2/12/2019
IMPORTANT DISCLAIMER
The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
EURUSD
Volatility keeps on decreasing on EURUSD, especially for the last week. Weekly open and close were almost on the same price at 1.1017 and the highest weekly price was at 1.1031. When we had a bearish breakout of 1.10 on Friday (weekly low at 1.0980), almost immediately the pair had a bullish reaction and return above this critical support. Last week had public holidays (Thanksgiving Day) but as it seems we’re into an era of strong USD or even better into the era where all the rest currencies are weak, each one for its own specific reasons. News from Europe and Germany were either worse than the expected or very close to the expected values. On the contrary, the announcement of the US GDP, which had a Q3 2019 performance of 2.1% vs expected 1.9%, increases the confidence of the markets to the US economy. This week contains many important news that could potentially move the pair and the peak is on Friday with the US NFPs but one way or another it is very difficult for EURUSD to escape from the tight price channel of the last weeks. Again, we’ll wait until we have a solid bearish breakout of 1.10 before we open sell positions, targeting 1.09
The table with the most important announcements and events of the current week for Europe and US economies is presented below
| Daytime | Economy | Announcement or event |
| Monday 2/12 | Germany | Manufacturing Markit PMI |
| Monday 2/12 | Eurozone | Speech – Testify of Christine Lagarde (ECB) at European Parliament |
| Monday 2/12 | USA | ISM Manufacturing PMI |
| Wednesday 4/12 | Eurozone | Eurogroup meeting |
| Wednesday 4/12 | Germany | Composite Markit PMI |
| Wednesday 4/12 | Eurozone | Composite Markit PMI |
| Wednesday 4/12 | USA | ISM Non-Manufacturing PMI |
| Thursday 5/12 | Germany | Factory Orders |
| Thursday 5/12 | USA | OPEC meeting |
| Thursday 5/12 | Eurozone | GDP |
| Thursday 5/12 | USA | Factory Orders and Non-Durable Goods Orders |
| Friday 6/12 | Germany | Industrial Production |
| Friday 6/12 | USA | Non-Farm Payrolls (NFPs) & Unemployment |
GBPUSD
Bullish was the last week for GBPUSD as the pair exceeded 1.29 with a weekly close at 1.2930 while the weekly lows and highs were at 1.2827 and 1.2950 respectively. It was another confirmation that the pair is not able to escape from the price zone between 1.28 and 1.30. We took our weekly target of our buy positions though. A possible breakout of this zone would occur only if things correlated with the UK elections fix some progress. A clear victory of Boris Johnson maybe would be the necessary fuel for GBP but in the different occasion there will be disturbance and uncertainty at the financial markets. It is obvious that the elections and Brexit developments overshadow the news & results from the UK economy that show in a higher level all the bad influence of the Brexit mess in the economy. It means that Brexit along with rumors and polls regarding the upcoming elections will dominate again but of course we should take under serious consideration the upcoming news from USA this week too that potentially could increase the volatility. Without fresh & clear news from UK (Brexit and elections) it’s very difficult to see a breakout from the channel 1.28 – 1.30, that’s why we’ll prefer the range trading strategy this week as well.
Besides the US news that we saw at the EURUSD section, the most important news for UK economy are presented below
| Daytime | Announcement or event |
| Monday 2/12 | Manufacturing Markit PMI |
| Tuesday 3/12 | Like-For-Like Retail Sales |
| Tuesday 3/12 | Markit Construction PMI |
| Wednesday 4/12 | Markit Services PMI |
USDJPY
After a two weeks bearish break, USDJPY returned back to its uptrend that has been established from the end of August. The pair opened at 108.67 and closed at 109.51 and the weekly lows and highs were at 108.60 and 109.66 respectively. We could not reach the target for our buy positions but the week was indeed profitable. The good news from US economy and the positive claims of Jerome Powell (FED) in combination with a quiet international atmosphere (even if Donald Trump’s voting regarding Hong Kong created some turbulences) keep the traders and the investors away from safe haven assets such as JPY. Most likely, we’ll see an extension of the pair’s uptrend and maybe it would try the price area of 110 again, after the mid May. This price area will be the target for our buy positions this week.
A very noisy week for the Japanese economy has already started. The following news along with the important news of the US economy this week will define the trend and the volatility of USDJPY
| Daytime | Announcement or event |
| Tuesday 3/12 | 10 years bond auction |
| Thursday 5/12 | Foreign investments in Japanese stocks & bonds |
| Thursday 5/12 | Yutaka Harada speech (Bank of Japan) in Oita |
| Friday 6/12 | Overall Household Spending and Leading Economic Index |
EURJPY
Clearly bullish week we had for which opened at 119.67 and closed above 120 at at 120.68, allowing us to take the profit from our last week’s buy positions. All days were bullish and each one had a daily close above previous day’s close price. Such a solid uptrend had the result of an easy breakout of the important resistance at the price of 120 and the price consolidation above this level. EUR is not that strong in order to justify such a movement so probably the traders and the investors have a risk mood that keeps them away from JPY. Now the next challenge for the pair is the price area of 121 which will mean the return to the uptrend that started in early September, stopped for a while by the end of October and now it comes back again. We’ll open buy positions this week with main target the price area of 121.
News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly.
EURGBP
A vividly bearish week passed by for EURGBP which opened at 0.8568, it tried the on Last Thursday to bearishly breakout the price of 0.85 and finally closed on Friday at 0.8519. GBP is getting stronger and stronger as there’s a confidence in Boris Johnson’s victory at the 12 December elections. In parallel, the confirmed stagnation of the Eurozone economy produces a weak EUR. All the evidence confirms the bearish outlook of the pair but the point is that we haven’t seen solid prices below 0.85 since the May of 2017, so many buyers are getting activate in these levels either manually either through automated systems. Also, there were two more attempts on the bearish breakout of 0.85 this year (in March & April) but after their failures, the price started a rally, up to 0.93! Of course, things are very different now as we’re on the way of a final solution to the Brexit issue but in any case, we should always consider the technical reactions of the markets. We remain sellers but we’ll revert our positions when the price approaches the area of 0.85.
News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly.
USDCAD
The USDCAD uptrend paused for a while last week. The week closed with a small drop of 20 pips showing us that the price area of 1.33 is not an easy thing for the pair. Oil prices during the week helped CAD but on Friday, oil prices dropped significantly and this would weaken it even more but the Canadian GDP announcement which showed a growth of 1.3% vs expectancies for 1.2%, strengthened the Canadian Dollar again. The pair closed at 1.3275 even if during last week it exceeded 1.33 with a weekly high at 1.3318. The most possible scenario is that we’ll have a balance again and USDCAD will attempt to breakout 1.33 again this week. We need to underline that the last time that we had prices above 1.33 was in last June. This week, news & announcements from both USA and Canada may give extra fuel to the pair that’s why we’ll try buy positions, targeting the price area of 1.34
Regarding Canada & its economy, news that may affect the pair are presenting below
| Daytime | Announcement or event |
| Monday 2/12 | Markit Manufacturing PMI |
| Wednesday 4/12 | Interest Rates Decision – Bank of Canada (no change from current rate of 1.75% is expected) |
| Wednesday 4/12 | Bank of Canada – Press Conference |
| Thursday 5/12 | Speech – Economic Progress Report by Tim Lane (Bank of Canada) |
| Thursday 5/12 | Imports – Exports – Trade Balance |
| Friday 6/12 | Unemployment |
USDCHF
The uptrend momentum of USDCHF carried on last week too and lead to the breakout of the price – milestone of 1:1 on Friday. Due to the domination of automated trading systems after this breakout and while the price was close to 1.0020, almost immediately strong price pressures took place and after 2-3 hours the pair returned back to prices below 1:1. This was a very good confirmation of our range trading strategy last week which gave important profits. After that, consolidation behaviors dominated and the week close was exactly on 1:1 price. Even this failing attempt of being steadily above this level gave fresh air to the pair since the sellers are getting exhausted and now the probability for a consolidation above 1:1 is significantly increased. In the current week we need to be very careful though because news from Switzerland but mainly news from USA are too important and may turn things upside down. We’ll take our chances for buy positions, targeting the price area of 1.0070.
A lot of news and events for the Swiss economy this week
| Daytime | Announcement or event |
| Monday 2/12 | Retail Sales |
| Monday 2/12 | Manufacturing PMI |
| Tuesday 3/12 | Consumer Price Index |
| Friday 6/12 | Foreign Currency Reserves |
AUDUSD
We came through another bearish week, the 4th in a row for AUDUSD. Weekly open was at 0.6789 and weekly close at 0.6761 without high volatility from these prices either up or down. The pair price approached dangerously the support of 0.67 and we haven’t seen prices below this level for the last 10 years! Early this Monday the Chinese Indicator Caixin PMI was released with a price of 51.8 vs expected 51.4 and immediately the pair had a bullish reaction and currently it’s moving close to 0.68. It’s a good sign on how thirsty are the markets for news that will keep AUDUSD away from 0.67. During last week, news for Australian economy were not positive enough but maybe we’ll see some reactions that will bring AUDUSD above 0.68 again. The main target for our buy positions will be the price area of 0.6859. We also need to underline that the first week of each month is a week full of news & announcements so we expect to see high volatility as well.
Along with the US news and as we keep on saying, news from Australia and China affect directly the Australian Dollar and so the AUDUSD pair.
At the table below, we present the most important news for the economies of Australia and China for the current week
| Daytime | Economy | Announcement or event |
| Tuesday 3/12 | Australia | Rate Decision from Reserve Bank of Australia (no change from current rate of 0.75% is expected) |
| Wednesday 4/12 | Australia | GDP |
| Wednesday 4/12 | China | Services Caixin PMI |
| Thursday 5/12 | Australia | Imports – Exports – Trade Balance – Retail Sales |
SP500
The US Index SP500 is unstoppable and it breaks one record after the other. After a little pause, Index returned to positive area with profits more than 0.8% last week and a weekly close at 3,144 points. With such a huge liquidity in the markets, with negative rates at the bond markets that keep the traders & investors away and without important complications in the geopolitical area, the stock markets get points and it will continue to produce profits. In a certain time, there will be a correction since the investors & traders will liquidate and take the profit and of course things in the global geopolitics will not be always happy. Until then, always keeping in mind that the current prices are unexampled, the only realistic targets would be the round numbers such as 3,200 points which is always a psychological resistance and support for the prices of the assets. We’ll try buy positions and we’d take the profit a few points below 3,200 points.
DAX30
DAX30 had the expected behaviour for one more week and closed slightly lower than the weekly open at 12,232 points. The volatility is getting lower and lower and as a result the price range of last week was between 13,165 and 13,319 points. In other words, the Index moved from -0.6% to +0.56% from its weekly open. This price squeeze most of the times concludes to an energy accumulation and explosion and if we consider the uptrend of the Index that has started from the mid-August period, most likely this explosion will have as a result a bullish movement. We’ll open buy positions and 13,500 points is a realistic target for our case.
FTSE100
It was a really strange week for FTSE100 since all week long it was moving to a positive area but on Friday it performed a big drop of 1%. After that, the week was slightly lossy with a weekly close at 7,341 points. During the week though we saw prices clearly above 7,400 points, up to 7,446 points and it’s possible enough to see the same scenario in the current week as well. We prefer long positions this week and we’d take the profit close to 7,430 points. Brexit and UK elections will dominate for one more week but we should not forget that there is also news for the British companies & economy. Such an example is the deal between Ocado, the British super markets chain with the Japanese company Aeon which is the biggest super market group in Japan with 21,000 stores and 100M customers.
Gold
Profits close to 0.2% we had for gold last week, which came mostly from the last Friday’s rally. The rest of the week, prices of gold were below the weekly open of $1,461. After a bearish trip that stopped at $1,450, gold recovered above $1,460 with a weekly close very near to $1,464. We don’t disregard or ignore that November was a month with important losses for gold but we cannot also ignore that it refuses to drop below $1,450, even with a very strong USD and positive news from US economy. We don’t forget that gold is denominated in USD and a strong USD means price drops for gold. This week is very critical since the announcements of PMIs as well as the NFPs & US Unemployment announcements will give extra boosting to the gold. Since we don’t see a risk mood to the traders, this boosting most likely will be in the bearish direction, especially if the above announcements strengthen USD even more. We’ll take short positions and our target remains the same: $1,440.
US Oil
During last week, US Oil was trying to build prices around $58 level but on Friday after information and statements (mostly from Russia) for a no extension of productions cuts, oil collapsed and its price returned back the area of $55 which is considered as a fair price for this period of time. Losses were close to 5% and the weekly close was at $55.17. All eyes are now turn to the OPEC meeting on Thursday and to the games of the oil producer countries such as Saudi Arabia and Russia which have different and contrary opinions regarding production cuts. In case of further cuts, we may see oil prices close to $60 again but if does not happen (so far this is the most possible scenario) the oil prices will fluctuate around $55. Range trading with center the $55 is our applicable strategy for the current week.
Bitcoin
Even if we saw a bullish reaction on the free-fall movement of Bitcoin last week that recovered the prices to the area of $7,750, we also saw two strongly bearish days that tainted the character of this reaction and so last week closed at $7,400. Weak and anaemic was the bullish reaction and the big downtrend movement that started from the end of October is on again as it does not meet a majority of buyers as a support. Bitcoin is pointing to $7,000 again and this price area will be very important for its future. A possible bearish breakout of $7,000 for a second time in a few days most likely will disappoint the traders and it will open the road for even lower prices. On the contrary, bullish reactions to the area of $7,700 – $7,800 will bring optimism again to the cryptocurrency’s community. We favor the first case and we’re looking for closing our sell positions, close to $7,000.
