Morning Report: Quiet Day After Wild Wednesday

Key Data Releases For Today

1000GMT -EUR  Eurostat Release First GDP Estimates After ESA 2010 Adoption
1230GMT -CAD  Canada CPI Core (SEP) exp 2.1% v 2.1%
1230GMT -CAD Canada CPI (SEP) exp 2.0% v 2.1%
1230GMT -USD  Building Permits exp 2.7% v -5.1%
1230GMT -USD  Fed’s Yellen Speaks At Boston Fed Conference


Overview:

A relatively range bound day yesterday as markets digested the wild swings seen in Wednesday’s sessions which saw massive covering of long USD positions. Of note yesterday, were comments made by Fed’s Bullard who suggested the Fed may want to extend their Bond buying program beyond October amid falling U.S inflation expectations citing the fact that U.S economic fundamentals remain strong. Yellen’s speech at 1230GMT could prove a critical opportunity for the Fed to deliver its interpretation of recent events and the impact they could have on policy. The recent shift in expectations is most likely to weigh on U.S. trade and confidence (and therefore business investment); however both the consumer and housing should be supported by lower oil prices and low interest rates.

GBPUSD:

Cable put in a nice bounce Yesterday and closed marginally above Wednesday’s highs and is currently holding against the the descending trendline formed by the contracting wedge into lows.

Order Flow Indicators are still to the upside here and I maintain expectations for a further move up to retest the descending trendline from summer highs where I will look to set shorts. 

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USDJPY:

Price held the retest of the 105.40s breakout zone where we exited shorts, and is currently witnessing a modest bounce. With Daily Order Flow Indicators having crossed to the upside here.

I will look to play small longs on a lower timeframe pull backs in line with Order Flow Indicators. With On Balance Volume still off highs, we could see this bounce fail and downside resume, I will be looking for any rejection candles in this correction to try shorts on lower timeframes.

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EURUSD:

Price saw a sharp reversal yesterday falling by 150 pips initially on exploding Periphery yields only to end the session back up near Wednesday’s highs.

Whilst price is still within Wednesday’s range,  the short term picture remains mixed.  Daily Psychology Indicator is holding just below it’s midline whilst Order Book Regression is still down. Should price break Wednesday’s highs in line with Order Flow Indicators crossing to the upside I will set longs.

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USDCAD:

Still holding against the double top level with previous YTD highs, price has now put in 2 Daily pin bars and downside give good risk:reward at these levels. Bias is confirmed  with Order Flow Indicators having crossed to the downside. Risk to this trade is CAD CPI up later today and the possibility of a downside surprise given the fall in global inflationary pressure and growth outlook.

I will set shorts on a confirmed H1 break of the two Daily Pin Bars targeting a retest of  the ascending trendline.  Alternatively, should we break higher on data I will set longs on a confirmed break of highs. 

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