Forex Trading Opportunities for the Week Ahead 2 September 2019: FXRenew

Note that this is my current view, but if market conditions change my view can change too. Generally I will trade in alignment with what I have noted here, though I will wait for a set-up before I enter. I base my view on technical and fundamental information. This is my beliefs and you are welcome to have opposite ones. Having a plan is more important than the actual direction for me. 

• Buy DXY.– MT is bull normal. On the Trade War front tension eased somewhat this week thanks to soothing rhetoric coming from both sides. Nothing concrete, with new tariffs still being imposed from September 1, but there seems to be a willingness to continue with the scheduled talks this month. In the US, if a recession is coming, the general public doesn’t seem to be worried about it yet with Consumer Confidence and Personal Spending remaining firmly in positive territory. The Dollar Index rose in four out of the past five session touching the 99 level before closing the week just under it at 98.80. With headline risks always a consideration it is still possible that the greenback might revert back into the range but, given that the most recent weekly reversal pattern has now failed, odds have increased of further gains in the Index. Monday is a holiday in North America and the main releases for the rest of the week are the ISM Manufacturing PMI and on Friday the NFP employment data.

• Sell GBP/USD. – MT is bull normal. Political risk remains high for the Pound with the latest Brexit development being PM Johnson’s move to prorogue Parliament from mid-September to October 14 making it more difficult for politicians to block a no-deal Brexit before the October 31 deadline. The pair failed to break through 1.23 this week and seems to have started drifting back down toward a re-test of 1.20 support. PMI data is due out this week and a decline in the Services PMI could accelerate the slide. However, any positive headline regarding a deal on Brexit, whatever it may be, as opposed to a no-deal, will likely have a far stronger influence than economic data.

• Wait USD/JPY. – MT is sideways normal. The pair dipped below 105 support early in the week but those levels were strongly rejected indicating the possibility that a temporary bottom might now be in place. Trading above 107 would confirm the shift to a more bullish sentiment.

• Sell AUD/USD. –  MT is bear normal. The fundamentals remain mostly negative for Australia with considerable risk coming from the global outlook. Two further rates cuts from the RBA are already expected by early next year. The only bright spot is an improvement in the domestic real estate market. The Aussie earlier in the week re-tested support at 0.67 rejecting it strongly but in subsequent sessions couldn’t manage to gain any further strength, hindered by a string of poor data, and it is now close to testing it again.  The economic calendar is dense with readings on Company Operating Profits, Retails Sales and GDP. The RBA also meets this week but no change in the cash rate is expected until October at least. A close below 0.67 would be likely open the door for the pair to fall further.

• Sell EUR/USD. –  MT is bear normal. US Dollar strength, disappointing German data and the indication that the German Government still doesn’t see the proposed idea of a fiscal stimulus package as urgent all contributed to the Euro finally closing below 1.10 on Friday. Expectations are high for the ECB to take action at the next meeting on September 12 but whether that will include a relaunch of quantitative easing has been put into doubt following statements by Council Members from the Netherlands, Germany and Austria who don’t see the need for a resumption of bond purchases. German Factory Orders and Industrial Production as well as Eurozone final GDP are the main data points to watch in the coming week.

• Sell NZD/USD.–  MT is bear normal. Perhaps the realisation that the trade war might impact Chinese demand for New Zealand products more significantly than previously thought, as well as a deteriorating global outlook, led the RBNZ to take decisive pre-emptive action with a 0.5% rate cut earlier last month. A worse than expected Trade Deficit and a plunge in Business Confidence this week sent the Kiwi further down to close the week just above 0.63.

• Buy USD/CHF.  – MT is bull normal. After falling sharply late last week on the back of the Trade War skirmishes the Swissie recovered strongly helped by a supportive environment in the equities space. The pair rose in each of the five sessions this week closing right on 0.99.

• Wait USD/CAD. – MT is bull normal. The Bank of Canada Rate Statement this coming week could very well provide the catalyst we have been waiting for to take us out of the current trading range. Whilst domestic data in the past week showed a better than expected GDP the BOC cannot ignore the deteriorating global outlook and its effects on Canadian exports, therefore an insurance cut, like the one taken out by the Federal Reserve last month, wouldn’t be too surprising after all. While the BOC is the main act, we will also see data on Trade Balance and Employment the day after and the day before the Bank meets respectively.

• Sell EUR/GBP.  – MT is bear normal. After reversing from long term resistance at 0.93 three weeks ago, the pair has managed to remain above 0.90 over the past six sessions. The outlook for the Euro continues to be bearish, however Brexit headlines will be an influence for the short term movements in the pair.

Crosses

• Sell EUR/CHF. – MT is sideways normal.
• Wait AUD/JPY.  – MT is bear normal.
• Sell NZD/JPY. – MT is bear normal.
• Wait GBP/JPY. – MT is sideways normal.
• Sell EUR/JPY. – MT is bear normal.
• Wait CAD/JPY. – MT is sideways normal.
• Sell CHF/JPY.  – MT is bear normal.
• Buy GBP/NZD. – MT is bull normal.
• Wait EUR/NZD. – MT is bull normal.
• Buy AUD/NZD. – MT is bull normal.
• Wait EUR/AUD.  – MT is sideways normal.
• Wait GBP/AUD. – MT is bull normal.
• Wait AUD/CAD. – MT is bear normal.
• Wait GBP/CAD. –  MT is bull normal.
• Sell EUR/CAD. – MT is bear normal.
• Sell NZD/CAD. – MT is bear normal.
• Wait GBP/CHF. – MT is sideways normal.
• Buy CAD/CHF.  – MT is bull normal.
• Wait NZD/CHF.  – MT is bear normal.
• Wait AUD/CHF. – MT is sideways normal.

Other Markets

• Wait Gold. – MT is bull normal.
• Wait Oil. – MT is sideways normal.
• Wait S&P 500.  – MT is sideways normal.
• Buy DAX. – MT is bull normal.
• Wait Nikkei. – MT is sideways normal.
• Buy T-Notes. – MT is bull normal.

(MT = Market Type: Click for more information on market types.)

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