Market Outlook for 23rd August 2016

Market Outlook for 23rd August 2016

The US dollar’s positive tone that came on hawkish comments from Fed officials, proved to be short-lived as near-term bulls lost traction and the greenback came again under pressure against the basket of major currencies.
The Euro returned back above 1.1300 level, after Monday’s correction found support at 1.1270 zone. The single currency is holding just under session highs, ahead of Eurozone’s PMI data, key releases of the European session.
The British Pound stays tall against dollar in early Tuesday’s trading after Friday/Monday dips were contained above psychological 1.3000 support, keeping strong market bets against pound on hold for now.
The dollar fell back to pivotal 100.00 support against yen, after being unable to sustain Monday’s rally and take out barriers at 101 zone. Monday’s close in red and violation of 100.00 pivot signal fresh pressure on dollar/yen pair.
Antipodean currencies, Australian and New Zealand dollars, moved higher against the greenback on Tuesday, following comments by Reserve Bank of New Zealand Governor Graeme Wheeler and as demand for the greenback weakened. The Kiwi dollar rallied towards 0.7330, key resistance zone, after RBNZ Governor Wheeler said the bank’s current interest rate policy involves further monetary easing measures but he said he did not see the need for a rapid series of rate cuts.
Spot gold is taking a pause after two days in red, on a bounce off strong support at $1330 zone. The yellow metal shows again lack of clear direction, as the price remains within short-term range, entrenched between $1330 and $1358, with focus at Friday’s speech of Fed’s Chair Janet Yellen, which is expected to bring more light on the timing of US interest rate hike.
Oil prices fell further on Tuesday, with rising pressure coming from oversupplied markets and speculation that proposed oil production freeze would not help much.
US Crude Oil probed below $47.00 support and posted session low at $46.61, on extension of pullback from month’s high at $49.34, while Brent oil fell more on Monday’s sharp bearish acceleration from Augusts’ recovery peak at $51.20, posting fresh correction low at $48.49 so far.

Highlights of the day

Europe

German / Eurozone Manufacturing and Services PMI data are the highlights of the European session.
Forecast for German August Manufacturing PMI at 53.5, stands below July’s 53.8 release, while Services PMI is expected to stay unchanged at 54.4.
From the Eurozone, August Manufacturing PMI is showing forecast at 52.0, unchanged from the previous month, while Services PMI is expected to tick lower to 52.8 in August, compared to 52.9 in July.

America

US Manufacturing PMI is forecasted at 52.7 in July, slightly below June’s release at 52.9. Data are due at 13:45 GMT.

US New Home Sales are the next highlight of the American session, due at 14:00 and forecasted at 592K in July, compared to 592K in June. US home sales jumped 3.5% in June, the steepest jump since February 2008 as purchasers took advantage of historically low interest rates. According to Federal Reserve chair Janet Yellen, home sales and construction have been gradually improving, while residential investment made a noticeable contribution to GDP growth in 2016.
Important levels

GBPUSD
Cable cracked 1.3200 barrier on Tuesday’s extension of Monday’s strong rally that turned near-term focus higher. Probe above near-term congestion tops would trigger fresh bullish acceleration, after multiple downside attempts were contained at 1.3030 zone, where higher base was formed.
Firm break above 1.3200 barrier would open targets at 1.3250 and 1.3300.
Initial support lies at 1.3126, followed by 1.3080 and pivotal 1.3020/00 support zone.
USDJPY
The pair came under fresh pressure after failure to break above pivotal 101 resistance zone and retested strong 100.00 support, posting session low at 99.92. Bearish near-term technicals turn focus lower, with sustained break below 100.00 handle, expected to open next strong support at 99.52 and re-expose post-Brexit low at 98.98.
Session high at 100.37 marks initial resistance, ahead of Monday’s rally high at 100.91 and 101.15 (17 Aug high) which mark upside pivots.

BRENT OIL
Brent oil posted new correction low at $48.49 on Tuesday, on extension of Monday’s steep fall that marked the biggest one-day fall since mid-July. Weakness threatens thin daily cloud support, spanned between $48.30 and $48.07, below which good supports lay at $47.49 (Fibo 38.2% of $41.50/$51.20 upleg) and daily Tenkan-sen line at $47.33.
Extended bearish acceleration below $46.35 (daily Kijun-sen line), would signal an end of Aug’s recovery rally.
Initial resistance lies at $49.04 (session high) ahead of psychological $50.00 barrier and Monday’s high at $50.59., Market Analysis