Morning Report: Mood Change On Global Growth Concerns

KEY DATA RELEASES TODAY:

0930GMT GBP Manufacturing Production m/m exp 0.2% v 0.4%
1500GMT USD JOLTS Job Openings exp 4.81M v 4.74M

OVERNIGHT:

There has been a mood change in the market since Friday. The positive response to the robust US nonfarm payroll data has been replaced by caution. This mood change is evidenced by the 20%-plus rise in the VIX index since Fridays close.

Markets appear a bit concerned that the obvious recovery taking place in the US economy is being countered by the weaker global environment. The steep falls in the energy sector are having ramifications in other markets. Funds that have tried to pick a bottom in the oil price and energy related stocks have been punished and there has been market chatter that a few have liquidated profitable positions in other assets to compensate for the losses in energy strategies.

As highlighted by the COT data the market is very long USD against the EUR and JPY so there might be more consolidation/correction even though falling commodities are usually USD positive. If the market does pare back USD longs against the EUR and JPY it should present excellent USD buying opportunities into year end and the beginning of 2015.

The Fed is far less concerned by falling energy prices and the impact it may have on inflation in the short-term. Meanwhile the ECB and BOJ are likely to still be in an easing cycle while the Fed is commencing a tightening cycle. This should certainly be USD positive

OVERNIGHT PRICE ACTION:

EUR: Descending trend line supports potential wedge pattern.
GBP: As anticipated snap back returns price to range.
JPY: Ascending trendline resistance rejects price.
CAD: Pierces double top resistance.
AUD: Under pressure, psychological .80 eyed

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutralAwait new signal
GBPUSDNeutralAwait new signal
USDJPYBullishAwait new signal
USDCADBullishBUY 9th DEC1.1495 OPEN 1.1345
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • Price holds descending trendline support forming a potential descending wedge pattern
  • Order Flow indicators; OBV continues consolidating at lower levels, Linear Regression pierces midpoint from below and Psychology attempting midpoint test from below
  • Watching for a break and retest of 1.2270 from below for new shorts, or a break of trendline resistance for longs 

eu2014-12-09 07_24_12-

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

  • As anticipated snap back into range from lower end of the range as with previous topside range break
  • Order Flow indicators; OBV consolidating at lower levels, Linear Regression and Psychology testing midpoints from below
  • Watching for range break and retest to enter new positions

gu2014-12-09 07_28_53-

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

  • Ascending trendline resistance holds on first test
  • Order Flow indicators; OBV bullsih but retreating form recent extremes, Linear Regression and Psychology to retest midpoints form above
  • Watching for previous resistance to act as support to set new longs

uj2014-12-09 07_33_49-

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

  • Price pierces year to date highs double top resistance
  • Daily Order Flow indicators; OBV bullish no new highs, but ticking back up, Linear Regression and Psychology bullish
  • Long orders set on break and close above year to date highs please see key trades

uc2014-12-09 08_10_22-

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

  • Price remains pressured to the downside, targeting lower end of projected channel
  • Order Flow indicators; OBV ticking lower confirming price action, Linear Regression and Psychology bearish, continue testing lower level support areas
  • Monitoring trendline resistance and previous spike lows to set new shorts

au2014-12-09 08_13_17-

Posted in Forex Analysis, tagged with on