Forex Market: EUR/HKD daily trading forecast

Yesterday’s trade saw EUR/HKD within the range of 9.9009-9.9722. The pair closed at 9.9070, losing 0.52% on a daily basis.

At 6:25 GMT today EUR/HKD was down 0.21% for the day to trade at 9.8875. The pair broke the first key weekly support and touched a daily low at 9.8855 at 6:15 GMT.

Fundamental view

Euro zone

Italian retail sales

Seasonally adjusted retail sales in Italy probably increased 0.2% in July compared to June, according to the median forecast by experts, after in June the index of sales had a flat performance, while in May sales dropped 0.7%. Annualized sales probably decreased 0.7% in July, after in June the index dropped 2.6%, or the most considerable decline since March.

The index reflects the change in the total value of inflation-adjusted sales by retailers in the country and provides key information regarding consumer spending trend. However, as retail sales in Italy tend to be seasonal and volatile, a larger than expected rate of increase would have a limited bullish effect on the euro. The National Institute of Statistics (ISTAT) is to release the official data at 8:00 GMT.

Draghi remarks

On Wednesday European Central Bank President Mario Draghi said that the financial institution will continue the current policy course of low rates for as long as it takes for the rate of inflation in the Euro region to approach the 2% inflation target, providing price stability. Draghi also stressed on the need for structural reforms in some of the member states in the region.

Hong Kong

The deficit on Hong Kongs Balance of Trade probably widened to 43.3 billion HKD during August, according to the median forecast by experts, from a deficit of 42.13 billion HKD, registered in July. Total exports of goods rose 6.8% in July compared to the same month a year ago to 326.2 billion HKD, following a year-on-year increase of 11.4% in June. The value of re-exports surged 6.8% to 321.0 billion HKD in July, while the value of domestic exports increased 7.0% to 5.1 billion HKD. Total imports of goods rose 7.5% in July compared to the same month a year earlier to 368.3 billion HKD, following a year-on-year increase of 7.6% in June, according to data by the Census and Statistics Department.

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 has been producing deficits on its trade balance since late 1990s, as imports rose at a faster rate than exports. The country exports primarily electronics and household electrical appliances, clothing and footwear, textile yarn and fabrics, while its imports include machinery and equipment, manufactured goods, mineral fuels and food.

In case the trade balance deficit widened more than anticipated, this would have a bearish effect on the local dollar. Hong Kongs Census and Statistics Department will release the official numbers at 8:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 9.9267. In case EUR/HKD manages to breach the first resistance level at 9.9524, it will probably continue up to test 9.9980. In case the second key resistance is broken, the pair will probably attempt to advance to 10.0238.

If EUR/HKD manages to breach the first key support at 9.8812, it will probably continue to slide and test 9.8554. With this second key support broken, the movement to the downside will probably continue to 9.8099.

The mid-Pivot levels for today are as follows: M1 – 9.8327, M2 – 9.8683, M3 – 9.9040, M4 – 9.9396, M5 – 9.9753, M6 – 10.0109.

In weekly terms, the central pivot point is at 9.9855. The three key resistance levels are as follows: R1 – 10.0302, R2 – 10.1165, R3 – 10.1612. The three key support levels are: S1 – 9.8992, S2 – 9.8545, S3 – 9.7682.