Volatile Market Ahead of U.S. Data Releases

As we witnessed last night, the EUR/USD traded higher, supported by the U.S. consumer confidence index which also caused the USD Index to break downwards.

Today, the Euro is expected to trade sideways, which is an opportunity for short term traders to engage in the market while waiting for major news to break this tight price range.

Here are the major Resistance (R) & Support (S) levels of the EUR/USD:


S2 S1 Pivot Point R1 R2
1.2354 1.2410 1.2470 1.2500 1.2555

As for today’s figures, we’ll start with Europe and specifically with its economic engine, Germany, where the German Import Price Index is scheduled for release; measuring the change in the price of imported goods purchased domestically.

Ø Forecast: -0.3%
Ø Previous: 0.3%

A higher than expected reading should be taken as positive for the EUR, while a lower than expected reading should be taken as negative for the EUR.

Moving to the UK, the Business Investment announcement will be released; measuring the change in the total inflation-adjusted value of the capital expenditure made by companies in the private sector.

Ø Forecast: 2.3%
Ø Previous: 3.3%

A higher than expected reading should be taken as positive for the GBP, while a lower than expected reading should be taken as negative for the GBP.

The UK Gross Domestic Product (GDP) is also scheduled for release; measuring the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of the economic activity.
Ø Forecast: 3.0%
Ø Previous: 3.0%

A higher than expected reading should be taken as positive for the GBP, while a lower than expected reading should be taken as negative for the GBP.

As for the U.S., the most important data release for this week is scheduled for today. The Core Durable Goods Orders announcement measures the change in the total value of new orders for long lasting manufactured goods, excluding transportation items. Due to the high volatility of the aircraft orders, the core number gives a better measure of ordering trends. A higher reading indicates increased manufacturing activity.

Ø Forecast: 0.5%
Ø Previous: -0.1%

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

Staying in the U.S., the Initial Jobless Claims announcement is scheduled for release; measuring the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

Ø Forecast: 287K
Ø Previous: 291K

A higher than expected reading should be taken as negative for the USD, while a lower than expected reading should be taken as positive for the USD.

At the same time, the Personal Spending announcement will be released; measuring the change in the inflation-adjusted value of all spending by consumers.

Consumer spending accounts for a majority of the overall economic activity. However, this report tends to have a slight impact, as government data on retail sales are released about two weeks earlier.
Ø Forecast: 0.4%
Ø Previous: -0.2%

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

These previous data are followed by the release of the Chicago Purchasing Managers' Index (PMI), which determines the economic health of the manufacturing sector in Chicago region.

A reading above 50 indicates an expansion in the manufacturing sector; while a reading below 50 indicates a contraction in the manufacturing sector. The Chicago PMI tends to help in forecasting the ISM manufacturing PMI.
Ø Forecast: 63.1
Ø Previous: 66.2

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

From the U.S. also, the University of Michigan Consumer Sentiment Index is scheduled for release; rating the relative level of current and future economic conditions.

There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact than the revised ones. The reading is compiled from a survey of around 500 consumers.
Ø Forecast: 90.2
Ø Previous: 89.4

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

Today is a very busy day full of data releases, such like the New Home Sales announcement, which measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it's released ahead of Existing Home Sales because the reports are tightly correlated.

Ø Forecast: 471K
Ø Previous: 467K

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

At the same time, the National Association of Realtors (NAR) Pending Home Sales Report will be release; measuring the change in the number of homes under contract to be sold but still awaiting the closing transaction, excluding new construction.

Ø Forecast: 0.9%
Ø Previous: 0.3%

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

Moving to New Zealand, the Trade Balance announcement is scheduled for release; measuring the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

Ø Forecast: 183 M
Ø Previous: 650 M

A higher than expected reading should be taken as positive for the NZD, while a lower than expected reading should be taken as negative for the NZD.



Disclaimer: The prices and news mentioned in this outlook are absolutely no guarantee of future market performance. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

Engaging in CFDs or Spot FX carries a high risk to your capital. You should not engage in this form of investing unless you understand the nature of the Transaction you are entering into and the true extent of your exposure to the risk of loss. Your profit and loss will vary according to the extent of the fluctuations in the price of the underlying markets on which the trade is based.