Arnaud Masset
Swissquote Bank Ltd
Forex News and Events
Gloomy outlook for Australia (by Arnaud Masset)
The Australian economy started 2016 off to wheel as most economic indicators showed signs of stabilisation and even of improvement for a few of them. The unemployment rate fell to 5.8% in December, while inflation pick-up significantly in the fourth quarter, rising from 1.5%y/y to 1.7% (beating estimates of 1.6%). However starting from February, a few cracks started to appear as the economy struggles to gain momentum in this low commodity price environment.
According to the latest report by the Australian Bureau of Statistics, expected annual private capital expenditure fell sharply reaching the lowest level in nine years as Australian non-mining companies cut spending unexpectedly. The market broadly expected a collapse of mining investment, mostly due to the prospect of low commodity prices and weak demand from China. However, investors were expecting stronger figures from the non-mining sectors. On the bright side, expected investments in manufacturing increased 9.3% for 2016-2017 compared to 2015-2017.
As a result, we believe that the pressure on the Aussie will increase substantially as the economy is losing momentum, while the Reserve Bank of Australia has maintained its easing bias as it would rather see the Australian dollar at a weaker level. AUD/USD is currently trading at around 0.7170; on the downside a support lies at around 0.71, while on the upside a resistance can be found at 0.7259 (high from February 23rd). In our opinion, the risk is on the downside as long as the pair stays below the above resistance.
Mexico: Peso’s weakness is not over (by Yann Quelenn)
The Mexican peso keeps struggling as it went from below 15 peso for one single dollar note early 2015 to above 19 a few days ago. Lingering oil prices have contributed to weakening the currency as less revenues come from oil but it is also true that the share of total government revenue from the commodity has declined, over the past twelve years, by one third to 20% from 34%. We firmly believe that there is one specific reason for this. Mexican’s infrastructure to produce oil and the state-owned companies have not been able to make sufficient investments which has prevented Mexico from gaining competitiveness over the past decade. Now that crude oil is at record low, it seems obvious that Mexico must find another sources of revenue as investments on oil have sharply declined.
Today’s data, current account balance, will be released and is set to remain in deficit at around 8 billion dollar. Export revenues are clearly not sufficient to offset import needs. As a result, CPI jumped to 10-month high in early February. Last but not least, retail sales decreased strongly in December at -1.6% m/m from 0.5% in November. We are clearly bullish on the USDMXN which should head back towards 19.00.
Gold - Targeting Year-High.
| Today's Key Issues | Country/GMT |
| Jan PPI MoM, last -0,70% | EUR/08:00 |
| Jan PPI YoY, last -2,20% | EUR/08:00 |
| Feb Manufacturing Confidence s.a., exp 115, last 120,8, rev 121,5 | SEK/08:00 |
| Feb Consumer Confidence, exp 96,8, last 97,5, rev 97,6 | SEK/08:00 |
| Feb Economic Tendency Survey, exp 109,1, last 111,9, rev 112,1 | SEK/08:00 |
| 4Q F GDP QoQ, exp 0,80%, last 0,80% | EUR/08:00 |
| 4Q F GDP YoY, exp 3,50%, last 3,50% | EUR/08:00 |
| 4Q Industrial Output WDA YoY, last -2,80%, rev -2,70% | CHF/08:15 |
| 4Q Industry & Construction Output WDA YoY, last -3,10%, rev -3,20% | CHF/08:15 |
| Jan PPI MoM, last -0,70% | SEK/08:30 |
| Jan PPI YoY, last -1,90% | SEK/08:30 |
| Jan Trade Balance, exp 1.0b, last 4.7b | SEK/08:30 |
| Jan Household Lending YoY, last 7,50% | SEK/08:30 |
| Bloomberg Feb. Russia Economic Survey | RUB/08:30 |
| Bloomberg Feb. Turkey Economic Survey | TRY/08:50 |
| Jan M3 Money Supply YoY, exp 4,70%, last 4,70% | EUR/09:00 |
| Feb Consumer Confidence Index, exp 118, last 118,9, rev 118,7 | EUR/09:00 |
| Feb Business Confidence, exp 102,7, last 103,2 | EUR/09:00 |
| Feb Economic Sentiment, last 101,5 | EUR/09:00 |
| Jan PPI MoM, exp 0,30%, last 0,20% | ZAR/09:30 |
| Jan PPI YoY, exp 6,30%, last 4,80% | ZAR/09:30 |
| 4Q P GDP QoQ, exp 0,50%, last 0,50% | GBP/09:30 |
| 4Q P GDP YoY, exp 1,90%, last 1,90% | GBP/09:30 |
| 4Q P Private Consumption QoQ, exp 0,80%, last 0,90% | GBP/09:30 |
| 4Q P Government Spending QoQ, exp 0,20%, last 0,60% | GBP/09:30 |
| 4Q P Gross Fixed Capital Formation QoQ, exp 1,00%, last 0,70% | GBP/09:30 |
| 4Q P Exports QoQ, exp 0,40%, last -0,30% | GBP/09:30 |
| 4Q P Imports QoQ, exp 1,30%, last 2,70% | GBP/09:30 |
| Dec Index of Services MoM, exp 0,30%, last 0,20% | GBP/09:30 |
| Dec Index of Services 3M/3M, exp 0,70%, last 0,60% | GBP/09:30 |
| 4Q P Total Business Investment QoQ, exp 0,90%, last 2,20% | GBP/09:30 |
| 4Q P Total Business Investment YoY, exp 6,40%, last 5,80% | GBP/09:30 |
| Jan CPI MoM, exp -1,40%, last 0,00% | EUR/10:00 |
| Jan F CPI YoY, exp 0,40%, last 0,40%, rev 0,20% | EUR/10:00 |
| Jan F CPI Core YoY, exp 1,00%, last 1,00% | EUR/10:00 |
| Jan CPI EU Harmonized MoM, exp -0,50%, last -0,20% | CHF/10:00 |
| Jan CPI EU Harmonized YoY, exp -1,30%, last -1,40% | CHF/10:00 |
| Dec Retail Sales YoY, last -0,10% | EUR/10:00 |
| Dec Retail Sales MoM, exp 0,10%, last 0,30% | EUR/10:00 |
| Eurostat switching CPI base-year to 2015=100 | EUR/10:00 |
| 4Q South Africa Unemployment, exp 25,60%, last 25,50% | ZAR/11:00 |
| Feb FGV Construction Costs MoM, exp 0,39%, last 0,32% | BRL/11:00 |
| Feb FGV Consumer Confidence, last 67,9 | BRL/11:00 |
| Jan Unemployment Rate, exp 8,00%, last 6,90% | BRL/12:00 |
| Bank of Spain Governor Takes Part in Madrid Book Presentation | EUR/12:00 |
| Jan Tax Collections, exp 130000m, last 121502m | BRL/13:00 |
| Feb 22 CPI Weekly YTD, last 1,40% | RUB/13:00 |
| Feb 22 CPI WoW, last 0,20% | RUB/13:00 |
| Feb 19 Gold and Forex Reserve, last 382.4b | RUB/13:00 |
| Fed's Lockhart to Give Opening Remarks at Banking Conference | USD/13:15 |
| Feb 20 Initial Jobless Claims, exp 270k, last 262k | USD/13:30 |
| Feb 13 Continuing Claims, exp 2253k, last 2273k | USD/13:30 |
| Jan P Durable Goods Orders, exp 2,90%, last -5,00% | USD/13:30 |
| Jan P Durables Ex Transportation, exp 0,30%, last -1,00% | USD/13:30 |
| Jan P Cap Goods Orders Nondef Ex Air, exp 1,00%, last -4,30% | USD/13:30 |
| Jan P Cap Goods Ship Nondef Ex Air, exp -0,50%, last 0,20% | USD/13:30 |
| 4Q House Price Purchase Index QoQ, last 1,30% | USD/14:00 |
| Dec FHFA House Price Index MoM, exp 0,50%, last 0,50% | USD/14:00 |
| Feb 21 Bloomberg Consumer Comfort, last 44,3 | USD/14:45 |
| Feb Kansas City Fed Manf. Activity, exp -6, last -9 | USD/16:00 |
| Jan Central Govt Budget Balance, exp 11.3b, last -60.7b | BRL/16:30 |
| Fed's Williams Speaks in New York | USD/17:00 |
| Jan Trade Balance, exp -271m, last -53m | NZD/21:45 |
| Jan Exports, exp 3.71b, last 4.43b | NZD/21:45 |
| Jan Imports, exp 3.95b, last 4.48b | NZD/21:45 |
| Jan Trade Balance 12 Mth YTD, exp -3871m, last -3549m | NZD/21:45 |
| Jan Eight Infrastructure Industries, last 0,90% | INR/23:00 |
The Risk Today
Yann Quelenn
EUR/USD is trading mixed. Yet, the short-term technical structure still suggests a further bearish move. Hourly resistance lies at 1.1053 (23/02/2016 high) and hourly support is given at 1.0957 (24/02/2016 low). Expected to show continued weakness. In the longer term, the technical structure favours a bearish bias as long as resistance holds. Key resistance is located region at 1.1453 (range high) and 1.1640 (11/11/2005 low) is likely to cap any price appreciation. The current technical deteriorations favours a gradual decline towards the support at 1.0504 (21/03/2003 low).
GBP/USD's sharp downside momentum is now pausing. Hourly support lies at 1.3879 (24/02/2016 low). The road is wide open to stronger support at 1.3657 (11/03/2009 low). Hourly resistance is given at 1.4168 (22/02/2016 high). The technical structure suggests further decline. The long-term technical pattern is negative and favours a further decline towards the key support at 1.3503 (23/01/2009 low), as long as prices remain below the resistance at 1.5340/64 (04/11/2015 low see also the 200 day moving average). However, the general oversold conditions and the recent pick-up in buying interest pave the way for a rebound.
USD/JPY has bounced bacl from 110.99. Yet, the medium-term technical structure is clearly negative. Hourly resistance can be found at 112.60 (intraday high). Stronger resistance is given at 113.39 (22/02/2016 high). Expected to further decline towards hourly support at 110.99 (11/02/2016 low). We favour a long-term bearish bias. Support at 105.23 (15/10/2014 low) is on target. A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems now less likely. Another key support can be found at 105.23 (15/10/2014 low).
USD/CHF has exited uptrend channel. Hourly support is given at 0.9847 (16/02/2016 low). Hourly resistance is given at 1.0003 (22/02/2016 high). The bullish momentum has faded. Expected to see further weakening toward support at 0.9847. In the long-term, the pair is setting highs since mid-2015. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours a long term bullish bias.
Resistance and Support:
| EURUSD | GBPUSD | USDCHF | USDJPY |
| 1.1561 | 1.4591 | 1.0328 | 117.53 |
| 1.1376 | 1.4409 | 1.0257 | 115.17 |
| 1.1193 | 1.4168 | 1.0074 | 114.91 |
| 1.1015 | 1.3927 | 0.9911 | 112.23 |
| 1.0893 | 1.3845 | 0.9847 | 110.99 |
| 1.0711 | 1.3657 | 0.966 | 105.23 |
| 1.0524 | 1.3503 | 0.9476 | 100.82 |
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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