It was a volatile session following the solid US jobs data on Friday, finishing a wild first week of 2016, with the prospect of plenty more of the same to come in the weeks ahead. Risk assets were sold heavily with stocks and the commodity bloc currencies all being hard hit, while defensive assets such as Gold, Yen and Chf were all beneficiaries. The focus this week will remain heavily on China, with both the stock market and the Yuan in focus. Elsewhere the beginning of the corporate reporting season begins with Alcoa’s results today and will have a strong influence on the direction of US stocks over the next couple of weeks. There is a fair bit of secondary data due as well, much of it later in the week. Today is a bit thin on the ground, with the EU Sentix Investor Confidence Survey being the main focus, although before then Asia gets the NZ Building Permits, the Australian ANZ Job Ads, and the Chinese New Loan figures. Tread carefully!
CURRENCIES
EURUSD: 1.0918
Res
1.0945
1.0990
1.1010
Sup
1.0885
1.0850
1.0800
USDJPY: 117.25
Res
117.65
118.00
118.30
Sup
117.00
116.80
116.40
GBPUSD: 1.4521
Res
1.4560
1.4645
1.4600
Sup
1.4500
1.4470
1.4425
USDCHF: 0.9945
Res
0.9970
1.0000
1.0035
Sup
0.9920
0.9900
0.9870
AUDUSD: 0.6947
Res
0.6980
0.7000
0.7025
Sup
0.6940
0.6900
0.6870
NZDUSD: 0.6540
Res
0.6580
0.6600
0.6625
Sup
0.6540
0.6515
0.6490
INDICES / COMMODITIES
S+P: 1912
Res
1928
1964
1948
Sup
1900
1884
1860
DJI: 16233
Res
16320
16400
16480
Sup
16200
16100
16000
ASX SPI: 4846
Res
4872
4900
4920
Sup
4820
4800
4780
GOLD: 1104
Res
1114
1122
1130
Sup
1098
1092
1084
SILVER: 13.91
Res
14.10
14.20
14.40
Sup
13.85
13.65
13.50
OIL (WTI): 32.87
Res
33.40
34.00
34.55
Sup
32.05
31.50
31.00
Indices/commodities
S&P Futures
1912
Stocks have had their worst start ever to a year’s trading and were unable to garner any relief from the strong US Jobs data on Friday, with the S+P falling hard to finish just above the session low of 1909. Investors will be hard pressed to find any relief this week either, with prospects dimming for a strong start to the corporate earnings season which begins today with Alcoa’s results, and also due to the growing concerns about slowing economic growth in China, not to mention the battering that the equity markets there have taken in the last week. The initial support arrives at 1900 and at 1895 (76.4% of 1830/2110) below which would head to 1882 (2 Oct low) and then below that to 1860 (29 Sept low). A break of this would then open the way to a deeper decline, towards 1850 (26 Aug low) and on to 1830 (24 Aug low). On the topside, minor resistance will arrive at 1925/30 above which would allow a run towards 1948 (23.6% of 2074/1909) and on to Friday’s high of 1964, although I don’t see it going close today. Note that the 4 hour charts are oversold and thus a bounce is to be expected although these should offer a good sell opportunity, I suspect, as the daily/weekly/monthly charts all tell us that the pain is not done with yet.
DJI Futures
16233
The DJI fell another 1% on Friday, closing just above the 16207 low, after earlier spiking higher to 16662 following the release of the solid US jobs data. From there it was a steady slide lower, and given the look of the daily/weekly/monthly charts, further losses look to be in store in the days/weeks ahead. Support will arrive at Friday’s low (61.8% of 15163/17895) but below which would then open the way to 16000 and potentially to 15810 (76.4%). Under there, the 200 Week MA and major rising trend support are seen at 15650, and if/when seen should be strong support. To the topside, minor resistance is seen at 16360/80, above which would then open the way towards descending trend resistance/Fibo resistance at 16600 (23.65 of 17902/16207) and to Friday’s peak at 16662.
ASX SPI
4846
The SPI looks horrible and we could be in for a major decline given the look of the daily charts, where the SPI closed below the neckline (4900) of what appears to be a large head and shoulders, and we could be heading to a technical objective of 4400. That is some way off, and in the short term the 1 & 4 hour charts are oversold, suggesting that we could see a bit of a bounce towards 4870 and possibly to 4900. Back above here would negate the head/shoulder theory and could see a nasty squeeze towards 4950 (23.6% of 5315/4839) and on towards 5000 and to 5020 (38.2%). As long as we stay under 4900, then the downside pressure should take the SPI towards 4800 and then to the 21 Aug low at 4731 and eventually a fair bit lower.
GOLD
1104
Gold looks as though it is building a head of steam for a run to the topside, which would most likely come about if China continues to implode causing a run towards safe-haven assets such as the Yen and Gold. The 100 DMA sits close by at 1111 and will again see sellers ahead of the Fibo resistance at 1116 (23.6% of 1332/1047) and again at 1127 (23.6% of 1392/1047), a break of which would head on towards the 200 DMA at 1139. The downside will see support at 1100 and again at 1090, below which would see further bids at 1078 (200 HMA). For the time being it would appear that Gold has further upside, but this will depend largely on the outcome of what happens in China. If things settle down there, then Gold may begin to resume its steady slide back to the downside. The daily charts currently suggest that the upside has more potential.
SILVER
13.91
Silver is rather uninspiring at present as it sits near 14.00, unable to find much direction. If Gold heads higher, dragging Silver along with it, then expect a move towards 14.40 and possibly to 14.62 (7 Dec high). The downside looks well protected for now at 13.65/75, although a break of this would then open the way to the August 2009 low at 13.48 and then to the major rising trend support seen at around 13.30.
OIL (WTI)
32.87
WTI had yet another tough day, falling for the 5th consecutive session in reaching a low of 32.62, a level last seen in Jan 2004 when the low was 32.27. Below this would then head towards the December 2003 low which was at 29.66 and the November 2003 low at 28.47 To the topside, minor resistance is to be seen at 33.65 and then at Friday’s high at 34.29. Above this may prove tricky, although the 4 hour charts are showing some bullish divergence and a squeeze towards 35.50 should not be ruled out. Any meaningful rally would seem to be a selling opportunity as we look towards WTI heading towards 30.00
EURUSD: 1.0918
The Dollar initially jumped higher on Friday following the release of the much stronger than expected US jobs data, where the NFP report showed 292k growth in December versus expectation of 200k, while the prior month’s figure was also revised up from 211k to 252k. The headline unemployment rate was unchanged at 5.00%. After spiking to a session high against the Euro of 1.0803, those gains were slowly eroded through the rest of the session as disappointment over the average hourly earnings of 0.0% mm (versus expectation of 0.2% mm) made traders cautious and caused some covering of long dollar positions.
There is a fair bit of data out in the days ahead, particularly during the latter half of the week, although most of it is secondary and unlikely to provide the main direction for the markets. Most of the focus will be on the ongoing gyrations in China and on picking apart the outcome of last Friday’s US Jobs report, as traders attempt to divine when the next rate hike may be. There are plenty of Fed speakers due this week, and Friday in particular sees a heavy data-load from the US, headed by the Retail Sales,which may help to clarify the intentions of the Fed and to provide some directional moves.
Technically a fairly cautious stance is required over the next day or two. The daily charts are inconclusive, while the 4 hourlies are pointing higher but at this stage without any great conviction, and following Friday’s strong jobs data it would seem unlikely that the dollar is going to lose too much ground early in the coming week. The initial resistance will arrive at the Friday high of 1.0933, where the minor descending trend resistance will act as a hurdle. Above this would allow a move towards 1.1000 and then on to the 100/200 DMAs which have converged at 1.1040. Above here will run into the 15 Dec high of 1.1059, which coincides with the longer term descending trend resistance and should be a tough hurdle to break. If wrong, look for plenty of stops to be triggered, taking the Euro on towards 1.1120 (61.8% of 1.1495/1.0521).
The downside will find support at 1.0870 (200 HMA) and then at Friday’s lows near 1.0800. Below here, which may be unlikely today, would allow a return to 1.0770 (minor) and then to the recent lows of 1.0710 (5 Jan low).
More choppy sideways trade appears likely in the days ahead, and if anything, the DXY index (see report) does hint that the dollar could come under some mild pressure in the next few sessions. Having said that, given the solid jobs data from the US on Friday and the diverging monetary policies of the Fed/ECB it would seem that eventually the dollar will begin to move towards the topside and a look at parity will eventually seem likely. That may not be for some months though, possibly not until the second half of 2016, and in the meantime I would expect it to stay rather choppy.
Economic data highlights will include:
M: EU Sentix Investor Confidence Survey, US Labor Market Conditions Index, Feds Lockhart Speech
T: US NFIB Business Optimism Index
W: EU Industrial Production, ECB Non MP Meeting, US Beige Book, Speeches Feds Rosengren/Evans
T: Eurogroup Meeting, German Real GDP Growth, ECB MP Meeting Accounts, US Jobless Claims, Import/Export Index (Dec), Fed’s Bullard Speech
F: German Wholesale Price Index, EU Trade Balance, New York State Empire Mfg Index, US Retail Sales,
Rts/Michigan Consumer Sentiment Index, PPI, Capacity Utilisation, Industrial Production, Business Inventories, Fed’s Dudley Speech.
Meta Trader – AxiTrader
EURUSD: 4 Hour
…
USDJPY: 117.30
The strong NFP reading caused some volatile trade on Friday, taking the dollar briefly up to 118.86 (23.6% of 123.59-117.33), although the under-performing average hourly earnings figure of 0.0% quickly reversed those gains and the dollar headed back to finish at the session lows of 117.30.
While the shorter term charts are oversold, suggesting that any downside momentum may slow a little in the coming session or two, the longer term charts do suggest that we could be in for further dollar losses at some stage. Much will depend on how Chinese markets continue to react, but any major selloff in the Chinese stock markets or continued weakness in the Yuan, would most likely see demand for the Yen increase on the back of safe-haven demand.
Technically, a break of 117.30 would open the way towards 117.00 and then to the 12 month rising trend support at 116.40, below which would meet the 24 August spike low at 116.12 and then the 50% pivot of 105.19/125.85, at 115.47.
On the topside, 118.00 and then the 100 HMA at 118.50 will see offers, ahead of Friday’s session high of 118.86. Above here seems unlikely today, but if wrong, further strength could then take the dollar on towards the 200 HMA at 119.35.
It is a Japanese holiday and thus should be fairly quiet in Asia, unless we see a major move in the Chinese markets.
Economic data highlights will include:
M: Japan Holiday
T: Consumer Confidence, Eco Watchers Survey
W:
T: Machinery Orders, Machine Tool Orders .
Meta Trader – AxiTrader
USDJPY: Daily
…
GBPUSD: 1.4521
Sterling is unable to gather any strength at all, and while the other majors managed a recovery against the dollar on Friday following the release of the US employment figures, Cable remained firmly rooted near its new 6 year low of 1.4505.
The main event this week will be the BOE meeting on Thursday although no changes are expected. At the same time, a Fed rate hike in March is looking to be an increasing possibility, particularly after Friday’s US jobs data. Given the diverging stance in monetary policy between the Fed/BOE, the low inflation outlook for the UK and the increased chances of a UK exit from the EU, a dovish outlook from the BOE on Thursday could see Sterling come under further downside pressure in the weeks ahead, both against the dollar and also the Euro. Ahead of the BOE Meeting, Tuesday sees the important manufacturing and industrial Production figures which will provide plenty of short term volatility.
Below 1.4500, it could be steady ratchet lower towards 1.4400 and lower, as there is actually not too much to support Cable ahead of the major Fibo support at 1.4360 (76.4% of 1.3502/1.7180).
On the topside, look for offers to arrive at 1.4550 (minor) ahead of 1.4600 (55 HMA) and then 1.4635 (100 HMA). Above here looks unlikely today, although if wrong, further strength could take Cable towards 1.4670 (38.2% of 1.4944/1.4505).
Selling rallies would seem to be the plan.
Economic data highlights will include:
M:
T: Manufacturing Production, Industrial Production, NIESR GDP Estimate
W:
T: BOE Meeting/Statement/Minutes/Vote Count/APP Facility .
F:
Meta Trader – AxiTrader
GBPUSD: Daily
GBPUSD Weekly
USDCHF: 0.9945
US$Chf was choppy following Friday’s US jobs data, gyrating between 0.9926/1.0051, but finished close to its lows.
More of the same would appear likely, although note in the 1 hour chart, below, the possibility of a head and shoulder formation, with a neckline, close by at 0.9920, which if broken would have an objective of around 0.9720.
Before then, support would be seen at 0.9900, at 0.9840 (100 DMA/38.2% of 0.9071/1.0327) and then at 0.9780 (14 Dec low).
On the topside, resistance will arrive at 0.9975 (200 HMA) and then at 1.000 and at Friday’s top at 1.0051, but which looks rather unlikely to be seen today.
The dailies are inconclusive suggesting caution but the shorter term charts do seem to be lining up for a test and possible break of 0.9920/00.
Economic data highlights will include:
M: Retail Sales
T:
W:
T:
F:.
Meta Trader – AxiTrader 1 Hour
USDCHF: Daily
…
AUDUSD: 0.6947
After a relief rally up to 0.7076 in Asia on Friday when the Chinese markets stabilised, it was pretty much all downhill for the Aud which made new trend lows of 0.6943 right at the end of the session. Not even the selloff in the dollar seen against the other majors following the release of Fridays’ US jobs data could help it out and the weak finish in the US equity markets made sure that risk assets, including the commodity bloc currencies, remained under heavy pressure into the weekend.
Following the weekend release of the Chinese Inflation data, which came in at close to expectations, much of the focus in the coming week will again be spent on closely watching how events unfold in China. The Yuan fixing and the stock markets will be at the centre of attention, with the New Loans (December) due today, and the Trade Balance, due on Wednesday, also to be thrown into the mix. The domestic interest will lie in Thursday’s Unemployment figures (Exp 5.9%, -12.5K, PR 65.2%). The hobs figures have outperformed expectations recently so the market will be looking for a pullback. Another solid result would further reduce the chance for a near term rate cut from the RBA.
The charts look pretty horrible for the Aud, and a test of 0.6935 (29 Sept low), the trend low of 0.6900 (30 Aug), and lower, would not surprise. The next meaningful support would be at 0.6769 (March 2009 low), and eventually I think we head towards the head/shoulder target that we have been harping on about for almost 2 years, at 0.6000! http://www.fxchartsdaily.com/audusd-aud-heading-0-6000-check-monthly-chart/
In the short term, the charts are oversold and the hourlies are showing some bullish divergence, so I would not be too aggressively short at these levels. Minor resistance arrives at 0.6980, 0.7000 and then again at 0.7048 (23.6% of 0.7327/0.6962) and at Friday’s high of 0.7076.
Selling rallies for a continuation of the medium term move lower would seem to be the plan, although I suspect that we may see better levels to sell into. In the bigger picture though, slowing demand from China is going to do nothing to help the Aud and the carry trades are getting blown to smithereens! AudJpy is already down by over 7% this year and we’ve only had 5 days of trade!
Economic data highlights will include:
M: ANZ Job Ads, China New Loans,
T:
W: China Trade Balance
T: Unemployment
F: Home Loans, Investment Lending for Homes, China Foreign Direct Investment .
Meta Trader – AxiTrader
AUDUSD: Daily
AudUsd: Monthly …
NZDUSD: 0.6540
As with the Aud, the Kiwi headed to new trend lows on Friday, as negative risk sentiment dominated trade, and from the look of the charts there is more downside ahead. With little domestic data due this week the Kiwi will again be at the mercy of risk on/off moods flowing through the market.
Technically a fairly cautious stance is required over the next day or two as the 1 and 4 hour charts are somewhat oversold, so a bounce would not really surprise. Resistance will be seen at 0.6570 (100 DMA), which could act as a pivot over the next couple of days, and then at 0.6590. Back above 0.6600 would then see a run towards 0.6620 (23.6% of 0.6882/0.6540) and then to the 100 HMA at 0.6650 and possibly to 0.6670 (38.2%).
To the downside, important support arrives nearby at 0.6535 (76.4% of 0.6428/0.6882), a break of which would then head towards 0.6513 (30 Nov low) and to 0.6490 (23 Nov low). Under here would potentially see acceleration towards 0.6427 (18 Nov low) and then to 0.6415 (61.8% of 0.6125/0.6896). Below 0.6400 there is not too much, until 0.6305 (76.4%), to support the Kiwi although that is for another day. Eventually I suspect that we do head there though and selling rallies remains the theme.
Economic data highlights will include:
M: ANZ Commodity Prices
T:
W:
T: Electronic Card Retail Sales
F: Food Price Index .
Meta Trader – AxiTrader
NZDUSD: Daily
…
DXY: 98.37
The DXY is chopping around and apparently going nowhere too fast. The price action actually does look a bit concerning for the dollar bulls and the indicators do not really hint that we are in for the uptrend to resume any time soon, despite Friday’s strong Jobs data and the potential for a Fed rate hike in March.
It could be that we continue to move erratically sideways, in which case, the points to watch, on the downside, would be at the recent minor lows between 98.15/97.80, below which would open the way to a move towards the 100 DMA at 97.15, the 200 DMA at 96.75 and possibly at the 18 month rising trend support at around 96.40, which if seen should be strong.
On the topside, offers should be seen at last week’s highs at 99.19 and then above that at 99. 63 (5 Jan high), at 100.00, and then at the 2 December/trend high, at 100.51.
For the time being the indicators, if anything, look slightly negative and a test of the support levels would not really surprise, suggesting that the Euro may want to take a look at 1.1000.
www.tradingview.com
DXY: Daily
…
DXY: Weekly
The post 11 Jan: Negative risk sentiment persists despite strong US jobs data. appeared first on FX Charts Daily.