It was a choppy session Friday although the US$ managed some mild gains after some solid US Consumer Confidence data. More choppy but rather directionless trade may be in store today in the absence of any major data (German PPI, Existing US Home Sales), but it will warm up as the week wears on, starting tomorrow with the release of the China GDP/Retail Sales/ Industrial Production. US equities rebounded well, generally underpinning improved risk sentiment.
EUR/USD: 1.2760
The dollar made back some of the recent lost ground into the US close on Friday, and after a brief squeeze to 1.2835 in Europe the Euro headed lower as the dollar took advantage of the better than expected Rts/Michigan Consumer Confidence data, the strongest reading since July 2007, to finish near its session highs.
The first half of the coming week is rather thin on economic data and thus more chopping around within the 1.2700/1.2840 range would not really surprise and it would seem unlikely that we are going to see any real directional move, either way, ahead of the US CPI on Wednesday (although the China data on Tuesday may decide differently). If anything, the daily momentum indicators still point to the chances of another near term recovery in the Euro and we could yet want to take another look at the topside.
Technically, 1.2800 will see sellers ahead of Friday’s 1.2836 high. A break of 1.2845/50 would see a return to last week’s spike high following the US retail sales at 1.2885. If this is taken out then, look for a run to 1.2900 and possibly to 1.2950 (38.2$% of 1.3699/1.2501 & weekly tenkan) but with the dovish EU outlook it is difficult to the see the Euro being up here very long, if indeed it even gets close.
On the downside, minor bids will arrive at around 1.2750, ahead of the Thursday session low at 1.2705 (200 HMA: 1.2710). A break of 1.2700 would lead towards 1.2645 (61.8% of 1.2501/1.2885) but below here seems out of range in the short term. The 15 Oct low at 1.2624 would see bids ahead of 1.2600 but I would be doubtful of heading back to 1.2500 any time soon unless the EU flash PMI’s due on Thursday are soft in the extreme.
Further out, I will be looking for a resumption of the dollar uptrend for a run eventually below 1.2500 and on towards 1.2000 and possibly a lot lower, but at this stage the timing is not right.
For today, use 1.27/1.28 as a guide.
Economic data highlights will include:
M: German PPI, EU Current Account, US Existing Home Sales
T:
W: US CPI
T: EU Flash Mfg/Composite/Services PMI’s, US Markit Flash Mfg/Composite/Services PMI, Chicago, Kansas Fed National Activity Index, Jobless Claims,
F: German Consumer Confidence.
Meta Trader – AxiTraderEUR/USD: 4 Hour
USD/JPY: 106.87
The dollar squeezed slowly higher on Friday continuing its recovery from last week’s 105.18 spike low (where the top of the steeply rising daily cloud would now add support) as solid US consumer confidence data saw a return in positive risk sentiment, allowing a squeeze to finish at the session highs, just below 107.00.
We are now at decent resistance though, with 107.00 being 38.2% of 110.08/105.18, and really need to overcome this in order to be confident in further gains. Keep an eye on the Nikkei, which seems to be lagging and needs to see a squeeze higher early in the week if the current dollar strength is going to be maintained. Any signs of further weakness in the Nikkei could see this dollar rally run out of steam rather quickly.
In the meantime, the 1 and 4 hour momentum indicators look positive and if 107.00 can be overcome, then look for a run towards the 200 HMA at 107.20 and possibly to the 50% pivot of the downtrends at 107.55. I doubt that we are heading above here in the short term, but taking out 107.50/60 would allow for a quick run back to 108.00 and eventually I think we are heading back to 110.00, but as yet it is far too early to think of this.
On the downside, the immediate support will come from the 100 HMA at 106.60, with further minor support at 106.30 and at 106.00.
For the time being look for some choppy trade near 107.00, but with a mild upside bias. Use 106.75/107.40 as a guide today.
Economic data highlights will include:
M:
T:
W: Trade Balance.
T: Nomura Flash Mfg PMI
F:.
Meta Trader – AxiTraderUSD/JPY: 4 Hour
GBP/USD: 1.6091
Cable had a choppy session on Friday, initially falling to 1.6030 in early European trade courtesy of a BOE economist comment that UK interest rates “could remain lower for longer” before squeezing up to the 1.6120 topside target (high 1.6125) and then heading south again to finish the session pretty much unchanged from where it had started.
More choppy range trade looks likely early in the week, with not much data out until the second half of the week when the BOE Minutes, UK Retail sales and GDP will all be released.
In the meantime, 1.6120/25 will be the first upside hurdle, above which could see a run towards 1.6180 (23.6% of 1.7191/1.5876) and then to 1.6200.
The downside will find buyers today at 1.6050 (200 HMA) and then at 1.6005 (100 HMA). I don’t think we go under here but if wrong, it would open the way for a fall to last Thursday’s 1.5940 low.
For now, use 1.6050/1.6125 as a guide. A break of the descending trend resistance would trigger some stops and propel Cable a bit higher, in which case I would be looking to sell at around 1.6200, although it looks rather unlikely to be seen early in the week.
Economic data highlights will include:
M:
T: PSNBR
W: BOE Minutes
T: UK Retail Sales
F: UK GDP.
Meta Trader – AxiTraderGBP/USD: 4 Hour
USD/CHF: 0.9458
US$Chf traded a 0.9405/75 range on Friday, but looks as though it is attempting to build the momentum for a near term run back towards 0.9500. I would not be getting too carried away on the topside given that the dailies still point lower, but if 0.9500 can be overcome, then further gains towards 0.9510 (200 HMA) and possibly to 0.9560 (61.8% of 0.9686/0.9360) could lie ahead
The downside will see buyers at 0.9440 and again at 0.9400. I doubt we are heading below here today but if wrong, the dollar may want to take another look at last week’s 0.9360 low.
Overall, more choppy trade, with a near term upside bias looks likely early in the week. That may all change on Wednesday if the US CPI is below expectations, which would then see the dollar take another run to the downside.
Economic data highlights will include:
M:
T: Swiss Trade Balance.
W:
T:
F.
Meta Trader – AxiTraderUSD/CHF: 4 Hour
AUD/USD: 0.8743
The Aud had a choppy session on Friday but for the most part stuck fairly close to either side of the 100/200 HMA’s (0.8757/67). The Aud was underpinned by market chatter of a possible easing in China in coming weeks and spiked up to a brief high of 0.8811 on the news that the PBOC will inject 200 bio Yuan of 3 month loans to certain banks. That rally did not last long and saw a quick return to trade the rest of the session close to 0.8750.
More choppy trade looks likely this week and it could be quite volatile, although Monday may be quiet. Tuesday is likely to be a busier session after the release of the RBA minutes and the China Q3 GDP/Industrial Production/Retail Sales and Urban Investment numbers. Wednesday sees the Australian CPI and then on Thursday we get the Oct HSBC Flash Mfg-PMI, so there will plenty going on.
Technically the charts are telling us very little and thus a neutral stance is required in the short term with the price action likely to be dominated by spikes following the release of the various bits of data. The dailies are still supportive of further gains though, as they are still unwinding their previous oversold condition. Although I don’t think we see it much above 0.8785 today (the daily Tenkan, at 0.8775 seems to be acting as a pivot), a break of 0.8800/20 resistance would allow for another move up towards 0.8860 and possibly to the daily Kijun at 0.8875 and then the 9 Oct high at 0.8898, which if seen would be a decent sell opportunity I suspect for an eventual resumption of the downtrend.
The downside will see buyers at Friday’s lows around 0.8730 and then again at 0.8700. I doubt that we are heading below here early in the week, but if wrong, would hint at a run towards last week’s lows at 0.8685, 0.8675 and below there at 0.8651.
For today expect a reasonably tight 0.8730/0.8785 range.
Economic data highlights will include:
M:
T: WBC Leading Index, RBA Minutes, China GDP, Industrial Production, Retail Sales, Urban Investment
W: CPI
T: RBA Glen Stevens Speech, NAB Business Confidence/Conditions, HSBC China Flash Mfg-PMI
F: China House Price Index.
Meta Trader – AxiTraderAUD/USD: 4 Hour
NZD/USD: 0.7911
The Kiwi had a quick dip to 0.7885 early on Friday, on the release of an erroneous RBNZ report, but otherwise traded fairly quietly until the NY session when China announced a 200 bio Yuan loan injection to certain Chinese banks. This caused a brief spike to 0.7968 before turning lower to trade with a heavy tone, finishing ht week at 0.7915.
The coming week does not see any domestic early in the week and direction will be reliant on international flows until the release of the NZ Q3 CPI on Thursday, with a soft outcome potentially starting a run back towards the recent 0.7707 low. We shall see..
Further consolidation looks likely in the short term although the 4 hour indicators do look a bit heavy. A break of 0.7900 would see a run towards 0.7880 (200 HMA) and then to minor rising trend support at 0.7840 and possibly to 0.7800 although this looks doubtful in the first half of the week.
The topside will find sellers at 0.7950 and then at 0.7970. I don’t see a run up to 0.8000 in the coming couple of sessions, although if wrong, look for a squeeze higher towards 0.8040 and possibly to 0.8070.
Look for 0.7885/0.797 0 to cover it, – capped & collared by the daily tenkan/kijun, – possibly for the next couple of sessions, until the RBA/China data – Tuesday.
Economic data highlights will include:
M:
T:
W:
T: NZ CPI
F: NZ Trade Balance.
Meta Trader – AxiTraderNZD/USD: 4 Hour
AUDJPY: 93.45
It was a wild ride in the Yen crosses last week and despite finishing unchanged from the previous Friday it have a very nasty spike down to 91.76 from where it bounced equally quickly. The daily charts appear to have turned higher and while we may see dips it is beginning to look as though any move back towards 92.75 may be a buy opportunity for a run back up to current levels and on towards the 200 HMA at 94.00 and possibly to 94.50. Downside stops should be placed below 91.75Meta Trader – AxiTraderAUDJPY: Daily
NZDJPY: 84.50
NzfJpy continues to head slowly lower although the price action is choppy and would seem to be running out of some downside momentum. For the time being use the range of 83.50/85.50 as a guide with a preference to buying dips, with a SL placed below 83.00.Meta Trader – AxiTraderNZDJPY: Daily
EURJPY: 136.45
EurJpy saw a nasty spike down to 134.13 last week, where it met the bottom of the channel (chart) and has since reversed. Although I would not be diving in right now, dips do appear to be buying opportunities, with a stop placed below the channel base at 134.50 or more ideally below 134.00. We are currently sitting on the 200 HMA which may act as a pivot in the absence of too much data early in the week, but upside probes may want to retest 136.70 and possibly 137.00. The 100 DMA is at 137.70 and may see some interest later in the coming week if risk sentiment remains positive and does not see another flight back into the Yen.Meta Trader – AxiTraderEURJPY: Daily
GBPJPY: 172.00
GgbJpy also saw a nasty spike lower last week, falling to a low of 167.95 and then turning higher again after some violent price action, to sit at 172.00, sitting right on the 200 day MA at 171.96.
It could be a choppy and rather directionless start to the week, but I mildly favour the upside and fresh buying could see the cross head above the nearby 200 HMA at 172.18, to take a look at 172.80 (38.2% of 180.70/167.95) and then to the 100 day MA at 173.32. Beyond this lies the 50% pivot of the move down from 180.70/167.95 at 174.34 but may be a stretch too far for now.
The downside will find buyers at 171.50 and 171.10 (both minor) ahead of the 100 HMA at 170.60, but given the positive look of the indicators, this appears unlikely to be seen today/tomorrow unless we see a major deterioration in risk sentiment. Buying dips is the favoured play..
Meta Trader – AxiTraderGBPJPY: Daily
DXY: 85.11
The DXY is continuing to correct from its 86.74 high but is so far holding above the important Fibo support at 84.86 (23.6% of 78.87/86.75). The indicators still look heavy though, and a break of the support could see a move to the spike low, seen last week at 84.47, which would see the Euro back at last week’s spike top at 1.2885. Below the 84.50 area would suggest a run towards rising trend support at 84.00, although I don’t think this is likely to be seen over the next few days unless the US data is very soft later in the week.
On the topside, the index is going to struggle for now at 85.50, and 86.00 currently looks over the horizon, so all up it appears that we are in for more choppy trade, but with a possible downside bias.
Further out though, the monthly indicators do look as though the dollar uptrend will eventually reassert itself – and while this could be some way off, I have not lost hope that it will eventually resume and that the Euro will head below 1.2500 and on towards 1.2000 – and potentially a lot lower.
In the meantime look for an 84.50/85.50 range early in the week with choppy condition looking likely to prevail. Longer term trader should still be looking to buy dips in the dollar.
Meta Trader – AxiTraderDXY: Daily
DXY: Weekly.
Meta Trader – AxiTraderDXY: Weekly
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