It has been a mixed day following the release of the solid US GDP number, with the US$ generally holding on to the post FOMC gains, performing particularly well against the Jpy after talk of an asset reallocation for the GPIF. Stocks have done well taking the Aud along for the ride, while metals, especially Silver, took a hit. Today will look to the EU CPI for guidance, where another weak reading will see the Euro come back under pressure. Before then, Asia will see plenty of Japanese data as well as the BOJ meeting. The US sees Personal Consumption/ Income/ Spending, Rts Michigan Consumer Confidence Survey. Have a good w/e.
EUR/USD: 1.2608
The dollar is back at 1.2600 today, with the Euro having recovered from an overnight low of 1.2543 seen after the US Q3 GDP growth slowed to 3.5% annualized, but came in above expectation of 2.9%. The Euro has actually performed reasonably well, given that the German annualized inflation data slowed to a 0.7 % gain in October, the lowest reading since May. We get more data today from Germany (Retail sales/Unemployment) and another weak reading could see the Euro come under further pressure, although there are some large 1.26 option expiries so it could end up being a choppy end to the week while the market sits on its hands ahead of the ECB meeting next Thursday. EU inflation data, also due today, is forecast to be at 0.4%yy, up from 0.3% in September but should it fail to meet expectations would see another run to the downside.
The technical picture sees bids at the session lows at 1.2543 and below there at the strong 1.2500 level. I would doubt we are going under here today, but if wrong the way would open up to much lower levels as we commence the run towards 1.2000.
On the topside, the session high is at 1.2638, which is going to be tough to break. If wrong, look for a run towards 1.2685 where the 100/200 HMA should cover it.
Look for a choppy day, but with a mild downside bias, although unlikely to break through 1.2500 ahead of the weekend unless the EU CPI misses badly. That being the case, the market will be looking towards the possibility of the ECB pulling the trigger on some sort of action from the meeting, next Thursday.
Economic data highlights will include:
German Retail Sales, EU CPI, Unemployment, US Core Personal Consumption Index, Personal Income,/ Spending, Rts Michigan Consumer Confidence Survey, Chicago Purchasing managers Index.
Meta Trader – AxiTraderEUR/USD: 4 Hour
USD/JPY: 109.24
The dollar is firmly underpinned today after a Nikkei report said that Japan’s GPIF pension fund will raise its allocation to 25% in domestic stocks and lower holdings of government bonds to 35%. Although old news, the market liked it and took the dollar sharply higher.
Having been up to a high of 109.46, it is currently a bit lower but the momentum seems to suggest that further gains may be in store. Above the 109.50 will find sellers at around 109.85 ahead of 110.00 and the 110.08 trend high. I doubt that we see it up here today, but the BOJ meeting/press statement later on could provide some impetus to push it higher. No change in policy is expected but the BOJ are expected to cut GDP expectations and are likely to hold on to their 2% CPI target, though with a less stringent timeframe for achieving it.
On the downside, 109.00 will see bids ahead of importers, lined up at around 107.75. There are some large 108.50 option expiries today so there is a chance that this could attract although right now it seems doubtful.
The BOJ aside, there is a whole plethora of data out today so it could be a busy session. Look for 108.80/109.80 to cover it.
Economic data highlights will include:
CPI, Unemployment, BOJ Policy Statement, Housing Starts, Construction Orders.
Meta Trader – AxiTraderUSD/JPY: 4 Hour
GBP/USD: 1.5997
Having taken a bit of a beating yesterday, Cable has recovered from the session lows of 1.5948 to sit pretty much unchanged from this time yesterday at 1.6000.
Another choppy day, sitting around current levels looks to be the most likely outcome, and selling rallies still appears to be the strategy, looking for lower levels, albeit probably not till next week.
On the topside, after Cable recovered from its lows it headed up to a session high of 1.6038 which will provide the first hurdle ahead of the 100 /200 HMA’s at around 1.6085.
Support will arrive once more at 1.5950, beyond which would see bids at the 16 Oct low at 1.5936. I don’t really see it below here today, but if wrong look for a move towards 1.5900 and then back to the trend low at 1.5873.
Meta Trader – AxiTraderGBP/USD: 4 Hour
USD/CHF: 0.9560
US$Chf made it to 0.9610 (76.4% of 0.9686/0.9360) today but has since given up those gains to sit back at 0.9560, not too far removed from where it was at the previous NY close.
Some choppy trade may be in order today although the overall theme of trading from the long side remains unchanged.
Support will be seen at 0.9540 and then at 0.9500, where the 100/200 HMA’s should hold it up.
On the topside, I suspect that 0.9600/10 should again contain it. If wrong look for further gains towards the July high at 0.9660 and possibly to the May high at 0.9838, although at this stage that looks some way off.
Meta Trader – AxiTraderUSD/CHF: 4 Hour
AUD/USD: 0.8832
After trading heavily for the first half of the session, the Aud bounced off trend line support at 0.8760, seen briefly after the US GDP release, and has since climbed steadily and impressively to a high of 0.8840, helped in part by purchases of AudJpy, which has pushed up to a high of 96.68 following the GPIF announcement.
Further short term gains look possible and if we can crack 0.8840 we could then see a run towards 0.8860 and it could be that we retest yesterday’s high at 0.8910, although I think that it may be a stretch too far today. If we do see it near 0.8900 I think it may be a sell while it trades within the channel formation seen on the chart below. Stops should be left above 0.8950, or ideally above 0.9000.
The downside will today see bids at 0.8820 (100 HMA) and then at 0.8800 (200 HMA).Below here may be a bit unlikely, but below 0.8800 would see a return towards 0.8785 and to the session’s 0.8755 low, where the rising trend support should hold it. A break of this would have further bearish implications for a move back towards 0.8715 and then 0.8700. I don’t really see it below here in the near term, but if wrong look for a run towards 0.8680 and eventually to the 0.8641 trend low.
Economic data highlights will include:
PPI, Private Sector Credit.
Meta Trader – AxiTraderAUD/USD: 4 Hour
NZD/USD: 0.7842
The Kiwi has recovered impressively from its session lows of 0.7765 to currently sit just below the highs of 0.7860.
Further short term gains now look possible, to further resistance seen at the 100 HMA (0.7875) and the 200 HMA (0.7895).
The downside looks well supported today at 0.7825 and then at 0.7800.
A choppy but rather directionless session looks to be in store, but the medium term strategy of selling into strength, looking for an eventual return to the trend low of 0.7707 remains intact.
Economic data highlights will include:
Building Permits.
Meta Trader – AxiTraderNZD/USD: 4 Hour
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