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After somewhat slow last trading week due to public holidays last Monday etc., this week shapes up to be opposite mainly due to likely binary event for EUR on Thursday. Same day Bank of England will announce their interest rates as well as RBA will have their rates decision on Tuesday as well. See more detailed description belowRisk events (UK time) Tuesday China HSBC manufacturing PMI (May, final), 2.45am: Manufacturing numbers in China are expected to hold steady at 49.7 for the final revision of this index. Market to watch: AUD/USD, FTSE 100, ASX 200, China A50, CopperReserve Bank of Australia rate decision (June), 5.30am: The Australian central bank is forecast to leave rates unchanged at 2.5% for the month. Market to watch: AUD/USDUK construction PMI (May), 9.30am: Construction is the smallest part of the UK economy to be measured by a PMI, so its importance versus the services and manufacturing reading is limited, but the index is forecast to nudge higher to 61 from 60.8. Market to watch: GBP/USDEurozone CPI (May), 10am: Price growth in the eurozone is expected to be 0.7% for May, with the reading being particularly important ahead of the European Central Bank the next day. Market to watch: EUR/USD Wednesday Japan services PMI (May), 2.35am: No forecast data is available, but the reading will help gauge how well the economy is performing. Market to watch: Nikkei, USD/JPYFrench, German, Eurozone services & composite PMIs (May, final), 8.50 – 9am: This swathe of eurozone data is not expected to change for the last reading of the month. Market to watch: EUR/USD, Germany 30, France 40UK services & composite PMI (May), 9.30am: Both of these readings are expected to weaken slightly from the April reading. Market to watch: GBP/USDEurozone GDP (Q1), 10am: Growth expectations for the region are forecast to stay at 0.2% quarter-on-quarter and 0.9% year-on-year. Market to watch: EUR/USDADP Employment report (May), 1.15pm: This important precursor to Friday’s non-farm report is expected to show job growth of 218K from 220K a month earlier. Market to watch: EUR/USD, GBP/USD, USD/JPY, Dow Jones, S&P 500US services & composite PMI (May), 2.45pm: These are the final readings for these indices in the month, with little change forecast. Market to watch: EUR/USD, GBP/USD, USD/JPY, Dow Jones, S&P 500Bank of Canada Rate Decision (June), 3pm: The latest decision on rates for Canada is not expected to see any change from the current 1%. Market to watch: USD/CADFederal Reserve Beige Book, 7pm: This is an informal, semi-annual survey of conditions in industries across the US, and helps gauge the strength of the US economy. Market to watch: EUR/USD, GBP/USD, USD/JPY, Dow Jones, S&P 500 Thursday China services & composite PMI (May), 2.45am: Given recent comments about weakness in China, these readings will be important to measure economic growth. Market to watch: China A50, AUD/USD, FTSE 100, CopperBank of England rate decision & asset purchase target (June), 12pm: Yet again, no change is forecast from Threadneedle Street, with rates unchanged at 0.5% being the consensus outcome. Market to watch: GBP/USDEuropean Central Bank decision (June), 12.45pm, press conference 1.30pm: The ECB decision is particularly important, as markets believe that the bank will take some form of action to push the euro down and attempt to boost inflation. Market to watch: EUR/USDUS initial jobless claims, 1.30pm: Weekly claims are forecast to rise to 318K from the previous 300K. Market to watch: EUR/USD, GBP/USD, USD/JPY, Dow Jones, S&P 500 Friday US non-farm payrolls (May), 1.30pm: The final event of the week is the big one, with the official US government estimate of job growth for May. The consensus is for growth of 218K, down from April’s strong 288K, while the unemployment rate is not expected to change from 6.9%. Look out for any revisions to the figure from the previous two months.Market to watch: EUR/USD, GBP/USD, USD/JPY, Dow Jones, S&P 500, FTSE 100 (plus all other major indices, FX and commodities) CAC40
On the contrary to many expectations this market made new highs recently. 4497 level is the one to watch in my book for coming weeks as it served as a ceiling resistance prior to breakout and as support later on. Although there is not much fundamental support for this level to be buying opportunity, technicals are pointing to strong buy from there. The market curve is clearly bullish, will be looking to take advantage of this trend continuation opportunity.
There is potential bearish Cypher pattern setting up on 4 hours chart at the moment that is supported fundamentally with ECB is likely to make another attempt to weaken EUR this week. With volatility increasing around these type of events i would not be surprised if price would go higher before it went lower this week. Cypher pattern completion @1.3694-1.37's level, see the chart below.
This FX pair came close to completion of bullish AB=CD pattern last week before stalling around 1.67's level. Fundamentally GBP seem to have much more solid foundations than it's EUR counterpart at the moment. Will be looking for a buy at @1.6660's level where AB=CD pattern is about to complete with some pivot confirmation at this level as well.
There was clear shift to the downside last week for this market when price broke out of the range it was stuck for many weeks. The setup that shapes up on 4 hour chart is on the contrary to what seem to be bearish trend at the moment. Area @1207's is where BAT pattern will complete if price will get there. There has to be at least 35 USD stop risk taken on board with this setup in my book. Having in mind that this is very much position against the trend, position has to be adjusted accordingly, see the chart below.
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