Aud, Nzd find their legs again. More to come I suspect.
Yen, Aud and Kiwi strength were the main themes today although Cable had a wobble and headed lower, partly on some Scottish devolution concerns! The dollar remains under pressure following the NFP miss and focus will now turn towards today’s very important December US Retail Sales number. Below the expected +0.1% would see further dollar losses, as the question of whether tapering is such a good idea at this point, comes into focus. Elsewhere, Australia gets the WBC leading Index and the UK gets the CPI, PPI data.
CURRENCIES
EUR/USD: 1.3668
Outlook
Res
1.3685
1.3700
1.3720
The dollar has been fairly flat against the Euro today, with the latter unable to take further advantage of the poor US jobs data on Friday, while other currencies, particularly the Yen, continue to make good ground.…..scroll down
Sup
1.3635
1.3600
1.3570
USD/JPY: 102.90
Outlook
Res
103.35
103.50
103.85
The Yen did as we largely expected today and has continued to reverse its recent weakness, both against the dollar and on the crosses …..scroll down
Sup
102.85
102.65
102.45
GBP/USD: 1.6380
Outlook
Res
1.6400
1.6450
1.6480
Having made it up to a high of 1.6507 in early trade yesterday, Cable has been hit hard, falling to a low of 1.6346 before a minor bounce.…..scroll down
Sup
1.6345
1.6300
1.6260
USD/CHF: 0.8995
Outlook
Res
0.9045
0.9070
0.9090
US$/Chf has chopped largely sideways today, pretty much following the lead from the Euro…..scroll down
Sup
0.8985
0.8960
0.8925
AUD/USD: 0.9070
Outlook
Res
0.9085
0.9100
0.9125
The Aud has seen good short covering demand today and having broken above the 0.9010 resistance and then above the next level of 0.9135, it has continued to make good gains in Europe/NY to reach a high of 0.9085..…..scroll down
Sup
0.9040
0.9025
0.9000
NZD/USD: 0.8376
Outlook
Res
0.8385
0.8400
0.8415
The Kiwi followed the lead of the Aud and is back in favour, having advanced strongly today in taking out all the near term resistance levels in reaching a high of 0.8386.…..scroll down
Sup
0.8350
0.8335
0.8315
Commodities / Indices
ASX SPI: 5215
Outlook
Res
5230
5245
5270
The lower US equities markets and the stronger Aud has put pressure on the SPI, which broke through the 5260 support and is currently on its lows, but holding on above the 5200 support for the time being. The SPI could come under further pressure in the days to come and as we said last week, a break of 5190 could potentially head towards the next major support level at around 5120, with 5150 likely to see interim buyers. Rallies towards 5270 look like selling opportunities, with a SL set above 5300, and in the short term 5240 may well cap it.
Sup
5200
5190
5150
S+P Futs: 1820
Outlook
Res
1830
1835
1840
The S+P still looks heavy and the preference to sell into strength remains unchanged as long as the index remains under 1850. That looks pretty safe, and right now it would be a surprise to see it above 1835. Momentum is pointing lower and a test of 1800 would not surprise. Below that, we could accelerate to the downside, with not a whole lot to stop it heading towards 1770.
Sup
1810
1800
1785
DJI Futs: 16250
Outlook
Res
16300
16350
16400
The Dow looks as though the downside momentum is finally building for a potential test of 16150 and possibly 16090 or even 16000. Topside squeezes should be contained now by 16310/50 and if seen would appear to be a sell opportunity.
Sup
16200
16150
16100
GOLD: 1253
Outlook
Res
1255
1260
1270
Gold remains firm but is running into good resistance at current levels with 1257 (daily cloud base), 1267 (Dec 10 high) and 1271 (50% of 1361/1181) all lying ahead. The 4 hour and daily charts are still both mildly positive so this could be the direction of it over the next few days, and a sustained break of the 1270 area could see a run towards 1292 (61.8%), although there is plenty of resistance ahead of this and it could well be a stretch too far. If 1250/60 does continue to cap the topside, then look for a run back towards the middle/lower end of the range at 1220/1200.
Sup
1240
1230
1220
SILVER: 20.40
Outlook
Res
20.50
20.70
20.85
Silver is giving the top of the 20.35/45 resistance a good workout and the 4 hour charts are still positive, so we could see further attempts to the topside. I am also told that there are very big stops building above 20.50 so be careful up at that level if we see it – it is not so far away now so would seem to be a magnate. The dailies are also mildly supportive so I suspect the downside is limited to around 20.10 today and overall suspect that the stops could get triggered before return to the downside, possibly for an eventual return to the recent 19.65 low, although that is some way off – if at all.
Sup
20.20
20.00
19.85
OIL(WTI): 91.80
Outlook
Res
92.50
93.20
93.50
Fridays’s rally in WTI was a brief affair and we have returned to a low of 91.41, just holding on above the recent 91.22 base. The daily charts are pointing lower and the pressure looks to remain on the downside. Below 91.20 would see a more aggressive look at 90.00 and possibly lower. On the topside, we could yet get a rally back towards 93.00/50, but as before, I think that if we do it would be a sell opportunity
Sup
91.45
90.50
90.00
EUR/USD: 1.3668
The dollar has been fairly flat against the Euro today, with the latter unable to take further advantage of Friday’s poor US jobs data, while other currencies, particularly the Yen, continue to make good ground. Eur/Jpy took a beating, down from 142.30 to 140.50.
Focus will now turn towards to today’s December US Retail Sales (exp +0.1%), which some analysts suggest could come in below expectations and could put further pressure on the dollar. Also worth watching today will be comments from the Fed’s Plosser and Fisher with regards to tapering. Two Fed hawks, Bullard and Lacker, have already tried to talk down the significance of the NFP disappointment and today’s comments will be closely monitored.
Technically things are pretty much unchanged. Today’s high has been 1.3685 and if we can crack that, there will be sellers at 1.3700, and then 1.3720 (50% pivot of 1.3892/1.3548). I am not sure that we are heading above here today, but if wrong the next port of call would be 1.3760 (61.8%) and then 1.3810 (76.4%).
A return to the downside would see some support at the day’s low at 1.3638, which is where the 200 HMA currently sits, a break of which would head back towards 1.3600 (weekly Tenkan/pivot) and possibly to 1.3575, where the medium term rising trend support now lies. Below this would head back towards further decent support at 1.3560 (daily cloud), 1.3545/25 area (100 DMA, 61.8% of 1.3294/1.3892,) and then to 1.3500. Further out, 1.3455 (23.6% of 1.2042/1.3892 & 38.2% of 1.2755/1.3892) and 1.3435 (76.4% of 1.3294/1.3892) will attract.
The outlook is for more choppy trade with a mild bias to the topside, although overall a neutral stance is probably required ahead of the US data. Use 1.36/1.37 as a rough guide, with a chance that we may give 1.3700 a nudge, particularly if the US retail sales are soft. Ahead of that, the EU I/P will be in focus.
Economic data highlights will include:
EU Industrial Production, US Retail Sales
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EUR/USD: 4 hour
USD/JPY: 103.00
The Yen did as we largely expected today and has continued to reverse its recent weakness, both against the dollar and on the crosses as the dollar comes under pressure following Friday’s poor jobs data.
Despite being a Japanese holiday yesterday, stops were triggered on the downside in Asia and the pressure on the dollar has been maintained today by the continued trend lower in US Treasury yields which have fallen once again, with the 10 Years now at 2.82%.
The dollar is currently hanging on at 103.00 (low 102.85). It still looks heavy although the short term charts are now becoming oversold and we may need to chop around here for a while to allow them to unwind. If we do head lower, minor support will arrive, below the current session low, at 102.65, 102.45(17 Dec low) and then 102.18 (38.2% of 96.94/105.43). The dailies are pointing increasingly to the downside and given the crowded nature of the short Yen trade, we could see a more aggressive slide, to below 102, with the next Fibo/rising trend support not seen until 101.20. This is currently some way off and may not eventuate.
On the topside, there will be sellers at the first minor Fibo levels at 103.50 and then at 103.85. I am not sure that we are going back up here today, but if wrong, 104.00 would attract plenty of interest ahead of 104.15 (50% of 105.34/102.97).
The short term charts are showing some bullish divergence, and with Tokyo back in from holiday today, it could well be that there will be plenty of interest out to buy dollars at these low levels, which have not been seen for a month.
Use 102.65/104.50 today as a rough guide.
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USD/JPY: 4 hour
GBP/USD: 1.6380
Having made it up to a high of 1.6507 in early trade yesterday, Cable has been hit hard, falling to a low of 1.6346 before a minor bounce, although it has the medium term rising trend line under pressure.
Sterling remains under pressure after Friday’s U.K. manufacturing and industrial production numbers were both weaker than expected, sparking concerns that the rate of economic growth in the U.K. may have slowed in Q4, after expanding by 0.8% in Q3.
Also weighing on Cable today was the subject of Scottish devolution! A vote on independence is due September but there are many questions on how to split the assets/liabilities of the two economies and whether Scotland could continue to use the pound as their national currency.
Today the focus will turn to the UK CPI data.
Technically, while today’s low holds, the uptrend will remain intact but a break of this would potentially accelerate the downside momentum, with little immediate support to be seen apart from minor levels at 1.6300/05, 1.6260 and then 1.6225 (61.8% of 1.5853/1.6602)
On the topside, there will be sellers now at 1.6400, and above here at 1.6450 and then at the previous resistance at around 1.6480 ahead of 1.6500, which now looks over the horizon. The short term charts are oversold and we may need to consolidate for a session or two but the momentum does appear to be heading increasingly to the downside and I suspect a test of 1.6300 may lie ahead.
Economic data highlights will include:
CPI, PPI, PPI, RPI
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GBP/USD: 4 hour
USD/CHF: 0.8995
US$/Chf has chopped largely sideways today, pretty much following the lead from the Euro, although the Chf does look to be gaining slowly against its counterpart, with the cross now down for the 4th consecutive day, as safe haven demand increases following the poor US data.
For its part, $/Chf has traded in a 50 point range for much of today, before a late NY run to 0.8985.
The charts still look heavy for further possible dollar weakness and if 0.9000 (38.2% of 0.8798/0.9126/ daily Tenkan) is unable to hold, then look for a run towards minor support at 0.8985 and then to 0.8960 (50%/daily Kijun). Below that would head towards 0.8925 (61.8% of 0.8798/0.9126) but may be a stretch too far today.
A return to the topside would see a run back towards the day’s high at 0.9047, where minor descending trend resistance currently lies. Above that would most likely head back towards minor resistance at 0.9070 and then to the Friday high at 0.9090. I doubt we are heading above 0.9100 today but if wrong, look for a squeeze towards Thursdays high at 0.9126. Beyond there would head towards 0.9145 (76.4% of 0.9248/0.8798), above which would suggest a run towards 0.9188 (20 Nov high) ahead of 0.9249 (7 Nov high), where the 200 DMA/top of the descending channel now lies. This is well over the horizon for the time being.
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USD/CHF: 4 hour
AUD/USD: 0.9070
The Aud has seen good short covering demand and having broken above the 0.9010 resistance and then above the next level of 0.9035 in Asia, it has continued to make good gains in Europe/NY to reach a high of 0.9085.
Further gains look possible over the next few days, although there is little data out today and it could be that the Aud wants to consolidate ahead of the local Jobs data due on Thursday. The 4 hour charts are pointing higher but are reaching overbought territory and momentum may slow a little, but the dailies remain positive and any dips back below 0.9050 would look to be well supported. Further support would arrive at 0.9035 and then at 0.9000/10 although we are unlikely to see this today.
On the topside, above 0.9085 would head on towards 0.9100 and then potentially to 0.9175 (38.2%/ daily cloud base). 0.9167 is the 12 Dec high which will see sellers ahead of the Fibo resistance. Keep an eye out for a weak US retail sales number. Below the expected 0.1% reading for December could see the next spike up in the Aud.
The RBA will not like the chances of a further rally in the Aud and so we should look out for further efforts to talk it back down and even the chance of a Feb rate cut in order to give it a helping hand to the downside. At present though, a rate cut seems unlikely.
Today use 0.9040/0.9100 as a guide with a preference to buying dips.
GBPAUD: 1.8095. For those who sold Gbp/Aud yesterday, as per the website, I think we are now on our way to 1.7950/1.8000. SL on shorts should be at the neckline at around 1.8175, but preferably above 1.8200.
Economic data highlights will include:
WBC Leading Index
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AUD/USD: 4 hour
NZD/USD: 0.8370
The Kiwi followed the lead of the Aud and is back in favour, having advanced strongly today in taking out all the near term resistance levels in reaching a high of 0.8386.
The 4 hour charts are still positive, if in some danger of becoming overbought, but the dailies are building some positive momentum too and a test of 0.8400 could be on the cards. There is plenty of resistance up there though, and the last few attempts to head much above here have resulted in a smart about turn and back into the range. The last two highs have been at 0.8407 and 0.8415 and so they need to be overcome before further possible advances on 0.8435. Above that would be getting a little short of oxygen, but it could be that the Kiwi wants to head back for another look at 0.8500. It is too early to anticipate this so don’t get too excited, although if the US retail sales are soft, then look for another topside run in the Kiwi.
On the downside we would see a return towards 0.8335 and then to 0.8315 ahead of 0.8300. I don’t see this happening, but if wrong, would suggest another topside failure and would probably bring on more 0.82/0.83 range trade.
More likely I suspect we are going to see a test of 0.8400 and possibly higher.
Today’s NZ Business Confidence could be the catalyst to help us on our way.
Economic data highlights will include:
Business Confidence
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NZD/USD: 4 Hour