Forex Monthly Outlook – August 2017

GBPUSD Looks Bullish

It was a classic bullish month for the GBPUSD in July after seemingly down in the dumps for most of the time in the month of June. Of course, it did not utilise the weakness in the dollar as much as the euro did but still it was enough for the pound bulls to cross some important hurdles along the way which has now helped them to look ahead to the month of August with a lot of hope for the bullishness to continue. Unlike the euro, the move up in this pair has been purely due to the dollar and the pound bulls would now expect the pound to respond and pick up the pieces and run as fast as it can in the coming month.

The pair started the month in a weak manner as the dollar held steady but as the month went on, it was clear that the dollar was on the backfoot. Despite the rate hike, the incoming data from the US did not improve through the entire month and this kept the pressure on the dollar. Also, the Fed did not seem to care too much about the weakness in the dollar and that was a signal to the markets to sell the dollar even more. The Trump administration also had its share of problems which put pressure on the dollar and this helped the GBPUSD pair to climb up.

It used the 1.28 region as the launchpad to push itself towards the 1.3030 region and once it was through that region, it used that as the support to push through and end the month close to the 1.32 region. In the upcoming month, it looks good for pushing through 1.34 and maybe even more as the BOE has signalled its intention to hike rates. Some part of the market expects it to happen in August but even if it doesnt, it should come along quite soon and this is likely to keep the GBPUSD pair buoyed.

USDJPY Set to be Choppy and Weaken

The USDJPY pair had a choppy and volatile month with no specific direction. Of course, the pair did close lower for the month but with the strong support nearby at 110, it remains to be seen whether this can be used as the launchpad for pushing higher in the coming month of August.

The pair began the month of July pretty strongly on the back of dollar strength and also due to the rate hike from the Fed and it also made a brief move towards the 115 region during this period. But that was as high as it got during the course of the month as the dollar weakened across the board and the pair fell through. The USDJPY did not manage to recover during the month and though there were semblances of a bounce at various points of the month, the downtrend was clear for everyone to see and the pair weakened and closed the month much lower at the 110 region.

The pair does look weak but the fact that it is close to the 110 region should lend it some support in the short term. The first week of the month is likely to be crucial as we have loads of data coming in from the US, including the employment data. If this data continues to be weak, then we are likely to see the 110 region broken and then there would not be much to save the dollar. We would then be looking at 108 and lower during the month of August.If the data comes in stronger, then we should see a bounce which would see it move back towards the 115 region during the course of August.

AUDUSD Finally Breaks Through

It was a month when the Aussie bulls finally managed to make a statement. The paid had spent quite a long time around the 0.75 region during the earlier weeks consolidating and ranging. It was put under pressure by the low gold prices and for a brief amount of time, it looked like going under as the gold prices fell towards the 1200 region. This was also the time of the rate hike by the Fed and the dollar being strong and it looked pretty difficult for the AUDUSD pair.

But then the recovery began as the dollar floundered. The gold prices managed to recover from their lows and closed the month at their highs. The dollar was beaten black and blue across the board and a combination of these 2 factors helped the Aussie to recover and close just below the 0.80 region for the month. It did close near its highs which means that it is likely to stay bullish in the coming month.

Of course, the region around 0.80 is likely to provide some resistance and see some selling in the early part of the month but once that is crossed, then we should see a smooth path for the Aussie towards the 0.82 mark and further. Like the other pairs, the first week is likely to be key for this pair as well and a strong showing from the dollar is likely to lead to some correction in the AUDUSD pair but any such correction will be bought into as the trend seems to be strong for now.