The Turn Of The Pound

Two events in the coming weeks might represent some absolutely important market movers. The first one is the deadline linked to the raising of the mandatory debt ceiling as required by the U.S. Constitution, but still very far from a political point of view. The second event is related to the agreement of commercial exchange by means of regulations in the respective national currencies, which took place last week between Australia and China. In December 2011, the China-Japan agreement put an end to the bear market of UsdJpy: is it going to be the same for the bull market of AudUsd too? The expected macro data of this week from the U.S. are different: the first ones are expected on April 15th, with the Empire manufacturing and sales of existing homes, then on April 16th, with inflation and industrial production and, at the end, the Phily Fed and the leading indicator on April 18th. Not to be underestimated, the publication of the Fed's Beige Book on April 17th.

IS THE POUND READY FOR A NEW BEAR MARKET RALLY?

While Europe keeps on floating waiting for the moves of the ECB, the inflation data will be published on April 16th and will attract the attention of analysts. On the same day, the German ZEW index will be published. More interesting information will come from UK with the expected inflation on April 16th and the unemployment on April 17th; on the same day, we will also be able to know the minutes of the last meeting of the Bank of England. Graphically, EurGbp has tested the support of 0.841 (38.2% of retracement of 0.7757-0.8816) before starting again upward. The low level of the oscillators and the Adx below 20 might signal a rise of EurGbp in the coming weeks.


RAW MATERIALS INDICATE THE FUTURE DIRECTION OF THE LOONIE

Inflation is always the center of the attention for Canada (April 19th ), but the economy will also be affected by the announcement on interest rates scheduled for April 17th. By watching the diverging trend between UsdCad and the price of the aluminum, we can forecast a negative period for the Canadian currency, represented here on reverse scale. In fact, the recent fall in the price of the raw material seems to anticipate a more pronounced weakness of the Canadian dollar in the coming months.


EMERGING COUNTRIES

South Africa: retail sales and inflation (April 17TH )
Brazil: rates announcement (April 17th )
Turkey: unemployment (April 15th ) – rates announcement (April 16th )
China: retail Sales + Gdp (April 15th )
India: industrial production and inflation (April 12th )

Trade of the week: long EurHuf at 295 stop 291

We can see some interesting entry opportunities with a low risk on EurHuf. As we can see from the graph, the bullish trend started in August 2012 has come down to 308.6 before starting a correction that is coming now close to the 38.2% of retracement of the rise up to 295. The "cloud" remains untouched for now and the lagging line (red line) does not provide any reversal signal, this is why we think it is correct to enter long.