Morning Report: GBP Data On Watch As Greek Drama Drags On

KEY DATA RELEASES TODAY (GMT) :

0930 GBP PPI Input m/m exp -2.5% v -2.4%
0930 GBP RPI y/y exp 1.2% v 1.6%
0930 GBP CPI y/y exp 0.3% v 0.5%
1000 EUR German ZEW Economic Sentiment exp 55.4 v 48.4
1000 EUR ZEW Economic Sentiment exp 51.3 v 45.2
1115 EUR ECOFIN Meetings
1330 USD Empire State Manufacturing Index exp 8.9 v 10.0
1500 USD NAHB Housing Market Index exp 58 v 57

OVERNIGHT:

Ekathimerini reported that Greece was told that it has until Friday (20 February) to request an extension to the current bailout or face the possibility of losing the pending funds after the second meeting of euro zone finance ministers in the last few days ended on Monday without an agreement. Communication broke down as the finance team from Athens rejected a proposal by the Eurozone Finance Ministers that Greece would accept a six months extension to its international bailout as ‘acceptable’ Greece wants a six-month loan with no conditions during which time it can negotiate its debt burden.Greek finance minister Yanis Varoufakis still thinks a deal may be reached within two days,

The EURUSD traded off from earlier 1.1429 down to 1.1317 before stabilising. The next Greek headline risk comes as the ECB is set to decide on Wednesday whether to maintain emergency lending to Greek banks.

USDJPY saw a third consecutive day of declines and traded at a six day low of 118.16 in holiday thinned trade, fourth quarter GDP missed expectations rising 2,2% versus the anticipated 3.7%, all eyes will be on the BOJ for further indications of stimulus plans.

GBPUSD printed a six week high yesterday at 1.5440 buoyed by hawkish comments from BOE member’s over the weekend, traders pared risk as Greek negotiations started to breakdown and the pair pulled back to retest last weeks highs. Raft of UK data today should define the next directional move.

AUDUSD rallied printing one week highs after slightly more hawkish RBA minutes which revealed that the surprise rate cut was in fact a very close call and thus threw doubt on another OCR cut in March. RBA also offered no forward guidance and expressed some concern over the risk of housing inflation given the rise in mortgage lending.

Looking ahead, European data will be the major focus today. UK will release CPI & CPI. German and Eurozone ZEW economic sentiment are expected to show improvements in February. In the US we get empire state manufacturing index and NAHB housing market index.

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 117.50 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
GBPUSDBullishAwait new signal
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, 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

eu2015-02-17 07_27_13-

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

  • 1.5330 being tested from above 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 ticking up from lows, Linear Regression and Psychology stalling testing midpoints form above
  • Monitoring price action at 1.5330 for longs to 1.5450/55 corrective target

gu2015-02-17 07_30_47-

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

  • 117.50/118 should act as base now for resumption of uptrend if the broader bullish consolidation pattern is to be validated, below 117 threatens broader correction
  • Order Flow indicators; OBV still consolidating below recent highs, Linear Regression and Psychology bearish
  • Monitoring price action at 117.50/118 to set longs to target 2014 highs

uj2015-02-17 07_32_43-

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

  • While 1.2350 support holds expect retest and break of 1.28 on route to key 1.30 resistance.
  • Daily Order Flow indicators; OBV consolidating at highs, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow indicators to set long positions targeting 1.30

uc2015-02-17 08_28_06-

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

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

au2015-02-17 08_29_20-

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