A big day on all markets today, with major moves seen after the soft US Retail Sales increased concerns over the global growth outlook, potentially further delaying any rate rise from the Fed. The US$ is under considerable pressure, as are stocks and oil, which saw another steep sell-off before a late bounce. Today sees the EU CPI as well as a Mario Draghi speech, which may give the dollar a short reprieve ahead of the upcoming US data (I.P./ C.U./ Philly Fed Mfg survey) but if that repeats the underwhelming retail sales release from the US, then the dollar and stocks will be in further trouble.
EUR/USD: 1.2812
Concern over global growth outlook has sent the dollar, bond yields and stocks sharply lower following a weak round of data today. Starting with the softer than expected Chinese inflation numbers, things did not improve with the release of the US Retail Sales, which came in at -0.3% mm, lower than the expected -0.1%. The Ebola scare is certainly not helping sentiment in the US, which is contributing to the current dollar weakness and which looks as though it could have further to run.
The Euro screamed higher, taking out plenty of stops on the way, reaching a high of 1.2886 before partially correcting the move to sit at 1.2775 before a late move back to 1.2800 at the NY close. There may be some respite for the dollar later in the day when the EU CPI is released (exp Core 0.7% yy, CPI 0.4%yy, 0.3% mm), although any strength will be negated if the US Industrial Production and Capacity Utilisation follow today’s weakness in the Retail Sales numbers.
Technically, defining the appropriate support and resistance levels is a little tricky today after the sharp moves, but in the short term, sellers should reappear at 1.2830, again at 1.2850 and the session high at 1.2885. Above there will want to take a look at 1.2900 and potentially we could be in for a run at 1.3000 although given the precarious state of the EU data, I think any approach to this would be a decent sell opportunity.
The downside will see bids at 1.2770, 1.2740 (38.2% of 1.2501/1.2886) and then at 1.2700. It does not appear that we are heading back to the session lows at 1.2624 for a while, but Mario Draghi is due to speak shortly and could put the Euro under some pressure again.
Stay nimble, but for the next session or two at least it looks as though selling the dollar is possibly the way to go. There are various Fed speakers due today which is likely to add to the choppy conditions.
Economic data highlights will include:
EU CPI, Trade Balance, Capacity Utilisation, Industrial Production, Philly Fed Mfg Survey.
Meta Trader – AxiTraderEUR/USD: 4 Hour
USD/JPY: 106.13
US$Jpy got hammered down to a low of 105.18 on the release of the US data, not helped in the least by the steep selloff in US yields and in global stock markets.
Currently back at 106.00, the dollar still looks precarious although the short term charts are becoming oversold which may stall the downside momentum.
The points to watch are at 105.60(50 % pivot of 110.08/105.18), 105.20 and 105.00. A break of this would head back to 104.50 (61.8% of 110.08/105.18).
On the topside 106.50 and the previous support at 106.65 will see sellers ahead of 107.00, but which looks unlikely to be seen for a while, particularly if the global stock market sell-off continues at its current pace..
Meta Trader – AxiTraderUSD/JPY: 4 Hour
GBP/USD: 1.5964
Cable has had a wild ride, in spiking up to 1.6068 following the release of the soft US retail sales before falling sharply to make new trend lows at 1.5875 later in the NY session following remarks from the BOE’s Weale who said that weakness in inflation in the UK was due to the strong Gbp and then bouncing sharply once again to currently sit at 1.5975.
Having bounced to current levels, buyers will be seen at various levels down to 1.5900, ahead of the session lows. Below there would target the 12 Nov 2013 low at 1.5853, below which there is not too much to support it until 1.5725 (61.8% of 1.4813/1.7192).
On the topside minor resistance will be seen at current levels, ahead of 1.6000 and the 100 HMA at 1.6030 and the session highs at around 1.6070.
While the overall trend looks set to remain lower it is going to be volatile, given the overall weakness in the dollar and also due to the swings in the cross which today has seen Eur/Gbp rocket higher from 0.7935 to 0.8046.
Treading very carefully seems to be the plan.Meta Trader – AxiTraderGBP/USD: 4 Hour
USD/CHF: 0.9422
US$Chf obliterated the support levels in reaching 0.9360 today before a recovery to currently sit at 0.9420.
Care is required while the markets settle, but the points to watch are at 0.9400 and 0.9370 (38.2% of 0.8855/0.9686), below which could head back towards 0.9300.
The topside will find sellers at 0.9480, 0.9500 and above here at 0.9525.
Meta Trader – AxiTraderUSD/CHF: 4 Hour
AUD/USD: 0.8811
The Aud spiked higher following the US data release to hit a 0.8860 high before a bounce in the US$ to sit at 0.8780 at the end of the NY session and then squeezing back to 0.8800 in early Australian trade.
Today will look to the Consumer Inflation Expectations as well as another speech from the RBA’s Debelle for guidance. China New Loans are also due for release.
0.8825 will again see sellers ahead of 0.8860 and possibly 0.8900.
The downside will find buyers at 0.8770, 0.8750, 0.8720 and 0.8700 although yesterdays low at 0.8674 now looks to be out of site, for the next session or two at least.
Choppy trade with a mild near term upside bias appears to be the most likely outcome, although gains may be limited if the risk-off move continues in the stock markets which may eventually flow through to the Aud. In the mean time it appears that investors are happy to earn the yield and let the markets do the work.
Economic data highlights will include:
Consumer Inflation Expectation, China FDI/New Loans
Meta Trader – AxiTraderAUD/USD: 4 Hour
NZD/USD: 0.7984
The Kiwi has performed very well today, despite the general risk off move and currently sits at 0.7970, close to session highs of 0.7996.
Sitting on the sidelines seems to be the best laid plan for the time being, although the momentum indicators are now suggesting that we could see some more gains ahead, which would give 0.8000 a good workout, a break of which would take out the strong down trend resistance, triggering plenty of stops in the process and could head on towards 0.8050 and possibly to 0.8100.
The downside will find buyers at 0.7930 and then at 0.7900. Below there looks unlikely today, but further bids will arrive at 0.7840/60 (200/100 HMA’s).
Economic data highlights will include:
NZ Business PMI.
Meta Trader – AxiTraderNZD/USD: 4 Hour
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