Morning Report: Majors Test Highs & Lows For The Year

KEY DATA RELEASES TODAY:

0930GMT GBP Manufacturing PMI exp 53.1 v 53.2
1500GMT USD ISM Manufacturing PMI exp 57.9 v 59.0

OVERNIGHT:

Busy session in Asia as we enter the final trading month of the year.

Euro tested Friday’s lows at 1.2426 after inflation data for the Eurozone came is at 0.3 percent, which is a five-year low for consumer inflation. The soft data suggested that deflation remains a real threat for the European Central Bank.

Yen made a new yearly high at 119.03 Japanese data on Friday showed the unemployment rate dropped to 3.5 percent, while the consumer price index came in at an annualized 2.9 percent against the expected 2.3 percent.

Cable made a new yearly low at 1.5585 pressured by a softer consumer sentiment survey, the combination of negative news on the economy and a speech given by Prime Minister Cameron served to highlight Britain’s increasingly conflicted attitude to Europe.

The Loonie continued to push higher overnight , touching a three-week high as tumbling US crude oil prices outweighed the stronger than expected Canadian GDP figures for the third quarter. Oil prices have dropped around 10 percent since OPEC’s decision of keep the current production levels unchanged.

The Aussie is trading with an offered tone on the back of weakness in the China PMI, which came out lower than expected at 50.3 vs 50.6 exp, new export orders recorded a deeper contraction, despite the government’s easing measures. The Aussie made another new low for the year at 0.8417, breaking through three year trend channel support on the weekly chart around 0.8460.

Looking ahead, Thursday brings the much anticipated ECB Rate Decision and Press Conference as well as the BOE Rate Decision. Friday brings the main data point for the week from the US with the Change in Nonfarm Payrolls.

OVERNIGHT PRICE ACTION:

EUR: Range continues to contract below overhead trendline resistance
GBP: Snap back gathers momentum and retests range lows
JPY: 117 bids propel price to new year to date highs
CAD: Regains bullish channel retesting year to date highs
AUD: Piercing descending trendline support, close below for trend continuation

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutralBUY/ Nov 261.2495OPEN 1.2345
GBPUSDNeutralBUY/ Nov 251.5745 OPEN1.5580
USDJPYBullishAwait new signal
USDCADBullishAwait new signal
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • Range continues to contract directly below trendline resistance
  • Order Flow indicators; OBV bearish, Linear Regression and Psychology testing midpoint form above
  • Counter trend longs in play, please see key trades

eu112

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

  • Price reversed sharply from topside range break to retest range lows, a break of lows suggests false topside break and continuation of medium term down trend 
  • Order Flow indicators; OBV bearish ticking up from depressed levels, Linear Regression and Psychology retesting midpoint form above
  • Counter trend longs in play, please see key trades

gu112

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

  • 117 117 supports and provides platform for new year to date highs
  • Order Flow indicators; OBV bullish retesting recent highs, Linear Regression and Psychology break lower, continue  to test support levels
  • Watching for Order Flow indicators to confirm trend continuation for new long positions. Monitoring possible double top with potential divergence in price, Linear Regression and Psychology

uj112

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

  • Price reverses sharply on OPEC news, regaining bullish channel and now retests year to date highs
  • Daily Order Flow indicators; OBV bullish but no new highs, Linear Regression and Psychology testing midpoints from below
  • Monitoring potential double top with divergent Order Flow signals 

uc112

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

  • Rapid retest of descending trendline support a close below today will suggest continuation of medium term down trend
  • Order Flow indicators; OBV rolling over again, Linear Regression and Psychology rejected at midpoints
  • Monitoring a close above or below descending trendline support for new positions

au112

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