The dollar is generally firmer again today ahead of the global manufacturing PMI’s, which will include various EU members, but kicking off today with the HSBC China figure. Cable is soft following the dovish BOE Minutes. Elsewhere WTI took another hit after the inventories report rose three times more than market expectations. PMI’s aside, today sees NZ CPI (shortly), Australian Business Confidence/Conditions and UK Retail Sales. Later on, from the US, will see some regional Fed activity data and the weekly jobless claims.
EUR/USD: 1.2645
The Euro is a little lower today after a choppy session against the dollar, mostly around 1.2700, but it has fallen to the session lows at the end of the US session, ahead of the upcoming global Mfg PMI’s, including quite a few EU members, with the market generally expecting another soft reading from the EU, particularly in the manufacturing sector. The steady US CPI provided the dollar with some support, with the headline number coming in unchanged at 1.7% yy in September (exp 1.6%).
Technically, while the dailies continue to unwind their oversold condition, there is little to suggest that the current consolidation phase has finished and we could well be in for some more choppy trade ahead of us. The daily indicators though are beginning to flatten out and if the EU data is again very soft then further pressure will be seen on the Euro.
At the end of the NY session it is attempting to break down through minor Fibo support at 1.2645 (61.8% of 1.2501/1.2885) below which would test the 15 Oct low at 1.2624 and then possibly head on to 1.2600. Below here would find further bids at 1.2590 (76.5%) and at the minor low at the minor 7 Oct low at 1.2580. Once that gives way though there is little to stop the Euro heading back to 1.2500, but which, if seen today should be strong support.
On the topside, minor resistance should arrive at around 1.2675/80 and then again at the 1.27 pivot. Beyond here would retest the session high at 1.2740 (200 HMA: 1.2732) but looks unlikely to be seen today.
Overall, look for a day confined to 1.26/1.27 with the overall theme remaining unchanged of playing it from the short side and looking to sell into strength.
Economic data highlights will include:
EU Flash Mfg/Composite/Services PMI’s, US Markit Flash Mfg/Composite/Services PMI, Chicago, Kansas Fed National Activity Index, Jobless Claims..
Meta Trader – AxiTraderEUR/USD: 4 Hour
USD/JPY: 107.13
US$Jpy has ground its way back above 107.00, although it appears to be struggling somewhat against the dollar at the moment having traded a similar range to yesterday, but so far unable to overcome Monday’s high at 107.38. The crosses have really been the driver today, with the Yen seeing broad demand, against the European majors in particular.
More of the same is possible today, although the 4 hour charts appear to be attempting to build some positive momentum, and so as with yesterday, buying dips remains the preferred strategy as I suspect that eventually the dollar will want to take another look at 108.00, and higher.
For the time being, 107.38 provides the resistance, above which would take us back to 107.50 and then on to 108.10 (61.8% of 110.08/105.18). Above there may prove tricky today, but the next point to watch would be at 108.75 (76.4%).
The downside will see bids now, below 107.00, at 106.85 where the 100/200 HMA’s are in the process of crossing higher. I doubt that we are going below here today, but if wrong, the session low has been at 106.78, a break of which would head towards 106.60.
Economic data highlights will include:
Nomura Flash Mfg PMI.
Meta Trader – AxiTraderUSD/JPY: 4 Hour
GBP/USD: 1.6053
Cable headed lower on the release of the October BoE minutes, falling from a session high of 1.6130 at a low of 1.6010. The vote result was as expected, with 2 votes in favour of a rate hike with 7 voting against. However, the minutes were more dovish than has recently been the case, which fits in with the recent soft data and noted “few signs” of inflationary pressures and that “further dovish news in the Euro area had increased the risks” to the economy. Today sees the UK Retail Sales although the focus will turn increasingly to tomorrows UK GDP release.
We are currently sitting right on the 200 HMA at 1.6055, and on the downside, 1.6010 remains the support to watch ahead of 1.6000, a break of which would hint at a steeper fall towards the 16 Oct low at 1.5936, and eventually, via 1.5900, back to the trend low at 1.5873.
On the topside, we could see a squeeze back to 1.6075 (minor) and possibly to the 100 HMA at 1.6105, above which, would take us back to the session high at 1.6130. With the 4 hour charts pointing lower, this looks unlikely and selling rallies remains the preferred strategy.
Economic data highlights will include:
UK Retail Sales.
Meta Trader – AxiTraderGBP/USD: 4 Hour
USD/CHF: 0.9535
US$ Chf trade higher eventually, after some choppy trade around 0.9500 and currently sits at the session high at 0.9540.
No change in plan, in trading from the long side, looking for a run up to 0.9560 (61.82% of 0.9686/0.9360) and eventually to 0.9600 (.9608; 76.4%).
The downside should now find support at 0.9500 below which would return to 0.9480 (200 HMA) although I don’t really see it happening today.
Meta Trader – AxiTraderUSD/CHF: 4 Hour
AUD/USD: 0.8777
A choppy day following the release of the Q3 CPI, saw the Aud make a quick squeeze to 0.8815 in the US, before heading lower once again to currently sit pretty much unchanged from yesterday’s Asian close at 0.8780. More of the same could be in store, with today’s action to be driven, initially by a Glen Stevens speech, and then later by the NAB Business Confidence/Conditions and the HSBC China Flash Mfg-PMI.
Technically there is little change as the sideways action continues, and another day largely confined to 0.8710/0.8810 would not surprise.
If the data is generally soft, we could see another run, below the 200 HMA (0.8760), to yesterday’s spike low following the CPI, at 0.8745. Below there would head towards Friday’s lows around 0.8730 and then to 0.8700. I doubt that we are heading below here today unless the HSBC data is overly weak, but if wrong, would hint at a run towards last week’s lows at 0.8685, 0.8675 and below there at 0.8651.
On the topside, 0.8800 will once again see sellers ahead of the recent highs at 0.8815, 0.8832 and 0.8860 although I can’t see it up here today and would be surprised to see it much above 0.8800.
It seems to me that the Aud has had plenty of attempts to head above 0.8800, but being unable to sustain the gains, what cannot go up, must eventually go down. Today may not be the day, but I still prefer to sell into strength and to trade from the short side.
Economic data highlights will include:
RBA Glen Stevens Speech, NAB Business Confidence/Conditions, HSBC China Flash Mfg-PMI.
Meta Trader – AxiTraderAUD/USD: 4 Hour
NZD/USD: 0.7926
The Kiwi is breaking down to session lows as I write, just ahead of the CPI release (exp 1.3% yy, 0.5% mm).
Technically there is little change from yesterday, after a session mostly confined to 0.7940/90.
The hourly momentum is pointing lower though, so a break of the 200 HMA (0.7920) could quickly head to 0.7900, below which would see a deeper correction towards 0.7885 and possibly 0.7840 although this seems rather a long way off for now.
The topside will find sellers again at 0.7955 (100 HMA) and above that, which currently looks a little less likely, would see sellers at 0.7980 (minor) and then at 0.8000. The 21 Oct high of 0.8034 looks out of reach, but if wrong, further strength would see a run towards 0.8070.
Economic data highlights will include:
NZ CPI.
Meta Trader – AxiTraderNZD/USD: 4 Hour
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