US$ still firm. Aud under fire ahead of Jobs data, China CPI. RBNZ Unchanged.

The dollar remains underpinned ahead of expectations of a more hawkish mood from the Fed at next weeks FOMC meeting, while the ECB, BOJ and now the SNB look to be heading in the opposite direction. The Aud, having been a major beneficiary of the carry trade, was a big loser today and looks as though it is headed to 0.9000 and lower. Direction for the Aud today will come from the Jobs data and the Chinese CPI. The RBNZ just left rates unchanged, which caused the Kiwi to dip briefly lower. Later in the day the highlights will be German/French CPI, with not much else due until tomorrow’s US Retail Sales.

EUR/USD: 1.2915

The Euro was bid through Asia and early Europe, reaching a high of 1.2962 before a press article suggested that the Swiss National Bank are preparing to use negative interest rates, sending the Chf sharply lower and dragging the Euro with it.Having headed down to a low of 1.2888, the Euro has since bounced to close the US session at 1.2910 and now awaits the outcome of today’s inflation reports from Germany and France. Another weak reading would open the way, below 1.2860,  for a test of the target at 1.2745.On the topside the first, minor resistance is at the 100 HMA, now down at 1.2930 and above there at the session high at 1.2962, which comes ahead of Friday’s post-NFP high at 1.2987. Note that while we remain above 1.2858, we could be in the process of building a small inverse Head/Shoulder formation with a neckline at 1.2960. This being the case, we could then see a run, beyond 1.3000 and the 200 HMA at 1.3030, on to a target at 1.3060, where the descending trend and Fibo resistance would probably cap it (1.3057:23.6% of 1.3700/ 1.2958) and provide another sell opportunity.On the downside, below today’s 1.2888, would then head to the trend low at 1.2858, and  as we said before, there really is not a lot to stop it heading to 1.2800 and then to the target area of 1.2780 (major rising trend support; from July 2001) which comes just ahead of the 9 July 2013 low at 1.2754.

No change in view. Trade from the short side but allow for the chance of another short term squeeze higher. Weak CPI data later today would probably erase that idea and see the Euro head lower, when the market will then begin to focus on tomorrows US retail sales.

Further out, the immediate risk to long dollar positions is if Janet Yellen remains cautious on her outlook at next week’s FOMC meeting. If the Fed are less hawkish than expected, we may see a rather sharp reversal in the dollar, but the general feeling is that markets are indicating a strong structural change, which could see a long way to go for the dollar’s run higher.

Economic data highlights will include:

German CPI, ECB Monthly Report, US Jobless Claims, Monthly Budget Statement

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EUR/USD: 4 Hour

USD/JPY: 106.85

The Yen was under pressure today in heading to a new 6 year low against the dollar.  Ongoing weak Japanese data and the BOJ’s Iwata downplaying the net impact of the Yen’s weakness  did nothing to assist the Yen and the dollar found additional support from firmer US yields, which comes ahead of next week’s FOMC meeting at which a more hawkish tone is expected.

We are now above the 100 Month MA (106.45) and look set for an imminent test of 107.00. Above there, the next resistance would arrive at 107.30 where the trend resistance joining the May 2013/Jan 2014 highs is to be found. A break of this level could see quite an acceleration higher towards 108.01 (Sept 19, 2008) beyond which, there is not much resistance to be seen until the August 2008 high at 110.65, and then at the 76.4% Fibo level at 112.50.

The 4 hour charts are at overbought extremes so dips are inevitable but look to be relatively shallow. 106.45 is the first obvious support, below which could head back to 106.00 and possibly to the 105.70 area which would again see decent bids. Right now it shows no sign of turning lower so stay long but probably look to take some profit f we see the dollar up near 107.30 today and then look to buy a corrective dip.

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USD/JPY:Daily

GBP/USD: 1.6215

Having fallen to a new trend low at 1.6051 today, Cable has picked itself up off the floor to close the session back at 1.6200

BOE Chief Carney, speaking before the TSC, ruled out any chance of Scotland using Sterling in the event of voting for independence helped Cable to head higher and which was assisted further by another poll, indicating that 53% of Scots intend to vote “No” on independence.

Technically, the shorter term charts remain positive and it looks as though Cable is going to try and close the Monday opening gap that would take it back towards the Fibo resistance at 1.6320. Ahead of that, minor resistance would be seen at around 1.6275.

On the downside, which looks a bit better supported today, the 100 HMA at 1.6185 will see bids, but a break of which would head back to 1.6150 and possibly back to 1.6100. I am doubtful of seeing it down here today but further out support would again be seen at 1.6050 and then at 1.6000 (50% pivot of 1.4813/1.7191) which should be strong. Below 1.6000, there is not a whole lot to hold Cable up and it could target 1.5725 (61.8% of 1.4813/1.7191) and then 1.5380 (76.4%). Below there would see a return to 1.4813, the July 2013 and potentially even to 1.4230, the May 2010 low – Don’t get too excited yet, but if Scotland go for it, we could get there in a hurry

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GBP/USD: Daily

USD/CHF: 0.9368

The SNB joined the ECB and the BOJ in the race to the bottom today by hinting that negative official rates are possible in an effort to protect the Eur/Chf floor.The cross headed immediately higher and currently sits close to 1.2100, while at the same time the dollar made a new trend high, with US$/Chf trading up to 0.9395 before topping out just ahead of the 0.9400 target and closing the NY session at around 0.9370.There is no real change in outlook, and while we should expect some near term dips – note the bearish divergence on the 4 hour charts – the overall strategy remains that we need to play this from the long side.If we do see a dip, buyers should step in at 0.9340 and at 0.9315. I doubt that we are heading back below 0.9300 today but if incorrect then look for a run towards 0.9270.

On the topside, 0.9400 will not give way easily (61.8% Fibo level of 0.9838/0.8698) but beyond which, the next target would be the 6 Sept 2013 high at 0.9455. Above here there is little to stop the dollar heading to 0.9570 (76.4% Fibo level of 0.9838/0.8698).

Stay long but allow for dips and possibly use 0.9340/0.9400 as a guide.

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USD/CHF:4 Hour

AUD/USD: 0.9150

The Aud saw little respite today and headed down to 0.9112, before a mild bounce, to hold on above 0.9150 and it will now await the outcome of today’s Jobs data, expected to show a mild improvement (6.3%, +12K). Also today, keep a close eye on the Chinese CPI (exp 0.4%mm, 2.2% yy) which if below par, will add further downside pressure.As we said yesterday, with the focus beginning to turn towards next Wednesday’s FOMC meeting and the expectation that the Fed will ramp up the hawkish rhetoric, we could see a further move out of the Aud which has been a major beneficiary of low US rates and with yield spreads set to diminish, I suspect that in the not too distant future the Aud will be trading below 0.9000.If today’s data fails to meet expectations, then we could head lower rather quickly but below today’s 0.9112 low would find strong support at 0.9100 (100 Month MA). A break of this would then head towards  0.9050 (Weekly Cloud Base, 50% pivot of 0.8660/0.9505, Monthly Tenkan) and eventually towards 0.9000.  Further out the head/shoulder target is to be seen at around 0.8950.If the data surprises to the upside, we could see a squeeze back towards the 100 DMA at 0.9185, and then to 0.9200. The steep descending trend resistance is at 0.9220, which should we see it, would appear to be a sell opportunity although a break would see a squeeze back towards the breakdown level in the 0.9240/60 region, where again I think the Aud would be a sell, looking for lower levels towards 0.9000 next week.

Economic data highlights will include:

Unemployment, China CPI, PPI

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AUD/USD:4 Hour

NZD/USD: 0.8205

The Kiwi made a new trend low at 0.8208, in exactly meeting the initial downside target by trading to the 5 Feb low today before a mild bounce, and now sits at 0.8220, waiting for this morning’s RBNZ meeting, at which rates are likely to stay on hold at 3.5%. The interest will be in the Statement and the Governor, Wheeler rarely fails to lose an opportunity to talk the Kiwi lower and is likely to do so again today.If he does  then we could see a more sustained run to below 0.8200, where support would be seen at the 5 Feb. low at 0.8187 and then at the weekly cloud base at 0.8177. Under here would target the Fibo support (61.8% Fibo 0.7670-0.8839) at 0.8145 and the 200 WMA at 0.8135 before an eventual test of the 2014 low at 0.8051 on Feb 4, from where it bounced sharply.I don’t think we see too much upside today and would be surprised to head much above 0.8240/50. If wrong, further resistance would arrive at the 100 HMA at 0.8275 and then at the 200 HMA, 0.8305.I think we should look for a run toward 0.8175 after the RBNZ, and then further out for a more concerted test of 0.8100 and 08000, albeit that this could take a while.

Economic data highlights will include:

RBNZ IR Decision, Monetary Policy Statement, Press Conference, REINZ House Price Index

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NZD/USD:4 Hour