Morning Report: Back With A Bang!

KEY DATA RELEASES TODAY:

0930GMT EUR Eurozone Senitx Investor Confidence exp -1.0 v -2.5
1445GMT USD ISM New York 62.4

OVERNIGHT:

News that Germany’s Merkel would tolerate a Greek exit from the Eurozone and continued ECB QE expectations both prompted a EUR plunge early in Asian trading. The EURUSD push down helped USDJPY up to 120.68 even as EURJPY plunged alongside EURUSD in thin trading. Moves down in EURJPY and other crosses, especially with risk off too as per the early 1%+ Nikkei plunge could not be ignored however, and USDJPY later pushed down to 119.98 despite talk of good post-holiday pent-up FX demand. Option-related bids at 120.00 held however (US$2.228 bln in vanilla expiries at this strike for the New York cut), and the market bounced towards where it started later on broad USD strength and a Nikkei recovery. Option-related offers at 120.50 helped cap it ($1.916 bln in 120.50 expiries).

EURUSD opened in Asia at 1.2002 and traded steady between 1.2001-06 initially despite EUR-negative news surrounding Greece. Option-related bids ahead of 1.2000 finally gave way and massive stops below saw it shoot down to 1.1860 where a trade or two was recorded. It quickly bounced however back to 1.1978, filling a big chunk of the gap down, before falling back. EUR will likely remain under pressure with Greek political uncertainty and expectations of ECB QE on January 22 weighing on sentiment. The market will likely remain volatile however what with the Greek election three days after the ECB meeting and stiffer German resistance to full blown ECB QE.

GBPUSD plunged alongside EURUSD from 1.5355 to 1.5185 before bouncing later to 1.5319. Like EUR, GBP has since faded. With BOE interest rates hikes expectations pushed back to 2016 now, GBP looks to trade in sympathy with the EUR on the weak side.

Elsewhere USDCAD continued its march higher overnight while AUDUSD opened in Asia at 0.8095 and traded on the soggy side between 0.8053-0.8107, the former a fresh trend low. Broad USD strength helped cap the upside. Offers were strong on the bounce to the high and remain around 0.8100. Another plunge in NYMEX crude on Globex helped push it back down. The bias remains down however and an all out attempt below 0.8000 could be seen in the next session or two.

Looking ahead Eurozone Senitx investor confidence is the highlight on the data front during the European session with New York ISM released during the US session.

OVERNIGHT PRICE ACTION:

EUR: Testing 2010 lows
GBP: Sustained break lower from 3 month range
JPY: Attempting to break short term resistance to test 2014 highs
CAD: Testing projected trend channel resistance
AUD: Psychological 0.80 level targeted.

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearishAwait new signal
GBPUSDBearishAwait new signal
USDJPYBullishAwait new signal
USDCADBullishAwait new signal
AUDUSDBearishAwait new signal

ANALYSIS:

EURUSD Short Term (1-3 Days): Bearish  – Medium Term (1-3 Weeks) Bearish

  • 1.20 projected channel support gives way, 1.1876 2010 lows pressured
  • Order Flow indicators; OBV consolidating near lows yet to confirm new lows in price, Linear Regression and Psychology bearish
  • Watching price action for short entries at retest of 1.20 from below

eu2015-01-05 07_30_45-

GBPUSD: Short Term (1-3 Days): Bearish  – Medium Term (1-3 Weeks) Bearish

  • Range lows break descending trendline support holds on first test 
  • Order Flow indicators; OBV consolidating at lows yet to confirm new lows in price, Linear Regression bearish and Psychology rejected at midpoint
  • Watching for a retest of range lows from below to set short positions

gu2015-01-05 07_32_27-

USDJPY: Short Term (1-3 Days): Bullish  – Medium Term (1-3 Weeks) Bullish

  • Bullish consolidation continues next resistance area is 2014 highs
  • Order Flow indicators; OBV consolidating at recent highs, Linear Regression pierce midpoint from below and Psychology bullish but pulling back to test midpoint from above, setting potential platform for trend continuation 
  • Monitoring price action for favourable risk reward to set new long positions towards trendline support 118.50 area or on a break of 120.75

uj2015-01-05 07_35_51-

USDCAD: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish

  • Upside break from holiday consolidation to challenge topside of projected trend channel
  • Daily Order Flow indicators; OBV new highs, Linear Regression and Psychology bullish
  • Profit targets hit, watching for retest of previous highs as support to set new long positions

uc2015-01-05 08_18_09-

AUDUSD: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish

  • Overnight low of .8034 the psychological 0.80 and descending trendline support the next downside objective
  • Order Flow indicators; OBV consolidating at depressed levels, yet to confirm new lows in price, Linear Regression ticking up to test midpoint from below and Psychology pierces midpoint from below
  • Monitoring trendline resistance and previous spike lows to set new shorts

au2015-01-05 08_22_19-

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