NAGA Weekly Market Analysis - 20.05.2019

President Trump’s decision to raise the tariff rate from 10% to 25% on USD200 billion of imports from China has provided a significant negative surprise for the global economy. The announcement has seriously challenged the consensus view that the US and China were moving close to finalizing a trade deal in the coming months. There is still some optimism that trade deal can be reached and the threat to impose tariffs on all remaining imports will not be backed up. However, market participants will understandably display more caution now. It creates a more supportive US dollar environment.

Our Favourite assets we are watching this week:

#GBP/USD – Strongly Bearish
GBP/USD drops to as low as 1.2736 so far today and intraday bias remains on the downside. Current decline from 1.3381 should target retesting 1.2391 low. On the upside, above 1.28.08 minor resistance will turn intraday bias neutral for consolidation first. But recovery should be limited well below 1.3176 resistance to bring fall resumption.

#EUR/GBP – Strongly Bullish
Intraday bias in EUR/GBP remains on the upside for the moment. Consolidation pattern from 0.8472 is extending with another rising leg. Further rise could be seen to 0.8840 resistance. On the downside, break of 0.8668 minor support will turn bias back to the downside for 0.8472 low instead.

#GBP/JPY – Strongly Bearish
GBP/JPY’s fall is in progress and intraday bias stays on the downside. Current decline should target 61.8% retracement of 131.51 to 148.87 at 138.14 next. Sustained break there will pave the way to retest 131.51 low. On the upside, above 141.64 minor resistance will turn intraday bias again and bring consolidations, before staging another decline.

#XAU/USD – Strongly Bearish
Gold is currently testing a short-term value area at $1285.80 to $1281.40. If the uptrend is legitimate, then buyers could come in on a test of this area. But in order to generate a bona fide breakout to the upside, big volume is going to have to come in on the buy side. Furthermore, it would help if the U.S. Dollar weakened along with stocks in order to attract foreign buyers.

Week ahead: From a perspective of Economic Data, the ‘Medium- High Impact’ releases this week are as follows;

Monday – 20.05.2019

Japanese GDP: The Gross Domestic Product released by the Cabinet Office shows the monetary value of all the goods, services and structures produced in Japan within a given period of time. GDP is a gross measure of market activity because it indicates the pace at which the Japanese economy is growing or decreasing. A high reading or a better than expected number is seen as positive for the JPY, while a low reading is negative.
Markets to watch: JPY crosses

Tuesday - 21.05.2019

Fed Chair Powell Speech:
Jerome H. Powell took office as a member of the Board of Governors of the Federal Reserve System on May 25, 2012, to fill an unexpired term. On November 2, 2017, President Donald Trump nominated Powell to serve as the next Chairman of the Federal Reserve. Powell assumed office as Chair on February 5, 2018.

Markets to watch: USD Crosses

RBA Meeting Minutes
The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

Markets to watch: AUD Crosses

RBA Governor Lowe Speech
Philip Lowe replaced Glenn Stevens as governor of Australia’s central bank. Lowe was the Deputy Governor of the Reserve Bank of Australia, a position he held since February 2012.

Markets to watch: AUD Crosses

Inflation Report Hearings
The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration and policy of HM Treasury, HM Revenue & Customs, and associated public bodies, including the Bank of England and the Financial Services Authority.

Instruments to watch: GBP Crosses

Wednesday- 22.05.2019

NZ Retail Sales: The retail Sales released by the Statistics New Zealand measures the total receipts of retail stores. Quarterly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. A high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative (or bearish).
Instruments to watch: NZD crosses

UK CPI: The Consumer Price Index released by the National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).
Instruments to watch: GBP crosses

Canada Retail Sales: The Retail Sales released by Statistics Canada is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, the positive economic growth anticipates bullish movements for the CAD.
Instruments to watch: CAD crosses

US FOMC: FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Instruments to watch: USD crosses

Thursday - 23.05.2019

Germany Markit Manufacturing PMI: The Manufacturing Purchasing Managers Index (PMI) released by Markit economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in Germany. Normally, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.
Instruments to watch: EUR crosses

Euro Market PMI: The PMI monthly Composite Reports on Manufacturing and Services, released by Markit Economics, are based on a large number of business executives in private sector manufacturing and services companies. Data is usually released on the third working day of each month.
Instruments to watch: EUR crosses

Friday - 24.05.2019

US Nonedefense Caspital Goods Orders: The Nondefense Capital Goods Orders Excluding Aircraft, released by the US Census Bureau, measures the cost of orders received by manufacturers for capital goods (capital goods are durable goods used in the production of goods or services), which means goods planned to last for three years or more, excluding the defence and aircraft sectors. As those durable products often involve large investments they are sensitive to the US economic situation. Generally speaking, a high reading is bullish for the USD, while a low reading is seen as Bearish.
Instruments to watch: USD crosses

Sources:

https://zerohedge.talking-forex.com/live.html

https://www.fxstreet.com/economic-calendar

https://www.actionforex.com

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