FOMC minutes signalled increased hawkishness, emphasizing for the first time prospects of a Fed rate hike in December. “Members emphasized that this change was intended to convey the sense that, while no decision had been made, it may well become appropriate to initiate the normalization process at the next meeting”. This was the first time Fed policy makers explicitly pinned down the timing of its initial rate lift-off, setting the stage for the long-awaited move at next month’s FOMC meeting. USD weakened after sliding post-FOMC minutes as markets turned risk-on amid growing certainty in the Fed’s direction. USD remains soft over early European trading today as equity markets continue to trade higher.
EURUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR was stronger over the European morning as USD remained soft following last night’s Hawkish FOMC minutes release. Traders look ahead to the ECB monetary policy meeting account at 1230 GMT, focus will be on signs of action in December. US initial and continuing jobless claims the only notable US data over the US session today. Fed’s Lockhart and Fischer will both be speaking today also.
Technical: While 1.0750 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 1.08 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Short 1.0830 targeting 1.0560
GBPUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: GBP was initially weaker today following the release of UK retail sales data which was greatly below expectations of 5.9% at just 3.0% for October. Initial losses were reversed with GBP heading into the US cross-over roughly flat on the session.
Technical: While 1.5285 contains upside reactions expect a test of of bids at 1.50 as the next bearish objective. Only a close above 1.53 eases immediate bearish bias
Interbank Flows: Bids 1.5150 stops below. Offers 1.53 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
USDJPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: After the Fed minutes were released, USDJPY went up to touch a three-month peak of 123.67. JPY was slightly recovered at the early Asian session and it is now trading at around 123.00. Japan Merchandise Trade Balance was better than market expectations, showing an improving Japan economy. The BOJ remained on hold in a largely non event meeting of the central bank.
Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next
Interbank Flows: Bids 122 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Long 122.50 stops to entry target 125.50
EURJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Japan’s trade balance recorded its first surplus in eight months for October, the finer details of the data were less impressive, with exports sliding for the first time in over a year. EURJPY firmer over the European morning with EUR better against the US Dollar.
Technical: Equality corrective objective at 131.20 achieved, only a close above 133.50 eases immediate bearish pressure, while 132.50 caps upside reactions expect retest of 130.50 lows
Interbank Flows: Bids 130.50 stops below. Offers 132.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
AUDUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: AUD rose to yesterday’s high of 0.7118 after the release of the Australia’s Q3 Wage Price Index which came in right in line with consensus. The FOMC minutes revealed that many members believed conditions for liftoff could well be met by the December meeting, sending the pair down to an overnight low of 0.7067. However, rate has since recovered to trade fresh weekly highs as USD softens amid risk-on trading.
Technical: While .7170 caps corrective upside reactions expect a retest and breach of .7010 as bearish momentum builds for a retest of year to date lows. A close above .7200 eases bearish pressure
Interbank Flows: Bids .7000 stops below. Offers .7170 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now
USDCAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: USDCAD remains range-bound heading into the US cross-over. US Dollar is softer so far today and Oil is broadly flat, keeping flows in either direction stemmed.
Technical: Offers just above 1.3350 stall the upside ratchet, bulls have the ball while 1.3220 supports intraday downside. However a close below 1.3220 would ease the near term bullish bias.
Interbank Flows: Bids 1.3250 stops below. Offers 1.3350 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
