Morning Report: OPEC Disappoint, USD Supported

KEY DATA RELEASES TODAY:

1000GMT EUR Core CPI Flash Estimate y/y exp 0.7% v0.7%
1000GMT EUR Unemployment Rate exp 11.5% v 11.5%
1000GMT EUR CPI Flash Estimate y/y exp 0.3% v0.4%
1330GMT CAD Gross Domestic Product  exp 2.1% v 3.6%

OVERNIGHT:

OPEC failed to reach an agreement on output reduction late Thursday the rapid decent in crude prices supported the USD in holiday thinned trade.

The Euro opened around 1.2480 and attempted to rally earlier yesterday but soon lost traction on the back of soft data. The pair was well capped above 1.2500 level after German CPIs printed at 0.6% vs 0.8% prev, putting pressure on the nationwide CPI. Also, bank lending in Eurozone continued to decline, adding further weight to calls for the ECB to launch more aggressive stimulus measures in December.

Cable mostly traded in tandem with the Euro. The pair rallied to 1.5825 in early in the day but then slumped to 1.5714 low after OPEC failed to reach a new agreement to cut oil production, as downside risk to inflation increased as well as the chance of the BOE holding off longer on any rise in interest rates. The market is increasingly aware of political risks before next year’s general election in May, as there are still some unresolved structural problems with current account and budget deficits in the UK.

The Yen was slightly changed on Thursday, reached an intra day low of 117.22 due to soft US economic data. The pair again broke the 118 level overnight as Japanese inflation data fell short of the expectations, with the CPI coming in at 2.9 percent annually for October. high of 118.27after the figures. Besides, unemployment rate in Japan for October dropped to 3.5 percent unexpectedly.

Post the OPEC announcement that it would not cut crude output levels. Oil prices plunged to new four-year lows supporting the Loonie which rallied strongly on the back of the news. The Aussie took the other side of the Loonie movie and Thursday’s rally proved to be short-lived as the pair retreated swiftly heading back to test Wednesdays lows.

Looking ahead the main data point today will be the Eurozone Consumer Price Index released this morning, with Canadian GDP the headline release in the US session. Caution this afternoon as liquidity likely still lower as many US participants taking a long holiday weekend coupled with month end flows.

OVERNIGHT PRICE ACTION:

EUR: Range continues to contract below overhead trendline resistance
GBP: Snap back retesting previous range resistance as support
JPY: 117 attracts buyers on first test, bullish consolidation continues
CAD: Sharp reversal on OPEC news  rally regains bullish channel
AUD: Retesting descending trendline support and potential double bottom

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullishBUY/ Nov 261.2495OPEN 1.2345
GBPUSDBullishBUY/ Nov 251.5745 OPEN1.5580
USDJPYBullishAwait new signal
USDCADNeutralAwait new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • Range continues to contract support at the 1.2350 double bottom with trendline resistance above containing the upside for now
  • Order Flow indicators; OBV bearish ticking up from depressed levels, Linear Regression and Psychology bullish
  • Counter trend longs in play, please see key trades

eu2811

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

  • As anticipated snap back to retest range highs as potential support 
  • 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

gu2811

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

  • 117 supports on first test as bullish consolidation continues
  • Order Flow indicators; OBV bullish ticking down from elevated levels, Linear Regression and Psychology break lower, testing support levels, Psychology hold support levels, Liner Regression testing support level for trend continuation
  • Horizontal support holds on initial test, watching for Order Flow indicators to confirm trend continuation for new long positions

uj2811

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

  • Price reverses sharply on OPEC news, regaining bullish channel
  • Daily Order Flow indicators; OBV bullish but pulling back, Linear Regression and Psychology testing midpoints from below
  • Monitoring horizontal resistance break, with Order Flow indicators confirming to set new long positions

uc2811

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

  • Rapid retest of descending trendline support with the potential for a daily double bottom to develop
  • Order Flow indicators; OBV rolling over again, Linear Regression and Psychology struggling to regain midpoints and maintain positive momentum
  • Will set counter trend longs on trendline resistance break, or daily double bottom

au2811

 

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