Forex Monthly Overview – September 2014 (EURUSD, GBPUSD, USDCAD)

The month of August saw the Greenback gaining momentum against the backdrop of an improved Q2 GDP data as speculation for the Fed’s rate hike continues to fuel the markets. With the QE tapering expected to end by October, markets are poised to subtle clues from the Fed on the timeline of an interest rate hike.

Most of the USD pairs lost ground, including the strong Sterling which has been in a downward spiral since July. The month of September is rife with lots of economic news being released which could bring quite some volatility into the currency markets.

The un-factored risks do come in the form of geo-political events from Ukraine/Russia and the ISIS crisis in the Middle-East

Below is the monthly overview of the major pairs in the FX Markets.

EURUSD Monthly Outlook & Technicals

• The key risks to EURUSD comes from speculation on the ECB’s QE-style ABS purchase program
• Markets are expecting to either see the ECB’s QE being announced at this month’s ECB’s press conference, or at the very least expect to hear from Draghi his plans on a Eurozone QE.
• Germany seems to be clearly unhappy with the ECB’s plans of QE, going by the rhetoric of German finance minister Wolfgang Schaeuble and the Chancellor Merkel
• A continued bearish run is likely to see some pullbacks to the downtrend, providing a good opportunity to sell the corrective rallies
• The monthly candle closed on a very bearish sentiment, while the gap at 1.3241 is yet to be closed.

EURUSD Monthly Pivots

EURUSD Weekly Pivots

GBPUSD Monthly Outlook & Technicals

• The British pound lost steam after enjoying a great rally through the second quarter of this year. Considering the rally, the recent bearish moves are likely to be seen as a correction at this point in time
• The week starts off with various PMI data from the UK being released. In terms of monetary policy, it was for the first time in August that the BoE was divided in its policy outlook, which was hitherto unanimous in their decision to keep interest rates unchanged.
• Markets will be clearly looking to September’s MPC minutes for any further dissent within the BoE
• Unemployment data, which has been causing a dent in the BoE’s rate hike plans will also be closed watched for any signs of improvement in the labour market slack, besides inflation which edged lower to 1.6%.
• Markets will also be looking to the BoE’s inflation report hearing scheduled for 9th September and the quarterly bulletin

GBPUSD Monthly Pivots

GBPUSD Weekly Pivots

USDCAD Monthly Outlook & Technicals

• Bank of Canada is expected to remain neutral in this month’s monetary policy, thus keeping interest rates unchanged
• Comparing to the Fed’s monetary policy tightening, the Canadian Dollar is likely to be weaker against the Greenback
• The Canadian dollar was strong against most of its peers last month, especially against the Euro, while trading mixed with the US Dollar. Friday’s GDP monthly data saw the Canadian economy grow by 0.3%, modestly lower from previous month’s upward revision of 0.5% growth. The actual print was however better than the median estimates of 0.2%
• USDCAD Weekly candlesticks show a bearish engulfing pattern along with the formation of an outside bar, which could see some weakness in this pair

USDCAD Monthly Pivots

GBPUSD Weekly Pivots