All currency pairs against the USD will be sensitive to manufacturing data in the coming week, as well as to developments coming out of Europe as the quarter ending June 30 comes to a close. Two out of the three major exchanges ended the week lower. The Dow Jones Industrial Average finished the week down to 11,935, and the S&P 500 Index ended down to 1,268. Only the Nasdaq Composite Index finished the week up with a 1.4% gain to 2,653.
Earlier in the week, Fed Chairman Ben Bernanke lowered the central bank’s forecasts for U.S. economic growth to between 2.7% from 3.3%. Also, Greece’s government survived a vote of confidence, allowing it to try to pass austerity measures in the coming week — a prerequisite for it to get further European aid. Commodities took a rude hit on the week, after International Energy Agency member countries said they would release a total 60 million barrels of oil to ease prices. Crude oil fell by 2% on the week.
With plenty of economic uncertainty about, markets are looking for hard data in the week ahead for a truer read on the economy. The Chicago-area purchasing managers’ index for June comes out on Thursday, and on Friday the Institute for Supply Management releases its report on June manufacturing activity. Analysts expect slight declines in both metrics. Will the USD continue to strengthen, only time will tell.
Today’s Important Economic Announcements (GMT)
12:30 PM USD Core PCE Price Index m/m
12:30 PM USD Personal Spending m/m
3:00 PM USD FOMC Member Kocherlakota Speaks
11:50 PM JPY Retail Sales
Forex & Commodities Technical Analysis
USD/JPY
The yen has certainly seen its share of volatility this week as headlines dominated by Greek news. Japan’s economic docket next week sees a flurry of data with the May retail trade figures kicking off the week on Monday. Consensus estimates call for a print of -2.2%, a slight improvement from the previous read of -4.8%. Also, the Bank of Japan is widely expected to move in to support its domestic market as the isle-nation struggles to deal with the devastation left behind from the March disasters. There is no doubt we are heading higher.
Stop Loss: 80.46
Take Profit: 81.00
GBP/USD
The British Pound slipped to a fresh monthly low of 1.5939 as the Bank of England struck a dovish tone for monetary policy, and the sterling is likely to face additional headwinds over the near-term as the slowing recovery in the U.K. spurs speculation for further easing. As members of the Monetary Policy Committee see scope to expand its asset purchase program beyond the GBP 200B target, the sharp reversal in the GBP/USD is likely to gather pace in the second-half of 2011, and the pound-dollar may threaten the rebound from earlier this year as interest rate expectations falter. The Sterling will weaken in the next 24 hours.
Stop Loss: 1.6202
Take Profit: 1.6100
AUD/USD
The bearish sentiment underlying the Australian dollar should gather pace in the week ahead as the shift away from risk-taking behaviour continues to dampen demands for the higher-yielding currency. As the economic docket for the isle-nation remains fairly light in the week ahead, trader sentiment is likely to dictate price action for the AUD/USD, while the balanced tone held by the Reserve Bank of Australia could mean interest rates will remain steady in the short term. Even though the RBA sees a heightening risk for inflation, we advice our traders to open short positions with caution.
Stop Loss: 1.0471
Take Profit: 1.0400
Published by www.SolidityBrokers.com
