Morning Report: BOJ On Hold, FOMC Minutes Eyed

KEY DATA RELEASES TODAY:

0930GMT  GBP MPC Official Bank Rate Votes exp 2-0-7 v 2-0-7
0930GMT  GBP MPC Asset Purchase Facility Votes exp 0-0-9 v 0-0-9
1330GMT  USD Housing Starts exp 1.03M v 1.02M
1330GMT  USD Building Permits exp1.04M v 1.02M
2000GMT  USD FOMC Meeting Minutes


OVERNIGHT:

The Asian session has seen a marginally bid USD against the majors, allowing the DXY to bounce off 87.50 support to move above 87.70, albeit still 0.5% away from the recent highs. The printed ranges in EUR, GBP and CHF have all been reasonably narrow but the commodity currencies have extended slightly further.

This all seems to be led by the price action in USDJPY, which managed to make a new 7 year high at 117.42. The Bank of Japan meeting was the main risk event overnight but as expected, it didn’t yield anything particularly new. They acknowledged that the Japan’s economy is expected to continue its moderate recovery trend and that inflation expectations appear to be rising on the whole from a somewhat longer-term perspective.

Elsewhere, there has been a decent move lower in both AUD, with commodity prices continuing to trade lower, with oil and iron ore lower over the NY session. Westpac leading index and skilled vacancies also come in weaker than expected.

Looking ahead, we have the FOMC minutes tonight market thinks there may be some discussion of the potential risks to growth and inflation, a shortfall in global growth, a stronger dollar, and weaker commodity prices, even if they weren’t seen as high enough to be included in the post-meeting statement. Finally, we get BoE minutes, with the market expecting the broad message of the minutes to be the same as October – no urgency over a rate rise. The Minutes may sound less doveish than the Inflation Report since they will give airtime to some of the more hawkish views on the Committee.


OVERNIGHT PRICE ACTION:


  • EUR: Continues to pressure trendline resistance
  • GBP: Trading below descending trendline but lacking momentum
  • JPY: Pressuring ascending trendline resistance
  • CAD: Supported near trendline support
  • AUD: Rejected from trendline resistance

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullish Buy / 19 Nov 1.2590 Open 1.2440
GBPUSDBearishSell / 14 Nov1.5650Open1.5650 Risk Free
USDJPYBullishAwait new signal
USDCADBullish  Buy / 19 Nov 1.1350 Open 1.12
AUDUSDNeutral Sell / 17Nov8690Open.8690Risk Free

ANALYSIS:

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

  • Price continues to test trendline resistance, range contracting
  • Order Flow indicators; OBV bearish but ticking up form low levels, Linear Regression and Psychology bullish
  • Price retesting trendline resistance, setting counter trend longs on trendline break

EU

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

  • Price has broken descending trendline support but range continues to contract
  • Order Flow indicators; OBV bearish, Linear Regression and Psychology reject mid points suggesting trend continuation
  • Potential double bottom acting as support, downside price momentum fading into risk event

GU

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

  • Price continues to be pressured to the upside testing ascending trendline resistance
  • Order Flow indicators; OBV bullish, Linear Regression and Psychology bullish
  • Monitoring trendline resistance break for new trade set up

UJ

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

  • Price supported near trendline support
  • Daily Order Flow indicators; OBV bullish but retreating form extreme levels, Linear Regression and Psychology re-testing mid points from below
  • Setting new longs with yesterdays rejection candle near trendline support

UC

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

  • Rejected on trendline test
  • Order Flow indicators; OBV continues to tick up, Linear Regression and Psychology re-testing midpoint from above
  • Rejection candle at trendline test, sell orders triggered buy order cancelled. Moving stops to break even ahead of risk event  

AU

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