Aud and Kiwi both under pressure. A big day of data today. Australian Retail Sales, RBA and China Mfg numbers. NZ Terms of Trade
The dollar is higher today, with the Euro under pressure ahead of Thursdays ECB meeting, and the DXY seems to be breaking important resistance which suggests that more of the same may lie ahead. Today’s EU CPI will give an important lead into Thursday’s ECB outcome. Ahead of that, we get the Australian Retail Sales & HSBC China Mfg data and then the RBA IR decision/ press statement, which could keep the Aud under pressure if Glen Johnson paints a dovish outlook. NZ gets Terms of Trade. Later in the day, US factory orders will be the focus.
CURRENCIES
EUR/USD: 1.3596
Outlook
Res
1.3620
1.3635
1.3650
The Euro has been stuck in a relatively tight range against the dollar either side of 1.3600 after mixed data from the EU and the US..scroll down
Sup
1.3585
1.3570
1.3550
USD/JPY: 102.40
Outlook
Res
102.50
102.65
102.85
The dollar has been well bid pretty much through the session, helped by a strong showing from the Nikkei...scroll down
Sup
102.25
102.15
102.00
GBP/USD: 1.6745
Outlook
Res
1.6765
1.6780
1.6800
Cable had a steady day stuck in a 40 point range after the UK manufacturing PMI came in pretty much as expected at 57 in May..scroll down
Sup
1.6725
1.6700
1.6690
USD/CHF: 0.8986
Outlook
Res
0.8990
0.9000
0.9040
The dollar made it to a new trend high today with the Chf under some pressure after the Swiss SVME PMI dropped to 52.5 in May (exp 55.5)..scroll down
Sup
0.8970
0.8960
0.8930
AUD/USD: 0.9247
Outlook
Res
0.9270
0.9285
0.9300
Despite the improved weekend China data, the Aud did not like the softer domestic building approvals and fell from an early high of 0.9320 to test the resilience of the bids below 0.9250 ..scroll down
Sup
0.9235
0.9210
0.9200
NZD/USD: 0.8450
Outlook
Res
0.8465
0.8485
0.8500
The Kiwi remains under pressure falling to a low of 0.8440 late in the day after the US$ picked up some ground..scroll down
Sup
0.8430
0.8400
0.8375
Commodities / Indices
ASX SPI: 5531
Outlook
Res
5540
5550
5560
The SPI continues to consolidate below the important 5560 level and may well continue to do so. If the RBA are dovish in today’s statement though and hint that rates will stay low for a prolonged period, 5560 could get taken out which could see a run towards 5600 and possibly higher. Above 5600 there is not much to stop it heading to 5750. Support now looks likely at 5500.
Sup
5520
5500
5485
S+P Futs: 1921
Outlook
Res
1925
1930
1940
The S+P made another new all time high today, before the debacle that was the ISM data - which included 2 corrections – and sent the S+P quickly lower to 1913 before an equally quick bounce back to where it had started. As I said yesterday, it looks as though we are going to head closer towards the top of the long term channel, where the resistance lies at 1940 and where I would be a seller with a tight SL placed at just above 19.50. The downside looks well protected in the 1905/15 area.
Sup
1915
1910
1900
DJI Futs: 16725
Outlook
Res
16750
16800
16850
The Dow has made another new high today at 16742.50 and looks destined for 16800 and and eventually to 17000, but as I said before, it will do so without any participation from me because when this turns lower it is going to be ugly. The downside currently has support at today’s spike low – seen after the ISM release – at 16667 where the 100 HMA lies. Below that would hint at 16630 and possibly 16600 but looks unlikely for now.
Sup
16700
16665
16600
GOLD: 1243
Outlook
Res
1250
1260
1270
Gold remains heavy but is currently hanging on to 1240 support. A break would head to strong support at 1232 (76.4% of 1182/1392), below which would signal further medium term weakness towards 1215 and then perhaps to 1200. If we do see a bounce, sellers will gather at 1265 and at 1272 where the 200 HMA currently lies. Selling rallies appears to be the way to go, and, further out, we could yet get a retest of the 31 Dec 2013 low at 1182 .
Sup
1240
1232
1215
SILVER: 18.75
Outlook
Res
18.85
19.00
19.25
Silver has shown no sign of a bounce today and the dailies are beginning to look as though they are building for a bigger move to the downside, albeit that this could be rather premature, so caution is needed. The 4 hour charts are also pointing a bit lower, and if 18.60 is taken out we can expect a move towards the 28 June ’13 low at 18.20 (76.4% of 8.4/49.78), which is huge support and which should hold at the first attempt, although I am not sure we are going to see it for a while. On the topside, back above 19.00 would see further offers at around 19.25 and again at 19.40 although, once again, this looks some way off and unlikely to be visited in the near term. Selling rallies seems to still be the strategy.
Sup
18.60
18.40
18.20
OIL(WTI): 102.40
Outlook
Res
103.00
103.50
104.00
WTI headed lower again today, to 102.08, before a mild bounce and while the medium term pressure remains lower, the hourly charts are showing some bullish divergence. Selling near term rallies therefore remains the preferred strategy with the 100/200 HMA resistance sitting at the 103.20/50 area. Below 102.00 would head towards 101.50 and eventually to 101.00 but not for a while I suspect.
Sup
102.00
101.50
101.00
EUR/USD: 1.3595
The Euro has been stuck in a relatively tight range against the dollar today, either side of 1.3600, after mixed data from the EU and the US, with neither currency able to make any real gains ahead of Thursday’s ECB meeting. The generally soft EU PMI’s aided an early decline to 1.3594 but the Euro squeezed back towards 1.3625 after the German CPI release saw some short covering; it slowed more than expected to 0.9% yy in May (exp 1.1%), down from 1.3% in April but was unable to break below the support. A miscalculated US ISM had the market confused but the dollar eventually regained its ground and headed back to 1.3600 where it sat at the NY close.
Today sees the EU CPI number (exp 0.7% yy), and a low reading will add further pressure to the ECB to act on Thursday, although it is pretty much written in that there will be an easing so downside progress may be slow, with much depending on Mario Draghi’s outlook. In the meantime, being back at 1.3600 means that little has changed from a technical perspective and it would not really surprise to see the Euro chop around close to current levels until Thursday.
We are currently sitting right on the major Fibo support at 1.3596 (76.4% of 1.3475/1.3995) a break of which would return to the minor double bottom at 1.3588, where there was previously talk of good Asian demand. Below here though would see a drop towards 1.3560 (27 Feb low) and then to 1.3520 (38.2% of 1.2754/1.3995) but I doubt we head down here yet.
On the topside, the 200 HMA is at 1.3630, ahead of today’s peak at 1.3636. A break of this would see further sellers at 1.3650 (daily Tenkan) and then at last week’s high of 1.3668. The first Fibo level to watch is at 1.3680 (23.6% of 1.3993/1.3585) a break of which could head on to 1.3700 and 1.3739 (38.2%/100 DMA).
The EU CPI will be the focus and I suspect that 1.3585/1.3630 may again more or less cover the action. EU Unemployment also due.
Keep an eye on the DXY (chart below) which appears to be in the process of taking out the important resistance at 80.60 (see yesterday’s outlook) and could be a sign that the dollar is about to pick up some positive momentum.
Economic data highlights will include:
EU CPI, Unemployment US Factory Orders
Meta Trader – AxiTrader EurUsd: 4 hour
DXY: Daily
USD/JPY: 102.40
The dollar has been well bid pretty much through the entire session, helped by a strong showing from the Nikkei, which yesterday reached an 8-week high, and followed through in the futures markets, with the index looking likely to open up above 15000 in the coming Asian session.
Having made it up to 102.00 by the end of Asian trade, the dollar has since reached a peak of 102.47 where it has met the major Fibo resistance (102.45: 76.4% of 103.01/100.82, 50% of 104.11/ 100.82) and looks like closing the US session above the 100 DMA at 102.36.
If the dollar continues to head higher, the next resistance will be at the daily cloud top at 102.65, although I suspect that the momentum should slow a little as we move into the cloud. If we do take out the cloud top, then we will see an accelerated run back towards 102.85 (61.8% of 104.10/100.82) and probably to the 2 May high at 103.01.
The hourlies are now very overstretched and so some consolidation would not surprise. The 4 hour and daily charts though both remain positive so dips look likely to be shallow. Minor support should arrive at 102.15, a break of which would head back to 102.00. This looks unlikely in the short term, but if wrong look for further bids at 101.85.
Buying dips appears to be the strategy, and today look for 102.20/70 to cover it. Keep an eye on the Nikkei.
Economic data highlights will include:
Nomura Mfg PMI
Meta Trader – AxiTrader
USD/JPY: 4 Hour
GBP/USD: 1.6745
Cable had a steady day, stuck in a 40 point range after the UK manufacturing PMI came in pretty much as expected at 57 in May.
Today’s action will centre on the Retail Sales Monitor and UK Construction PMI, but realistically we should probably expect further choppy trade until the BOE meeting on Thursday.
Little has changed from a technical perspective.
On the topside, today’s peak was 1.6766 and will again see minor sellers, above which would see another run towards Fibo resistance at 1.6780 (38.2% of 1.6920/1.6692) and above here we could see a squeeze towards the 200 HMA at around 1.6800, although I think rather doubtful.
On the downside, today’s low at 1.6723 will again see minor buying interest ahead of 1.6700. I don’t think we are going below here today, but if wrong, further bids will arrive at last week’s low at 1.6692, below which, there is not much to stop it heading towards the 100DMA/15 April spike low at 1.6656. Under here the next realistic support is at the 50% Fibo pivot of 1.6251/1.6995 at 1.6525.
Use 1.6720/70 as a guide once more, with a mild bias to trading from the short side, looking for lower levels later in the week.
Economic data highlights will include:
UK Retail Sales Monitor, UK Construction PMI
Meta Trader – AxiTrader
GBP/USD: 4 Hour
USD/CHF: 0.8986
The dollar made it to a new trend high today with the Chf under some pressure after the Swiss SVME PMI dropped to 52.5 in May (exp 55.5).
It looks as though the dollar is making an attempt to break above the 200DMA, currently sitting right on it at 0.8990. We have not been above here for 9 months and so a break would most likely produce fresh buying, potentially taking the dollar above 0.9000 and on to the next major resistance at around 0.9100. There is plenty of work to do before then though, and ahead of the ECB on Thursday the 200 DMA may well continue to cap it. Above 0.9000, expect to see minor resistance at 0.9040 and 0.9085, but probably not today.
A turn to the downside, would see minor support now at 0.8970 (100 HMA) and at 0.8960 (200 HMA). Below this would return to the session low at around 0.8930 but I doubt we see it down here today and prefer to buy dips for an eventual test of 0.9000 and above.
Meta Trader – AxiTrader
USD/CHF: 4 Hour
AUD/USD: 0.9247
Despite the improved weekend China manufacturing data, the Aud did not like the softer domestic building approvals and fell sharply, from an early high of 0.9320, to test the resilience of the bids below 0.9250 by the time Asia wound up. It remains close to these levels at the end of the US session having earlier seen a run to 0.9234.
Things are not looking particularly healthy for the Aud, with weak commodity prices likely to keep the topside somewhat limited. We have the RBA meeting coming up today and although no change is expected, Glen Johnson could well take the opportunity to talk the Aud lower once again. Before the RBA decision, we get the Retail Sales (exp +0.2% Apr), where the RBA will want to see what effect the recent Federal Budget has had on consumer spending. The HSBC China Mfg number will also be released. The flash reading was a strong number (49.7) so will be worth watching closely.
A break below 0.9235 would again head back into the strong support in the 0.9200/10 area which has recently held well and could do so again given the mixed nature of the momentum indicators. A break would have rather bearish implications, invalidating the reverse head/shoulders by heading back below the neckline and would suggest a run towards 0.9175, where the 200 DMA lies. Below this would potentially see a quick run towards 0.9155 (38.2% of 0.8660/0.9460), which is where the base of the channel lies. Below here would hint at an accelerated run towards 0.0.9115 (100 DMA).
On the topside, it currently looks as though the Aud is going to have some difficulty in regaining 0.9270. If wrong, 0.9285 and 0.9300 will again see sellers, ahead of Fridays high at 0.9328. I don’t see the Aud above 0.9330 any time soon given the very strong resistance to be seen up here (61.8% of 0.9408/0.9208/ Weekly cloud base/Tenkan). If wrong, the next target would be 0.9360 (76.4%) above which the descending trend resistance is at 0.9375.
Wait for the data/RBA but a break of 0.9200 to see what lies below is looking increasingly possible.
Economic data highlights will include:
Current Account, Retail Sales, RBA IR Decision/Statement, HSBC China Mfg PMI, China Non-Mfg Index
Meta Trader – AxiTrader
AUD/USD: 4 Hour
NZDUSD: 0.8450
The Kiwi remains under pressure, today falling to a low of 0.8440 late in the session after the US$ picked up some ground following the confusion surrounding the release of the ISM.
It is currently holding on above minor support at 0.8433 (12 march low), but the NZ Terms of trade lie ahead and are expected to come in at +1.8% v the prior 2.36% . Export volumes are expected to be at +1.0% v the prior 9.7%. If the reading is a soft one then expect another leg lower towards 0.8400 and possibly towards the major Fibo support at around 0.8375(38.2% of 0.7718/0.8778).
The topside looks to have less potential, but the short term charts are somewhat oversold so we may see a bounce towards 0.8470 and possibly to the 100 HMA at around 0.8490. The major resistance is at around 0.8515 which I don’t think we are likely to see any time soon and rallies towards 0.8500 would appear to be a selling opportunity.
Economic data highlights will include:
NZ Terms of trade
Meta Trader – AxiTrader
NZD/USD: 4 Hour