A volatile Thursday chose an improving euro zone over an improving US today, with dollar strength from a better than expected US Unemployment Claims being reversed following the upbeat ECB rate hold and press conference, despite the upbeat US jobs data coming in ahead of Friday’s modestly forecast and potentially explosive Non-Farm Payrolls. While it seems doubtful the the Fed will taper in December, this still can’t be ruled out so Friday’s NFP will be closely watched and likely very volatile. It is entirely possible that the moves from Thursday could completely reverse from good NFP and Unemployment Rate numbers. We also have the UoM Consumer Sentiment survey to get through which is a significant risk event.
USD% Index
The dollar continued to slide on Thursday, after quite a bullish pop higher from positive employment data from the US. NFP will be critical for the dollar and could be the source of the lack of direction lately, with the Fed using the two key benchmark rate as a central decision making tool for the taper. RSI remains below 50 and below the 100 period moving average which is a bearish signal. I am mildly bearish USD
USD% Index Resistance (EUR/USD support): EUR/USD 1.3656, 1.3646, 1.3600, 1.3568
USD% Index Support (EUR/USD support): EUR/USD 1.3656, 1.3687, 1.3713
EUR% Index
The US data released just prior to the ECB press conference on Thursday pushed EUR/USD quite low before reversing and there may be similar volatility on Friday although risk is skewed to the opposite direction, with NFP forecast quite low and the potential for a beat on expectations to push the pair lower again. Of course a poor number will just add to the sentiment from the previous day and break higher again, safe in the assumption that the Fed are less likely to taper this year. I am bullish EUR
EUR% Index Resistance: EUR/USD 1.3673, 1.3700, 1.7766, !!! 1.3773 !!!
EUR% Index Support: EUR/USD 1.3619, 1.3600, 1.3510, 1.3492
JPY% Index
The Nikkei and USD/JPY having sold off nicely this week have rallied slightly overnight in the Asian session with the Nikkei not quite testing the critical 15000 level before bouncing higher. As such we need to be sure of a break below that level before entering short USD/JPY from here, which equates roughly to a level of 101.50 in USD/JPY. Trend remains bearish JPY but we expect the bounce to continue in the short term
JPY% Index Resistance (USD/JPY Support): USD/JPY 101.95, 101.34, 101.00
JPY% Index Support (USD/JPY Resistance): USD/JPY 102.20, 102.70, 102.88, !!! 103.00 !!!
Nikkei 225 Futures
GBP% Index
EURGBP buying weighed heavily on the pound on Thursday with the ECB rate hold and bullish outlook driving the cross higher at the expense of the pound. There still remains a bullish bias for the time being in GBP, albeit not a very strong one currently, so any dollar weakness will likely push the pair higher again. There does seem a keenness to take profit ahead of the potential for dollar strength on
Friday, which has also compounded to the slight drop. I am bullish GBP although we may see a further correction lower before a continuation
GBP% Index Resistance: GBP/USD 1.6400, !!! 1.6460 !!!
GBP% Index Support: GBP/USD 1.6263, 1.6200, 1.6155
AUD% Index
Sentiment remains poor for the Aussie although we seem to be struggling to go lower from here. As with all of the other majors today, a lot is focused on NFP, with a strong number likely to push the Aussie much lower. A poor number though will likely see a good rejection from these low levels which may offer good risk:reward for medium term longs once this hurdle is cleared. Longer term, further downside is still expected. I am neutral AUD
AUD% Index Resistance: AUD/USD 0.9065, 0.9100, 0.9170
AUD% Index Support: AUD/USD 0.9023, 0.9000, 0.8961
CHF% Index
The CHF% index mirrored the EUR% index and rallied well after the ECB press conference, breaking resistance and holding position high with only minimal retracement. This could quickly tumble down on a strong NFP number so caution remains advised from here. I am bullish CHF
CHF% Index Resistance (USD/CHF support): USD/CHF 0.8927
CHF% Index Support (USD/CHF resistance): USD/CHF 0.9000, 0.9088, 0.9088