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Dukascopy Forex Overview: 24-05-2016 - Afternoon

Dukascopy Bank analytic desk report
Published: 24/05/2016 15:02
Community Forecast
megajorko on EUR/USD
“The EUR/USD has broken a lot of support lines recently but the main still stays - 1.116-1.118. This was the start of the rise when Janet Yellen announced no rate hike and now the new information about the hawkish fed turns the pair more bearish. Without any bullish momentum I think that my target from the year start of 1.1111 (magic number) will be end of week/month target”.
Dukascopy Technical Analysis

USD/CAD risks falling back under 1.31
“We've had a very punchy move (in Fed expectations) from a week ago. (But) one of the mitigating factors for why we favor fading this rebound in the dollar is that we still haven't heard from (Fed Chair Janet) Yellen.”
- BNP Paribas (based on Reuters)
Despite the American Dollar outperforming its Canadian counterpart for the fifth time in a row yesterday, the USD/CAD’s bullish potential appears to be fading. The pair is now facing a relatively strong resistance cluster around 1.3250, represented by the weekly R1 and the Bollinger band. 
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Dukascopy Fundamental Analysis
US manufacturing sector continues to struggle in May
Business activity in the US manufacturing sector continued to decline in May with new orders increasing at the slowest rate so far this year, as manufacturers have been hit hard by a stronger US Dollar and tepid global demand. Markit’s preliminary manufacturing PMI eased to 50.5 this month, down from 50.8 in April, when it logged the worst performance since September 2009. The gauge remained well below the post-crisis average of 54.1. A renewed decline in production was one key factor weighing on the headline index in May, alongside softer new order growth and further cuts to stocks of inputs.
Expert Commentary
"Currently, we are very much in the camp that expects to see the Dollar appreciate. Indeed, there has been a period of weak-ness, as we saw the January sell-off in emerging market currencies start being reversed."
- Christian Lawrence, FX Strategist at Rabobank, on US economy and USD
Moreover, we have seen consistent strength within the Euro and the Japanese Yen, which have weighed significantly on the Greenback. That being said, we do think that we are likely to see another round of global risk aversion, and that safe-haven bid is likely to see money going back into dollars.>>
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Press Review
Bloomberg
Could Yuan Slide Impact Fed Policy Decisions?
JPMorgan Asset Management Fixed Income Specialist Oksana Aronov discusses the yuan and Fed policy.
Market Research
Relative Currency Strength and Volatility: USD
The USD Index started the week with a slide below the baseline and only managed to recover on Wednesday. Before that, the measure dropped to the week’s low twice, losing ground against the background of the RBA minutes release in the morning and then again in the afternoon. On Wednesday, the index enjoyed its most notable increase, as it surged more than 0.7 points after the FOMC minutes release.
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Dukascopy Bank Sentiment Index
April release
Academia experts were more positive on economic growth outlook for the European region over the last month. In the course of March, the near-term sentiment index stood at 0.40 points, indicating a strongly negative Europe’s economic performance due to a number of threatening economic and political factors, compared to the data registered in April, which saw the six-month gauge jumping to 0.49 points. In the longer term, experts remained quite optimistic, revising upwards their three-year economic outlook.
Global Stock Market Review
Japanese shares closed purely green
Asian stock markets managed to rise on Friday, missing any real market driver as the session was calm. Japanese stocks, in turn, were boosted by a slightly weaker yen. Meanwhile, Japan reported a robust 1.7% annualized rate of growth in gross domestic product in the first quarter of the year. The extra day gained is believed to have accounted for about 1% of the 1.7% growth rate. 
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Commodity Overview
Base Metals Lower on Stronger Greenback
Aluminum led gains on Friday, hitting its highest mark in a week, as investors closed out short positions ahead of the weekend; however, the metal paired gains towards the end of the session on Friday on the back of a plunge in other metals amid a firmer Greenback. Three-month metal’s contract added 0.1% on the London Metal Exchange by the end of trade, finishing at $1,547 a tonne after touching a level of $1,577, a mark not seen since early May. In light of the increase posted on Friday, aluminum managed to advance over the course of the whole trading week, closing ...% higher and snapping the three-week losing streak on the LME.
Trade Pattern Idea
GBP/AUD 4H Chart: Channel Up
GBP/AUD has been moving upwards in a tight trading range, therefore leaving a high risk of break outs in any direction. Now the outlook is maintaining bullish bias, as both trend-lines of the pattern remain intact.>>

EUR/SGD 1W Chart: Channel Down
At the moment EUR/SGD is bullish, as the currency pair is guided north by the trend-line that was established back in 2015, currently at 1.53.>>
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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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