Aud firm after Capex & ahead of Private Sector Credit. Kiwi rangebound ahead of Building Permits.
Soft EU data and the return of Russia/Ukraine headlines dominated European trade ahead of the US GDP, which came in firmer than expected and has helped to underpin the dollar in choppy but generally rangebound trade. WTI headed higher on geo-politcal worries and oversold conditions, as did Gold, although it eventually gave up its gains and returned to the range. Today’s focus will be on the EU CPI reading and on the possibilities of what Mario Draghi may announce at next Thursday’s ECB Meeting. Ahead of that, it is a big day of Japanese data, also featuring the CPI, which could cause some ripples for the Yen. Otherwise, being month end – and a long weekend in the US (Labor Day), – it looks like being a day of book/position squaring. Have a good weekend.
EUR/USD: 1.3180
Generally soft EU data and the stronger US figures, where the Q2 GDP was revised up to 4.2%, from the initial estimate of 4.0%, beating expectation of 3.9% has once again underpinned the dollar today.
A soft reading from the EU CPI (exp 0.3%YY, Core 0.8%YY) later today will place further pressure on the downside, as thoughts turn to next week’s ECB meeting and the increasing prospect of Mario Draghi indicating some sort of easing in attempting to spark some sign of life into the EU economy.
Technically, the Euro did make an attempt to fill the Monday opening gap to 1.3235 , reaching 1.3220 today, but then came unstuck when headlines began to emerge of increased tensions between Ukraine & Russia, and it quickly dived towards 1.3170 and later saw a low of 1.3159 after the US data release.
All up, the recent range is pretty much intact, with the 1.3150 option barrier still untouched although a low CPI reading would send the Euro lower, giving it a good workout. The next target to watch, below 1.3150, would be 1.3104 (6 Sept ’13 low), a break of which would head towards the Fibo level (76.4% of 1.2754/ 1.3993) at 1.3045, which if/when seen should prove strong support. The 4 hour charts are still unwinding their O/S condition and for the time being if we do head lower, I would imagine that ahead of the weekend, then 1.3100 or thereabouts should hold it.
If on the other hand, the CPI improves, which looks doubtful, given yesterday’s individual readings (Germany; 0.00%) then the Euro will squeeze back above 1.3200 and possibly to the session high of 1.3220. Beyond this would hint at a return to 1.3235/40 which would close the week’s opening gap lower, and is where the minor descending trend resistance currently lies. Above here would head towards 1.3270 and then possibly to 1.3300/15 where strong resistance is seen, this being the base of both the monthly (1.3300) and weekly cloud (1.3315).
Wait for the EU data, which will then be followed by a round of secondary US data, but overall a choppy day, confined within 1.31/1.32 would not surprise. It is month-end and a long weekend in the US so position squaring will most likely be the name of the game.
Economic data highlights will include:
EU CPI, Unemployment, Core Personal Consumption/Expenditure Index, Personal Income/Spending, Rts/Michigan Consumer Sentiment Index
Meta Trader – AxiTrader EUR/USD: 4 Hour
USD/JPY: 103.75
The dollar chopped around for much of the day, but headed lower as safe haven considerations once again raised their head after Russia/Ukraine came back into the picture, underpinning the Yen in Europe. The dollar swiftly headed to a low of 103.55, where it found support from the 200 HMA, where it bounced as the headlines faded, with the dollar assisted by the firm US data.
There is a raft of Japanese data due today, with the focus likely to be on the CPI, but with the BOJ likely to stay on hold, as far as policy is concerned, for the next couple of months at least, the reaction today is likely to be muted.
Technically, the momentum does still appear mildly to the downside and a break of 103.50 would then open up the chance of a test of the daily Tenkan/ 38.2% of 101.50/104.26 at 103.25, below which would then head lower, towards 103.00.
On the topside, there is minor resistance at 103.90, which could cap it again today. If wrong, a break of 104.00 would allow a run towards yesterday’s session high at 104.15. I doubt we are going to make a new trend high above 104.26 for a while, but if wrong look for a run up towards 104.50.
Further out, as we said before, a break of 104.50 would head on towards 105.00, and beyond that, I suspect that we are eventually headed back up towards the 200 month MA at 106.50.
For today look for another 103.50/103.90 day, with a chance of looking at 103.35/25. It is likely to be flows in Eur/Jpy that influence the action today after the EU CPI release, so keep an eye on the cross.
Economic data highlights will include:
Japan CPI, Unemployment, Industrial Production, Retail Trade
Meta Trader – AxiTrader USD/JPY: 4 Hour
GBP/USD: 1.6585
A short squeeze in the Euro helped Cable to head higher in Europe, triggering stops and taking it up to 1.6613 before a quick reversal back into the range, where it has chopped around ever since.
More of the same looks likely today, with the price action likely to be dominated by flows in EurGbp following the release of the EU CPI, where further medium term gains for Sterling look likely.
The 200 HMA capped the gains for Cable today and will again be a hurdle, now sitting at 1.6600. Above the 1.6613 session high though would open the chance of a run up to the top of the descending channel, now at 1.6650 and then to 1.6685 (23.6% of 1.7191/1.6535).
On the downside, 1.6650 and 1.6535 are the still immediate supports and I am doubtful of heading below here today. If wrong, look for a run towards 1.6500 and then eventually towards the 24 March low at 1.6462.
Look for a similar session, with 1.6550/1.6610 being a guide.
Meta Trader – AxiTrader GBP/USD: 4 Hour
USD/CHF: 0.9150
US$Chf ran down towards the support above 0.9100, reaching a low of 0.9125 when the Euro was squeezing higher, before a bit of a bounce back towards 0.9150/60, where it is closing the NY session.
The shorter term charts have now more or less unwound their overbought condition and appear to have flattened out somewhat, and it could be a day of rangebound trade, although the Chf will be heavily influenced by the flow on price action from the EU CPI later today.
A soft CPI, taking the Euro lower would have the Chf under pressure once again, with the chance of revisiting yesterdays 0.9184 high, above which would open up the chance for a run up towards 0.9200 and to the November 2013 high at 0.9249.
The downside will find support now at 0.9125, below which would see a return towards 0.9115 and 0.9100(daily Kijun/Tenkan) although I don’t see the dollar below here today. If wrong, further losses could take see an acceleration to the downside with the first stop being at around 0.9060.
If Russia/Ukraine takes another turn for the worse, the Chf will be a beneficiary of safe haven buying, and ahead of the weekend, I cannot see it weakening a great deal, …just in case….
Meta Trader – AxiTrader USD/CHF: 4 Hour
AUD/USD: 0.9355
The improved Capex yesterday sent the Aud up to a high of 0.9373 where we now have a double top with the 6 Aug high, before it turned sharply lower as the Ukraine/Russia headlines hit the wires, causing a run for cover, particularly against the Yen, pushing Aud/Jpy lower. The Aud moved quickly back down to 0.9340, and has traded above here in choppy consolidative trade ever since.
In heading to its highs, the Aud did breach the base of the daily cloud and the daily Kijun at 0.9355, but it failed to hold onto its gains and is closing the session sitting right at this level. It needs to make further gains reasonably quickly as the 4 hour charts will soon become overbought and will eventually need to unwind, creating headwinds for further positive momentum.
Ahead of concerns of an increase in the Russian tensions over the weekend, I would be a bit surprised to see the Aud do too much today, particularly as it is also month-end and the US Labor Day holiday on Monday. However if 0.9355/70 can be overcome, further resistance will lie at 0.9380 (61.8% of 0.9472/0.9236), a break of which would then the way would open up for a run to 0.9400 and possibly to 0.9416 (76.4%).
The downside now sees support at 0.9340, below which further bids would be seen at 0.9325 and again at 0.9315/00. Below here seems unlikely in the short term, but if wrong look for a run back towards 0.9285 and eventually towards 0.9260.
Further out, a sustained break of the recent 0.9236 low would most likely see an acceleration towards 0.9200, below which, the next target would be the 200 DMA/38.2% Fibo support of the rally from 0.8660/0.9505 at 0.9175. A break of this could see a deeper move towards minor support at around 0.9135 and then to 0.9100 and maybe to 0.9050 (50% pivot of 0.8660/0.9505.
Economic data highlights will include:
Private Sector Credit
Meta Trader – AxiTrader AUD/USD: 4 Hour
NZDUSD: 0.8380
Several attempts by the Kiwi to rally above 0.8405 in Asia and Europe failed and it reversed sharply after the Ukraine/Russia headlines hit the headlines, causing a run towards safe haven assets and a rush for the exit from risk assets, sending the Kiwi to a low of 0.8362, from where it has squeezed 20 points higher late in the day.
It is currently sitting pretty much where it was trading this time yesterday and the technical picture remains largely intact.
Currently sitting on the 200 HMA, this could act as a magnate today but if we do head higher, a break of 0.8410 would likely see some minor stops getting triggered which could take the Kiwi on to 0.8430 (23.6% of 0.8514/0.8310) but at this stage seems unlikely.
The downside will find bids at the 100 HMA at 0.8357, below which could head towards 0.8320/25. I don’t think we see it down here today, but further losses would take the Kiwi back to the trend low at 0.8310, which should act as strong support.
Further out, a break of 0.8300 would hint at a run towards 0.8275(50% Fib of 0.7670-0.8839) and then 0.8242 (February 20 low,).Below this would suggest further losses towards the 5 Feb low (0.8187) and possibly to the 4 Feb low (0.8051).
Economic data highlights will include:
Building Permits
Meta Trader – AxiTrader NZD/USD: 4 Hour
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.