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Dukascopy Forex Overview: 04-05-2016 - Afternoon

Dukascopy Bank analytic desk report
Published: 04/05/2016 15:05
Community Forecast
Jignesh on USD/JPY
“Last week's price action on the back of an announcement from the BOJ showing some renewed commitment may have traders looking at this pair with the view that the longer term up trend may have continued. Dips should be supported in this pair as it gets bought up further this week“.
Dukascopy Technical Analysis

NZD/USD keeps gravitating towards 0.70
“The scheduled GDT dairy auction in the early hours of tomorrow morning will likely also be a key determinant of the fate of the NZD in the coming 24-hours. We are hopeful that the auction may continue the recent theme of modest improvement.”
- BNZ (based on WBP Online)
Due to a poor reading of the US Manufacturing PMI, the New Zealand Dollar outperformed the American Dollar, having added almost 45 pips yesterday. The Kiwi now faces a rather strong resistance area around 0.7050 in face of the weekly R1 and the Bollinger band.
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Dukascopy Fundamental Analysis
RBA unexpectedly cuts OCR amid slowing inflation
The UK manufacturing sector encountered a surprise contraction in April that reflected in the PMI, as it entered negative territory for the first time in 4 years, plummeting under the 50 point mark to show 49.2 points. The indicator missed the initial investor forecast of 51.2 and fuelled concerns by showing a drop in comparison to March. Worries about industry health were amplified by the Markit Economics claim that output in the manufacturing sector is shrinking in a scale of 1% per quarter, and around 20 000 jobs have already been lost in the last three months.
Expert Commentary
"The other thing that will influence silver is obviously the price of gold, and we are somewhat bullish on the yellow metal."
- Edward Meir, Senior Commodity Consultant at INTL FCStone, on silver
We think that this central banks’ easing that is taking place across the world will be bullish for gold. The metal will also be a good hedge for some investors who are looking to protect themselves against a drop in the equity markets. Thus, we think with gold looking steady silver should benefit. However, it is not the first choice for investors, since they would rather buy gold than sil-ver, because silver is also much more of an industrial metal and its fortunes are tied more to manufacturing activity and, I sup-pose, to investor activity.>>
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Press Review
Bloomberg
Gold Retreats Following Climb to $1,300 an Ounce
Todd Colvin, senior vice president at Ambrosino Brothers and Bloomberg's Matt Miller examine the two-day drop in gold prices after breaking through $1,300 an ounce.
Market Research
Relative Currency Strength and Volatility: AUD
Australian Dollar and Japanese Yen are possibly the only two major currencies that are worth being discussed throughout this overview. The former had been the purest loser of the period ended May 3, while the latter continued to register massive value gains. AUD was hit twice, firstly after disappointing inflation figures and secondly in the wake of the RBA’s decision to cut interest rates.
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Dukascopy Bank Sentiment Index
March release
In North America, professors shared less optimistic outlook for the economy in the foreseeable future, with the six-month sentiment index sliding 0.15 points among local experts, while overseas professors upgraded their view on the region’s economy by 0.04 points compared to the previous month’s index. As concerns the long-term outlook, both foreign and domestic economists’ confidence slipped sharply, though still remaining in the positive territory in the observed month.
Global Stock Market Review
US stock indices close mostly lower compared to the previous week
Equity market in the US traded mostly down during the week ended April 29, however, the price changes were insignificant. Meanwhile, the US Federal Reserve's Federal Open Market Committee made no move on interest rates this week sending mixed signals on the timing of its next hike. Seven weeks left until the next FOMC meeting in June, so the committee will have plenty of data to digest before it meets to set rates again.
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Commodity Overview
Base Metals Close Higher on Lower Greenback
Aluminum posted significant gains on Friday, with metal’s futures hitting a nine-month peak amid a lower US Dollar. Three month metal’s contract added 0.8% on the London Metal Exchange by the end of trade, finishing at $1,678 a tonne and marking the best close since July 2015, even despite aluminum stocks remaining very high. In light of an increase posted on Friday, aluminum managed to lead solid gains, closing the prior trading week up 1.53% and bringing monthly advance to around 12%, metal’s best month-on-month performance since September 2012. However, analysts warn that it is still to early to talk about long-term improvement in the value of the industrial metal.
Trade Pattern Idea
GBP/CAD 1H Chart: Channel Up
GBP/CAD is expected to face an increased pressure from the bearish side of the market. This currency pair has just reached the upper boundary of the channel up pattern, meaning the correction has become the base scenario.>>

AUD/NZD 1W Chart: Ascending Triangle
AUD/NZD is well-positioned for a rally. For one, the currency pair has just breached a major five-year resistance trend-line. As if this were not enough, there is an ascending triangle emerging in the weekly chart, a pattern that indicates growing demand.>>
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Economic Research

Forecasting Models for Exchange Rate
The science of prognostics has been going through a rapid and fruitful development in the past decades, with various forecasting methods, procedures and approaches flooding the economic world. It is estimated that there are more than 100 prediction methods, and sometimes the diversity makes it difficult to choose the one that would do the trick. In our new research we try and compare a few of the most popular techniques, and see if they are in fact suitable for forecasting currency exchange rates.
Dukascopy Aggregate Technical Indicator
Dukascopy Bank presents a new research product - the aggregate technical indicator. The new tool will indicate the strongest signals on major currency pairs. Dukascopy Aggregate Technical Indicator for 30 min and 1H time frame charts for major pairs for the last 144 periods till 14:30 GMT.
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Disclaimer:
This overview can be used only for informational purposes. Dukascopy Bank SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.

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