Weekly Fundamental Forecast: A Week Ending Trade War Salvo Leaves Distinct Unease for Next Week’s Trading...

Sentiment was just starting to find its balance this past week when another US-China trade war headline involving the US President hit the wires. Will this theme return to prominence next week or will we fall back on scheduled event risk? US Dollar Forecast – US Dollar Rally May Resume on Fed Rate Hike Bets, Risk Aversion The US Dollar backtracked last week but a durable upshift in Fed interest rate hike expectations and the threat of renewed risk aversion may put it back on the offensive. Euro Forecast: After ECB Holds, Italy to Come Back into Focus for Euro The European Central Bank is sticking to its preset policy course as uncertainty around its inflation forecasts is receding, but with Italy back in the news, any goodwill injected into the Euro from the recent policy decision will likely be neutralized. New Zealand Dollar Forecast – NZD Rise to Gain if GDP Sinks RBNZ Rate Cut Bets, Trade War a Risk The recovery in New Zealand Dollar prices may continue if GDP data lowers RBNZ rate cut bets. US President Donald Trump rekindling trade war fears poses a risk for...

USD Bears Hit Back: US Dollar Drops from Resistance at Prior Support...

Talking Points: – US Dollar weakness has shown quite visibly thus far on the fresh week, with the US Dollar dropping from the 95.00 area of resistance that had come into play around the Friday close. This level of 95.00 was the swing-high for the Month of May, after which this became a key area of support for the US Dollar as the currency gyrated throughout this summer. More recently, as USD-breakdown themes have become more pronounced after the August mid-point, prices have broken-below and are now finding resistance at prior support, keeping the door open for a deeper breakdown in USD. – Both GBP/USD and EUR/USD are gaining as the Dollar is dropping, but noticeably weaker than USD over the past week has been the Japanese Yen. A Bank of Japan interest rate decision highlights this week’s economic calendar, and the prospect of additional Yen-weakness can keep the bid supported in pairs like EUR/JPY and GBP/JPY. Around the British Pound – we’ll likely continue to see Brexit headlines driving the flow, but we also have a CPI print on the calendar for this Wednesday, and this will likely bring impact to near-term price...

FX Week Ahead: Inflation Data Due from Eurozone, UK, Japan, and Canada...

Talking Points: – Trade tensions are back in the spotlight after Friday’s announcement that US President Trump was ordering tariffs on $200 billion of Chinese imports. – Inflation figures due out over the coming week may not carry the potency that they usually do – but the Canadian CPI report seems like it has the greatest potential to leave an impact. – Retail trader sentiment is starting to turn back in the US Dollar’s favor after a disappointing week of trading. Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below. 09/17 Monday | 09:00 GMT | EUR Eurozone Consumer Price Index (AUG F) The final August Eurozone Core CPI is due in at +2.0% (y/y), a slight drop from the initial reading reported in at +2.1%. The final core reading for August is set to be confirmed at +1.0% (y/y), down from +1.1% in July. The Euro, on a trade-weighted basis, is down over the past year, so it stands to reason that inflationArticle source:...

Euro Forecast: After ECB Holds, Italy to Come Back into Focus for Euro...

Fundamental Forecast for EUR/USD: Neutral – The European Central Bank continues to aim for ending its QE program in December, then raising rates by the end of “summer 2019”, citing “receding” uncertainty around its inflation outlook. – Any goodwill provided by the ECB’s confidence in its policy path was quickly erased by Friday as concerns over the Italian government’s upcoming budget resurfaced. – The IG Client Sentiment Indexhas returned to ‘neutral’ for the Euro after its late-week reversal. See our long-term forecasts for the Euro and other major currencies with the DailyFX Trading Guides. For the third week in a row, the Euro found itself in the middle of the pack, gaining ground against four of the major currencies and losing ground against the other three. But this past week, winners and losers among the EUR-crosses were flipped: the Euro performed well against the safe havens and struggled against the higher yielding and risk-correlated currencies. EUR/GBP led the way lower by -0.52%, while EUR/CHF, EUR/USD, and EUR/JPY gained +0.54%, +0.62%, and +1.57%, respectively. Price action at the endArticle source:...

JPY Rate Forecast: Easing Trade Tension and Widening Spreads Weigh...

USDJPY Analysis and Talking Points: Easing Trade Tensions and Widening Spreads Bearish JPY BoJ Rate Decision and CPI in Focus Fundamental Forecast for JPY: Bearish Easing Trade Tensions and Widening Spreads Bearish JPY The Japanese Yen had been notably weak against the USD with losses of over 1%. While the economic calendar had been somewhat quiet from the Japanese point of view. Mid-week source reports that the US are looking to reach out to China for another round of trade talks had led to an easing of trade war fears, consequently weighing on the Japanese Yen. Alongside this, US and Japanese 2yr bond spreads continue to widen, driving further losses for the Yen with the currency hovering around 112 against the greenback. The US-JP 2yr bond spread is now the widest since 2007 and with no signs that the BoJ are looking to exit their ultra-loose monetary policy, USDJPY may well push for higher levels. Within the option market, risk reversals continue to suggest a moderation in demand for protection against JPY strength. 1-week risk reversals now atArticle source:...

S&P 500 Maintains Solid Trend, Can the DAX and FTSE Follow Higher?...

Equity Talking Points: Little data on the docket, risk appetite remains firm; SP 500 trend intact Light calendar next week post-ECB; DAX will try and buck the trend CPI data on Wednesday; FTSE looking to rebound For forecasts, trade ideas, and educational guides, check out the DailyFX Trading Guides. SP 500 This coming week is a quiet one on the data front, with no ‘high’ impact releases on the schedule. Trade war headlines from time-to-time have looked to take stocks lower (as was the case on Friday when it was reported Trump gave the go-head on $200 bln tariffs on China), but at this time the market receives news with only limited concern. Look for this trend to continue. Seasonality is unfavorable for stocks right now, but has not mattered thus far. Turning to the technical landscape, the uptrend remains well intact as the prior high and trend-line from June were met last week and price turned higher. Record highs are only a short distance away and as long as support holds a run on new levels looks likely. For more on U.S. indices, checkArticle source:...