Morning Report: Market Awaits EU Finance Ministers Meeting

KEY DATA RELEASES TODAY (GMT) :

0930 GBP Manufacturing Production m/m exp 0.3% v 0.7%
1320 USD FOMC Member Lacker Speaks
1500 USD JOLTS Job Openings exp 5.03M v 4.97M
1500 GBP NIESR GDP Estimate 0.6%

OVERNIGHT:

Directionless price action continues into today’s session, with most of G10 FX lacking any real impetus. The DXY is slightly offered, but still hovering around the 94.50 level, which is an encouraging sign for medium term USD longs. Another encouraging sign is the re-emergence of higher US yields, with the 10yr pushing back up to 1.97, the highest level since early Jan. Main data release overnight China CPI came in at 0.8% below already low expectations of 1%, the lowest reading in the past five years. Monetary conditions are too tight in China, and the PBOC will need to ease again whether through cuts to RRR/rates or FX.

AUDUSD was unperturbed by the China release and the mixed bag of domestic Australian data (house-price index up 6.8% vs 7.1% exp and weaker NAB business conditions). First resistance comes in at last week’s highs 0.7877, post payrolls high.

USDJPY failed break the resistance of the Dec high at 119.30.A break through the resistance, should see an accelerated move towards 120.00, and to shift new range 118-122 from 115-119. Domestic investor are likely helping to cap short term gains for the with flows related to the coupon payment redemption toward the middle of February.

EURUSD trading off headlines as Greek woes continue but again we fail to break through the 1.1250-70 zone causing some near term short covering up to the mid 1.13 s. Market eagerly awaiting Wednesdays European Finance ministers meeting and we likely range trade 1.1250-1.1380 till then. Market still remains a seller on the rally looking for a sustained break lower. GBPUSD continues to be pushed around by various crosses as the market awaits the much anticipated inflation report released on Thursday for a clearer direction, currently the pair is rotating in a 1.5190 – 1.5250 range.

Looking ahead we get UK Manufacturing Production data during the London session with JOLTS job opening released during the New York session.

PRICE ACTION OVERVIEW:

EUR: While 1.1300/1.1250 supports focus on 1.1590 upside corrective equality target
GBP: 1.5325 trendline resistance being tested break target retest of December range lows
JPY:  119 – 117 range lows continue to be pressured but holds on a closing basis for now
CAD: 1.28 caps advance for now, 1.2350 support being retested, break targets 1.22 trendline
AUD: Sharp reversal from trend channel support  at .7650, stalls ahead of 0.79 resistance, break targets .8050

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutralAwait new signal
GBPUSDNeutralAwait new signal
USDJPYNeutral Await new signal
USDCADBullishAwait new signal
AUDUSDBearishShort Jan 29.7878 OPEN.7878Intraday Signal

ANALYSIS:

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

  • Currently retesting previous trendline resistance as potential support in the 1.1250 area, while this holds 1.16 is the next upside objective, a break of 1.12 brings 1.10 back into sight in the downside.
  • Order Flow indicators; OBV consolidating at lows, Linear Regression and Psychology are bullish but lacking momentum or follow through
  • Monitor price action at 1.1590 or a break of 1.12 to reset short positions to target 1.10

eu2015-02-10 06_55_46-

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

  • Trendline resistance at 1.5325 caps the upside advance for now a breach of Fridays lows would suggest resumption of bearish trend. A break of trendline resistance opens up a retest of lows of the December range towards 1.55/1.5550
  • Order Flow indicators; OBV ticking up from lows, Linear Regression pulling back to test midpoint from above, Psychology bullish but starting to stall.
  • Monitoring price action to reset short positions to target retest of year to date lows, long positions on break and retest of trendline resistance as support

gu2015-02-10 06_59_01-

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

  • Range resolving to the upside while 118 supports anticipate 120 test next, and potential for new range trade of 118 -122
  • Order Flow indicators; OBV still consolidating below recent highs, Linear Regression pierces midpoint from below, Psychology rotating at midpoint with a bearish bias
  • Monitoring price action for a retest of recent range highs to set long positions to target 2014 highs

uj2015-02-10 07_06_58-

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

  • 1.2350 support continues being tested, while 1.26 caps expect further corrective price action with a trend line test at 1.22 above 1.26 targets retest of 1.28
  • Daily Order Flow indicators; OBV consolidating at highs, Linear Regression and Psychology pierce midpoints from above
  • Monitoring price action and Order Flow indicators to set long positions targeting 1.30

uc2015-02-10 07_34_45-

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

  • While 0.79 contains the upside expect a retest of last weeks lows, a break of .79 suggest broader corrective phase with a retest of .8050
  • Order Flow indicators; OBV consolidating at lows, Linear Regression and Psychology pierce midpoints from below
  • Risk free shorts in play, see key trades for details

au2015-02-10 07_37_20-

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