Fed speakers continue to echo recent hawkish Fed rhetoric. Fed Vice Chairman Stanley Fischer said that the central bank is trying to “avoid surprising the markets and government” when they hike, setting the stage for a hike in December. On the other hand, Atlanta Fed Chair Dennis Lockhart reiterated that pace of increase will likely remain gradual. Yesterday’s initial jobless claims and Philly Fed business outlook all painted a rosier growth picture while leading index rebounded to positive territory, signalling quicker growth in 4Q. Fed’s Bullard speaks later today addressing the US economy.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR was initially weaker over the European morning as ECB’s Draghi promised that the central Bank will “do what we must to raise inflation as quickly as possible”. These comments were then countered by ECB’s Weidmann who urged caution stating there was “no reason to talk down the economic outlook”. The US Dollar was firmer heading into the US cross-over leading EUR/USD lower once more.
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
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: The European morning saw quite choppy trading in Sterling with price initially spiking on financing data for the UK, which showed that Public Sector Net Borrowing continued to decline though not as much as expected, which in light of the firmer USD saw Sterling sharply lower into the New York open.
Technical: While 1.5350 contains upside reactions expect a test of of bids at 1.50 as the next bearish objective. Only a close above 1.54 eases immediate bearish bias
Interbank Flows: Bids 1.52 stops below. Offers 1.5350 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: JPY strengthened to 122.82 overnight after the Bank of Japan kept policy steady. Although no new monetary easing was imminent, Kuroda said there was no limit to how long QE can last. Japan’s Merchandise Trade Export growth posted a reading of -2.1% which missed the market expectation of -2.0%.
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
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: The Bank of Japan as widely expected kept rates on hold and QE annual pace at 80 trillion yen despite entering a technical recession earlier part of the week. EUR was firmer against JPY over early European trading today, recovering some of yesterday’s losses.
Technical: 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
AUD/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: AUD continues to remain supported heading into the weekend as investors start to adjust to the prospect of a “Dovish Hike” by the Fed in December, seeing some USD weakness. Copper prices were better so far today adding further support to the Aussie.
Technical: While .72 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 .73 eases bearish pressure and resets focus on the upside.
Interbank Flows: Bids .7100 stops below. Offers .7250 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: Oil prices were sharply lower over the European morning as the increasing supply starts to weigh once more. Lower Oil was however offset by a softer US Dollar to keep flows in either direction contained. Canadian CPI due at 1330GMT expected unchanged at 1.0%.
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
