Aud, Kiwi steady ahead of today’s data.
The dollar is a little weaker today as the markets digest last week’s strong U.S. employment report, with focus now turning to Wednesday’s FOMC minutes and with the markets wondering when the Fed is likely to begin raising U.S. interest rates. Today could be rangebound, with not too much to provide inspiration, although we do get the German Current Account & Trade Balance and also the UK Industrial & Manufacturing Production, which might provide some direction for Cable. Early Asia will get the NZ Business Confidence and then from Australia, the NAB Business Confidence/Conditions.
EUR/USD: 4 Hour
USD/JPY: 4 Hour
GBP/USD: 4 Hour
USD/CHF: 4 Hour
AUD/USD: 4 Hour
NZD/USD: 4 Hour
The dollar is a little weaker today as the markets digest last week’s strong U.S. employment report, with focus now turning to Wednesday’s FOMC minutes and with the markets wondering when the Fed is likely to begin raising U.S. interest rates. Today could be rangebound, with not too much to provide inspiration, although we do get the German Current Account & Trade Balance and also the UK Industrial & Manufacturing Production, which might provide some direction for Cable. Early Asia will get the NZ Business Confidence and then from Australia, the NAB Business Confidence/Conditions.
EUR/USD: 1.3606
The dollar, having drifted higher in Asia, as the market continued to digest last week’s US jobs numbers, later turned around and drifted back, to sit just above 1.3600 against the Euro, in what was a fairly listless day’s trade.
There was little data out, although the German industrial production for May was weak (-1.8% vs 0.0% exp) and kept the Euro under pressure early on, where it reached a session low of 1.3575 before recovering as the US$ weakened. Today could be another rangebound one, with little data to provide volatility, but with the focus now turning towards tomorrows FOMC Minutes.
Technically, we now have a minor double bottom at around 1.3575 (Thursday low 1.3573) and the Euro is sitting right on the daily Kijun which looks as though it will continue to be a pivot. For the time being the short term charts have now found some positive momentum and I suspect the downside is somewhat limited, with the first support to be found once again at the minor Fibo support at 1.3583 (61.8% of 1.3512/1.3700), ahead of 1.3575. Beyond there would head towards 1.3557 (76.4%) a break of which would head to the greater degree of Fibo support at 1.3518 (38.2% of 1.2754/1.3995) but which looks unlikely to be seen today. If wrong, a break lower would see good bids ahead of the post-ECB spike low at 1.3502. The base of the rising wedge now lies at around these levels as well, so if we see 1.3500 I think I would be squaring up short positions at the first attempt to break through it, as it should be strong support. If wrong on this, a break of the wedge base would hint at a further move south towards 1.3415 (200 WMA), 1.3370 (50% pivot % of 1.2754/1.3995) and then to 1.3300 (100 WMA) and 1.3294 (7 Nov ’13 low).
On the topside, we are approaching minor descending trend resistance at 1.3610, a break of which would see a test of the 100 HMA at 1.3625 and then the 200 HMA at 1.3635. Above here may prove a bit tricky, but could head up to 1.3650 (61.8% of 1.3700/1.3573) and possibly to 1.3670 (76.4%). Further out, the Euro would find sellers at 1.3700, a break which would see a run up towards 1.3730/37 (100 DMA/daily cloud base), which should be solid resistance although a break of this level would head on towards 1.3803 (61.8%).
More likely, ahead of the FOMC Minutes, some more trade close to current levels would not surprise, and using 1.3600 as a pivot, within 1.3580/1.3630 seems to make sense.
Economic data highlights will include:
German Current Account, Trade Balance, US Consumer Credit
Meta Trader – AxiTraderEUR/USD: 4 Hour
USD/JPY: 101.87
Having tried the topside early on in Asia, reaching 102.19, the dollar has turned lower after a BOJ official said that further Yen weakness might be undesirable. Coming on top of recent BOJ comments that there is currently no need for any further easing in Japan, the Yen began to find its feet, with the dollar falling to 101.78.
On the downside, minor support is still to be seen at the day’s lows, where 101.75 (200 DMA/daily Tenkan) will find strong buyers ahead of the daily cloud base at 101.67. Below here would see a run back towards 101.57 (61.8% of 100.82/102.80) and 101.50 and then to the recent low of 101.23. Doubtful.
On the topside, we need to regain 102.00, above which would head back to the strong resistance at around 102.20 (61.8% of 102.80/101.23/100 DMA), but above which, we could see a run up to 102.40 (76.4%) and 102.47 (daily cloud top). The next resistances would be seen at the 4 June 102.80 top, a break of which leads back to 103.01 (2 May top) but appear out of touch for the time being.
The low volatility looks likely to continue today, possibly until the FOMC minutes early Thursday (Asia time), which will be followed up later in that session by the BOJ meeting. For today, use 101.60/102.00 as a guide.
Meta Trader – AxiTraderUSD/JPY: 4 Hour
GBP/USD: 1.7128
Sterling had a reasonably steady session as it consolidated its recent gains, trading a 1.7110/66 range, but so far holding above the rising trend support.
We could see some action today, with the Industrial & Manufacturing Production both due, but overall Cable still appears set to test the higher ground because of the existing interest rate differentials. This would apply particularly against the Euro, where the cross made another trend low at 0.7915 today, before profit taking took it a little higher, to where it currently sits at 0.7945.
A strong data reading today may propel Cable back towards the recent high at 1.7180 beyond which would head towards the 1.7200 barrier. The 4 hour charts are pointing lower though, so I would be a bit surprised to see it reach 1.7200 today and there will be plenty of option related selling interest ahead of it to protect the barrier from being knocked out.
On the downside, the rising trend support now arrives at 1.7110, a break of which would see some bids/stops at around 1.7100, but below which would head back to the previous 1.7060 peak. Below there would head back into the congestion of last month but there is no major support until 1.7000 and then at 1.6975 (23.6% of 1.6692/1.7062) although this looks unlikely to be seen of a while. If wrong, a break of this level would head back to the June 25 low at 1.6950, below which, would see 1.6921 (38.2%).
I think we may need to take a look below 1.7100 at some stage and would therefore use 1.7085/1.7150 as a guide today, but it will be the UK data that decides, beyond which the market will begin to focus on Thursday’s BOE meeting. (No changes expected).
Economic data highlights will include:
UK, Industrial & Manufacturing Production, GDP Estimate
Meta Trader – AxiTraderGBP/USD: 4 Hour
USD/CHF: 0.8933
The dollar almost made it up to the top of the channel today, reaching a peak of 0.8958 before running out of steam and heading back to where it started, currently near session lows at 0.8933.
Another narrow range looks likely today with the overall view being that the market will remain on hold until the FOMC minutes, which could see the dollar come under pressure once again if Janet Yelled remains overly dovish, despite the improving jobs data.
On the downside, a break of the session lows would suggest a run back towards 0.8900 and then possibly to 0.8885, with stronger support to be found at the 100 DMA at 0.8870. While I don’t think we are headed below here in the next few sessions, a break would see the chance of a run back to last week’s low at 0.8855, below which, look for further support at 0.8830/40.
On the topside, which looks a little less likely for the coming session, the top of the channel is now at around today’s session high, a break of which would hint at a run back up towards the previously troublesome 0.8995/0.9005 area.
For today, use 0.8900/50 as a guide.
Economic data highlights will include:
Swiss CPI
Meta Trader – AxiTraderUSD/CHF: 4 Hour
AUD/USD: 0.9375
The Aud continues to recover from its post-NFP selloff, when it reached 0.9328, and is now stabilising back near the rising trend line that previously acted as support – now resistance – and assisted higher today by the generally soft tone in the US$.
While the daily charts still look heavy following the sharp selloff from 0.9505 last week, the short term charts do look a bit more positive, so we could be in for a squeeze back towards 0.9400. It will be the NAB Business Confidence/Conditions that dictate direction, but if we can continue higher, the points to watch will be at 0.9380 (minor) and then at 0.9390 (100 HMA). Above 0.9400, where good selling interest is reportedly to be seen, the 200 HMA is at 0.9406. I doubt we head much above here today, but if wrong 0.9420 and then 0.9435 (61.8% of 0.9505/0.9328) will be targets.
On the downside, the 50% pivot of 0.9210/0.9505 is at 0.9355. A break of this would find minor bids at 0.9335 ahead of last week’s 0.9328 low and 0.9320 (61.8% of 0.9220/0.9505/18 June low). A break of this would most likely see an acceleration down through 0.9300 to 0.9275 (76.4%), but not for a while.
We have the Consumer Confidence data tomorrow and the Jobs data on Thursday. Neither of these look likely to be anything special, so the overall strategy of selling into short term strength would appear to make sense.
Use 0.9350/0.9400 as a guide.
Economic data highlights will include:
NAB Business Confidence/Conditions,
Meta Trader – AxiTraderAUD/USD: 4 Hour
NZDUSD: 0.8760
The Kiwi had a choppy session, falling early to a low of 0.8713 before recovering to finish the session near the high of 0.8767.
We have the Business Confidence data coming up today and the Business PMI tomorrow and if these continue to perform well, could be the catalyst to send the Kiwi up to and beyond 0.8800 as we approach the RBNZ meeting on July 24 at which another hike is generally expected.
Ahead of 0.8800, the points to watch are at 0.8775 (minor), above which would see another run up to last week’s 0.8793. Beyond 0.8800, we may head towards the July 2011 high at 0.8842 and eventually to the top of the long term channel, now at around 0.8900, where, if long, I would be taking profit and possibly going short.
On the downside, the daily Tenkan at 0.8726 continues to provide the initial support, a break of which would head back to the session low (0.8713) and to 0.8700. A break of this would see a deeper correction towards 0.8660(25 June low) but currently looks unlikely.
Use 0.8740/85 as a guide, but the direction will come from the data.
Economic data highlights will include
NZ Business Confidence
Meta Trader – AxiTraderNZD/USD: 4 Hour
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