Data flow was heavy yesterday as some US data was brought forward in lieu of Thanksgiving holiday today. While there were pockets of weakness in the barrage of US data overnight, economic releases were positive overall, continued paving the way for a Fed rate hike in December. USD strengthened, USD Index jumped in European trade on strong safe haven demand and climbed further on mostly brighter US data before paring gains post US mid-day ahead of Thanksgiving holiday, closing 0.27% higher at 99.79.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR dropped as far as 1.0565 against USD, the lowest since mid-April as ECB officials said they are considering varied stimulus options such as buying up more debt or charging banks for hoarding cash.
Technical: While 1.07 caps intraday upside corrections, bears target a test of 1.0560 next ahead of an assault on year to date lows. Only a close above 1.08 eases immediate downside pressure.
Interbank Flows: Bids 1.06 stops below. Offers 1.0750 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Short 1.0830 targeting 1.0560, Target achieved cover shorts +265pips
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: GBP traded slightly stronger overnight, having found support above three week lows around 1.5050 levels. But GBP remains vulnerable on diverging monetary policy stance between BoE and Fed, especially following BoE Governor Carney’s dovish speech and records of low inflation. Attention will slowly turn to UK Q3 GDP due this Friday as US investors are enjoying Thanksgiving holiday.
Technical: While 1.5160 contains upside reactions expect a test of of bids at 1.50 as the next bearish objective. Only a close above 1.5250 eases immediate bearish bias
Interbank Flows: Bids 1.5050 stops below. Offers 1.5250 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: USD/JPY was changed little at 122.70, higher than 122.46 of previous session. A more subdued session on Thursday is expected with US markets shut for Thanksgiving Day holiday. Geopolitical Tensions following the downing of the Russian warplane were eased as Russia said there will be no escalation of the issue
Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next. A failure at 122 opens a test of 121.40 support next ahead of pivotal 120.
Interbank Flows: Bids 122 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: The government maintained its assessment of the economy – “on a moderate recover, while weakness can be seen in some areas”. What was new was its view that capital spending was “almost flat”, suggesting that the economy could face headwinds from the reluctance of business to invest given the current sluggish regional growth outlook.
Technical: While 131.30 caps upside reactions expect a sustained break below 130 to confirm a retest of 2015 lows. Only a close above 132.50 eases immediate bearish pressure. Intraday initial upside hurdle is 130.50 while this caps upside corrections expect further grind lower to retest and break 129.70 lows.
Interbank Flows: Bids 130.50 stops below. Offers 132.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: Despite a decline in global commodities and increasing geopolitical tensions between Russia and Turkey, AUD was buoyed by optimistic comments from RBA Stevens touching intra-day high of 0.7283. However, the currency pair was hit hard this morning as Australia’s Q3 CAPEX came in at -9.2% against -3.0% expected. AUD/USD is now trading at around 72.20 US Cents after the data release. With US Thanksgiving holiday on the deck, trading volumes around the globe are expected to remain thin.
Technical: While .7170/50 remains the bid zone expect grind higher to test .7350 area next, only a close below .7150 concerns near term bullish bias.
Interbank Flows: Bids .7150 stops below. Offers .7300 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: USD/CAD scored its daily high of 1.3340s after US Durable Goods Orders surprised markets to the upside during October, expanding at a monthly pace of three percent. Crude oil prices closed slightly higher, reversing early losses, after Baker Hughes (N:BHI), one of the world’s largest oil field services companies, released a report showing another drop in the country’s oil rig count.
Technical: Bulls have the ball while 1.3280 supports intraday downside. A close below 1.3220 would ease the near term bullish bias and suggest a broader correction is underway.
Interbank Flows: Bids 1.3250 stops below. Offers 1.34 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
