Poor data and a lower growth outlook from Germany and the UK undermined both the Euro & Sterling today, helping the US$ to find its feet again. The Euro & Cable will be in focus again today when the German CPI & UK unemployment will be released, while Mario Draghi will also be speaking, and who is unlikely to be helpful to the Euro in reiterating his dovish outlook. Before then, China will release its CPI/PPI, while Australia gets Consumer Confidence data. US Retail Sales to be released later in the day. WTI got hammered: down almost 5% on the day.
EUR/USD: 1.2654
After the selloff in the dollar at yesterday’s NY close, on the back of the Ebola rumours in the US, which took the Euro up to 1.2767, a slow recovery commenced as those rumours began to subside and eventually gathered pace in Europe on the back of more soft EU data and a lower growth outlook from the German government. Both the German ZEW and the EU Industrial Production failed to meet expectations, renewing fears of another recession in the EU and sent the Euro lower to where it currently sits on its lows towards the end of the NY session.
Technically, further choppy trade looks in store, although the Euro could well be slanted to the downside again later in the session. With the German CPI due for release and with Mario Draghi due to speak, who is likely to reiterate his dovish outlook, the odds look rather stacked against it.
The dailies though are still in corrective mood though and the indicators do point higher, so it may be that we are in for another session of trade within the 1.26/1.27 band.
A return to the topside will see sellers at 1.2680 (100 HMA) and at 1.2700, above which now looks unlikely but could see a return towards 1.2750 and possibly to 1.2770. I doubt we are going up there again, but if wrong, further gains would head towards last week’s peak at 1.2798, while above 1.2800 would hint at a steeper rally towards 1.2900 and possibly to 1.2950.
While the Euro is currently hovering near the 20 HMA (1.2650), the short term indicators do suggest the chance of heading lower. The first port of call would be yesterday’s Asian low of 1.2620 and then 1.2600. Below this, minor support lies at 1.2575, a break of which would suggest a return to the trend low and the major Fibo level at 1.2505 (76.4%of 1.2041/1.3995), albeit probably not today. If wrong, a break of 1.2500 would open up the path for a steeper decline towards the 22 July 2012 low at 1.2041, and while I think that we are eventually headed in this direction, it may need some time before we retest 1.2500 while the dailies continue to unwind.
Use 1.2570/1.2670 as a guide. Draghi is likely to be dovish again, and a combination of weak German Inflation and solid US retail sales would put the dollar back on trend for further gains.
Economic data highlights will include:
German CPI, Draghi Speech, US Retail Sales, PPI, NY Empire State Mfg Index.
Meta Trader – AxiTraderEUR/USD: 4 Hour
USD/JPY: 107.01
US$/Jpy had a choppy ride either side of 107.00 today, guided largely by the gyrations in the equities markets, but has ended up pretty much where it started and it looks as though we could be in for more of the same today.
For the time being, today’s range of 106.66/107.31 may well hold it again although the Yen crosses still look under pressure and demand for the Jpy seems likely to continue. Another slide in the Nikkei, and then later in US stocks, would ensure that this would be the case and would see the session lows (106.65; 38.2% of 101.06/110.08) come under pressure for a likely test of 106.50 (200 Month MA), below which, the dollar could skid towards 106.00, although I think this unlikely today.
The topside will again see sellers at 107.30 and then at 107.50 (100 HMA). I doubt that we are heading above here, but if wrong 107.80 and 108.00 will see decent offers ahead of the 200 HMA at 108.20.
Once again, use 106.50/107.50 as a range guide.
Economic data highlights will include:
Capacity Utilisation, Industrial production.
Meta Trader – AxiTraderUSD/JPY: 4 Hour
GBP/USD: 1.5908
Cable headed sharply down towards 12 month lows of 1.5896 after the soft UK CPI (0.2%mm against 0.4%, 1.2%yy against 1.4% exp expected) pushed out UK rate hike expectations from mid to late 2015, with the focus now turning towards today’s unemployment data (exp 6.1%, Claimant Count -35K). Another poor reading there would add to thte downside pressure on Cable.
While the trend remains lower, the dailies are showing some mild bullish divergence and warn not to get overly bearish down here. However Cable is finishing the NY session just above its lows and we could be in for a test of the 12 Nov 2013 low at 1.5853, below which there is not too much to support it until 1.5725 (61.8% of 1.4813/1.7192), although I dont think this is going to come under pressure for a while.
On the topside, a bounce would find sellers at 1.5940, and again at 1.6000. Above here looks unlikely, but if wrong, look for further gains towards 1.6040 and possibly to 1.6070 (100/200 HMA).
Economic data highlights will include:
UK Unemployment.
Meta Trader – AxiTraderGBP/USD: 4 Hour
USD/CHF: 0.9539
The dollar held the 0.9468 support today, where we now have a double bottom, and has bounced back to sit just below the session highs of 0.9555.
Shorter term momentum remains positive and on the topside 0.9570 will provide the initial resistance (200 HMA) ahead of 0.9600. There is no change in the longer term view and eventually I think 0.9600 will be overcome and that we will head on towards 0.9700, above which there is little to stop it heading to 0.9750 (July 2013 high) and to the May 2013 high at 0.9837.
The dailies are not hinting at any major up-move in the dollar yet though, so we may be in for some more consolidation and we could yet see a dip to 0.9530 (100 HMA) which will provide the initial support ahead of 0.9500. Below there we could see a return to 0.9470 and possibly to 0.9455 (23.6% of 0.8698/0.9686), although I think it unlikely. Buying dips remains the strategy.
Meta Trader – AxiTraderUSD/CHF: 4 Hour
AUD/USD: 0.8707
Yesterday’s Asian gains, which saw a move to 0.8811, have been completely erased, with the Aud back at 0.8700, just above session lows of 0.8693 and while the short term indicators point lower, the choppy trade of recent days looks set to continue, with the daily charts still in corrective mode. Direction today will come via the WBC Consumer Confidence Survey and the China CPI, PPI.
The points to watch, on the downside, are at yesterday’s session lows at 0.8651, below which, the trend low at 0.8641 would come under pressure ahead of the July 2013 low of 0.8632. A break of this would then hint at a quick move towards 0.8600. Under here, there is little to suggest that the Aud will pull up ahead of the 50% pivot of the long term rally from 0.6006/1.1082 at 0.8538, but which is unlikely to be seen yet. Further out, as/when we do break below 0.8500, the way would then open up for a much deeper decline towards the May 2010 lows at 0.8066.
On the topside, 0.8740 will see minor sellers ahead of 0.8760 (100/200 HMA’s), beyond which would head on to 0.8800 and to yesterday’s high of 0.8811, albeit that this looks unlikely today.
Use 0.8660/0.8730 as a guide today
Economic data highlights will include:
WBC Consumer Confidence Survey, New Car Sales, China CPI, PPI.
Meta Trader – AxiTraderAUD/USD: 4 Hour
NZD/USD: 0.7834
The Kiwi made it up to 0.7919 in Asia before running out of steam in Europe and heading lower to close the NY session at 0.7830, below the 200 HMA (0.78450) and the 100 HMA (0.7870) which will now act as resistances ahead of 0.7900 which looks unlikely to be seen again today.
The downside will see bids at 0.7800 and then at 0.7780. Below there would hint at a return to the 0.7707 trend low, and although this appears unlikely in the short term, I think it is the direction that we should be looking for in the medium term and another poor result from the dairy auction today could help it on its way.
Economic data highlights will include:
Global Daily Trade Auction.
Meta Trader – AxiTraderNZD/USD: 4 Hour
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