US$ takes off after solid data, hawkish Fed comments. WTI down 5.5%. US GDP today.

It was all about the US$ today (and WTI, which fell 5.5%), and after several weeks of consolidation it took off once the US got in, following some  hawkish comments from the Fed’s Bullard/Williams, and closely followed by some solid Durable Goods data which sent US bond yields soaring. Another busy session looks to be in store today and if the provisional US Q4 GDP backs up the DG data, then the dollar is going to head towards new trend highs against many of its counterparts, with the Euro looking particularly vulnerable. Elsewhere today, there is a lot of data out of Japan, headed by the CPI and Unemployment. Australia gets New Home Sales, Private Sector Credit while NZ has the Building Permits coming up shortly. Later on  sees German CPI, US GDP, Chicago Purchasing Managers Index, Pending Home Sales, Rts/ Michigan Consumer Sentiment Index, Personal Consumption. It will be a busy weekend session. Have a good one!

EUR/USD: 1.1197

After another day of consolidation through Asia and Europe, the dollar took off as NY walked in, sending the Euro sharply lower, through various support levels and not stopping until 1.1182. The strong Durable Goods Orders (+2.8% vs +1.6% exp) helped the dollar on its way, which took little notice of the January CPI which went negative due to the collapsing energy prices (-0.1% vs -0.1% exp y/y) but the real standout figure was the real weekly wages growth, which climbed 1.2% in the month compared to 0.3% expected, to give the best single month rise since 2008. Hawkish comments from the Fed’s Bullard and Williams did the dollar no harm at all either.

Today could be just as action packed, with the provisional February German CPI and the US Q4 GDP in focus, on top of a fair bit of secondary data, including the Pending Home Sales and the RM Consumer Confidence.

Technically, I don’t think that the current level is going to give way that easily as it is very important Fibo support (61.8% of 0.8225/1.6037), but if/when we do break below the session low, we would  then potentially see a run towards the trend low, seen on Jan 26 at 1.1097 . Below this there is again little to support to be seen until the Sept 2003 low at 1.0759 and while I think that  this lies ahead, I would imagine that a fair bit of work needs doing before then.

On the topside, 1.1200 is going to act as a pivot for today by the looks of it, with bounces likely to run into sellers at minor Fibo resistance levels of today’s fall, at 1.1227, 1.1258 and at 1.1300, and I would be surprised to see it above here for a while. If wrong, then further resistance would be seen within the previous 1.13/1.14 consolidation area (100/200 HMA’s at 1.1340/1.1360), above which would see the Fibo run into resistance at 1.1437 (23.6% of 1.2570/1.1097) and 1.1449, where we have a minor double top.

Trading from the short side and selling rallies seems to be the way to go again, while keeping an eye on the raft of data due later in the day.

Economic data highlights will include:

German CPI, US GDP, Chicago Purchasing Managers Index, Pending Home Sales, Rts/Michigan Consumer Sentiment Index, Personal Consumption.

Meta Trader – AxiTrader   EUR/USD: 4 Hour

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USD/JPY: 119.39

US$Jpy got somewhat left out of the action today  although the dollar did retain a bid tone on the back to the earlier rise in the Nikkei, which climbed to a 15 year high on Thursday. After breaking up through the 100/200 HMA’s, and having regained 119.00, the dollar has headed on to a high so far of 119.48, and while I still prefer to trade from the long side, the overall technical picture still looks rather choppy.

If we do head higher, then above 119.50 would see the dollar head back towards Tuesday’s session high at 119.83, beyond which we could see another squeeze beyond 120.00 and on to the 11 Feb, 120.46 high, although unlikely to be seen today.

Further out, I still think that we are eventually heading towards, and probably above 121.00. If/when we do so, look for further advances towards the trend high at 121.85 (8 Dec), above which would see a run towards the 15 July 2007 high at 122.42. In the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time given the resistance levels sitting in between.

On the downside, back below 118.90/119.00 (Daily Tenkan:119.00, 100/200 HMA’s 118.93/98 ) and below today’s 118.62 low, where the  daily Kijun once again propped the dollar up, lies the Fibo support at 118.40 (61.8% of 117.17/120.46), beneath which would head back to the recent 118.23 low and to the daily cloud top, now at 118.05. Below 118.00 would then head back into the previous 117/118 consolidation area and could even see the chance of a move towards the 116.40 area, although right now this looks over the horizon.

The shorter term indicators are picking up some positive momentum and I prefer to guy dips towards 119.00 in looking for a move towards 120.00. There is a lot of Japanese data out today so we may see some decent action in Asia but I suspect the bigger moves are likely to be seen after the US GDP later in the day.

Economic data highlights will include:

Japan CPI, Unemployment, Industrial Production, Housing Starts, Construction Orders.

Meta Trader – AxiTrader   USD/JPY: 4 Hour

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GBP/USD: 1.5404

Cable made a heroic attempt to take out the resistance at the top of the channel in reaching 1.5551 today, but it was unable to carry on to reach the 100 DMA at 1.5580 and was not helped by soft UK data. While the Q4 GDP came out as expected, total UK business investment declined by 1.4% in Q4, its steepest drop since mid-2009, against a forecast increase of 1.9%. Today see the Gfk CC data and a soft number will now see further pressure likely to push Sterling down through 1.5400.

Technically Cable has had an outside reversal day, which signals the potential for further downside momentum. Currently breaking down through minor rising trend support, below 1.5400 would see bids at Fibo support at 1.5336 (38.2% of 1.4987/1.5551) which is backed up by the 23 Feb. low of 1.5331 and the 17 Feb low at 1.5315. Below 1.5300 would find further bids at 1.5285 (weekly Tenkan) but I think that this may be a few sessions away yet.

On the topside, the immediate resistance will be at 1.5425 (200 HMA) and then at 1.5455 (100 HMA) and the daily cloud top which has now fallen to 1.5465, while the minor Fibo retracements of today’s fall lie at 1.5432, 1.5455 and at 1.5491, although the latter of these seems unlikely to be seen today.

Selling rallies seems to be the way to go and I suspect that eventually we are now headed back towards 1.5200 and lower.

Economic data highlights will include:

UK Gfk Consumer Confidence.

Meta Trader – AxiTrader    GBP/USD: 4 Hour

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USD/CHF: 0.9533

The dollar has risen to new trend highs (0.9545) but a sharp fall in Eur/Chf, from 1.0795 to 1.0666 has hindered further progress for the dollar and as before I would leave it alone right now and concentrate on the EurUsd.Meta Trader – AxiTrader    USD/CHF: 4 Hour

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AUD/USD: 0.7792

After the selloff in the Aud following yesterday’s disappointing Capex data, it unbelievably rose to new highs in Europe, reaching 0.7912, presumably on the stories of the chance of a near term Chinese rate cut. It did not stay there very long and only gave the sell orders above 0.7900 a chance to get set, before falling sharply as US$ strength overwhelmed all its counterparts and currently sits at session lows at 0.7788.

With the focus now squarely on next week’s RBA meeting, the capability of the Aud to regain any ground may depend on the ability of the market to brush aside the data and I suspect that it will continue to feel the heat as we head towards next Tuesday, but with any interim action to be decided by the whims of the US$. With the US Fed now seen as being slightly more dovish than previously (not including today’s more hawkish Fed comments), analysts are beginning to feel that the RBA could cut rates next week without fear of criticism of doing so, while at the same time the Fed are about to begin hiking rates.

Technically the Aud has taken out plenty of support levels and looks headed to the base of the short term channel at 0.7765. A break of this would see further bids at last Thursday’s low at 0.7756 below which could head back to Tuesday’s brief low, at 0.7740, seen immediately after the release of the RBA Minutes. Below there, 0.7720/25 will be the next support ahead of 0.7700, a break of which would then head to minor support at 0.7665/70 and possibly on to last Thursday’s session low of 0.7643 and the trend low at 0.7625.

The topside is going to find trouble now above 0.7800 where sellers will be seen at the 200/100 HMA’s at 0.7815/0.7830. With the short term indicators pointing lower, I would be looking to sell into strength, with a SL placed above today’s 0.7912 high.

Economic data highlights will include:

New Home Sales, Private Sector Credit.

Meta Trader – AxiTrader    AUD/USD: 4 Hour

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NZD/USD: 0.7524

The Kiwi reached a peak today of 0.7613 and was the strongest currency overall, but has succumbed to the dollar’s strength and has reversed, to currently sit at session lows at 0.7525.

While holding on above 0.7500 the Kiwi remains comparatively firm, and currently sits right on where the 100/200 HMA’s have converged. A break of 0.7500 could see an acceleration lower towards the rising trend support at 0.7460 and then to the Fibo support at 0.7445 (38.2% of 0.7175/0.7610) beneath which, the next target will be the 13 Feb low at 0.7410 and then 0.7400.

Below 0.7400, which currently looks a little unlikely, for a while, would move back to minor Fibo supports 0.7375 and 0.7325 (50/61.8% of 0.7175/0.7573). I don’t really see it down here for some time, but if wrong, further bids would arrive at the 12 Feb session low at 0.7313 and then again at 0.7300.

Further out, below 0.7300 would see a run towards minor supports at 0.7250 and 0.7225, and then further out we could then be in for another test of 0.7200 and the trend low of 0.7185. Below this there is little support to be seen until the spike low at 0.7115 (17 Mar 2011) and even further out, I think we are eventually headed towards 0.6962 (38.2% of 0.3900/0.8842) and possibly to the 200 Month MA at 0.6538. Don’t get excited; this is still a long way off.

On the topside, while the US$ retains its bid tone, sellers will arrive at minor Fibo resistances today at 0.7540, 0.7555 and 0.7575.

Given the look of the indicators, selling into strength, with a SL above the day/s trend high at 0.7613 seems to be the plan.

Economic data highlights will include:

NZ Building Permits.

Meta Trader – AxiTrader    NZD/USD: 4 Hour