Light Data Week, Clear Market Themes To Continue

With US pending Home Sales the only major risk event on Monday, we may see a continuation of last week’s themes until there is a catalyst to cause a change. Home sales came in very poorly last time around, partly due to the effect of the the previous expectation of a September taper pushing rates up, however with many now focused on a spring taper and rates having reduced slightly we may see a return to form. This seems reflected in the forecast though so there is still the potential for a below forecast release. The Yen is still in a tailspin after the Nikkei broke major resistance and the BOJ’s continuation of their stimulus program. Further weakening is expected, particularly against the still bullish European currencies.

This week’s data is relatively light, so price action may be more focused on wider themes of dollar weakness, Yen weakness, Antipodean weakness and European strength, but the data focus mostly on the following:

Mon Nov 25
3:00pm USD Pending Home Sales m/m

Tue Nov 26
10:00am GBP Inflation Report Hearings
1:30pm USD Building Permits
1:30pm USD Housing Starts
3:00pm USD CB Consumer Confidence
9:45pm NZD Trade Balance

Wed Nov 27
9:30am GBP Second Estimate GDP
1:30pm USD Core Durable Goods Orders
1:30pm USD Unemployment Claims
2:45pm USD Chicago PMI
2:55pm USD Revised UoM Consumer Sentiment

Thu Nov 28
12:00am NZD ANZ Business Confidence
12:30am AUD Private Capital Expenditure
8:55am EUR German Unemployment Change
10:30am GBP BOE Gov Carney Speaks
All Day USD Bank Holiday

Fri Nov 29
7:00am EUR German Retail Sales
7:45am EUR French Consumer Spending
10:00am EUR CPI Flash Estimate
10:00am EUR Unemployment Rate
1:30pm CAD GDP

USD% Index

Having broken through the bearish channel, the USD% index has now broken to the downside once more and bounced from the major support level that had previously capped the index’s gains. RSI is currently still just about above the 100 period moving average although there has been a lack of continuation of bullish momentum indicating that we could see a return to selling in the medium term once 1.3573 is defeated once more. I bearish USD

USD% Index Resistance (EUR/USD support): EUR/USD 1.3488, 1.3464
USD% Index Support (EUR/USD support): EUR/USD 1.3543, 1.3573, 1.3600, 1.3626

EUR% Index

We have now pushed back inside the bullish channel that was recently broken by rumours of a negative deposit rate from the ECB. That threat has not gone away, with Draghi confirming that there had been discussions regarding it, but it was played down sufficient to allow a return to the bullish theme. We have recently sold off slightly from a double top so there is a risk of retracement, although upside is to be expected in the medium term.
I am bullish EUR

EUR% Index Resistance: EUR/USD 1.3564, 1.3600 1.3615
EUR% Index Support: EUR/USD 1.3536, 1.3500

JPY% Index

The JPY% index has comfortably pushed through support and now has 200% fib expansion support at 102.11 in it’s sights with a rapid acceleration towards the yearly lows at 103.00. We may see a slight bounce here before a decision is made whether to continue to push lower or to consolidate within this wide range in the medium to long term. I am bearish JPY

JPY% Index Resistance (USD/JPY Support): USD/JPY 101.13, 101.00, 100.50
JPY% Index Support (USD/JPY Resistance): USD/JPY 102.11, 102.50, 103.00

Nikkei 225 Futures

GBP% Index

We are fast approaching some major resistance levels in the GBP% index having recently broken above a double top slightly before retracing back to support, but the bullishness of the pound seems hard to argue against. We still need confirmation of a clean break above the long standing resistance levels at GBP/USD 1.6272 and 1.6300 though before we can be too sure of continuation. Regardless, There seems strong demand for GBP due to the pace of recovery in the UK economic indicators, so further upside is expected. I am bullish GBP

GBP% Index Resistance: GBP/USD 1.6272, 1.6300, 1.6330
GBP% Index Support: GBP/USD 1.6211, 1.6200, 1.6163

AUD% Index

A long continuous drop in the AUD% index has almost retested the bottom of the bearish channel, which could see a slight bounce now that the index has become oversold. However the overall theme will likely remain bearish within this defined range following the expectations of a rate cut or other further stimulus from the RBA. RSI is now reading quite oversold on AUD/USD and overbought on EUR/AUD so we could see a slight consolidation of the recent moves before continuation. I am bearish AUD although we may see a slight bounce

AUD% Index Resistance: AUD/USD 0.9150, 0.9169
AUD% Index Support: AUD/USD 0.9100, 0.9050

CHF% Index

The Swiss Franc is now outpacing the Euro and has comfortably defeated the recent double top before meeting trend line resistance to cap last week’s gains. Further upside is expected as part of a wider theme of dollar weakness vs the European currencies. I am bullish CHF

CHF% Index Resistance (USD/CHF support): USD/CHF 00.9061, 0.9000
CHF% Index Support (USD/CHF resistance): USD/CHF 0.9093, 0.9100, 0.9150