NORDIC FX, NOK, SEK WEEKLY OUTLOOK
- Swedish Krona, Norwegian Krone at risk from higher-than-usual volatility
- Growth-sensitive event risk out of Europe, China, US to impact NOK, SEK
- Nordic data docket: Sweden unemployment rate and Norway trade balance
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The first week of April had a hefty data docket for the Swedish Krona and Norwegian Krone. Traders were eyeing what were potentially global market-moving event risk. The ECB announced its rate decision, the FOMC released the March meeting minutes and an extension to the Brexit deadline was granted. Looking ahead, NOK and SEK may yet have another potentially tumultuous week driven primarily by external-event risk.
EUROPEAN-BASED EVENT RISK:
In Europe, several key growth indicators and announcements will be released from core Eurozone economies. Germany will be releasing its Zew Survey – a measure used to gauge sentiment – which will be particularly important to monitor given the region-wide slowdown. This follows a presentation by Germany’s Finance Minister on the latest economic forecasts.
In Italy, the lower house will be debating on the government’s most recent economic growth forecasts. Last week, the report showed a dismal outlook for the Italian economy in 2019 along with an update that the budget deficit will now be wider than previously agreed. The latter point in particular is a source of concern given the rising risk of another – and potentially more disruptive – Eurozone debt crisis.
In France, President Emmanuel Macron will be delivering a speech which will contain new policy measures as a response to the Yellow Vest protests. Since their start last year, it has severely impacted France’s economic performance and undercut the President’s ratings. The new policies may rattle the Euro and regional bond markets because of the potentially dangerous fiscal example it may set for other Eurozone governments.
This comes as the continent may now be re-entering another trade war with the US, putting further pressure on the already-battered economy. ECB President Mario Draghi reinforced the negative growth outlook at the last two meetings, signaling – along with the IMF – that the downside risks appear to be greater. Political risks are also rising as the European Parliamentary elections approach.
In Sweden, Riksbank Deputy Governor Martin Floden expressed concern on Friday over Germany’s lackluster performance. This in large part has to do with Germany’s status as the “steam engine of Europe”. Why this is of concern to Swedish policymakers is because the Scandinavian country’s economic performance is closely linked to European demand.
US-BASED EVENT RISK
A slew of key US economic indicators will be released which traders will be likely be monitoring closely because of the potential impact it may have on Fed monetary policy. Below are some key indicators to watch out for:
Tuesday – Industrial Production
Wednesday – Trade Balance, MBA Mortgage Applications, Fed Publishes Beige Book
Thursday – Retail Sales, Initial Jobless Claims
For a more extensive list, check out DailyFX’s economic calendar!
Japanese Economy Minister Toshimitsu Motegi will also be visiting the White House from April 15-18. The two powers will discus trade agreements in an effort to avert another trade conflict on a third front as US economic performance wanes. On Friday, the Easter holiday will begin and may cause additional volatility due to thinner liquidity.
NORWAY, SWEDEN EVENT RISK
In the Nordics, the economic docket remains relatively light, which could mean NOK and SEK traders will likely be keeping their attention more on external risks. On Thursday, Sweden will be releasing its unemployment rate. While broadly the indicator has been falling, there was a spike in November from 5.50 to 6.00 percent. The Swedish Krona promptly fell and cooled rate hike bets from the Riksbank.
In Norway, the data docket is very light with trade balance data due later today. For this reason, NOK’s price movement will be especially watchful for external event risk. The Krone last week was given a boost following better-than-expected CPI data. This was in large part due to the strong recovery in crude oil prices in 2019, although the Norwegian economy and CPI may be at risk if global and European demand wanes.
SWEDISH KRONA, NORWEGIAN KRONE TRADING RESOURCES
— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter
Weekly Trade Levels for US Dollar, Euro, Sterling, Loonie, Gold & Oil
DXY, Euro, Loonie Monthly Opening-Ranges Intact
The US Dollar Index is trading into the monthly opening-range highs into the start of the week and the focus is a reaction around the 98.05/10 resistance zone- note that the monthly ranges in Euro and Loonie also remain intact. In this webinar we review updated technical setups on DXY, EUR/USD, USD/CAD, GBP/USD, Crude Oil (WTI), Gold, USD/JPY, AUD/USD, EUR/AUD & SPX.
Why does the average trader lose? Avoid these Mistakes in your trading
Key Trade Levels in Focus
DXY – Immediate focus is on topside resistance at 98.05/10. Initial support at 97.87 with near-term bullish invalidation raised to 97.71.
EUR/USD – Euro is coiling into the monthly opening-range just above slope support. Immediate focus is on support at 1.1140. Initial resistance at 1.1187 with near-term bearish invalidation at monthly-open resistance at 1.1215– look for a bigger reaction there IF reached. A break lower would expose 1.1110.
GBP/USD – Sterling broke below multi-month slope support last week with price responding to near-term pitchfork support into the open. Initial resistance at 1.2798 with bearish invalidation at 1.2859. Downside support objectives at the August low-day close at 1.2697 and the 100% extension at 1.2662.
Gold – Risk for near-term recovery while above the yearly / monthly low-day close at 1270. Initial resistance at 1280 with near-term bearish invalidation with the monthly open a 1283.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Key Event Risk This Week
Economic Calendar – latest economic developments and upcoming event risk
Active Trade Setups:
—Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
AUDUSD Soars on Shock Election, Apple Shares Slump, Risk of S&P 500 Drop
AUD: The Aussie outperforms following a shock election outcome, in which Prime Minister Scott Morrison secured re-election (full story). In reaction, the Aussie gapped higher at the Asia open, reclaiming the 0.69 handle against the greenback. However, as equity markets have headed lower throughout the European morning, risks are for gains to be faded. Alongside this, key headwinds in the form of trade war tensions and a potential RBA June rate cut are likely to limit upside. Reminder, RBA Governor Lowe due to speak tonight after RBA meeting minutes (calendar)
Crude Oil: Oil prices surged at the Asia open as Saudi Arabia signalled that cuts could be extended throughout the remainder of 2019 at the JMMC meeting, while President Trump had also stepped up his critical rhetoric towards Iran. Although, with equity prices beginning to push lower, oil prices have pared the majority of its initial gains.
Equities: US equity futures have headed lower amid the continued crackdown by the US on China’s Huawei, which in turn has chipmakers come under pressure, while Google also stated that they are to restrict the company’s use on android services. Elsewhere, Apple’s price target had been cut by HSBC to $174 (median street price target = $220), citing concerns over China, while tariff led price increases on Apple products could also have dire consequences on demand. Apple shares currently lower by 2.4% in pre-market.
Source: DailyFX, Thomson Reuters
DailyFX Economic Calendar: – North American Releases
WHAT’S DRIVING MARKETS TODAY
- “Gold Price Sell-Off Continues, Silver Price Hits a Six-Month Low” by Nick Cawley, Market Analyst
- “COT Report: Japanese Yen and Euro Shorts Collapse, USD Longs Reduced” by Justin McQueen, Market Analyst
- “Crude Oil Price May Be Carving Out a Top” by Paul Robinson, Currency Strategist
- “Using FX To Effectively Trade Global Market Themes at IG” by Tyler Yell, CMT , Forex Trading Instructor
— Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.email@example.com
Follow Justin on Twitter @JMcQueenFX
Gold Price Sell-Off Continues, Silver Price Hits a Six-Month Low
Gold (XAU) and Silver (XAG) Price Analysis and Charts.
Gold (XAU) Needs to Support to Hold
The sell-off on gold continues with the precious metal down around $30 in less than a week. Gold is under pressure from a resurgent US dollar, buoyed by last Friday’s Uni of Michigan data which smashed expectations and hit a multi-year high. The important 61.8% Fibonacci retracement level at $1,287/oz. failed to provide any support when broken last week, while the $1,287 – $1,281/oz. zone made up of old horizontal support is being tested now. A clear break and close below opens the way to the recent double bottom around $1,266/oz. which is currently being guarded by the 200-day moving average at $1,268.6/oz. Below here the 50% Fibonacci retracement level at $1,262/oz heaves into view.
Gold (XAU) Daily Price Chart (August 2018 – May 20, 2019)
Silver (XAG) Nears a Fresh Six-Month Low
Another precious metal under heavy selling pressure. Silver is now at levels last seen in early December last year and is over 11% lower since making its recent high of $16.21/oz. in late February. The downtrend since the late-February high continues to be respected and it is possible that silver completely retraces all the way back down to the November 14 low at $13.89/oz. Psychological support at $14.00/oz. may slow the decline, while the CCI indicator shows that the market is extremely oversold.
Silver (XAG) Daily Price Chart (August 2018 – May 20, 2019)
IG Client Sentiment data show that retail traders are 79.1% net-long gold, a bearish contrarian indicator. Recent daily and weekly sentiment shifts give us a stronger bearish contrarian bias.
— Written by Nick Cawley, Market Analyst
To contact Nick, email him at firstname.lastname@example.org
Follow Nick on Twitter @nickcawley1
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