Morning Report: Positions Pared Before NFP Holiday Release

KEY DATA RELEASES TODAY (BST) :

09:30 GBP Construction PMI 59.7 v 60.1
13:30 USD Trade Balance -41.3B v -41.8B
13:30 USD Unemployment Claims 286K v 282K
13:40 USD Fed Chair Yellen Speaks
15:00 USD Factory Orders m/m -0.4% v -0.2%
20:45 USD FOMC Member Brainard Speaks

OVERNIGHT:

EURUSD rallied to 1.0799 high after the release of US ADP national employment figure alerted USD bulls to the potential of disappointment in the headline NFP release tomorrow, but then the pair fell back to 1.0720’s level as positions are pared ahead of the holiday weekend. The manufacturing activity in euro zone accelerated faster than the previous month, signalling the bloc’s economy is recovering. Fair sized option expirations at 1.0700 and 1.0800 bracket the market for now.

GBPUSD dropped to 1.4737 low following the UK manufacturing PMI, despite the manufacturing index rose to 54.4 in March, hitting an eight-month high. UK is once again facing the political uncertainty as a result of the general election.

USDJPY remains sub120 overnight, following the unexpectedly weak U.S. economic data. Japanese companies see 1.4%, 1.6% and 1.6% YoY inflation in one year, three years and five years respectively, according to the most recent BoJ’s survey. Near term headwind from topside option expiries have capped the market despite a Nikkei rally. Option-related offers are seen large from ahead of 120.00 with $2.8 bln eyed at this strike for the NY cut today.

PRICE ACTION OVERVIEW:

EUR: While 1.06 supports target 1.1190/1.1210 equality corrective target
GBP: While 1.5030/50  contains upside target 1.4630
JPY:  While 118.30 contains downside target 124.00
CAD: While 124.50 contains downside target 130
AUD:  While .7940/6- contains upside target .72

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearish Await new signal
GBPUSDBearishAwait new signal
USDJPYNeutral Await new signal
USDCADBullishAwait new signal
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • 1.0760/40 continues to support, 1.09 the new battle ground as this contains upside attempts expected continued range trade a breach of 1.09 eyes 1.12 corrective equality target. While 1.09 contains upside reactions there is the potential to breach 1.06 for trend resumption.
  • Order Flow indicators; OBV consolidates at lows, Linear Regression testing midpoint from below, Psychology bullish
  • Monitor price action and Order Flow to reset shorts against 1.12

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

  • Range trade persists intraday suggesting a bearish consolidation pattern, while 1.5030/50 caps upside expect a break of 1.47 to confirm trend resumption en route to 1.45, above 1.51 suggests a test of 1.52 in broader corrective pattern
  • Order Flow indicators; OBV ticking up from lows, Linear Regression and Psychology bullish
  • Monitoring price action and Order Flow against 1.5030/50 targeting 1.46/45

gu2015-04-02 07_33_30-

USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • Continued bullish consolidation below year to date highs while 118.30 supports expect retest and break of highs, below 118 negates pattern and suggests broader range trade towards 117
  • Order Flow indicators; OBV ticks down, Linear Regression pierces midpoint from below, Psychology ticking up to test midpoints from below
  • Monitoring price action and Order Flow indicators for longs targeting 124

uj2015-04-02 07_35_56-

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

  • Third rejection a the 1.28 attempt,  a close above here will target key 1.30 only below 1.2450 concerns bullish bias, potential for further range trade in bullish consolidation pattern
  • Daily Order Flow indicators; OBV retreating from highs, Linear Regression and Psychology bullish but rolling over to test midpoints from above.
  • Monitoring price action and Order Flow indicators to set longs targeting 1.30

uc2015-04-02 08_39_58-

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

  • Watching retest of year to date lows for potential double bottom attempt, a breach here targets .72
  • Order Flow indicators; OBV  at new lows, Linear Regression and Psychology bearish but ticking up from low levels
  • Monitoring price action and Order Flow indicators to set shorts targeting .72

au2015-04-02 08_41_48-

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