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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Euro and kiwi lag ahead of busy week that includes RBA, BoC, and NFP

Expected ECB weakness takes the euro lower for the week as the greenback regains lost ground.

EURO Source: Bloomberg

EUR/USD: Ending the week in red as ongoing weakness in Eurozone data set to confirm ECB easing

The euro lagged significantly last week, with Eurozone data failing to live up to expectations, and paving the way for the ECB to act without worrying about inflationary pressures given it currently stands well below its 2% target, and below expectations at its core which excludes energy prices. There’s clear negative technical bias forming here as its price breaches the lower end of the bear channel, and its price is below all its main weekly long-term and short-term moving averages. On the daily it’s a bear trend technical overview, and on the weekly it needs little at this stage to shift to a bear trend. That’s not to say breakout strategies won’t be enticing, especially if EU data this week disappoints and US data outperforms. In sentiment, retail bias has surged to extreme long levels as shorts got out – up 17% for the week – while institutional bias is down a notch to majority short 55% as both euro long and short positioning rose, by 8K lots and 5.8K lots respectively.

EURUSD Source: IG charts
EURUSD Source: IG charts

GBP/USD: Finishing lower for the week as Brexit woes fail to subside

It’s a busy and crucial week for the UK’s parliament, set to be suspended from mid-September to mid-October and putting pressure on MPs to decide what action they’ll take ahead of the suspension. And although there’s data that will be released out of the UK including manufacturing PMI today and services on Wednesday, those figures will likely take a backseat when it comes to the bottom line effect on the pound’s value. From a technical standpoint that means less in the current atmosphere, it’s a stalling bear trend technical overview where most of its indicators are shifting back to neutral on the weekly, but still showing a propensity to trend on the daily. Retail bias is up slightly for the week at heavy long levels of 75%, while institutional bias has edged off extreme short levels due to a larger rise in pound longs by 4.7K lots than a rise in pound shorts by only 1.3K lots.

GBPUSD Source: IG charts
GBPUSD Source: IG charts

USD/JPY: Week ends in a slight risk-on mood, takes this pair’s price up with it

With this pair heavily dependent on risk-on/off plays to determine appetite for the safe haven yen, its price managed to lift itself off lows earlier in the week alongside equities as a more reconciliatory tone took effect between the US and China on trade. It hasn’t translated into action yet though, and the gains made in equities are easily at risk of being undone, with further risk-off events a clear possibility. Friday’s Japanese data also disappointed for the central bank, as although unemployment dropped to 2.2% and industrial production grew, Tokyo’s core CPI grew by only 0.7% and retail contracted for the first time in nearly two years. Overall, the technical bias remains negative, and a cross occurred with the 50-week moving average now below the 100-week MA. Retail traders aren’t complaining having taken profit on longs and reducing bias by 9% for the week to a heavy short 66%, and institutional traders continue to anticipate further yen gains against the dollar with yen short positioning rising by 7.4K lots compared to yen longs up by a larger 9.8K lots.

USDJPY Source: IG charts
USDJPY Source: IG charts

USD/CAD: Price remains close to its short-term resistance level ahead of BoC later this week

It’s a seventh consecutive week of gains for this pair’s price, with its price above all its weekly moving averages and closing above its 200-day moving average on Friday. That is keeping positive technical bias intact, albeit consolidatory with retracement off the highs, especially as its short-term resistance level has managed to hold. Oil prices have been stuck in a bear trend channel, and if it holds it’ll result in a weaker CAD energy underlying that could aid in taking this pair’s price higher, especially if the greenback continues to relatively outperform. And while institutional bias is majority short, it has dropped a couple percent towards the middle on an increase in CAD shorts by 3.1K lots as opposed to a smaller increase in CAD longs by only 1K lots. There’s a bank holiday today for both US and Canada, but it’ll get busier later in the week with the BoC on Wednesday, and employment figures for both on Friday.

USDCAD Source: IG charts
USDCAD Source: IG charts

AUD/USD: Finishing slightly lower for the week as relatively range-bound negative bias persists

Another week, another consecutive finish lower for this pair’s price, though it continues to stall as it approaches the lows with range-bound movement the norm rather than the exception. That should come to a halt this week with significant Australian data with manufacturing this morning, retail data tomorrow, and GDP the day after. And then there’s the RBA, set to keep rates on hold at 1% tomorrow morning as opposed to its Antipodean neighbour’s surprise 0.5% rate cut that has caused AUD/NZD to rise to highs unseen since May. Institutional bias remains heavy short against the Australian dollar and little changed on last week’s heavy 74%, but for the New Zealand dollar shorts have piled in against the soft commodity currency, and NZD/USD’s bias is up 4% to a heavy short 69%.

AUDUSD Source: IG charts
AUDUSD Source: IG charts

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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