September, 2016

by Christala Parmaxi

Overview:

Economic Releases

New Zealand’s Gross Domestic Product for the second quarter of 2016 was released at 0.9% today, missing expectations of 1.1%. However, the figure of the 1st quarter was revised by 20 points upwards from 0.7% to 0.9%. Furthermore, the expectations for the monthly Australian Employment Change of 15K new jobs turned out to be too optimistic. Instead of the new jobs being added, 3.9K employees in Australia lost their jobs, with the actual figure being -3.9K. Both the Kiwi and the Aussie barely reacted to the announcements.

There were no big surprises about the Swiss National Bank interest rate decision as the bank left the rates unchanged at -0.75% as it was widely expected. As investors expected no action from the bank, Swiss Franc didn’t fluctuate, USDCHF barely raised after the announcement.

BoE Policy Meeting

The spotlight of the day is the policy meeting of the Bank of England. During its August policy meeting, the Bank cut the interest rates by 25 points from 0.5% to the record low level of 0.25% – for the first time in almost 8 years. Moreover, the Bank enhanced its asset purchasing program from GBP375 to GBP435 by buying UK government bonds of GBP60 billion and initiated in buying GBP10 billion of UK corporate bonds. September’s policy meeting is scheduled for today at 14:00 server time. The economic releases of August were mixed thus they cannot reveal much for the Bank’s next steps. Jobless Claims and Wages Growth were weaker than the previous month while Manufacturing Production, Retail Sales and Consumer Price have improved. The British Pound has advanced around 350 pips since the last meeting, with the overall technical outlook being bullish.

Economic Calendar

Besides the policy meeting of the BoE, we are expecting the news during the US session. At 15:30 server time we are awaiting for US August Core Retail Sales, which are expected at 0.2% against the -0.3% of the last month. At the same time US monthly Retail Sales, PPI and Philadelphia Fed Manufacturing Index will be released. A drop of 10 points is expected on Retail Sales while Producers Price Index is expected to rise from -0.4% to 0.1%.

Technical View

GBPUSD

The overall sentiment of the Cable is bullish since it is moving on an uptrend. However, MACD penetrated to the downside its equilibrium level while Average Directional Movement indicates negative direction. The risks to the downside are near the 1.304 and 1.29 support levels while to the upside we are looking for the levels of 1.3365 and 1.344.

 

GBPUSD

GBPUSD

EURUSD

The most traded currency is trading within a symmetrical triangle and above SMA100 on the daily chart. Usually, triangles are continuation patterns, thus I would expect the pair to break the triangle to the upside and continue the prevailing uptrend.

EURUSD

EURUSD

The targets to the upside are near 1.128 and 1.13 while the risks to the downside are near the psychological level of 1.12.

EURUSD

EURUSD

 

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