Yann Quelenn
Swissquote Bank Ltd
Forex News and Events
Middle East tensions weigh (by Peter Rosenstreich)
The ease at which oil could effortlessly move globally in 2015 has artificially reduced concerns of a potential supply disruption. Yet, mounting tensions between Saudi Arabia and Iran have recoupled supply disruption fears and sent oil prices surging higher. On Sunday, Saudi Arabia cut ties with Iran in reaction to the civilian raid of its embassy in Tehran. Relations between the two regional powers have deteriorated since Riyadh executed a Shit’ite Muslim cleric. With the vast majority of oil being produced in nations currently involved in some type of conflict there is a tangible probability of significant supply coming offline. However, the markets remain overly confident in the supply gut story and early oil gains are already easing. Brent crude rallied from $36.10 (6-year low) to $38.46, while WTI jumped from $36.22 to $38.32. Commodity currencies, especially those linked to oil such as NOK and CAD, have weakened against the USD. With investor sentiment deteriorating due to disappointing Chinese factory orders (Shanghai composite collapsing triggering limit down closure) and escalating geopolitical tensions, FX traders will stay buyers of risk off currencies like USD, JPY and CHF.
US 2016 outlook negative, Chicago PMI at its lowest level since 2009 (by Yann Quelenn)
December's Chicago PMI, one of the final pieces of data to be released in 2015 dropped unexpectedly to 42.9 from 48.7 in November. Chicago’s economic activity shrank despite the general optimism on the U.S economy. At the same time, initial jobless claims increased by more than 7% in the final week to 287k in December, while consensus was a very limited increase, around 1%.
Our 2016 outlook for the United States is negative. The fundamentals of the world’s first economy are still unsatisfactory. Despite the low official unemployment rate of 5%, we believe it is important to put this figure into perspective remembering that the allowance period is very short with the unemployed exiting the official data pretty quickly. Long story short, we think that US unemployment figures are largely underestimated.
We reaffirm our belief that QE has not done its job of pushing the U.S. economy back onto a path of real and sustainable growth with decent inflation. Current U.S. growth is in fact artificial, delivered by the Fed’s monetary policy. The recent Fed rate hike is, according to us, a simple gesture to keep the dollar attractive for investors. With most of the world trades in dollar, maintaining confidence in this currency is actually the Fed’s primary mission.
We remain, nonetheless bearish on the EURUSD as we believe that Eurozone uncertainties will weigh more on the currency and as long as the dollar situation is kept in check by the Fed, there’s no way for this currency to weaken. Over the medium-term, we target 1.0500.
| Today's Key Issues | Country/GMT |
| Dec CPI Saxony MoM, last 0,10% | EUR/08:00 |
| Dec CPI Saxony YoY, last 0,40% | EUR/08:00 |
| Dec Markit/ISO Turkey PMI Mfg, exp 50,6, last 50,9 | TRY/08:00 |
| Dec CPI MoM, exp 0,00%, last 0,67% | TRY/08:00 |
| Dec CPI YoY, exp 8,50%, last 8,10% | TRY/08:00 |
| Dec CPI Core Index YoY, exp 9,35%, last 9,22% | TRY/08:00 |
| Dec PPI MoM, exp -0,05%, last -1,42% | TRY/08:00 |
| Dec PPI YoY, exp 6,03%, last 5,25% | TRY/08:00 |
| janv..01 Total Sight Deposits, last 468.3b | CHF/08:00 |
| janv..01 Domestic Sight Deposits, last 406.0b | CHF/08:00 |
| Dec Markit Spain Manufacturing PMI, exp 53,6, last 53,1 | EUR/08:15 |
| Dec PMI Manufacturing, exp 50,1, last 49,7 | CHF/08:30 |
| Dec Markit/ADACI Italy Manufacturing PMI, exp 54,9, last 54,9 | EUR/08:45 |
| Dec F Markit France Manufacturing PMI, exp 51,6, last 51,6 | EUR/08:50 |
| Dec F Markit/BME Germany Manufacturing PMI, exp 53, last 53 | EUR/08:55 |
| Dec CPI Brandenburg MoM, last 0,00% | EUR/09:00 |
| Dec CPI Brandenburg YoY, last -0,10% | EUR/09:00 |
| Dec CPI Hesse MoM, last 0,00% | EUR/09:00 |
| Dec CPI Hesse YoY, last 0,30% | EUR/09:00 |
| Dec CPI Bavaria MoM, last 0,00% | EUR/09:00 |
| Dec CPI Bavaria YoY, last 0,50% | EUR/09:00 |
| Dec F Markit Eurozone Manufacturing PMI, exp 53,1, last 53,1 | EUR/09:00 |
| Nov Net Consumer Credit, exp 1.3b, last 1.2b | GBP/09:30 |
| Nov Net Lending Sec. on Dwellings, exp 3.6b, last 3.6b | GBP/09:30 |
| Nov Mortgage Approvals, exp 69.8k, last 69.6k | GBP/09:30 |
| Nov Money Supply M4 MoM, last 0,60% | GBP/09:30 |
| Nov M4 Money Supply YoY, last 0,20% | GBP/09:30 |
| Nov M4 Ex IOFCs 3M Annualised, exp 5,70%, last 3,70% | GBP/09:30 |
| Dec CPI North Rhine Westphalia MoM, last 0,10% | EUR/09:30 |
| Dec CPI North Rhine Westphalia YoY, last 0,40% | EUR/09:30 |
| Dec Markit UK PMI Manufacturing SA, exp 52,8, last 52,7 | GBP/09:30 |
| Dec Danish PMI Survey, last 61,7 | DKK/10:00 |
| Dec 31 FGV CPI IPC-S, exp 0,88%, last 0,93% | BRL/10:00 |
| Central Bank Weekly Economists Survey | BRL/10:25 |
| Dec Markit Brazil PMI Manufacturing, last 43,8 | BRL/12:00 |
| Dec P CPI MoM, exp 0,20%, last 0,10% | EUR/13:00 |
| Dec P CPI YoY, exp 0,60%, last 0,40% | EUR/13:00 |
| Dec P CPI EU Harmonized MoM, exp 0,20%, last 0,10% | EUR/13:00 |
| Dec P CPI EU Harmonized YoY, exp 0,40%, last 0,30% | EUR/13:00 |
| Dec RBC Canadian Manufacturing PMI, last 48,6 | CAD/14:30 |
| Dec F Markit US Manufacturing PMI, exp 51,1, last 51,3 | USD/14:45 |
| ECB Publishes Weekly QE Details | EUR/14:45 |
| janv..01 Bloomberg Nanos Confidence, last 54,5 | CAD/15:00 |
| Nov Construction Spending MoM, exp 0,70%, last 1,00% | USD/15:00 |
| Dec ISM Manufacturing, exp 49, last 48,6 | USD/15:00 |
| Dec ISM Prices Paid, exp 36, last 35,5 | USD/15:00 |
| janv..03 Trade Balance Weekly, last $2024m | BRL/17:00 |
| Dec New Car Registrations YoY, last 23,47% | EUR/17:00 |
| Dec Trade Balance Monthly, exp $5800m, last $1197m | BRL/17:00 |
| Dec Exports Total, exp $17110m, last $13806m | BRL/17:00 |
| Dec Imports Total, exp $11200m, last $12609m | BRL/17:00 |
| janv..03 ANZ Roy Morgan Weekly Consumer Confidence Index, last 115,4 | AUD/22:30 |
| Fed's Williams Speaks on Macroprudential Policy Implementation | USD/22:30 |
| Nov Retail Sales MoM, exp 0,50%, last -0,40%, rev -0,10% | EUR/23:00 |
| Nov Retail Sales YoY, exp 3,70%, last 2,10% | EUR/23:00 |
| Dec Barclays Manufacturing PMI, exp 45,5, last 43,3 | ZAR/23:00 |
| Dec Vehicle Sales Fenabrave, last 195212 | BRL/23:00 |
The Risk Today
Yann Quelenn
EUR/USD is trading sideways around 1.1000. Key support is given at 1.0796 (07/12/2015 low). Stronger support lies at 1.0524 (03/12/2015 low). Hourly resistance may be found at 1.1096 (28/10/2015 low). Expected to target again support at 1.0796. In the longer term, the technical structure favours a bearish bias as long as resistance holds. Key resistance is located region at 1.1453 (range high) and 1.1640 (11/11/2005 low) is likely to cap any price appreciation. The current technical deteriorations favours a gradual decline towards the support at 1.0504 (21/03/2003 low).
GBP/USD is heading lower after breaking support implied by the lower bound of the downtrend channel. Hourly support can be found at 1.4694 (04/01/2015 low). Hourly resistance is given at 1.5242 (13/12/2015 high). Stronger resistance can be found at 1.5336 (19/11/2015 high). Expected to further decline. The long-term technical pattern is negative and favours a further decline towards the key support at 1.5089 , as long as prices remain below the resistance at 1.5340/64 (04/11/2015 low see also the 200 day moving average). However, the general oversold conditions and the recent pick-up in buying interest pave the way for a rebound.
USD/JPY selling pressure continues. Short-term technical structure suggests a stronger downside momentum. Hourly support at 120.07 (28/10/2015 low) has been broken. Hourly resistance lies at 123.76(18/11/2015 high). Expected to further decline towards hourly support at 118.07 (15/10/2015 low). A long-term bullish bias is favored as long as the strong support at 115.57 (16/12/2014 low) holds. A gradual rise towards the major resistance at 135.15 (01/02/2002 high) is favored. A key support can be found at 116.18 (24/08/2015 low).
USD/CHF's uptrend momentum is still lively. Support is located at 0.9876 (14/12/2015 low). Hourly resistance can be found at 1.0034 (04/12/2015 high). The short-term technical structure shows an upside move. Expected to further increase. In the long-term, the pair has broken resistance at 0.9448 and key resistance at 0.9957 suggesting further uptrend. Key support can be found 0.8986 (30/01/2015 low). As long as these levels hold, a long term bullish bias is favoured.
Resistance and Support:
| EURUSD | GBPUSD | USDCHF | USDJPY |
| 1.1561 | 1.5659 | 1.1138 | 135.15 |
| 1.1387 | 1.5529 | 1.0676 | 125.86 |
| 1.1095 | 1.5336 | 1.0328 | 123.76 |
| 1.0929 | 1.4857 | 0.9939 | 118.87 |
| 1.0524 | 1.4793 | 0.9786 | 118.07 |
| 1.0458 | 1.4566 | 0.9476 | 116.18 |
| 1.0000 | 1.4231 | 0.9259 | 115.57 |
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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