Your weekly fundamental view (August 1-5)

Srpen 01, 2016 14:30

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Need to know

The main focus of this week is the Non-Farm Payroll (NFP) figure and unemployment rate in the US on Friday. This rest of the trading week will also see the announcement of many PMI (Purchasing Manager's Index) numbers from a long list of countries.

Coming up

An interest rate decision from the Reserve Bank of Australia (RBA) on Tuesday 2 August. The current cash rate is set at 1.75% but the market is expecting a quarter percent rate drop to 1.5%. The RBA decreased its rate only recently in May 2016, to 1.75% after being a full year at the 2% mark. The move is expected due to recent weak economic data like consumer and inflation numbers. The inflation rate dipped below the 1% mark and is far away from the RBA's 2% target. The RBA is expected to release a monetary policy statement on Friday 3 August. Key resistance on AUD/USD is 0.7650 and 0.7750, key support 0.74 and 0.73.

An interest rate decision from the Bank of England (BOE) on Thursday 4 August. The BOE is still faced by indecision in the political arena, as the U.K. has not yet provided a political confirmation for a "Brexit" (British exit) out of the European Union. However, the market is seriously considering a scenario where the BOE will decrease its base rate from 0.5% to 0.25%, in an attempt to support the British economy prior and during the Brexit. Support and resistance on the GBP/USD is near current price, as the currency pairs builds a contracting triangle: 1.30-1.3150 support versus 1.33 and 1.35 resistance.

The unemployment rate and Non-Farm Payroll (NFP) figures on Friday 5 August. The unemployment rate is expected to decline again, after a recent uptick in July 2016. The market is assuming a drop from 4.9% to 4.8% in the employment rate, but also a dip in the NFP figures from 287k to 180k. The latter is not surprising considering the fact that last month's NFP was one of the strongest numbers in recent years. In fact, New York Fed President William Dudley says that the Federal Reserve may hike interest rates faster than expected. However, his view of the economy will need to be validated by upcoming economic figures, starting with the unemployment rate and the NFP. Support USD index at 95 and 92.5-93, resistance at 97.50 and 100.

Chart to watch: DAX 30

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The German stock index DAX 30 is reaching a key break or bounce spot at the resistance level of 10,500. A bullish breakout could indicate the start of a long-term bullish rally to re-test the tops and highs. A failure to break could see price remain in a long-term consolidation zone. In such a scenario, price could retrace back to the horizontal support levels seen before and during the Brexit.

DAX30 Instrument