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FX – The week ahead, Monday 15 Feb

GBP/USD (‘Cable’)

GBP/USD (15-min)

GBPUSD 15min (-)

 

GBP/USD (daily)

GBPUSD daily (-)

 

Macro observations

  • Dovish US Fed rhetoric still the main driver for USD strength
  • Bank of England more likely to hike UK rates than cut them in 2016 (yet more likely it’ll do nothing)

Technicals (based on daily price data unless otherwise stated)

  • Trading around 7-yr lows
  • Circa 18-month downtrend
  • Struggling to break above 50-day MA
  • Daily RSI just about holding above 50

Other notes…

US equity markets closed Monday 15th for President’s day

Macro data this week

  • UK: Rightmove house prices (Mon), Inflation (Tue), employment data (Wed), retail sales (FRI)
  • US: NAHB housing index (Mon), mortgage applications / industrial production / Fed minutes (Wed), Philadelphia Fed / jobless claims (Thur), inflation / Baker Hughes rig count (Fri)

 

EUR/USD

EUR/USD (15-min)   

EURUSD 15min (-)

EUR/USD (daily)

EURUSD daily (-)

 

Macro observations

  • Policy divergence between US and European central banks, with the ECB widely tipped to continue easing while the US Fed is desperate to tighten.
  • US rate cut is unlikely.

Technicals (based on daily price data unless otherwise stated)

  • EUR/USD sideways through 2015
  • Pair in upper half of 12-mth range
  • Break back above 11-mth rising trend line and 200-day MA
  • RSI & Stochastics both back from overbought with corresponding price correction
  • MACD peaked

Other notes…

  • US equity markets closed Monday 15th for President’s day;
  • Last time Draghi spoke in December, he surprised the markets.

Macro data this week

  • EU: Draghi speaking at European Parliament, construction output (Wed), consumer confidence (Fri)
  • US: NAHB housing index (Mon), mortgage applications / industrial production / Fed minutes (Wed), Philadelphia Fed / jobless claims (Thur), inflation / Baker Hughes rig count (Fri) 

 

 GBP/EUR

GBP/EUR (15-min)

GBPEUR 15min (-)

 

GBP/EUR (daily)

GBPEUR daily (-)

 

Macro observations

  • ECB widely tipped to continue easing, doesn’t appear happy with EUR at current levels.
  • UK rates seen staying put at 0.5% for foreseeable future
  • UK trade balance showing clear move towards services led economy, so potential for central bank action to support manufacturing and goods exports.

Technicals (based on daily price data unless otherwise stated)

  • 15-min chart showing a bearish rising wedge pattern, so potential for short term downside
  • GBP/EUR broke above 1.28854 – a 13-mth watch level, now support
  • Stochastics & RSI moved back up from oversold
  • Bullish divergence on MACD

Other notes…

  • Last time Draghi spoke in December, he surprised the markets leading to a spike in the EUR

Macro data this week

  • EU: Draghi speaking at European Parliament, construction output (Wed), consumer confidence (Fri)
  • UK: Rightmove house prices (Mon), Inflation (Tue), employment data (Wed), retail sales (FRI)
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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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