Morning Report: EU CPI In Sight

Key Data Releases Today

1000GMT – EUR EuroZone CPI exp 0.8% v 0.8%
1000GMT – EUR EuroZone Unemp rate exp 11.5% v 11.5%
1100GMT – EUR ECB Announces 3yr LTRO
1230GMT – CAD GDP exp 2.3% v 2.5%
1230GMT – USD Personal spending exp .3% v .3%
1230GMT – USD Personal Spending exp 0.1% v 0.5%


Overview:

USD started Yesterday strong with the Fed statement supporting an appreciating trend. Better than expected GDP print bolstered the bullish case though disappointing jobless figures capped upside.  BoJ unexpectedly increase their monetary stimulus overnight raising its annual target for monetary expansion to 80 trillion yen from 60-70 trillion yen. USD has rallied hard this morning against a backdrop of dovish ECB, BoJ action,  now back at multi year highs.

  • CAD flat going into GDP release
  • EUR is soft as Fed statement supports a strong USD & German inflation disappoints; market ignores improving German employment & EU conf. CPI print today will be main driver for short term action.
  • GBP is flat, with rising house prices offsetting some of the downside risk.
  • JPY is extremely weak after BOJ unexpectedly increase stimulus
  •  AUD is flat but still trading within range. Export & import prices fall.

Key Trades

USDCAD: Neutral To Bullish – Revised ( looking for spec longs)
EURUSD: Neutral – No Change
GBPUSD: Neutral To Bullish – Revised ( short stops to risk free, looking for spec longs)
USDJPY: Bullish – No Change

Analysis

EURUSD: Neutral – No Change 

  • Having fallen initially, price retraced on poor US jobs data closing the day with a pin bar through the support level at last week’s lows
  • Order Flow indicators to the downside here as price moves lower on expected weak CPI print
  • Break below NFP low to signal continued bearishness whilst any rejection candles at lows in line with Order Flow indicators crossing higher may provide spec long opportunities

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USDCAD: Neutral To Bullish – Revised

  • Price is still holding flat around last week’s lows
  • Daily Order Flow indicators are firmly to the upside here with OBV making new highs
  • Price action feels well supported here with this pullback from highs seeming corrective to the bull trend rather than the start of a reversal.
  • Will wait for clear signal to set longs

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GBPUSD: Neutral To Bullish – Revised 

  • Having retraced initial losses on the day, cable closed back up to form a bullish pin bar through last week’s lows
  • Have moved stops on shorts to breakeven and will try spec longs on break higher from pin bar targeting weekly highs initially.
  • Order Flow indicators have crossed to the upside here supporting possible bullishness

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USDJPY: Bullish – No Change

  • Price has broken higher through NFP lows with Order Flow indicators firmly to the upside here
  • Long positions are still fully intact with stops trailed up to just below the NFP highs to lock in profits.
  • Any retest of the NFP highs breakout level should present a good opportunity to add to longs 

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