Morning Report: Cable And Euro Double Bottoms Hold

KEY DATA RELEASES TODAY:

0930GMT GBP Prelim Business Investment q/q exp 2.3% v 3.3%
0930GMT GBP Second Estimate GDP q/q exp 0.7% v 0.7%
1100GMT GBP CBI Realized Sales exp 28 v 31
1330GMT USD Core Durable Goods Orders m/m exp 0.5% v -0.2%
1330GMT USD Durable Goods Orders m/m exp -0.4% v -1.3%
1330GMT USD Personal Spending m/m exp 0.4% v -0.2%
1330GMT USD Unemployment Claims exp 287K v 291K
1330GMT USD Core PCE Price Index m/m exp 0.1% v 0.1%
1445GMT USD Chicago PMI exp 63.1 v 66.2
1455GMT USD Revised UoM Consumer Sentiment exp 90.2 v 89.4
1500GMT USD New Home Sales exp 471K v 467K
1500GMT USD Pending Home Sales m/m exp 0.9% v 0.3%

OVERNIGHT:

FX markets remain rather subdued overnight as we head into month-end. The USD continued to lose upside momentum but failed to take out yesterday’s lows of 87.81. USD/JPY was contained in a narrow 30pip range having briefly printing a low of 117.66 on the back of local exporter month-end selling. Former MoF official Sakakibara noted the decline in JPY is likely near its end suggesting the 14% decline since mid-year has about run its course.

AUDUSD, which was the weakest major yesterday, had a nasty squeeze to 0.8563 before sellers emerged – month-end dollar buyers will likely keep the pressure on the downside, targeting a break of 0.8500

Elsewhere, US yields seemed to be finally taking up some downside momentum as 30 year yield closed below 3.000 level at 2.966. Similar picture is also seen in 10 year yield which dipped to close at 2.260. While oil continues to print multi-year lows ahead of today’s OPEC meeting with Jan WTI trading sub- $74/brl.

Looking ahead, we have a rather busy economic calendar with UK GDP revision the main focus in the morning session. We also get UK index of services and CBI reported sales. From the US we get durable goods, jobless claims, personal income and spending, Chicago PMI, U of Michigan confidence, pending home sales and new home sales.

OVERNIGHT PRICE ACTION:

EUR: Year To Date double bottom supports, retesting trendline resistance
GBP: Double bottom supports testing upper end of recent range
JPY: Profit taking pull back, bullish consolidation
CAD: Tight rotation around trendline
AUD: Testing descending trendline support

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullishBUY/ Nov 261.2495OPEN 1.2345
GBPUSDBullishBUY/ Nov 251.5745 OPEN1.5580
USDJPYBullish BUY / Nov 25 118.55 OPEN 117.40
USDCADNeutralAwait new signal
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • Year to date double bottom supports
  • Order Flow indicators; OBV bearish ticking up from depressed levels, Linear Regression and Psychology at midpoints
  • Double bottom supports, testing contracting range trendline resistance, please see key trades

eu2611

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

  • Downside momentum waning, 7 day rotation within 140 pip range
  • Order Flow indicators; OBV bearish ticking up from depressed levels, Linear Regression and Psychology bullish
  • Potential double bottom acting as support for now, will set longs on upside range break, please see key trades

gu2611

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

  • Profit taking continues, price rotating in upper end of range 
  • Order Flow indicators; OBV bullish ticking down from elevated levels, Linear Regression and Psychology testing midpoints from above
  • Setting new longs on upside break of yesterdays high, please see key trades

uj2611

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

  • Price rotating in tight range around trendline 
  • Daily Order Flow indicators; OBV bullish but pulling back, Linear Regression and Psychology pierce midpoints from above
  • Watching minor trendline resistance rejection or break for new trade set up

uc2611

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

  • Rejected at trendline resistance follows through to the downside
  • Order Flow indicators; OBV rolling, Regression and Psychology breaking mid points from above
  • Watching potential descending trendline support

au2611

 

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