Morning Report: GBP Data On Watch, FOMC Eyed

KEY DATA RELEASES TODAY (GMT) :

0930 GBP Claimant Count Change -exp 25.2K v -29.7K
0930 GBP Unemployment Rate exp 5.8% v 5.8%
0930 GBP Average Earnings Index 3m/y exp 1.7% v 1.7%
0930 GBP MPC Asset Purchase Facility Votes exp 0-0-9 v 0-0-9
0930 GBP MPC Official Bank Rate Votes exp 0-0-9 v 0-0-9
1330 USD Core PPI m/m exp 0.1% v 0.3%
1330 USD PPI m/m exp -0.4% v-0.3%
1330 USD Building Permits exp 1.08M v 1.03M
1330 USD Housing Starts exp 1.07M v 1.09M
1415 USD Industrial Production m/m exp 0.5% v -0.1%
1415 USD Capacity Utilization Rate exp 79.9% v 79.7%
1900 USD FOMC Meeting Minutes

OVERNIGHT:

A raft of M&A related headlines coupled with the bounce in yields and equities have helped push USDJPY back above the 119 handle. BOJ unchanged, and although it has caused a dip to a low of 118.88, it feels like market remains buyers on dips for now. Markets moving paradigm focus from hoping for further BOJ easing to concentrating on the dynamics in the US market as well as the persistent outflows experienced by the domestic sector (hence supportive USD- and cross-JPY). 118.10/20 is the key support level, move and close above 120.00 to act as a confirmation of a medium term uptrend worth participating in.

EURUSD held 1.1320 lows due to a general calming of ‘Grexit’ concerns,reports that Greece is reconsidering its position and will potentially request an extension of the “loan agreement”, for a period of four to six months has helped stabilise the EUR resulting in short term players covering exposure through range resistance levels at 1.1410 and 1.1440 with a high traded of 1.1449.Generally quiet Asian session as we move deep into the Chinese New Year holidays and players now move their attentions towards today’s FOMC minutes as main catalyst for directional guidance over coming sessions.

UK inflation data yesterday was weaker than expected, market takes comfort in the fact that core CPI came out as expected. With this said, we retain a bullish bias on GBP while supports at 1.5320/1.5300 GBP should catch a better bid compared to the rest of the currencies on the face of a USD rebound, based on BOE positioning in recent days.

Looking ahead, we get the minutes for BoE MPC Feb meeting, UK employment in the European session. In the US session we get housing starts, building permits, PPI and industrial production although the main focus will be on the FOMC minutes – markets will look for clues on whether the word “patient” to be removed from the statement in March meeting, thus paving the way for hike after two more FOMC meetings.

PRICE ACTION OVERVIEW:

EUR: While 1.1270 supports focus on 1.17 upside corrective equality target, below 1.12 targets 1.10
GBP: 1.5330 to act as support for correction targeting 1.5450/55. Below 1.52 suggest trend resumption
JPY:  Anticipated final corrective phase in broader bullish consolidation while 117 supports expect break of 120.50
CAD: Bullish consolidation continues to develop while 1.2350 trendline supports 1.28 next upside objective ahead of 1.30 key resistance
AUD:  0.79 resistance retest next upside objective ahead of .8050 corrective target.

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutralAwait new signal
GBPUSDBullishBuy/18th Feb1.5386OPEN1.5236
USDJPYNeutral Await new signal
USDCADBullishAwait new signal
AUDUSDNeutralBuy/ 16Feb 0.78 0.8050 0.77Counter-trend

ANALYSIS:

EURUSD Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBearish

  • Range persists with an upwards drift, while 1.1270 holds as support the EURUSD is on track to test a daily corrective equality target at 1.17, below 1.12 suggest early resumption of downtrend
  • Order Flow indicators; OBV consolidates at  lows, Linear Regression and Psychology bearish but no clear momentum
  • Monitor price action at 1.16/17 or a break of 1.12 to reset short positions to target 1.10

eu2015-02-18 06_28_27-

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

  • 1.5330 test underway while this area holds expect 1.5450/55 test, while this caps upside there is potential for downtrend to resume, above 1.55 targets 1.58 next
  • Order Flow indicators; OBV consolidating at lows, Linear Regression bearish, Psychology pierces midpoint form below
  • Longs orders in play, please see key trades for details

gu2015-02-18 06_32_12-

USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish

  • 118 acts as base now for potential resumption of uptrend, while 119.40 caps upside potential for 117 test remains a possibility before higher, over 119.40 targets 120.40 next
  • Order Flow indicators; OBV still consolidating below recent highs, Linear Regression and Psychology bearish
  • Monitoring price action at 117/118 to set longs to target 2014 highs

uj2015-02-18 06_35_18-

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

  • 1.2350 test underway while this area supports expect retest and break of 1.28 on route to key 1.30 resistance.
  • Daily Order Flow indicators; OBV consolidating at highs, Linear Regression ticking up to test midpoint from below, Psychology bearish
  • Monitoring price action and Order Flow indicators to set long positions targeting 1.30

uc2015-02-18 07_42_41-

AUDUSDShort Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBearish

  • .79 next upside objective as 7620 holds as potential double bottom for broader correction targeting .8030/50, below .7620 targets .75 next.
  • Order Flow indicators; OBV ticking up, Linear Regression and Psychology bullish but lacking upside momentum
  • Longs in play will look to reverse at corrective targets to rejoin broader trend

au2015-02-18 07_47_57-

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