Morning Report: Holiday Trading Conditions Commence

KEY DATA RELEASES TODAY:

1500GMT USD Existing Home Sales exp 5.21M v 5.26M

OVERNIGHT:

A very quiet start to the week in Asia ahead of the Tokyo holiday tomorrow and the Christmas holidays later in the week. Asian equity markets are broadly higher, WTI crude is also hanging onto its gains post last week’s lows of 54.05, while the USD is marginally lower against most majors as it digests last week’s gains.

USDJPY did little in Asia with the Tokyo holiday tomorrow and upcoming Christmas holidays later this week side lining many. A number of Tokyo players already look to have finished up for the year. Most Tokyo businesses officially close for the year Friday and don’t return till January 5. USDJPY traded mostly around massive option expirations at 119.50 ($2.552 bln to expire mostly at the New York cut). An outlier to 119.66 was seen early and others down to 119.31 thereafter. Despite the up bias, a broadly soggy USD provided headwind. EURJPY was better bid, up modestly from 145.98 to 146.20 with EURUSD bid.

EURUSD opened in Asia at 1.2226 after falling during thin US trading Friday with USD gaining across the board. In line with the Friday trend, it eased to 1.2220 early. EURUSD looks to remain under pressure in the short-run with the market ever more convinced of ECB sovereign bond buying or QE at their January 22 meeting. The market also looks to be pricing in the start of the Fed tightening cycle in June.Some see late April as a possibility if US data surprises to the upside.

Looking ahead, the economic data schedule is concentrated on the first half of the week with US Q3 GDP revision tomorrow the highlight. Today, we get Eurozone consumer confidence and existing home sales from the US.

OVERNIGHT PRICE ACTION:

EUR: New year to date lows
GBP: Rotation in lower end of 2 month range
JPY: Attempting to break short term resistance to retest year to date highs
CAD: Continued consolidation at highs
AUD: Consolidating at multi year lows

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearishAwait new signal
GBPUSDBearishAwait new signal
USDJPYNeutralAwait new signal
USDCADBullishBUY 9th DEC1.1495 1.1695 1.1545Risk Free
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • New year to date lows, projected trend channel support eyed below
  • Order Flow indicators; OBV consolidating at lower levels, Linear Regression and Psychology bearish
  • Watching price action for short set ups at better risk reward entries

eu2014-12-22 07_17_40-

 

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

  • Continued rotation in lower end of two month range
  • Order Flow indicators; OBV consolidating above recent lows, Linear Regression and Psychology rotating at midpoints
  • Double bottom supports for now

gu2014-12-22 07_22_20-

 

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

  • Break of 119.60 resistance opens up retest of year to date highs
  • Order Flow indicators; OBV consolidating at highs, Linear Regression and Psychology bullish
  • Monitoring price action for favourable risk reward to set new long positions

uj2014-12-22 07_27_01-

 

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

  • Five inside days after posting new year to date highs last week
  • Daily Order Flow indicators; OBV consolidating at highs, Linear Regression and Psychology pierce midpoints from above
  • Target and stops amended, please see key trades

uc2014-12-22 07_43_35-

 

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

  • Pause in the decline continues, three inside days after year to date lows printed lasted week
  • Order Flow indicators; OBV consolidating at depressed levels, Linear Regression ticking up to test midpoint from below and Psychology pierces midpoint from below
  • Monitoring trendline resistance and previous spike lows to set new shorts

au2014-12-22 07_51_05-

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