Morning Report: A Pause In The USD Advance

KEY DATA RELEASES TODAY:

1015GMT EUR Targeted LTRO exp 148.2B v 82.6B
1330GMT USD Core Retail Sales m/m exp 0.1% v 0.3%
1330GMT USD Retail Sales m/m exp 0.4% v 0.3%
1330GMT USD Unemployment Claims exp 299K v 297K
1330GMT USD Import Prices m/m exp -1.7% v -1.3%
1500GMT USD Business Inventories m/m exp 0.2% v 0.3%

OVERNIGHT:

The sell-off in equity markets continues with the DJIA down 1.51% & S&P500 down 1.64%. Asian equity markets are similarly under pressure as the sell-off continues with the Nikkei down almost 1%. The dollar index briefly breached 88, while EURUSD stopped just shy of 1.25 in early Asian trading before retracing. Political uncertainty in Greece, slowdown in China, next week’s FOMC & profit taking into year-end are all playing a part – US yields continue to track lower with the 10yr at 2-months lows & the 30yr at 20-month lows. It’s no surprise therefore to see USDJPY tracking the price action lower and briefly printing sub-117.50 overnight.

Elsewhere AUDUSD  recovered following better than expected job data. Employment grew 42.7K in November, almost triple market estimates, although the breakdown showed this was mainly driven by 40.8k growth in part time positions. Moreover, unemployment rate hit a 12-year high of 6.3%, even though participation rate rose to a 4-month high.

Looking ahead, we have a busy calendar to wade through today. Starting with the TLTROs take up. Whether the ECB announces further asset purchases in coming months is highly dependent on today’s take-up. Consensus expects EUR148bn for the second tranche so any miss here is likely to send EURUSD lower. We also get German CPI, ECB monthly bulletin, Canada new housing price index, US retail sales, import price, jobless claims and business inventories

OVERNIGHT PRICE ACTION:

EUR: Piercing  two month trendline resistance, testing primary horizontal resistance
GBP: Testng trendline resistance with range resistance eyed above
JPY: Ascending trendline resistance rejects sharply, testing key 117 area
CAD: Continues to rotate ate double top resistance zone
AUD: Pause in the decline continues, primary horizontal resistance eyed above

KEY TRADES:

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

ANALYSIS:

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

  • Break of trend line resistance, testing 1.25 with horizontal resistance at 1.26 eyed. Watching for potential snap back.
  • Order Flow indicators; OBV continues ticking up from lower levels, Linear Regression and Psychology break midpoints from below, now bullish
  • Watching for a a retest of trendline resistance as support to set counter trend long positions

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

  • Testing trendline resistance, recent range resistance eyed above 
  • Order Flow indicators; OBV continues ticking up, Linear Regression and Psychology pierce midpoints from below and are positive
  • Watching for trend line resistance break and retest to enter new positions

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

  • Ascending trendline resistance rejects testing support at 117
  • Order Flow indicators; OBV bullsih but pulling back, Linear Regression and Psychology pierce midpoints from above testing support levels for potential trend continuation
  • Watching for previous resistance to act as support to set new long positions

uj2014-12-11 07_30_15-

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

  • Price continues to pressure year to date highs
  • Daily Order Flow indicators; OBV bullish no new highs, ticking back up, Linear Regression rolling over and Psychology pushing back up
  • Long order triggered, please see key trades

uc2014-12-11 07_52_43-

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

  • Pause in decline continues as price looks to test horizontal resistance, with trend line resistance eyed above
  • Order Flow indicators; OBV ticking up from depressed levels, Linear Regression and Psychology bearish, but ticking up from support areas
  • Monitoring trendline resistance and previous spike lows to set new shorts

au2014-12-11 08_05_49-

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