FX Week Ahead – Top 5 Events: Aug China PMI Data & Chinese Yuan Price Outlook

AUGUST CHINA MANUFACTURING PMI USDCNH PRICE OUTLOOK:

  • China PMI information for Aug is on rug for recover and will approaching set a tinge for risk ardour subsequent week
  • USDCNH continues to stand as markets sojourn on corner in light of ongoing US-China trade fight uncertainty
  • Take a demeanour during a History of Trade Wars and their impact on financial markets

Caixin China PMI readings for Aug are approaching to cranky a wires this week starting Monday during 1:45 GMT and aim to set a tinge for risk ardour via a week. In contrariety to a country’s executive PMI readings from a National Bureau of Statistics, that reports on vast state-owned firms, a Caixin China PMI information covers a wider representation of tiny and middle sized businesses.

Although a dual reports generally pierce in lockstep, markets hence tend to place some-more faith on a Caixin PMI figures. Nevertheless, a inhabitant Chinese production PMI reading for Aug was already published late Friday and showed a zone stays in an mercantile contraction.

AUGUST CAIXIN CHINA MANUFACTURING PMI

Caixin China Manufacturing PMI Data Historical Chart

That said, a Caixin China production PMI reading for Aug is approaching to come in during 49.8 as a US-China trade fight bites a Asian economy. Although, a Caixin PMI reading for Jul softened somewhat to 49.9 from 49.4 in May. The month of May witnessed a remarkable escalation in trade tensions, however, and August’s tit-for-tat tariff whiplash from Beijing and Washington poses a downside risk to production activity in serve to marketplace sentiment. That said, traders will approaching keep tighten tabs on mark USDCNH as doubt surrounding a US-China trade fight lingers and a trade week progresses.

CHINESE YUAN PRICE CHART – SPOT USDCNH: WEEKLY TIME FRAME (MARCH 2019 TO AUGUST 2019)

Chinese Yuan Price Chart Forecast

We remarkable formerly how a Chinese Yuan could serve as a US-China Trade War Barometer saying that a PBoC has intervened to decrease a country’s banking to equivalent a impact of Trump’s tariffs. PBoC banking intervention is only one of a executive bank’s many impulse efforts destined during combatting a mercantile impact from a US-China trade war. Consequently, serve Yuan debasement – or arise in mark USDCNH – could be interpreted as a pointer that trade tensions sojourn towering and might even expand further.

USDCNH 25-DELTA RISK REVERSAL (1-WEEK)

USDCNH Price Chart Risk Reversal

Yet, according to USDCNH 1-week pragmatic sensitivity of 7.79%, a Chinese Yuan is estimated to vacillate between 7.0966-7.2272 with a 68% statistical probability. As such, a poignant crack of this 1-standard flaw choice pragmatic trade operation could advise a element change in a trade war.

Also, it is value mentioning that a Chinese Yuan still sank to a lowest turn opposite a US reflection given Feb 2008 final week – even notwithstanding a ostensible cease-fire and restarting of trade talks after tensions fast flared adult a week prior. But, a 1-week USDCNH 25-delta risk annulment reading has drifted reduce and sits nearby 0 definition direct for call options has waned and is now roughly on standard with direct for put options. A discerning spike aloft in this metric could prove that mark USDCNH prices face ceiling pressure.

— Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time marketplace insight

FX Week Ahead – Top 5 Events: Aug US Jobs Report & EUR/USD Rate Forecast

AUGUST US JOBS REPORT EURUSD PRICE OUTLOOK:

  • The Aug US jobs news slated for Friday’s trade eventuality looks to strongarm EURUSD cost movement as it sways a market’s Fed rate cut expectations
  • The US Dollar could trip from new highs if downside risks surrounding a trade fight and negligence tellurian enlargement uncover signs of weighing on US practice gains
  • Read some-more on EURUSD sensitivity spiking around a monthly US nonfarm payroll practice information release

The Aug US jobs news scheduled for recover this entrance Friday during 12:30 GMT will top off subsequent week’s jam-packed economic calendar. Forex traders will approaching spin to a Aug nonfarm payrolls (NFP) total for construction on a instruction of mark EURUSD after a loud week of information releases. This is due to a arrogance that markets mount to conflict some-more neatly to practice information saying that it has a larger luck of impacting Federal Reserve financial policy and so a US Dollar.

TOTAL CHANGE IN US NONFARM PAYROLL EMPLOYMENT DATA HAS TRENDED LOWER

US Nonfarm Payrolls Monthly Change Historical Data Chart

The title Aug NFP series is approaching uncover 158,000 pursuit additions for a US economy according to Bloomberg’s median economist estimate. While America’s labor marketplace and economy as a whole have shown resilience in light of slowing tellurian GDP growth, a transparent downtrend in pursuit origination has emerged given a US-China trade fight exhilarated adult final year. With a US-China trade fight sharpening once over new months, cracks might start to emerge if American companies cut behind on hiring.

That said, a Fed has communicated honesty to providing some-more accommodative financial process as a Jul FOMC matter pronounced that a executive bank “will act as suitable to means a enlargement with a clever labor market” after slicing a process seductiveness rate 25-basis points for a initial time in roughly a decade. Consequently, US Dollar cost movement is approaching to be overwhelmingly driven by Fed rate cut expectations as a Sep FOMC assembly approaches.

US DOLLAR IMPLIED VOLATILITY TRADING RANGES

US Dollar Implied Volatility and Trading Ranges EURUSD, USDJPY, GBPUSD, USDCAD, AUDUSD

As such, it comes as no warn that US Dollar 1-week pragmatic sensitivity measures have ticked aloft forward of a high-impact eventuality risk faced by a US Dollar. Spot USDCAD is approaching to be a many active vital USD-pair subsequent week with a September BOC meeting on deck. EURUSD 1-week pragmatic sensitivity of 5.40%, subsequent a 12-month normal of 5.94%, seems interestingly suppressed in light of a Aug US jobs news that looms and deliberation a large pierce available by mark EURUSD final week.

EURUSD 25-DELTA RISK REVERSAL (1-WEEK)

EURUSD Price Chart of 1 week risk reversal

Looking to EURUSD risk reversals, we see that banking choice traders reason a downside disposition toward mark prices subsequent week and hints that EURUSD might continue to corner lower. This is suggested by a reading subsequent 0 that indicates put choice direct outweighs that for call options.

EURUSD PRICE CHART: DAILY TIME FRAME (MAY 21, 2019 TO AUGUST 30, 2019)

EURUSD Price Chart Technical Analysis

Judging by EURUSD 1-week pragmatic sensitivity of 5.40%, mark prices are estimated to spin between 1.0919-1.1057 with a 68% statistical probability. Spot EURUSD offered vigour accelerated fast late final week after confirming a breakout from a bearish triangle pattern when a banking span sank subsequent a 1.1000 handle. Consequently, mark EURUSD might extend reduce subsequent week as a US Dollar continues to flex a muscles.

This bearish unfolding could be solidified by another plain NFP news as it will approaching keep Fed rate cut expectations during bay. On a contrary, debility suggested in August’s US jobs news could inspire a retracement aloft in mark EURUSD toward a upper-bound of a 1-week choice pragmatic trade range.

— Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time marketplace insight

Sterling Price Targets: GBP/USD Rejected during Resistance- Trade Outlook

Sterling is down scarcely 1% on a week after branch from downtrend resistance. Here are a levels that matter on a GBP/USD weekly draft streamer into September.

Sterling prices are softer this week after contrast downtrend insurgency on Tuesday and nonetheless a risk stays for a deeper expostulate from here, a bears aren’t utterly in control only yet. Here These are a updated targets and cancellation levels that matter on a GBP/USD weekly cost chart. Review my latestWeekly Strategy Webinar for an in-depth relapse of this gold cost setup and more.

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Sterling Price Chart – GBP/USD Weekly

Sterling Weekly Price Chart

Chart Prepared by Michael Boutros, Technical Strategist; GBP/USD on Tradingview

Notes:In final week’s GBP/USD PriceOutlook we remarkable that Sterling was contrast downtrend insurgency during a “median-line of a descending pitchfork formation we’ve been tracking off a late-2018 / 2019 highs converges on a 2016/2017 slope line around ~1.2315.” Cable purebred a high during 1.2310 this week before branch reduce with cost set to tighten a week down some-more than 0.9%.

The concentration streamer into Sep trade is either Sterling can find suggestive support on this pullback to advise that a Aug spin might have some legs. Looking for a low forward of a low-day tighten during 1.2081 IF Cable is indeed streamer aloft here- debility over this turn would risk a exam of a post-Brexit lows during 1.1950.

Key insurgency stands a a 2017 / 2016 low-week closes during 1.2374-1.2433– a crack / tighten above this section would be indispensable to advise incomparable improvement is underway with such a unfolding targeting a 38.2% retracement of a yearly operation during 1.2537.

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Bottom line:Sterling incited from downtrend insurgency this week during a median-line and we’re looking for support into a Sep open. From a trade standpoint, a risk is reduce though be on a surveillance for a low / downside depletion forward of 1.2081 for early in a week for probable entries – eventually a crack above 1.2433 is indispensable to keep a Aug allege viable. Review my latest GBP/USD Price Outlook for a closer demeanour during a near-term GBP/USD technical trade levels.

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Sterling Trader Sentiment (GBP/USD)

GBPUSD Trader Sentiment Chart

  • A outline of IG Client Sentiment shows traders are net-long GBP/USD – a ratio stands during +2.23 (69.0% of traders are long) – bearish reading
  • Traders have remained net-long given May 6th; cost has changed 6.2% reduce given then
  • Long positions are3.8% aloft than yesterday and 4.2% aloft from final week
  • Short positions are 9.1% reduce than yesterday and 5.2% reduce from final week
  • We typically take a contrarian perspective to throng sentiment, and a fact traders are net-long suggests GBP/USD prices might continue to fall. Traders are serve net-long than yesterday final week, and a multiple of stream positioning and new changes gives us a stronger GBP/USD-bearish contrarian trade bias from a view standpoint.

See how shifts in GBP/USD sell positioning are impacting trend- Learn some-more about sentiment!

Previous Weekly Technical Charts

Learn how to Trade with Confidence in a Free Trading Guide

— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

Gold Price Outlook Hinges on Fed Rhetoric, US NFP Report

Gold 2 Hour Price Chart

Gold Price Talking Points

Fresh developments entrance out of a US are expected to change a cost of bullion amid strenuous expectations for a Federal Reserve rate cut in September.

Fundamental Forecast for Gold: Neutral

The cost of bullion climbed to a uninformed yearly high ($1555) during a final full week of Aug amid flourishing tensions between a US and China, and a sharpening trade fight might force a Federal Reserve to serve isolate a economy as President Donald Trump tweets that a “Fed has been job it wrong for too long.

FED Target Rate Probabilities

As a result, Fed Fund futures uncover a larger than 90% luck for a 25bp rebate on Sep 18, though small signs of a appearing retrogression might coax a larger gainsay within a Federal Open Market Committee (FOMC) as a Atlanta Fed GDPNow indication now projects a US economy to expand 2.3% in a third entertain of 2019 compared to 2.2% on Aug 16.

Moreover, new remarks from Chairman Jerome Powell advise a Fed is in no rush to embark on a rate easing cycle as financial process “cannot produce a staid rulebook for general trade,” and arriving remarks from Boston Fed President Eric Rosengren, New York Fed President John Williams and Chicago Fed President Charles Evans, all 2019-voting members on a FOMC, might impact financial markets as a executive bank comes underneath vigour to retreat a 4 rate-hikes from 2018.

With that said, it stays to be seen if a US Non-Farm Payrolls (NFP) news will coax a suggestive greeting amid strenuous expectations for back-to-back Fed rate cuts, and a certain growth might stoke fears of a process error as Fed officials plan a reduce arena for a benchmark seductiveness rate.

In turn, marketplace participants might hunt for an choice to fiat currencies, and descending US Treasury yields along with a inverting produce bend are expected heighten a interest of bullion as the US-China trade war appears to be a spurring a moody to safety.

Gold Price Daily Chart

XAUUSD Daily Price Chart

Source: Trading View

Keep in mind, a broader opinion for bullion prices sojourn constructive as both cost and a Relative Strength Index (RSI) transparent a bearish trends from progressing this year.

Moreover, bullion has damaged out of a near-term holding settlement following a unsuccessful try to tighten next a $1402 (78.6% expansion) region, with a RSI still tracking a bullish arrangement from April.

However, a unsuccessful attempts to tighten next $1554 (100% expansion) might beget a short-term pullback in a cost of bullion as a RSI struggles to pull behind into overbought territory, with a break/close next a Fibonacci overlie around $1509 (61.8% retracement) to $1517 (78.6% expansion) lifting a risk for a pierce towards $1488 (61.8% expansion).

Additional Trading Resources

For some-more in-depth analysis, check out a 3Q 2019 Forecast for Gold

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Want to know what other banking pairs a DailyFX group is watching? Download and examination a Top Trading Opportunities for 2019.

— Written by David Song, Currency Strategist

Follow me on Twitter during @DavidJSong.

US Dollar May Rise if Fed Commentary Cools Rate Cut Expectations

US Dollar 2 Hour Price Chart

US DOLLAR FUNDAMENTAL FORECAST: Bullish

  • US Dollar might arise as US prepares to strictly exercise latest China tariffs
  • Commentary from Fed officials could also boost direct for liquidity, USD
  • Market expectations of assertive easing might be hampered by Fed comments

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The US Dollar might arise if direct for liquidity and breakwater resources increases opposite a backdrop of flourishing recessionary fears and occasionally developments in a US-China trade war. Next week, Washington is set to strictly exercise a latest turn of Chinese tariffs, serve undermining a awaiting of reconciliation. The US Dollar might also arise if comments from Fed officials cold increasingly-aggressive rate cut expectations.

US-China Trade War

Despite Washington’s pierce to levy some-more tariffs, Beijing will not respond with retaliations nonetheless with officials propelling “calm” negotiations in sequence to equivocate escalation. A assembly between Chinese and US officials might take place in September, presumption they are not derailed by a antagonistic twitter from President Donald Trump. But even a suggestive breakthrough in US-China trade family will not expected put a economy behind on track.

Will Fed Comments Cool Rate Cut Expectations?

Next week, markets might find themselves oscillating between explanation from Fed officials Charles Evans and Eric Rosengren. Near a finish of July, Mr. Evans signaled he was in preference of some-more easing, observant “that acceleration alone would call for some-more accommodation than we put in place with only a final meeting”. He also cited a ongoing US-Sino trade fight as a downside vigour on acceleration and downside risk for businesses.

On a other hand, Mr. Rosengren has voiced regard about a awaiting of easing too most too fast, citing a risk that it might indirectly minister to a debt build-up. While he concurred that prevalent mercantile conditions are weakening, he pronounced he wanted “evidence that we are indeed going into something that’s some-more of a slowdown”. He was one of dual dissenters when a Fed slashed seductiveness rates by 25 bps during Jul meeting.

Looking ahead, maybe if ongoing US-China trade family serve mellow and bushel cross-border investment and business enlargement Mr. Rosengren will lean some-more dovish. But even then, expectations of some-more easing might not indispensably criticise a US Dollar. If conditions continue to wear and direct for liquidity increases, a influx of collateral might overcome a downside vigour of Fed rate cut expectations.

US Dollar Index Continues to Rise Along with Fed Rate Cut Bet as Yields Fall

EURUSD Daily Price Chart

US Dollar draft combined regulating TradingView

US DOLLAR TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To hit Dimitri, use a comments territory next or @ZabelinDimitrion Twitter

Australian Dollar Slides to Decade Lows

Australian Dollar Talking Points:

  • AUDUSD Is trade during a lowest turn given Mar 2009
  • A solid decrease from a Aussie Dollar ‘normalizes’ a lows and curbs a clever suppositional reversal
  • While a singular banking is stretched and connected to trade wars, collect elite pairs wisely

See how sell traders are positioned in a Australian Dollar, AUDUSD, AUDJPY along with other pivotal FX pairs, indices and oil on a DailyFX Sentiment page.

Technical Forecast for Australian Dollar: Neutral

The Australian Dollar continued to teeter during a lowest ubiquitous turn in over a decade by this past week – not startling given a temperate state of lift trade ardour and a determined vigour by a US-China trade war. When interconnected with a US currency, a Aussie’s opening was such that a marketplace would trip even reduce to secure uninformed decade lows, that creates for some problem in substantiating suggestive levels of successive support. While there are many opposite forms of technical research employed by traders, there is comparatively small use in raised pivotal levels where chronological dominance is formidable to register. That translates into problem with ascent paced reversals when they would start clearly ‘in a center of nowhere’. It can also stifle a ambitions of those otherwise looking to take advantage of a prevalent trend – in other words, it can stifle movement notwithstanding a miss of barrier.

Looking during the benchmark AUDUSD on a daily time support (below) we can see that a anniversary normal of a still Aug has purebred a same grade of privacy we have come to design from risk-sensitive resources during this duration of a year. Through this past week, there was some additional vigour to arise behind a bearish side. The slip pushed us to a lowest tighten on a weekly basement given Mar 2009. On a daily chart, however, we are still absolutely within a throng shaped around a month. This should theatre a good short-term dermatitis (a non-directional tenure mind you) when sensitivity is approaching to lapse with a month of September.

Chart of AUDUSD (Daily)

AUDUSD Daily Price Chart

Chart combined with a TradingView Charting Platform

Though we have seen a substantial change towards converging this past week, it is vicious to conclude where a marketplace stands on a aloft time support – that sensitivity will force on us if/when it returns. The thrust by Jul tells us immediately that a new still is not accurately systemic. The trend over a past year has been determined with a bearish gaunt and we are still in some proviso of acceleration. The inconsistency between mark and a 200-day relocating normal is around as impassioned as it has been given a final month of 2018. In ‘normal’ or ‘mean reverting’ markets, this could act an amplifier should a Australian Dollar bounce; yet it is frequency an procedure of a own.

Chart of AUDUSD with 200-Day Moving Average and Difference between Spot and MA (Daily)

AUDUSD with 200-Day Moving Average Chart

Chart combined with a TradingView Charting Platform

Moving a scale many higher, we start to see some of a applicable levels to a stream orientation distant behind on a chart. The monthly draft shows we have to go all a approach bac to Mar 2009 before we see allied levels to work with as a beam to ubiquitous zones of trade range. And even then, a applicable activity behind afterwards by a six-month duration was intensely flighty and lonesome a 1,200 trill range. Not accurately apples to apples with a stream condition; and thereby, we would not put many importance on a sanctification of any chronological end as stream milestones.

Chart of AUDUSD (Monthly)

AUDUSD Monthly Chart

Chart combined with a TradingView Charting Platform

When looking during a AUDUSD, there is a substantial volume of change attributed to that span by a US Dollar’s possess sway. Removing a Greenback from a equation – or really, significantly alleviation a anxiety – we can find that an equally-weighted magnitude of a Australian Dollar vital crosses (below) leaves us with a really identical picture. And yet, it is not a same in a few vicious ways. This past week’s slip from a AUDUSD is not shown here and that suggests that a intensity for mangle is some-more offset than a benchmark span might imply. The Aug intraday lows still reside this measures Jan peep pile-up low that suggests a broader marketplace is expected affording some magnitude of support is still in play. Importantly, there is also a rave of vigour for any pointer of sensitivity that might lapse with September. In a draft below, we enclosed a directional sensitivity indicator that combines a 20-day ATR with a 20-day chronological range. The aloft a reading, a larger a dermatitis vigour to forge a new trend.

Chart of Equally Weighted Australian Dollar Index with Direction Volatility Indicator (Daily)

Equally Weighted Australian Dollar Index Chart

Though this is a technical report, we consider it is vicious to embody a visible illustration of pivotal elemental themes to watch for ‘impetus’ relocating forward. Volatility as a thoughtfulness of ‘risk’ is one such consideration, yet it seems a trade fight change is still improved targeted to a opening of AUDUSD in particular. As such, we overlaid a different of a Dollar-Yuan (CNHUSD) sell rate that aligns nicely. What’s more, with a PBOC permitting a Yuan to continue to swell over a 7.0000-mark, a vigour can lapse with a tweet.

Chart of AUDUSD with CNHUSD in Green (Daily)

AUDUSD with CNHUSD Daily Chart

Chart combined with a TradingView Charting Platform

The prevalent instruction in a Australian Dollar altogether favors a bearish perspective for a banking relocating forward. If indeed we extend this drive, there are countless pairs that an feat this trend, yet an already stretched AUDUSD would not be my elite vehicle. A miscarry on a other palm could be improved placed around this cranky as it has so many pent adult vigour – same with AUDJPY. Yet, to see a renewed and destined Aussie banking drop, we will demeanour to a span like AUDNZD. The Kiwi has suffered a slip of a possess that has put a AUDNZD during a median of a past year’s operation usually bashful of 1.0700.

Chart of AUDNZD (Daily)

AUDNZD Daily Price Chart

Chart combined with a TradingView Charting Platform

Another Australian Dollar cranky that is off a comprehensive low, yet that is substantially improved matched to a genuine miscarry – with some assuage swell and operable technical end – is EURAUD. The 1.6300 turn has proven Aug support and new sensitivity suggests there is maybe larger mangle vigour here than many other pairs for that it will take time to comfortable a engines to a poignant technical move.

Chart of EURAUD (Daily)

EURAUD Daily Price Chart

Chart combined with a TradingView Charting Platform

As for suppositional positioning, we see an fixing of a ‘professionals’ with a longer time support and a some-more timely gait of a sell crowd. Both are fighting a slip lately. From a CFTC’s Commitment of Traders (COT) reading, we find that net suppositional positioning is brief AUDUSD and significantly so, yet it is not augmenting over a chronological extremes as a sell rate plums new depths. Retail traders on a other palm are flourishing increasingly emboldened by a dump – yet they are usually looking for a operation opportunities and sojourn really heedful of a full reversal.

Chart of Net Speculative Positioning in Aggregate Dollar Futures from CFTC Report (Weekly)

COT Speculative Positioning Chart

Chart of Retail Trader Positioning from IG Clients (Daily)

AUDUSD Client Positioning Chart

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