Aud, Kiwi continue to bounce, with further upside very possible.
Mario Draghi’s rather more upbeat outlook on the EU economy today took the market by surprise and lit a fuse under the Euro which dragged the other risk related currencies along for the ride. The US$ was generally on the defensive ahead of today’s US Jobs/NFP reading, as was the Yen, which suffered from the broader risk-on flows that persisted, despite little progress on the Ukraine front. All the focus is now on the Jobs numbers, but Asia gets the BOJ monthly economic outlook and the Australian Construction PMI, while the UK has the Inflation Report, and from Germany, the Industrial Production data. Have a good w/e.
CURRENCIES
EUR/USD: 1.3860
Outlook
Res
1.3890
1.3950
1.4000
The Euro soared today after the ECB left rates unchanged as expected, but reacted to Mario Draghi’s upbeat press conference.….scroll down
Sup
1.3830
1.3800
1.3770
USD/JPY: 103.00
Outlook
Res
103.15
103.60
103.85
The dollar liked what it saw against the Yen today as a more positive risk outlook returned,…scroll down
Sup
102.80
102.65
102.50
GBP/USD: 1.6750
Outlook
Res
1.6775
1.6800
1.6821
As expected, BoE left rates unchanged at 0.50% and kept the asset purchase target at GBP 375bio..…scroll down
Sup
1.6700
1.6685
1.6650
USD/CHF: 0.8803
Outlook
Res
0.8850
0.8895
0.8920
The dollar has turned sharply lower after the ECB decision but has so far managed to hang on above the recent base of 0.8777.…scroll down
Sup
0.8775
0.8700
0.8645
AUD/USD: 0.9097
Outlook
Res
0.9115
0.9170
0.9205
The Aud responded positively to the much better than expected Retail Sales and Trade Balance figures …scroll down
Sup
0.9075
0.9050
0.9005
NZD/USD: 0.8485
Outlook
Res
0.8500
0.8540
0.8580
The Kiwi has taken out some important resistance at 0.8432 and headed on to a high of 0.8503 following the new found risk appetite, following on from Mario Draghi’s ECB Press Conference.…scroll down
Sup
0.8430
0.8400
0.8375
Commodities / Indices
ASX SPI: 5450
Outlook
Res
5460
5470
5480
The SPI traded pretty much to expectations and currently sits in the middle of the days 5417/68 range, and looks likely to do so, probably until the US jobs data. Keep an eye out for Glen Johnson speaking to the House of Reps later on. Momentum is mixed, but the dailies suggest that eventually we could squeeze a bit higher. Right here a neutral stance is probably best.
Sup
5430
5415
5400
S+P Futs: 1875
Outlook
Res
1880
1885
1890
The S+P made another new all time high at 1880, squeezing slowly towards our 1890 target. Today could be the day for it if the NFP is poor and the market decides that tapering could be put on hold , but the 4 hour bearish divergence continues and I remain wary of a correction lower. 1855 is now the immediate support. Below there would most likely see a run towards 1825, but it is too early to think of that and in the meantime the trend creeps slowly higher.
Sup
1865
1855
1845
DJI Futs: 16415
Outlook
Res
16450
16500
16537
The Dow is creeping back towards its own all time high at 16537 and maybe today’s data will decide if we get there. As with the S+P, the 4 hour bearish divergence is a concern, but the trend remains up. 16250 and 16150 remain the first decent supports, but dips to those levels could well be buying opportunities, ahead of the next assault on the topside.
Sup
16350
16300
16250
GOLD: 1351
Outlook
Res
1355
1365
1372
Gold held the 1335/30 support and has headed back to 1350. The choppy trade could continue, although it looks as though the resistance in the 1360/70 area could be in for a workout. If 1330 gives way, then expect a run back towards 1305. Until then it looks headed a bit higher but the NFP will be the arbiter of that.
Sup
1335
1325
1315
SILVER: 21.50
Outlook
Res
21.70
21.85
22.00
Silver has so far held the 21.00 support but looks will contained within 21/22. The short term charts look to be headed a bit higher but the dailies appear less sure. Sidelined.
Sup
21.25
21.00
20.85
OIL(WTI): 101.40
Outlook
Res
102.00
102.50
103.50
WTI has reversed sharply from its 100.14 lows late in the NY session to currently sit at the day’s highs. Not sure why, but possibly following Natural Gas which headed sharply higher after a bullish stockpile report. The short term charts suggest a possible run back towards the 200 HMA at 102.50. The downside looks supported at around the days base where the 200 DMA (100.00) is providing support. Use this as a range, with the NFP to provide the next direction.
Sup
101.00
100.00
99.00
EUR/USD: 1.3860
The Euro soared today after the ECB left rates unchanged as expected, but reacted to Mario Draghi’s press conference at which he indicated that any easing was not supported by the inflation outlook.. Rather than being somewhat dovish on the inflationary expectations, as the market had expected, he actually suggested the opposite in expecting the CPI to climb from February’s 0.8% to 1.0% by the end of the year and then to 1.3% in 2015. On economic growth, he revised the outlook up to 1.2% in 2014, 1.5% for 2015 and then 1.8% for 2016.
After some choppy trade, the Euro jumped sharply higher and has taken out the important long term descending trend resistance at 1.3830 in doing so, reaching 1.3873 so far, ahead of today’s US jobs and NFP data (exp 6.6%/150K) which should help confirm if the US dollar is going to remain under pressure.
We could be in for a big move if the NFP once again misses expectations. Above the session high, the next important point is at 1.3892, the 27 Dec high. Above there, as can be seen on the weekly chart below, there is not a whole lot of resistance to be seen until the next major Fibo resistance at 1.4240 (76.4% of 1.4940/1.2041). Minor levels will involve sellers at 1.3950 (50% of 1.6037/1.1876 & Monthly cloud top). If we get above 1.4000, then don’t sand in the way, as I do not see a lot to stop it heading to the Oct 2011 high of 1.4240 objective.
A good NFP reading would see the dollar recover and signal that this is a false break. Any deterioration in the Crimea stand off would have the same effect. 1.3830 now becomes the immediate support, ahead of 1.3800. Back below here would see 1.3770 once more, below which 1.3700 has been a good base this week. It looks doubtful that we see this level again for a while but if wrong then the recent low at 1.3643 should provide ample support.
Wait until the NFP but it is beginning to look as though the Euro has some decent upside potential and the dailies look as though they are winding up for further gains.
The DXY is back below the important 79.95/80.00 support and is currently at 79.65 (December low). A break of this could be very important as technically there is not too much to hold it up ahead of the rising trend support at around 79.00, and then the 50% pivot of the move from 72.67/84.75 at 78.71, which would mean a much higher Euro.
. Economic data highlights will include:
German Industrial Production, US Unemployment/NFP
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EUR/USD: Weekly
USD/JPY: 103.00
The dollar liked what it saw against the Yen today as a more positive risk outlook returned, diminishing the need for the safe haven of the Yen, with the dollar spiking up to 103.16, before settling back at around 103.00 going into the end of the session.
The uptrend remains strong, but the dollar may come under some pressure if the NFP is worse than expected today. Any turn for the worse in the Crimea situation would also see a return to the Yen although for the time being that appears to be under some control. The immediate support would be seen at the previous high at 102.80 and then at the rising uptrend base, currently at 102.60. Back below there would signal a return towards 102.00 although this currently looks unlikely while the 4 hour charts point strongly higher. The hourlies are turning lower though from an overbought level and thus we may get to see 102.60/80 today, but which if seen would appear to be a buying opportunity. Watch for the BOJ monthly economic survey to potentially provide some volatility.
On the topside, if/when the resistance in the 103.05/15 (weekly tenkan 103.05) area is overcome, look for a run towards the daily cloud top at 103.45 ahead of 103.63 (61.8% Fibo target of 105.43/100.75). Above that, minor resistance lies at 103.85, but there is not too much to stop it heading towards 104.30 (76.4%).
While the short term charts are a bit overbought, the dailies are picking up momentum and look to be heading higher so buying dips still appears to be favoured, but the NFP will decide.
Economic data highlights will include:
BOJ Monthly Economic Survey
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USD/JPY: 4 hour
GBP/USD: 1.6750
As expected, the BoE left rates unchanged at 0.50% and kept the asset purchase target at Gbp 375 bio. A brief statement was released and focus will now turn to meeting minutes to be published on March 19. Before then, today sees the Inflation Expectations which could cause some short term gyrations, but the focus will be on the US Jobs data.
Sterling got rather choppy around the release of the data, spiking down to 1.6685 but was eventually dragged higher by the Euro and currently sits below the session highs of 1.6778.
While the daily charts look rather non committal, the 4 hour charts remain positive and a test of 1.6800 and beyond looks possible, where 1.6821 is the 5 year high. Above there look for a run up towards 1.6875 (Nov 2009 high) albeit possibly not today, but if wrong there is not too much to stop Cable heading towards 1.6965 (100 Month MA) and then 1.7041 (July 2009 high).
On the downside, 1.6700 and 1.6685 are the immediate support. Below there would suggest a return towards 1.6600, with minor supports at 1.6650/ 1.6630 but which look unlikely to be bothered in the near future.
Economic data highlights will include:
Consumer Inflation Expectations
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GBP/USD: 4 hour
USD/CHF: 0.8805
The dollar has turned sharply lower after the ECB decision but has so far managed to hang on above the recent base of 0.8777.
While the longer term charts look a bit indecisive, the 4 hour charts appear to be building some downside momentum and we could be in for further sharp losses if the US Jobs data do not match expectations.
If we do go below 0.8775, then be very careful of buying dollars as there does not seem an awful lot to hold it up ahead of the channel base (red line – chart) which currently lies at 0.8645.
A good NFP reading would see the dollar once again turn higher, and once again, the 0.8850 level would act as a pivot. Above here would see another run towards the recent high at 0.8895. Above 0.8900 would head to 0.8920 (38.2% of 0.9156/0.8777).
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USD/CHF: 4 hour
AUD/USD: 0.9098
The Aud responded positively to the much better than expected Retail Sales and Trade Balance figures, jumping up to a high of 0.9032 in Asia, where it ran into decent sellers before settling back towards 0.9000. Once Mario Draghi had put renewed life into risk appetite, the Aud did not look back and has soared to a high of 0.9112, triggering plenty of stops along the way, before consolidating just below 0.9100. Having now taken out some important resistances, it would appear that as long as 0.9050/75 holds, we could be headed a fair bit higher, with the reverse head/shoulder objective being at 0.9490.There is a fair bit of work to do before we get there, and the RBA would not be happy to see it and would be doing a lot of jawboning to stop such an outcome.
The next resistance, above 0.9110/15 is at the 200 DMA at 0.9170, which in turn lies ahead of the 12 month descending trend resistance currently at 0.9195. Above that would see an acceleration higher but the Aud has already had a good run this week and may need time for a bit of a breather to allow the short term charts to unwind. The NFP will be the major driver today although we also get to see the domestic construction PMI (Feb) which may cause some volatility.
Below 0.9075 (100 DMA), the downside will find bids at 0.9050 (daily cloud top) and at 0.9005 (23.6% of 0.8659/0.9112/daily tenkan). The hourlies are very overbought and we may need some sort of minor retracement to allow them to unwind, but further out the momentum looks positive for further gains in the days to come.
RBA’s Stevens will be speaking to the Oz House of Reps Standing Committee on Economics later on this morning (22.30 GMT). A more hawkish tone on the back of the recent data would further underpin the Aud, but he will be wary of sending it higher and is more likely to be fairly reserved in his comments to the questions put to him.
Economic data highlights will include:
AIG Construction PMI, RBA Johnson speaking.
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AUD/USD: Daily
NZD/USD: 0.8485
The Kiwi has taken out some important resistance at 0.8432 and has headed on to a high of 0.8503 following the new found risk appetite following on from Mario Draghi’s ECB Press Conference.
If the session high can be overcome, then look for a run on towards 0.8543 (October high), above which 0.8580 (30 Apr 2013 high) and then 0.8675 (11 Apr 2013 high).
The downside now has support at 0.8430, and back below 0.8400 would see buyers at 0.8375 and 0.8345.
The market is getting itself long ahead of next week’s RBNZ meeting. If they do not hike rates, it will get rather ugly ion the downside. In the meantime wait for today’s NFP for the next directional move.
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NZD/USD: Daily