Another mixed session. CNH, CNY in focus. UK GDP coming up

Aud, Kiwi rangebound, with one eye on the Yuan. Australian Capex tomorrow.

The dollar is mixed against the majors today after yet more soft – weather affected – US data. In the absence of any major data today, it could be another rangebound session as the market looks towards Janet Yellen’s US testimony, Thursday. The direction of the Chinese Yuan is keeping the market guessing and is seeing some safe haven demand for the Yen, while at the same time keeping the pressure on the Aud. Today, the UK GDP, German Consumer Confidence and US New Home Sales will provide direction.

EUR/USD: 1.3740

The Euro was once again quiet into early European trade moving up briefly to 1.3766 shortly after the German Q4 GDP release, that came in as expected, at +0.4% mm, but overall the interest and volatility was muted. That was as good as it got for the Euro though, in another tight, session contained within the 1.3715/66 range, despite the dollar being slightly weaker elsewhere after more soft US data, this time being the US Consumer Confidence and the Richmond Fed Mfg Index, which both came in below expectations. On a brighter note, the Case-Shiller house price index rose 13.4% in December from a year earlier, the best December reading in eight years and slightly ahead of forecasts for a 13.3% gain.

Elsewhere today the EU Commission revised up its 2014 growth forecast for the Eurozone to 1.2%on from 1.1% in November, but cut its inflation forecast to 1% from 1.5% and warned that debt levels in several EU countries will continue to climb.

Technically there is no real change, and with little data due today it may be another quiets session as the market waits for Janet Yellen’s US Senate testimony tomorrow.

Having once again held above 1.3700 (23.6% of 1.3476/1.3772) again today, the Euro sits above the strong support at Thursday’s low at 1.3685 (50% pivot of 1.3476/1.3772). If seen, this area would continue to attract decent buyers, which is backed up by support at  1.3670 (daily tenkan) and Fibo support at 1.3660 (38.2% of 1.3476/1.3772) and then the top of the daily cloud, now at 1.3650. I don’t really see it below here in coming sessions – and for the time being the 200 HMA, now at 1.3720, is doing a good job of holding the Euro up ahead of 1.3700, – but if wrong, look for an acceleration towards the weekly tenkan at 1.3650 and then  1.3625 (daily Kijun/50% of 1.3476/ 1.3773).

On the topside, 1.3770 capped it once again today. Above there would head towards 1.3800 and then to the major descending trend resistance at 1.3830 (also 61.8% of 1.4939/1.2042). A break of this area would be fairly pivotal for the Euro, as I suspect we would then be headed towards 1.3892, (Dec high) and then possibly on to 1.4000 although this is still some way off and I would not expect it in the next few days.

Look for more choppy trade within 1.3700/1.3770, although a break of one side or the other is due, but for now remain neutral, with the German Consumer Confidence and US New home sales being the only data due out. The DXY is currently at 80.13, pretty much unchanged, but still holding the important support at around 79.95 (200 WMA and the multi-year rising trend support).

Economic data highlights will include:

German Consumer Confidence, US New Home sales.

Meta Trader – AxiTrader

EUR/USD: 4 hour

USD/JPY: 102.15

The dollar is a bit lower today after the soft US Consumer Confidence pushed it down to support at 102.00. Earlier in the day, the Yen had been in demand due to the sharp decline in the CNY (Chinese Yuan) which supported some safe haven demand and will again be watched today.

Although the dollar is a bit lower, there is not too much to add technically  as we still sit within the recent 102.00/70 range, although the 4 hour charts are pointing to the chance of another test of the range base and possibly a bit lower.

If we do head below 102, the next support to look out for will be at the minor Fibo level at around 101.80, which is where the 100 DMA also now lies, ahead of  rising trend support at 101.50. Note that the daily cloud base is rising sharply and will today sit at around 102.00, so that may act as support once again. If we go below 101.50, which I doubt, then it may be that the dollar tests 101.00 where the weekly Kijun lies, but I don’t think we are ready for that yet.

On the topside,  we need to get back above 102.50 and then the recent highs at 102.67 and at 102.83 (102.80: daily Kijun) which has proved a hurdle, before we can see a sustained move towards 103.00 (103.08: Weekly tankan/ 50% pivot of 105.43/100.77) and beyond, to descending trend/61.8% Fibo resistance at 103.50. Above 103.50, further strong resistance lies at 103.63 (61.8% of 105.43/100.75).

I don’t think we should expect too much different today and once again 102.00/102.60 could cover it but keep an eye out for what is going on with the CNY as further softening there could see another bout of Yen strength perhaps towards 101.75.

Meta Trader – AxiTrader

USD/JPY: 4 hour

GBP/USD: 1.6675

Cable  climbed back above 1.6700 today after some minor data showed that the February’s CBI retail sales data rose to a 20 month high. The BOE’s Weale said that market expectations of a UK interest rate hike in Q2 2015 are “not unreasonable which also spurred Cable briefly although he went to add that a stronger Sterling would be an issue for the economy that would need to be taken into account.

 Having reached 1.6725, which is now acting as resistance having also topped out there on Friday, it is now back at 1.6680, although the 4 hour charts look as though they may want to squeeze a bit higher once again. Above 1.6700, and then 1.6725, would see further sellers at 1.6740, beyond which, there is not too much ahead of 1.6800 and the recent top at 1.6821.

The hourly charts though,  are pointing in the other direction, and it could be that we see a mild drift back towards 1.6650, but I doubt we are heading back to 1.6600 today.

We get the UK GDP (exp 0.7%QQ, 2.8%YY) later today, which will be the main driver in the session ahead, but until then, maintain a neutral stance.

Economic data highlights will include:

UK GDP

Meta Trader – AxiTrader

GBP/USD: 4 hour

USD/CHF: 0.8870

There is nothing to add today on US$/Chf after it traded another session between 0.8854/0.8891.

On the topside, we need to head back above 0.8900, above which there is  decent resistance at 0.8915/25. If this can be overcome, which the dailies still suggest is unlikely in the next day or two, then we might run up towards 0.8950 and eventually to 0.8970 (38.2% of 0.9156/0.8855).

The downside will again see good support again at 0.8850. There will be plenty of stops on a break of 0.8850, and we could head quite quickly towards 0.8800. If we get below 0.8798 (Dec 27 spike low), then don’t stand in the way, as we are heading towards levels not seen since 2011, where the first decent support is not found until around 0.8600.

Meta Trader – AxiTrader

USD/CHF: 4 hour

AUD/USD: 0.9014

The Aud came under some pressure in Asia as traders watched  USD/CNY and USD/CNH trade up to 3 year highs with the market speculating that the PBOC is intervening to narrow the onshore/offshore spread in the Yuan, to contain the speculative flows into the Chinese real estate market.

Having run into some bids at 0.9000 the market again turned higher once NY got in, trading back toward the 0.9040 highs, although it again drifted a bit lower as the session wore on.

Second tier data, Q4 Construction Work is due today, but the focus will be on tomorrows Q4 Capex figure, with the market looking to see if the services sector has picked up any of the slack from the drop off in the resources industries. A soft number will see the pressure return to the downside.

Technically there is once again little change and we could well be in for another day of 0.9000/50, but need to keep an eye on what is happening to the CNY/CNH, as further weakness in those currencies would again put 0.9000 under pressure (0.9006: Daily Tenkan).

On the downside, minor rising trend support is at around 0.8975 and I would be surprised to see this broken today. If wrong then yesterdays low at 0.8937 would provide support ahead of 0.8920 (38.2% of 0.8659/0.90/0.9080/ daily cloud base), which in the near term should be solid.

The topside sees 0.9040/50 as the immediate resistance ahead of  0.9080 (38.2% of 0.9757/0.8659), which will be strong. If that gets taken out, look for a run towards 0.9105 (23.6% of 1.0582/0.8659/ daily cloud top) and then to the 100 DMA at 0.9115. Beyond here, there is not too much until the 200 DMA currently at 0.9190.

Another sideways day looks likely, although I suspect that we are in the process of building a bit more of a base for an eventual look at higher levels towards 0.9200. That is some way off and we could yet see a drop to 0.8900, so don’t get too excited. For today use 0.8985/0.9050 as a guide.

Economic data highlights will include:

ABS Construction Work Done (Q4)

Meta Trader – AxiTrader

AUD/USD: 4 hour

NZD/USD: 0.8322

The Kiwi is pretty much unchanged today, having been stuck within a 28 point range.

In the meantime a neutral stance is best, although the 4 hour charts retain a mildly positive bias and we could yet see a run  towards the recent 0.8392 high, beyond which could eventually bring about a retest of the 14 Jan high at 0.8432.

The downside will now find buyers at 0.8320 (200 HMA) and then at 0.8300 (100 HMA) ahead of yesterday’s session low at 0.8260.

NZ Trade Balance tomorrow.

Meta Trader – AxiTrader

NZD/USD: 4 Hour