Forex Market: EUR/HKD daily trading outlook

Friday’s trade saw EUR/HKD within the range of 10.3059 – 10.2475. The pair closed at 10.2621, falling 0.28% on a daily basis.

At 8:14 GMT today EUR/HKD was down 0.37% for the day to trade at 10.2246. The pair touched a daily low at 10.219 at 8:00 GMT.

Fundamental view

Germany

CESifo Group released its Business Climate Index today at 8:00 GMT, as well as its Current Assessment and Business Expectations indicators. The latter two are sub-indexes of the Business Climate Index. The Current Assessment gauges current business conditions in Germany, without taking into account future projections, while the Business Expectations index rates anticipations for the next six months.

Logically, among the three, the general Business Climate index has most weight, being eyed as an early indicator of current conditions and future expectations altogether. Prepared by CESifo Group, it is compiled from surveys conducted among 7 000 enterprises regarding their business assessment and short-term planning. A rise in the readings, and especially better-than-expected values, are seen as bullish for the euro and vice versa.

The IFO Current Assessment index registered at a worse-than-expected 111.1 in August from 112.9 in July, while the IFO Expectations index fell to 101.7 from 103.4 a month earlier. The composite Business Climate Index slid to 106.3, the lowest in 13 months, from 108.0 in July, trailing projections for a drop to 107.0.

Hong Kong

At 8:30 GMT Hong Kong’s Census and Statistics Department is to report on nation’s trade balance in July. In June, Hong Kong registered a trade deficit of 43.105 billion HKD, or an increase from 42.350 billion HKD in the prior month and following a record high deficit figure of 55.290 billion HKD in April. In June exports rose at an annualized pace of 11.4% to reach 309.2 billion HKD, while imports increased 7.6% to 352.3 billion HKD.

The trade balance, as an indicator, measures the difference in value between country’s exported and imported goods and services during the reported period. It reflects the net export of goods and services, or one of the components to form country’s Gross Domestic Product. Generally, exports reflect economic growth, while imports indicate domestic demand. Hong Kong’s main exports include electronics and household electrical appliances, clothing and footwear, textile yarn and fabrics, toys and games, watches. Imports consist mostly of machinery and equipment, manufactured goods, mineral fuels, food.

In case the trade balance deficit continues to widen, this would generally have a bearish effect on the Hong Kong dollar.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 10.2718. In case EUR/HKD manages to breach the first resistance level at 10.2962, it will probably continue up to test 10.3302. In case the second key resistance is broken, the pair will probably attempt to advance to 10.3546.

If EUR/HKD manages to breach the first key support at 10.2378, it will probably continue to slide and test 10.2134. With this second key support broken, the movement to the downside will probably continue to 10.2378.

The mid-Pivot levels for Monday are as follows: M1 – 10.1964, M2 – 10.2256, M3 – 10.2548, M4 – 10.2840, M5 – 10.3132, M6 – 10.3424.

In weekly terms, the central pivot point is at 10.2984. The three key resistance levels are as follows: R1 – 10.3493, R2 – 10.4365, R3 – 10.4874. The three key support levels are: S1 – 10.2112, S2 – 10.1603, S3 – 10.0731.