British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

3 Things to Know About the Dollar Outlook

Daily FX Market Roundup 06-28-13

By Kathy Lien, Managing Director of FX Strategy for BK Asset Management

3 Things Traders Should Know About the Dollar Outlook
EUR – Don’t Expect Any Help from Draghi
GBP Slips Despite Stronger Confidence and House Prices
AUD – Potential Test of 90 Cents
CAD – GDP Growth Slows
NZD – Gold Rebounds, Oil Down Slightly
USD/JPY Supported by Recovery in Nikkei

3 Things Traders Should Know About the Dollar Outlook

The U.S. dollar performed extremely well this week as investors and traders around the world continue to position for a change in monetary policy. A little more than a week ago, Federal Reserve Chairman Ben Bernanke kicked off a fresh rally in the dollar by saying that asset purchases could be tapered in 2013. His views were reinforced this week by other voting members of the FOMC and their comments drove the dollar to fresh highs against all of the major currencies. The greenback rose to its strongest level against the Australian dollar in 2.5 years and its strongest against the Canadian dollar in more than a year. While we did not see the dollar reach milestones as significant as these against the euro, Japanese Yen and British pound, the greenback still rose to a more than 3 week high against all 3 currencies.

Going into the new shortened trading week (U.S. markets will be closed for the July 4th holiday), there are 3 things that forex traders should know about the dollar:

#1 – The Fed will most likely taper in September. Despite all of the attempts by FOMC voters this week to downplay the significance of Bernanke’s comments by saying that the decision to taper will be based on data, Fed President Stein was quite clear that September could be the month when changes are made. Stein said, the Fed should “be clear that in making a decision in, say, September, it will give primary weight to the largest stock of news that has accumulated since the inception of the program and will not be unduly influenced by whatever data releases arrive in the few weeks before the meeting.” This specific comment about September sparked speculation that it will be only 2 more months before the Fed starts to taper, which we agree is likely because the central bank will not want to suddenly reduce stimulus right before the holidays. While we have already seen the dollar trade higher on liquidation of dollar funded carry trades and re-pricing of FOMC expectations, there’s scope for further gains on next week’s economic reports.

#2 – The Sustainability of Dollar Gains Hinge on Next Week’s Data. A number of U.S. economic reports are scheduled for release next week including manufacturing and non-manufacturing ISM and the ever important non-farm payrolls report. A minor slowdown in job growth is expected to be offset by a drop in the unemployment rate. The closer the unemployment rate gets to the 7% mark mentioned by Bernanke and Stein, the greater the likelihood of a reduction in stimulus in September instead of December. As long as there aren’t any major disappointments in U.S. data, we expect the dollar to extends its gains in the coming week.

#3 – President Obama Looking to Replace Bernanke. Finally talk of a replacement for Bernanke could gain momentum in the coming weeks. According to the Wall Street Journal, Obama already has a short list of candidates that most likely includes Janet Yellen, Tim Geithner and Larry Summers. The role of Fed Chairman is a very important one as this person’s background, experience and monetary policy bias will play a role in how he or she handles the recovery and future crises. If Bernanke settles on a candidate that the market is less familiar with, the uncertainty could add pressure on equities and currencies.

EUR – Don’t Expect Any Help from Draghi

Ahead of the European Central Bank monetary policy announcement, 1.30 appears to be rock solid support for the EUR/USD. The currency pair tested and held this level for 3 consecutive trading days thanks in part to better than expected economic data. German retail sales rose 0.8% in the month of May and consumer spending in France increased 0.5%. Consumer appetite is recovering after contracting the previous month, which is good news for the Eurozone. Earlier this week, we also saw an improvement in German labor market conditions. Unfortunately these stronger reports helped to stabilize the euro but did not rally it. This is due in part to concerns about next week’s ECB meeting. With inflationary pressures growing at a slower pace according to the latest German CPI numbers, the ECB has plenty of room to keep monetary policy easy. Generally speaking, the recovery in the Eurozone economy is still very uneven and this should encourage the ECB to maintain an easing bias. We firmly believe that when ECB President Draghi holds his press conference next week, he will repeat that the central bank stands ready to act if necessary. Unlike the Federal Reserve, the Europeans are not even thinking about reducing stimulus at this time.

GBP Slips Despite Stronger Confidence and House Prices

The British Pound weakened against the euro and U.S. dollar despite an improvement in consumer confidence. According GfK consumer sentiment rose to its highest level in 2 years as the survey index improved to -21 from -22. While the economy is showing signs of recovery after resuming growth in the first quarter, data yesterday revealed that disposable income fell the most in 26 years. GfK said, “The overall trend in confidence over the last year is clearly upwards. So the paradox is that while we are getting worse and worse off, we are feeling more positive.” Bank of England Governor Mervyn King said earlier this week that a recovery “is in sight” but is “too weak to be satisfactory.” Nationwide Building Society reported that house prices increased at the fastest pace since September 2010. Prices rose 1.9% year-over-year from 1.1%. Month-over-month, prices rose 0.3% in June compared to 0.4% in May. Nationwide noted that signs of economic recovery improved buyer sentiment. Nationwide said, “Demand for homes has been supported by further modest gains in employment, as well as an improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures, such as the Funding for Lending Scheme.”

AUD – Potential Test of 90 Cents

Broad based U.S. dollar strength drove the Australian and New Zealand dollars sharply lower against the greenback today. The AUD/USD broke below its prior 2.5 year low of 0.9148 intraday, making 0.9114 the new key level to watch in the currency pair. There were no major economic reports from Australia or New Zealand but the continued unwind of dollar funded carry trades and concerns about the outlook for China weighed heavily on both currencies. Next week will be a very busy one for the Australian dollar with PMI, retail sales and the Reserve Bank of Australia monetary policy meeting on the calendar. In addition to these Aussie specific event risks, China will also be releasing its official manufacturing and non-manufacturing PMI reports. We expect the Reserve Bank to remain dovish and if this sentiment is accompanied by weaker Australian or Chinese economic reports, the AUD/USD could test 90 cents. The Canadian dollar also lost value against the greenback on the heels of softer GDP numbers. The Canadian economy expanded by 0.1% in the month of May compared to 0.2% in April. This slowdown in growth dragged the year over year number down to 1.4% from 1.7%. While these figures are very dated, the lack of momentum in economy at the beginning of the second quarter should limit the optimism of the BoC.

USD/JPY Supported by Recovery in Nikkei

The Japanese Yen traded lower against all of the major currencies with the exception of the AUD. Having closed above 98 for the first time in 2 weeks yesterday, USD/JPY extended its gains above 99, putting the 100 level in reach. Last night was a very busy one in Japan with the release of a heavy dose of mixed economic data. According to our colleague Boris Schlossberg, “The latest releases showed that unemployment ticked up to 4.1% from 4.0% eyed, household spending contracted sharply to -1.6% versus 1.4% and inflation saw little pick up with National CPI at 0.0% versus 0.0%. There were however some bright spots as Retail Trade increased markedly to 0.8% from 0.2% forecast and Industrial Production improved as well. Overall the market took heart from the gradual improvement in activity in the corporate sector reasoning that an increase in profits will eventually translate into broader consumer demand.” Fixing demand for new toshin funds also helped to lift USD/JPY. In the new trading week, we will be keeping a close eye on the Nikkei. If Japanese stocks continue to recover, USD/JPY could extend its gains. The outlook for stocks will hinge in part on Sunday’s quarterly Tankan report, one of Japan’s most important economic releases. If business confidence continues to improve, the Nikkei could extend its gains.

3 Things to Know About the Dollar Outlook

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Forex Weekly Outlook June 24-28

The dollar ended the week, month and quarter with a nice rise. Can it continue into the second half of the year? Top tier US events culminate with the US Non-Farm Payrolls. Jobs data of all sorts becomes very important. In addition, we have rate decisions in Australia, the euro-zone and the UK. Will Draghi change his mood to a negative one? Will Carney make a big announcement in his first rate decision as BOE governor? It will certainly be an exciting week in the hot summer. Here is an outlook on the highlights of this week.

Weekly jobless claims dropped to 346K last week, in line with the moderate jobs growth, down 9,000 from the preceding week, matching market expectations. Most data remained mixed, showing the same picture of slow and steady growth in Q2, following a slower growth than expected in Q1. The Fed’s optimism seems to be disconnected from reality at this point. In the euro-zone, we have seen stronger data from Germany, but continued worried about the periphery, especially as yields are rising. The UK is stuck between slow growth and inflation. And in Australia, the bears are firmly in control. Let’s start:

1. US ISM Manufacturing PMI: Monday, 14:00. The US private sector businesses activity declined more than expected, reaching 49.0 following 50.7 in April. Analysts estimated a smaller decline to 50.6. New Orders Index registered 48.8, while manufacturing prices declined to 49.5, with the Employment Index at 50.1. The reading came below the 50 point line indicating a possible contraction in the Manufacturing sector. A rebound to 50.6 is expected now.


2. Australian rate decision: Tuesday, 4:30. The Reserve Bank of Australia kept the official cash rate at 2.75%, in line with market expectations. The RBA board said that international conditions remain satisfactory and that domestic inflation is moderating. No change in rates is expected. One of reasons for the rate cut in May was the strength of the Australian dollar. This doesn’t seem to be a problem any more, with the big crash. Will the RBA attempt to stabilize the situation? Or rather acknowledge the weakness of the Australian economy?


3. US ADP Non-Farm Employment Change: Wednesday, 12:15. Private sector employment edged up by 135,000 jobs in May from 113,000 job addition in April. However the reading fell below 171,000 expected by analysts suggesting job creation is stalling. An addition of 161,000 jobs is anticipated now. These are high hopes.


4. US Trade Balance: Wednesday, 12:30. The U.S. trade deficit increased in April reaching 40.3 billion from $37.1 billion in March, due to larger imports. Although the reading was better than the 41.1 billion deficit projected by analysts, it suggests sluggish growth in the second quarter. The US trade deficit is expected to remain unchanged this time. 


5. US Unemployment Claims: Wednesday, 12:30. The number of Americans filing initial claims for unemployment benefits dropped 9,000 last week to 346,000, in line with market expectations. The four-week average fell 2,750 to 345,750. The improvement in the job market was also evident in consumer spending, rising 0.3% after a 0.3% decline in the previous month. A slight drop to 345,000 is predicted.


6. US ISM Non-Manufacturing PMI: Wednesday, 14:00. US non-manufacturing PMI registered a slight increase in June reaching 53.7 from 53.1 in the previous month, a bit stronger than the 53.4 forecast. However this was the slowest growth in two and a half years. New orders and backlogs declined, suggesting lower spending and weaker economic activity in the coming months. A further improvement to 54.3 is expected.


7. UK rate decision: Thursday, 11:00. This decision will probably trigger more action in the markets than previous ones, as it is Carney’s first and expectations are high. However, it is unlikely that he will announce new QE at this time: inflation is rising and there are some signs of a return to more steady growth. In addition, the meeting minutes of recent decisions have shown there is opposition to more QE within the MPC. And while the members might want to be in line with the new governor, he will probably not choose to lead new policy at this time. The pound could leap on no change in policy and slide a bit on new QE.


8. Eurozone rate decision: Thursday, 11:45. The ECB isn’t expected to announce any change in policy in the upcoming meeting. In the previous one, it seemed that Draghi put the idea of a negative deposit rate on the backburner. However, the situation in the financial markets has dramatically changed since then: bond yields have risen and could bring the debt crisis back to the limelight. In the past, Draghi zig-zigged between different moods between various meetings. After a positive and confident appearance last month, he could warn about the rising bond yields, growth prospects and falling inflation, given an impression that negative rates are more relevant once again and that the OMT is ready to be used soon. A worried Draghi could send the euro lower, while another confident appearance could help it.


9. Canadian employment data: Friday, 12:30. Canada’s job market expanded by a remarkable 95,000 jobs mainly full-time positions. This was the biggest gain in more than a decade, indicating a genuine improvement in the Canadian economy. The big jump pushed unemployment down from 7.2% to 7.1% in May. All the new jobs are in the private sector-76,700 of them were full-time. However, weaker manufacturing sector still suffered a shortage of 14,200 workers in May from April, bringing the total losses in the sector in the past year to almost 100,000. A contraction of 12,300 jobs is expected, but unemployment is likely to remain at 7.1%.


10. US Non-Farm Employment Change: Friday, 12:30. U.S. employers increased hiring in May adding 175,000 jobs after an increase of 149,000 in the previous month, indicating US economy is resilient. Nevertheless, The unemployment rate increased to 7.6% from 7.5% April as more Americans started to look for jobs. This increase indicates that the economy is still in need of the Fed’s bond-buying stimulus measures. An expansion of 165,000 jobs is anticipated with a drop to 7.5% in unemployment rate. This publication is more important than previous ones due to the emphasis on jobs.

*All times are GMT.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

Forex Weekly Outlook June 24-28

Dollar Gains for Second Week

The US dollar had another week of gains, posting the second weekly gain against other most-traded currencies, including the euro, the Great Britain pound and the Japanese yen.

The main theme for Forex traders were the same as in the previous week: the potential tampering of Federal Reserve’s quantitative easing. It was expected that the dollar would extend its rally. The currency did not disappoint.

Some policy makers attempted to soothe worries of investors, saying that reduction of stimulus is not near as the economy does not look healthy enough. Such comments made the greenback slow the rally for a short time, but ultimately the US currency resumed its advance by the end of the week.

EUR/USD dropped from 1.3089 to 1.3014 this week. GBP/USD went down from 1.5368 to 1.5208. USD/JPY was up from 97.88 to 99.17 over the week, rebounding from the low of 96.95.

If you have any questions, comments or opinions regarding the US Dollar,


feel free to post them using the commentary form below.

Dollar Gains for Second Week

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Fundamental Forecast for the British Pound: Neutral

• 
  Speculative Sentiment Index Points to British Pound Weakness
  


• 
  GBP/USD Technical Analysis: Sellers Target Below 1.52 Figure
  

The British Pound was a bottom performer among the majors this past week, shedding -1.4% against the surging US Dollar, with the GBPUSD closing down at $1.5208 from 1.5417 to start the week. Although the Sterling didn’t post declines against the Japanese Yen – true risk aversion would have dropped the GBPJPY – weakness was quite prevalent as the GBPAUD, one of the top performers throughout the 2Q’13, fell by -0.5% to close at A$1.6641.

This past week, a surprise miss on the final 1Q’13 UK GDP report (+0.3% q/q unch, +0.3% y/y from prior +0.6% y/y) dramatically altered perception around the British Pound, and is likely to continue to be a negative influence in the coming weeks. The GBPUSD bottom in mid-March coincided with a turn in key data, with the PMI surveys showing broad improvement leading to hope that the economy accelerated, which would prevent the Bank of England from implementing any further accommodative policy measures that might weaken the British Pound. However, this ‘good feeling’ has dissipated, and it couldn’t come at a more critical juncture for the world’s oldest currency.

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration. In particular, Governor Carney has previously indicated that he might support a monetary policy that targeted a specific nominal GDP rate; this would entail, theoretically, the BoE easing at a faster pace (even in an ‘unlimited’ fashion like the Federal Reserve’s QE3), which would prove to be Sterling negative. Since the global financial crisis in 2008, the British Pound has depreciated by around -25% against its most highly traded counterparts.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

Accordingly, renewed focus will fall on the PMI surveys due for June activity; they were instrumental in bolstering the fundamental base that helped boost the Sterling in late-May/early-June. Of note, June UK PMI Manufacturing should be unchanged at 51.3, PMI Construction should tick up to 51.3 from 50.8, and PMI services should steady from 54.9 to 54.6.

These figures highlight a modest growth picture for the UK, which at this point might not be enough to reproduce previous bullish sentiment surrounding the British Pound. Accordingly, we retain a neutral outlook this week, as any outperformance is likely to be short-lived, as a slowly recovering economy will prompt dovish policy actions from new BoE Governor Carney soon enough. –CV

British Pound?s Prospects Damaged by GDP Revision; BoE on Hold this Week

Gold: $1181 Paramount for Bulls- Muted Recovery Ahead of U.S. NFPs

Gold: $1181 Paramount for Bulls- Muted Recovery Ahead of U.S. NFPs

Fundamental Forecast for Gold: Neutral

• 
  Gold Plunges as Fed QE Reduction Bets Scatter Demand
  


• 
  Gold Could Get Interesting for a Turn Slightly Lower
  


• 
  Gold, Oil Look to US Data Set to Guide Fed Outlook
  

Gold continued its historic descent this week with prices plummeting through support at $1273 before settling around $1226 at the close of trade in New York on Friday. This week’s 5.4% decline pushes the quarterly losses to 31%, the largest quarterly decline seen in over 93 years. Despite the depth and swiftness of the decline, we will maintain a neutral bias on gold as we head into the close of the week, month and quarter with price action early next week likely to offer further conviction as to the next move in bullion prices.

As heightening turmoil in China and the lack of positive developments out of the EU summit drags on broader market sentiment, gold has remained at the mercy of the bears with prices breaking below key support earlier in the week. In light of the shift in the Fed’s policy outlook, the precious metal has continued to trade alongside broader commodities with risk-off flows offering no relief for the yellow metal. With that said, a renewed flight to safety may limit the topside in gold prices over the near-term with key event risk next week likely to offer clarity on a directional bias as we head into the second half of the year.

Looking ahead to next week the June non-farm payrolls report highlights the most significant event risk for gold. Indeed the US economy is expected to add another 165K jobs with the unemployment expected to narrow to an annualized 7.5% from 7.6% the previous month. We also will be closely watching the participation rate with larger fluctuations in the US civilian labor force having attributed to the volatility in the headline unemployment rate. On the back of last week’s FOMC policy meeting where Chairman Ben Bernanke reiterated that monetary policy remained ‘data dependent’ a strong NFP print may further fuel the argument to tapper asset purchases which would undoubtedly add to the downside pressure on the beaten commodity.

From a technical standpoint, gold tagged critical near-tem support at $1181 (actual low on Friday was $1180) before rebounding back above the 2009 highs at $1226 on Friday. The $1181 level represents the 161.8% extension from the decline off the May highs and remains key support for bullion. Momentum indicators do look a bit stretched here but with the July 4th holiday and key US employment data on tap next week, prices may lack direction as we kick off the third quarter. A break below $1180 targets a support range between $1160 and the 161.8% Fibonacci extension taken form the decline off the all-time record highs set back in 2011 at $1151. A recovery back above $1245 suggests a larger topside correction may be at hand with subsequent resistance targets seen at $1273 and the $1300 threshold. Bottom line: although the broader fundamental outlook remains bearish, we’ll stick to the sidelines ahead of key event risk next week and the July opening range. –MB

Gold: $1181 Paramount for Bulls- Muted Recovery Ahead of U.S. NFPs

Canadian Dollar Falls as GDP Growth Slows

The Canadian dollar dropped today as nation’s economic growth slowed, leading to speculations that the central bank will not be able to tighten the monetary policy in the near future. The currency managed to advances versus the Japanese yen.

Canadian gross domestic product expanded 0.1 percent in April, slower than in March (0.2 percent). It was the fourth consecutive monthly increase. The slowdown made investors question if the Bank of Canada has scope for raising interest rates or talks about withdrawal of stimulus were just that: talks.

The loonie was under pressure, as well as other commodity currencies, from concerns about possible reduction of monetary accommodation by the Federal Reserve. Yet prices for crude oil, the chief source of export revenue for Canada, were rising, providing some form of support for the Canadian currency.

USD/CAD rose from 1.0473 to 1.0509 as of 19:49 GMT today, while its daily high was at 1.0551. EUR/CAD advanced from 1.3657 to 1.3676, but retreaded from the intraday maximum of 1.3733. At the same time, CAD/JPY went up from 93.84 to 94.35.

If you have any questions, comments or opinions regarding the Canadian Dollar,


feel free to post them using the commentary form below.

Canadian Dollar Falls as GDP Growth Slows

SAP puts active as shares stumble

Today’s tickers: SAP, CTRP& JBLU

SAP – SAP AG – Put options on SAP are active on Friday, with shares in the softwarecompany down more than 4.0% in the early going at $72.42. SAP’s shares are decliningin sympathy with Accenture, the world’s second-largest technology-consultingcompany, after that company posted lower-than-expected third-quarter revenueafter the closing bell on Thursday. Traders positioning for shares in SAP topotentially extend declines during the next few weeks picked up roughly 2,000puts at the Jul $72.5 strike for an average premium of $1.97 each. The bearish strategymakes money at expiration in the event that SAP’s shares slide 2.6% fromtoday’s low of $72.42 to breach the average breakeven point on the downside at$70.53. Shares in the name, down nearly 12% since the start of 2013, lasttraded below $70.53 back in November of 2012. SAP is scheduled to reportsecond-quarter earnings ahead of the open on July 18th.

CTRP – Ctrip.com International, Ltd. – Upside call options on Ctrip.com are active thismorning, with shares in the online provider of travel services in China rising2.0% to $33.38 during morning trading. The most heavily traded contracts asmeasured by volume thus far in the session are the Aug $34 strike calls, withroughly 2,500 lots in play versus open interest of 12 contracts. Time and salesdata suggests most of the calls were purchased within a few minutes of theopening bell at an average premium of $2.03 apiece. Call buyers stand ready toprofit at expiration in August should shares in CTRP rally another 10% over thecurrent price of $32.87 to exceed the average breakeven point at $36.03.Ctrip.com’s shares are up better than than 90% since this time last year.

JBLU – JetBlue Airways Corp – Takeover chatter sparked heavier than usual tradingtraffic in out-of-the-money call options on air carrier, JetBlue, Inc., thismorning. Shares in the name rose as much as 9.0% near the open to $6.63, thehighest level since mid-May, after a report in Brazilian newspaper, Folha deS.Paulo, on Friday said that David Neeleman, the founder and former CEO ofJetBlue and current owner of Brazilian airline Azul Linhas Aereas, is creatingan investment fund to buy back control of the company and purchase TAP, aPortuguese airline. Neeleman, according to a report by Bloomberg reporter, MarySchlangenstein, said, “No talks are underway” for such a fund during atelephone interview today. Shares are well off earlier highs, but remain up3.3% at $6.28. Options on JBLU popped on the unconfirmed takeover rumors, withvolume rising to 12,100 contracts by 11:40 a.m. ET versus the usual averagedaily volume of around 1,100 contracts. The Jul $7.0 strike calls are the mostactive, with some 7,300 contracts traded as of the time of this writing. Itlooks like most of the calls were purchased by for an average premium of $0.075each. The bullish position may be profitable at expiration next month if sharesin JBLU rally more than 12% over the current price of $6.28 to surpass theaverage breakeven point at $7.075.

SAP puts active as shares stumble

Euro Gains as Summit Ends, Federal Reserve Supports Stimulus

Euro is gaining ground today, heading higher, even though there are still deep issues that need sorting out in the eurozone, and even though a measure of contraction is still expected for the 17-nation currency region.

After a bit of a choppy week, euro is heading a little bit higher today against its major counterparts. At the conclusion of a summit meant to address youth unemployment, eurozone policymakers are congratulating themselves on a job well done. However, there are still many deep issues, and the eurozone’s economic crisis is not so much solved as it is managed.

However, the euro is getting help today as Federal Reserve officials rush to assure investors and the public that implications that the efforts to reduce tapering will start too soon aren’t correct. With the news that the Fed isn’t pulling money support, other currencies are once again gaining some ground on the Forex market.

The prospect of continued weakness — at least for now — of the US dollar is helping the euro. And, even though gold has dropped below $1,200 US dollar is not finding support; euro is getting the help instead.

At 13:58 GMT EUR/USD is up to 1.3046 from the open at 1.3040. EUR/GBP is up to 0.8571 from the open at 0.8546. EUR/JPY is up to 129.1435 from the open at 128.2750.

If you have any questions, comments or opinions regarding the Euro,


feel free to post them using the commentary form below.

Euro Gains as Summit Ends, Federal Reserve Supports Stimulus

EUR/USD: Sellers strong around 1.3100

EUR/USD Current price: 1.3065

View Live Chart for the EUR/USD

Better than expected EU macro data along with month end fixing is helping the EUR/USD correct higher today, with the pair flirting with the 1.3100 level, with a high so far at 1.3102, before retracing big on US opening: stocks are down, and strong selling interest remains aligned around 1.3100. The hourly chart shows price above a bullish 20 SMA, while indicators head lower still in positive territory. The 1.3110 area has prove strong over these last days, and won’t be an easy level to take. Steady gains above it may anticipate a continuation towards 1.3150/60 area today, while back below 1.3050, chances turn towards a retest of the 1.3000 price zone.

Support levels: 1.3050 1.3020 1.2980 

Resistance levels: 1.3110 1.3155 1.3200

GBP/USD Current price: 1.5244

View Live Chart for the GBP/USD

The GBP/USD holds to a tight range, trading with a bearish tone in the short term, as the hourly chart shows price below its 20 SMA and indicators standing in negative territory. The pair stands well below the 61.8% retracement of its latest daily run around 1.5280, and little buying interest should be expected as long as price holds below it. With a daily low of 1.5225, an acceleration below it should anticipate a downward continuation eyeing 1.5190 this June low.

Support levels: 1.5225 1.5190 1.5140

Resistance levels: 1-5280 1.5310 1.5345 

USD/JPY Current price: 98.96

View Live Chart for the USD/JPY 

The USD/JPY saw an interesting advance up to 99.12 where sellers halt the advance, but were unable to revert the dominant upward momentum: the pair pulled back some but holds above immediate support of 98.75, 50% retracement of its latest daily fall. The hourly chart shows indicators turning flat near overbought readings, but far from signaling a reversal. In the 4 hours chart however, technical readings maintain the positive tone, supporting the shorter term view.

Support levels: 98.75 98.35 98.00

Resistance levels: 99.10 99.40 99.80

AUD/USD: Current price: 0.9196

View Live Chart for the AUD/USD

Aussie fell below the 0.9200 level with US opening, maintaining the strong bearish momentum seen all over the week. The hourly chart shows 20 SMA heading south above current price with a strong bearish slope, while indicators stand in negative territory. In the 4 hours chart technical readings also favor a retest of 0.9150 lows, as indicators head lower below their midlines.

Support levels: 0.9190 0.9150 0.9110

Resistance levels: 0.9230 0.9270 0.9310

New to Forex? Visit our Glossary!

EUR/USD: Sellers strong around 1.3100

Time to calm down

Fri, Jun 28 2013, 13:47 GMT
by



Allan von Mehren





|



Danske Bank A/S

Time to calm down

Eurozone inflation expected to accelerate

Fri, Jun 28 2013, 13:36 GMT
by



Marco Valli





|



UniCredit Group

Eurozone inflation expected to accelerate

Business Spending Mid-Year Outlook

Fri, Jun 28 2013, 13:33 GMT
by



Tim Quinlan


, 

Sarah Watt





|



Wells Fargo

Business Spending Mid-Year Outlook

Russian Ruble Rises at End of Worst Quarter in Year

The ruble appreciated today as prices for Brent grade of crude oil rose and exporters were buying the currency to pay taxes.

Futures for Brent crude rose 0.03 percent to $102.85 per barrel today. Russian companies pay taxes today, therefore they had to convert their earnings in the local currency, increasing demand for the ruble. The Russian currency was heading to a 5.4 percent drop in the quarter, the worst quarterly decline in a year.

USD/RUB fell from 32.8117 to 32.7660 as of 11:48 GMT today and its daily minimum was at 32.7525.

If you have any questions, comments or opinions regarding the Russian Ruble,


feel free to post them using the commentary form below.

Russian Ruble Rises at End of Worst Quarter in Year

EURUSD trading higher after positive economic data from the Eurozone

EURUSD rose yesterday and closed at 1.3036. The economic indices in the Eurozone improved in June. The industrial and the consumer confidence index improved as well. In Germany the number of unemployed people in Germany dropped by 12K in June. On the other side of the ocean the Unemployment Claims in the United States came out at 346K during the last week. The Pending Home Sales in the US rose 6.7 percent in May reaching its highest level in 6 years. Jerome Powell the Governor of the United States Federal Reserve stated that FED may reduce its asset purchases if the economy improves substantially or at a pace they foresee. Powell also added that the Fed could even increase the pace if the economy performs more poorly. Support for the EURUSD is seen at 1.2997 and resistance is seen at 1.3149. The HotForex Traders Board shows that 52 percent of the traders are short on the EURUSD.

EURUSD trading higher after positive economic data from the Eurozone

NZD/USD: technical analysis for June 28, 2013

Exclusive newsline by InstaForex is your reliable assistant in the Forex world.

Top Forex analysts with immense experience in Forex trading, dozens of comprehensive analytical reviews daily, various subjects and types of analysis. Moreover, economic calendar by InstaForex Company can help you be in the middle of informational flow.

NZD/USD: technical analysis for June 28, 2013

EUR/USD technical analysis for June 28, 2013

Exclusive newsline by InstaForex is your reliable assistant in the Forex world.

Top Forex analysts with immense experience in Forex trading, dozens of comprehensive analytical reviews daily, various subjects and types of analysis. Moreover, economic calendar by InstaForex Company can help you be in the middle of informational flow.

EUR/USD technical analysis for June 28, 2013

Dollar Advances a Third Day as S&P 500 Returns to Critical Level

• 
  Dollar Advances a Third Day as S&P 500 Returns to Critical Level
  


• 
  Euro: It’s Core Versus Periphery Eurozone Once Again
  


• 
  Japanese Yen: Market Weighs BoJ Success in Dense Round of Data
  


• 
  New Zealand Dollar: Does the RBNZ’s Announcing Intervention Help?
  


• 
  British Pound Drops Against Most of the Majors after GDP Revision
  


• 
  Swiss Franc: EURCHF Resolves Congestion, Swiss Companies Concerned
  


• 
  Gold Struggling around $1,200 Just Before the Quarter End
  

Dollar Advances a Third Day as S&P 500 Returns to Critical Level

Has the market already fully discounted the impact of the Fed ‘Taper’? With the S&P 500 charging higher on its strongest three-day rally in five months, it seems that investors have accounted for – or simply forgotten – the detriment of a smaller stimulus backstop. In the past weeks and months, there has clearly been a positioning shift in recognition that the world’s largest central bank would eventually wean the market of its dependency on supranatural support. The most dramatic adjustments were seen in those assets that were most distinctively exposed either as particular Fed assets or simply via excessive exposure / leverage. The iShares-Barclay’s mortgage-backed securities (MBS) bond fund has retraced half of its gains since 2009 and the 10-year Treasury yield has risen 65 percent in eight weeks. Those are assets the Fed is directly buying. A peak-to-trough 7.5 percent retracement in the S&P 500, 3.2 percent EURUSD drop and average 6.7 percent correction from yen crosses (carry trade) is comparatively tame. Adeeper risk aversion move is highly likely, but the Taper catalyst may have been used up.

Euro: It’s Core Versus Periphery Eurozone Once Again

It has been said many times before that there is a two-speed recovery in the Eurozone. That split is more obvious now than ever – and that should concern investors. This past session was chock-full of event risk to update us on the region’s health. On the positive side, the region’s largest economy – Germany – reported an unexpected 12,000-position drop in unemployment that set the jobless rate at 6.8 percent in June – near the lowest rate Unification. Furthermore, the broader region’s economic confidence survey for the current month would also rise to the highest level in 13 months. Unfortunately, crises arise from the weakest links – not the strongest. Ireland – expected to soon exit the comfort of its bailout program – reported 1Q GDP with a hefty 0.6 percent economic contraction alongside a sizable downward revisions to the previous period’s reading. News is circulating that the Greece government is at risk of seeing its second largest privatization deal falling through and delaying necessary aid. And, Cyprus was approved for its €1 billion debt swap – while central bank data showed massive deposit outflows.

Japanese Yen: Market Weighs BoJ Success in Dense Round of Data

The Japanese yen took the title for worst performer of the day Thursday. The rebound in deflated risk positioning similarly bolstered the carry trade with gains for the yen crosses ranging from 0.3 percent for GBPJPY up to 0.9 percent for EURJPY. Over the past month, we have seen a varied degree of response to the sentiment exhale and stimulus withdrawal. Far from the extremes of high-yield debt and US Treasuries’ performance, the yen-based carry trade has held relatively steady. The carry these pairs offer is historically low, but the deleveraging pressure is tempered by the BoJ’s efforts to beat deflation and thereby drive their currency down. How well are they don’t in this endeavor? Aside from the yen’s titanic move through May, we were updated economic data this morning that shows very early but encouraging results.

New Zealand Dollar: Does the RBNZ’s Announcing Intervention Help?It seems direct intervention will be the norm for the Reserve Bank of New Zealand. According to the central bank’s Currency Flows report released Thursday morning, the group bought NZ$90 million in May. The bullish pressure this imparted on the kiwi was clearly minimal as NZDUSD dropped 7.2 percent and NZDJPY 4.2 percent through the period. We can thank the troubled global financial sentiment during the period which set off carry unwind that generally overwhelms all else. That said, it is worth noting that central bank saw its intervention capacity rise to NZ$8.83 billion (from NZ$8.48 billion). Intervention is likely to become a more frequented tool for the RBNZ – as it has globally. Yet, will it really give the bank much influence? April’s N$256 million is a good reference – far too small to offset a serious ‘risk on’ move.

British Pound Drops Against Most of the Majors after GDP Revision

With the exception of the ravaged Japanese yen, the sterling slid against all of its counterparts this past session. Top event risk was the final reading of the UK’s first quarter GDP report. While the first – or flash – reading carries the most influence as it sets speculators’ forecasts for deeper fundamental themes, the details can often carry clues for near-term shifts. While the quarterly pace of expansion was unchanged at 0.3 percent, the year-over-year read was cut in half – also 0.3 percent. Meanwhile, the period’s disposable income dropped an astounding 1.7percent – the biggest collapse since 1987. Even if the economy were to turn to growth form here, starting from a weaker platform will undermine the effort. Yet, is it enough to flip the switch at the BoE? Next week’s policy meet is Governor King’s last. Now it’s Carney’s turn.

Swiss Franc: EURCHF Resolves Congestion, Swiss Companies Concerned

The Swiss franc fell against most of its counterparts this past session, but the biggest and most fundamentally profound move would come via the Euro. Having worked its way into a make-or-break position, EURCHF resolved with a break above 1.2300. The impetus for this move was more likely technical in nature, but the bearing is undeniably founded on fundamentals. While Euro-area troubles are starting to percolate once again, the market’s disregard relieves the franc of its local safe haven status. Even if the fear of financial rout were injected into the market, the currency may still not play to its traditional capital harbor status. The SNB bulletin this past week revealed that the country’s corporations were concerned about the effects of changes to regulations and proposed tax laws – including opening banks’ books to foreign governments.

Gold Struggling around $1,200 Just Before the Quarter End

There seems to be no level that is sacred for the gold market since $1,500 collapsed and a tidal wave of deleveraging followed. The precious metal fell 2.1 percent Thursday for the fourth consecutive tumble. Through the session’s low – $1,180 which also happens to be the lowest since August 2010 – gold has plummeted nearly 9 percent for the week. Crashing through multiple psychological level during possibly the worst weekly performance in 21 months (generations if we close below $1,185), it is clear that we need to look beyond support and resistance. Continuation or reversal depends first on momentum. It is worth nothing that immediate selling pressure when the metal slipped below the $1,200 level was relatively restrained – unlike what transpired at $1,500, $1,400 and $1,300. This may be a sign that the deleveraging may be easing as panicked bulls refrain from placing large batches of stops below even numbers. That said, exceptional volatility has permanently altered this commodity’s role in the current market cycle – it is clear that this is not a practical, alternative store of wealth.

**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar

ECONOMIC DATA

GMT	Currency	Release	Survey	Previous	Comments
1:30	AUD	Private Sector Credit (MoM) (MAY)	0.3%	0.3%	Year over year estimates put consumer credit at a one year low.
1:30	AUD	Private Sector Credit (YoY) (MAY)	2.9%	3.1%
1:35	CNY	MNI Business Sentiment Indicator (JUN)			With downgrades and credit worries, all China data will be noted by market participants.
3:00	NZD	Money Supply M3 (YoY) (MAY)		6.5%	Levels have remained above 5% since early 2011.
4:00	JPY	Vehicle Production (YoY) (MAY)		-6.5%	Improved housing starts will be well received, but large year over year declines in auto production signal Japan is falling behind as global automakers compete with sales in the U.S. picking up.
5:00	JPY	Housing Starts (YoY) (MAY)	6.2%	5.8%
5:00	JPY	Annualized Housing Starts (MAY)	0.950M	0.939M
5:00	JPY	Construction Orders (YoY) (MAY)		2.0%
6:00	GBP	Nationwide House Prices s.a. (MoM) (JUN)	0.4%	0.4%	Although unchanged MoM, improvements over the last year are a bright spot in an otherwise questionable UK growth trajectory.
6:00	GBP	Nationwide House Prices n.s.a. (YoY) (JUN)	2.1%	1.1%
6:00	EUR	German Retail Sales (MoM) (MAY)	0.4%	-0.4%	Retail sales year over year in Germany look to take a hit, but improvements in France are noted as questions of Eurozone stability arise following the possible taper of QE this year.
6:00	EUR	German Retail Sales (YoY) (MAY)	0.2%	1.8%
6:45	EUR	French Producer Prices (YoY) (MAY)	1.0%	0.6%
6:45	EUR	French Consumer Spending (YoY) (MAY)	0.3%	0.2%
7:00	CHF	KOF Swiss Leading Indicator (JUN)	1.19	1.1	The print has failed to rise above 2 since 2011.
8:00	EUR	Italian Economic Sentiment (JUN)		79.8	Italian improvement, no matter how small, will be welcomed as recent taper fears have sent Italy’s bond yields screaming.
8:00	EUR	Italian Business Confidence (JUN)	88.9	88.5
8:30	GBP	Index of Services (MoM) (APR)	0.1%	0.2%	3Mo3M estimates are some of the most positive in recent years.
8:30	GBP	Index of Services (3Mo3M) (APR)	1.1%	0.6%
9:00	EUR	Italian CPI (NIC incl. tobacco) (MoM) (JUN P)	0.1%	0.1%	Region-wide inflation has found limited pressure from Italy. This allows the country some room in the absence of more ECB stimulus
9:00	EUR	Italian CPI (NIC incl. tobacco) (YoY) (JUN P)	1.1%	1.2%
9:00	EUR	Italian CPI – EU Harmonized (YoY) (JUN P)	1.3%	1.3%
10:00	EUR	Italian Producer Price Index (YoY) (MAY)		-1.1%
12:00	EUR	German Consumer Price Index (MoM) (JUN P)	0.0%	0.4%	A rebound in German inflation will unofficially bolster pressure on the ECB to avoid fresh easing
12:00	EUR	German Consumer Price Index (YoY) (JUN P)	1.7%	1.5%
12:00	EUR	German CPI – EU Harmonised (YoY) (JUN P)	1.8%	1.6%
12:30	CAD	Gross Domestic Product (MoM) (APR)	0.0%	0.2%	The first month of the 2Q data, an unchanged read sets a weak pace
12:30	CAD	Gross Domestic Product (YoY) (APR)	1.4%	1.7%
13:45	USD	Chicago Purchasing Manager (JUN)	55	58.7	Although the Chicago area indicator looks to take back some recent gains, the U. of MI Confidence survey looks to rise slightly in the face of taper talks.
13:55	USD	U. of Michigan Confidence (JUN F)	83	82.7

SUPPORT AND RESISTANCE LEVELS

To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visit Technical Analysis Portal

To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit our Pivot Point Table

CLASSIC SUPPORT AND RESISTANCE

INTRA-DAY PROBABILITY BANDS 18:00 GMT

v

— Written by: John Kicklighter, Chief Strategist for DailyFX.com

To contact John, email jkicklighter@dailyfx.com. Follow me on twitter at http://www.twitter.com/JohnKicklighter

Sign up for John’s email distribution list, here.

Dollar Advances a Third Day as S&P 500 Returns to Critical Level