KEY DATA RELEASES TODAY (GMT) :
- 0900 GBP MPC Member Shafik Speaks
- 1230 USD PPI m/m 0.2% -0.8%
- 1230 USD Core PPI m/m 0.1% -0.1%
- 1200 USD Prelim UoM Consumer Sentiment 95.6 93.6
- 1515 GBP MPC Member Haldane Speaks
OVERNIGHT:
It looks like market is the process of paring back positions into the FOMC and clearly we saw this for the first time yesterday with the first meaningful USD retracement in a number of sessions following a very brief dip below 1.0500 as the move back above 1.0550 appeared to be the catalyst for short term covering. The weaker-than-expected retail sales number provided additional USD selloff resulting in a rally to 1.0684 high however the sentiment appeared to be short lived with players discounting the data due to harsh weather conditions. Against yesterday’s low there is potential for further consolidation to test the 1.0740/60 area, while a break of yesterdays lows suggests trend continuation with 1.03 eyed next on the downside.
The Nikkei 225 continues to get lifted through fresh multi-year highs spurred by the developments in current wage negotiations that have been generally positive and upbeat, and although this could lead to market expectations pushing back calls for further BOJ easing in April, this will also lift the propensity to spend by Japan, hence accelerating outflows to other asset markets outside the country. USD/JPY is very quiet, but supported (bounced very well after printing a low of 120.66 last night), and we look for this condition to continue going into FOMC and month end related operations. While 120,40/60 supports, expect momentum higher to increase above 122.00
GBP continues to loose its lustre, with the currency meeting some fresh jawboning from Carney, citing he was in no rush to raise rates, and explicitly mentioning the pound’s rise as one of its culprits. This has pushed cable through fresh multi month lows, now eyeing the July 2013 low of 1.4814 next. While 1.4940/60 contains upside reaction expect a break of 1.48.
PRICE ACTION OVERVIEW:
- EUR: While 1.0740/60 contains upside target 1.03
- GBP: While 1.4940/60 contains upside target 1.48
- JPY: While 120.60/40 contains downside target 124.00
- CAD: While 126.60/40 contains downside target 130
- AUD: While .7760/80 contains upside target .72
KEY TRADES:
| FX Pair | Short Term | Position/Date | Entry Level | Target | Stop | Comments |
| EUR/USD | Bearish | Await new signal | ||||
| GBP/USD | Bearish | Await new signal | ||||
| USD/JPY | Bullish | Await new signal | ||||
| USD/CAD | Bullish | Await new signal | ||||
| AUD/USD | Bearish | Sell/02 Mar | .7760 | Open | .7760 |
ANALYSIS:
EUR/USD Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
- While 1.0740/60 caps upside pressure remains on the downside, with 1.03 the next downside objective, above 1.0850 suggests 1.0970/90 test in broader correction
- Order Flow indicators; OBV at lows, Linear Regression and Psychology bearish, but ticking up form depressed levels to attempt midpoint tests from below
- Monitoring price action and Order Flow below 1.0840 to reset short positions targeting 1.03
GBP/USD: Short Term (1-3 Days): Bearish - Medium Term (1-3 Weeks) Bearish
- While 1.4940/60 caps upside 1.48 is the next downside objective a break above 1.5030/50 suggests broader correction.
- Order Flow indicators; OBV at lows, Linear Regression and Psychology bearish
- Monitoring price and Order Flow below 1.5030/50 to reset short positions targeting 1.48
USD/JPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish
- As suggested double top on first retest of 2014 highs, watching for correction to 120.20/40 previous resistance to act as support and base for sustained break of 2014 highs, only below 118.50 concerns bullish bias
- Order Flow indicators; OBV continues ticking up from consolidation, Linear Regression piercing midpoint from above and Psychology bullish but pulling back to test midpoint from above
- Monitoring price action and Order Flow indicators on retest of 120.00/120.50 to set longs targeting 124
USD/CAD: Short Term (1-3 Days): Bullish - Medium Term (1-3 Weeks) Bullish
- Rejection at first test of 1.28 and potential double top while 1.2550 contains downside reaction expect retest and break of 1.28 with 1.30 the next key objective, only below 1.2350 concerns upside bias
- Daily Order Flow indicators; OBV consolidating at highs, Linear Regression and Psychology bullish but pulling back to test midpoints from above
- Monitoring price action and Order Flow indicators to set long positions at 1.2550 targeting 1.30
AUD/USD: Short Term (1-3 Days): Bearish - Medium Term (1-3 Weeks) Bearish
- While .7740/60 caps upside reactions next downside objective is .75 with .72 beyond only above .7860 concerns bearish bias
- Order Flow indicators; OBV consolidates at lows, Linear Regression and Psychology bearish but ticking up form lows
- Risk free shorts in play
