Forex Market: USD/BGN daily trading forecast

Yesterday’s trade saw USD/BGN within the range of 1.4579-1.4658. The pair closed at 1.4635, losing 0.04% on a daily basis.

At 8:07 GMT today USD/BGN was up 0.03% for the day to trade at 1.4638. The pair touched a daily high at 1.4651 at 6:00 GMT.

Fundamental view

United States

The number of people in the United States, who filed for unemployment assistance for the first time during the week ended on August 8th, probably increased to 294 000 from 289 000 in the prior week. This is a short-term indicator, reflecting lay-offs in the country. In case the number of initial jobless claims increases more than projected, this would have a bearish effect on the greenback. The Department of Labor is to release the weekly report at 12:30 GMT.

The number of continuing jobless claims dropped to the seasonally adjusted 2 518 000 during the week ended on August 1st, from 2 539 000 in the previous week. This indicator represents the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.

Bulgaria

Annualized Gross Domestic Product in Bulgaria probably expanded 1.5% during the second quarter of the year compared to the same period a year ago, according to the median estimate by experts. Nations economy grew at a pace of 1.2% during Q1. Accelerated growth usually provides support to the local currency.

On a quarterly basis, Bulgarian economy probably grew at a pace of 0.16% during Q2, following a growth of 0.3% in the first quarter of the year. The National Statistical Institute (NSI) is to release the official GDP figure at 8:00 GMT.

At the same time, the rate of unemployment in the country probably fell to 12.4% during the second quarter of the year from 13.0% in Q1. The unemployment rate in the country was at a record low of 5% during the fourth quarter of 2008.

This indicator represents the percentage of the eligible work force that is unemployed, but is actively seeking employment. It reflects overall economic state in the country, as there is a strong correlation between consumer spending levels and labor market conditions. Low rates of unemployment are accompanied by increased spending, which causes a favorable effect on corporate profits and also leads to overall growth acceleration. Therefore, lower than projected rates of unemployment usually support demand for the national currency. The NSI will release its official report at 8:00 GMT.

The deficit on nations current account probably widened to 83.90 million EUR in June from 15.20 million EUR in May.

Bulgarian current account produced a record-high deficit at the amount of 1167.40 million EUR in December 2007.

The current account reflects the difference between a nation’s savings and its investments. It is the sum of the balance of trade, net current transfers (cash transfers) and net income from abroad (earnings from investments made abroad plus money sent by individuals working abroad to their families back home, minus payments made to foreign investors).

A current account surplus indicates that a country’s net foreign assets have increased by the respective amount, while a deficit suggests the opposite. A country with a surplus on its current account is considered as a net lender to the rest of the world, while a current account deficit puts it in the position of a net borrower. A net lender is consuming less than it is producing, which means it is saving and those savings are being invested abroad, or foreign assets are created. A net borrower is consuming more than it is producing, which means that other countries are lending it their savings, or foreign liabilities are created. Therefore, a contracting surplus or a widening deficit on the current account of a nation usually has a bearish effect on its currency.

The Bulgarian National Bank is expected to release the official data at 9:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.4624. In case USD/BGN manages to breach the first resistance level at 1.4669, it will probably continue up to test 1.4703. In case the second key resistance is broken, the pair will probably attempt to advance to 1.4748.

If USD/BGN manages to breach the first key support at 1.4590, it will probably continue to slide and test 1.4545. With this second key support broken, the movement to the downside will probably continue to 1.4511.

The mid-Pivot levels for today are as follows: M1 – 1.4528, M2 – 1.4568, M3 – 1.4607, M4 – 1.4647, M5 – 1.4686, M6 – 1.4726.

In weekly terms, the central pivot point is at 1.4604. The three key resistance levels are as follows: R1 – 1.4649, R2 – 1.4712, R3 – 1.4757. The three key support levels are: S1 – 1.4541, S2 – 1.4496, S3 – 1.4433.