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Dukascopy Forex Overview: 31-05-2016 - Afternoon

Dukascopy Bank analytic desk report
Published: 31/05/2016 14:54
Community Forecast
Jignesh on EUR/USD
“Last week the Fed instilled confidence in the markets in regards to the rate hike path. Market participants may have underestimated the Fed's intentions. All eye will be on the end of the week's Q1 GDP number which has high expectations to come in positive. The Dollar may be able to extend it's run by posting a 4th week of gains if the number comes in positive”.
Dukascopy Technical Analysis

EUR/JPY recovers from 122.50
“When they [Japanese companies and investors] see the yen weaken, they may use that as an opportunity to repatriate the earnings.”
- JPMorgan (based on CNBC)
EUR/JPY keeps respecting the recently stablished up-trend, implying that near-term sell-offs are to be limited by 122.80 yen. Meanwhile, the immediate resistance is at 124.45/24, represented by the weekly R2 and 55-day SMA. 
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Dukascopy Fundamental Analysis
Canada’s current-account deficit expanded to –16.8B in the first quarter due to a decline in crude-oil prices
According to Canada’s Statistics Bureau, the country’s current-account deficit widened during the first three months of the current year to 16.77 billion Canadian dollars or $12.86 billion. The following release was largely in line with the market consensus for a $16.8 billion deficit, according to economists from Royal Bank of Canada. Meanwhile, the previous quarter’s deficit was revised higher to $15.71 billion.
Expert Commentary
"While the BoC kept rates unchanged last week, they did express a more optimistic view than expected despite the impact of the Alberta wildfires."
- Paul Rosenberg, Market Analyst at www.economiccalendar.com, on USD/CAD
In light of the fires, the Central bank believes significant weakness could be felt in Q2, however, a strong rebound is expected quickly thereafter. The upbeat tone of the BoC spurred selling in USD/CAD.>>
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Press Review
Bloomberg
Should Investors Be Wary of Emerging Markets?
UBS Global Emerging Markets Strategy Head Geoff Dennis weighs in on the currency markets and discusses his outlook for emerging markets.

 

Market Research
Relative Currency Strength and Volatility: USD
The Greenback was rather calm in the past week and fluctuated in a range between -0.5% and +0.5%. On Monday, the US manufacturing PMI pushed the index up, and it reached the 100.27 level. However, the momentum was soon lost and the index reduced to the 100 mark just a few hours later. On Tuesday, the gauge started to rise early in the morning, and gained 0.42% against the background of the German ZEW survey report.
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Dukascopy Bank Sentiment Index
April release
Experts’ sentiment towards the Asia-Pacific region remained undecided, as the preponderance of experts saw the economy either expanding or reaching the bottom of the business cycle curve in the nearest future, most probably on the back of unclear EM performance and other external factors such as oil price instability. Nevertheless, the region’s performance was still expected to gain a strong momentum in the next three years.
Global Stock Market Review
European shares posted major gains
European stocks rallied on Friday in vigorous volumes, extending their new-year gains amid expectations of a pick of a rate hike from the US Federal Reserve at either its June or July meeting. Meanwhile, Greece will avoid another debt crisis with upwards of 10 billion euro in financial aid from the Euro zone. The money will be disbursed in time for Greece to make its next round of debt payments, which come due in July.
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Commodity Overview
Oil Up on Unexpected Supply Disruptions
WTI oil futures for delivery in July slid on Friday, closing down 15 cents, or 0.3%, to end the week at $49.33 a barrel. Earlier in the week, Nymex crude oil prices soared to $50.21, the highest level since October 9 last year. In the wake of that, on the New York Mercantile Exchange crude oil futures for July delivery added 1.9%, or 92 cents, over the course of the whole trading week, marking the third consecutive weekly advance, as unplanned oil supply disruptions in France, Nigeria, Venezuela and Canada weighed.
Trade Pattern Idea
CAD/CHF 4H Chart: Channel Up
While in the long run the CAD/CHF cross has just confirmed the triangle pattern, in the short-term it is trading to the upside.>>

AUD/CHF 1W Chart: Channel Down
The Australian Dollar has been recovering since last year’s August, but now the outlook on AUD/CHF is heavily bearish.>>
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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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