Morning Report: Range-Bound Ahead Of FOMC

Key Data Releases Today

1230GMT – USD Durable Goods exp 0.5% v -18.
1400GMT – USD Consumer Confidence exp 87 v 86
2350GMT – JPY Industrial Production exp exp -0.1% v -3.3%


Overview:

  •  USD is mixed as markets digest European stress test results ahead of FOMC on Wednesday and GDP.
  • CAD is flat to Friday’s close after a quiet session. This week’s domestic
    highlight is GDP on Friday.
  • EUR sees modest rally on relief at stress test results
  • GBP is up on better than expected CBI sales data
  • JPY is strong leading into a heavy data and BoJ week.
  • AUD is traded up initially but reversed as price remains rangebound in quiet session.

Key Trades

  • USDCAD: Short Term Bullish – No Change  
  • EURUSD: Bearish – No Change 
  • GBPUSD: Bearish – No Change 
  • USDJPY: Bullish – No Change 
  • AUDUSD: Bearish – No Change 

Analysis

EURUSD: Bearish – No Change

  • Shorts are still open from last week but with price holding on a retest of Wednesday Oct 15th bull candle low, stops have been moved to breakeven.
  • Looking for the high of last Wednesday’s bearish candle to act as resistance for continuation to the NFP lows.
  • Order Book Regression has crossed to the upside here and unless we see a sharp reversal lower today, it’s likely we grind higher here and stops get triggered.

EuroZone fundamentals remain negative and CFTC data shows net EUR shorts have been increased to $25bn  suggesting a continuation lower is likely to manifest soon. Main driver’s today will be US data releases with the most important focus this week being FOMC tomorrow & EU CPI release on Friday.

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USDCAD: Short Term Bullish – No Change

  • Still holding longs from last week
  • On Balance Volume continues to move higher
  • Price is still to resolve last Wednesday’s range but with Psychology positive and
  • Order Book Regression has crossed back to the upside encouraging the bullish view.

Another quiet day Yesterday as markets remain rangebound (and likely will continue to do so) ahead of the FOMC on Wednesday. US CPI & Consumer Confidence have potential to drive price today.

00c

GBPUSD: Bearish – No Change

  • Still holding shorts from last week
  • Price failed to break lower as anticipated and is currently holding against the descending trendline from summer highs with resistance just above at last week’s high.
  • Psychology still to the downside here – though marginally and Orer Book Regression has crossed higher here in line with On Balance Volume moving off lows. 
  • Will exit shorts on a close above last week’s high.

A better day for GBP Yesterday as markets relieved at results of bank stress tests with better than expected CBI sales also supporting. US data will again be key driver for price as not much is on the slate this week by way of UK domestic data

00gbp

AUDUSD: Bearish – No Change

  • Still holding shorts from last week
  • Price continues to trade in contracting triangle formation at lows failing to close above the upper line suggesting bearish resolution still possible. 
  • Order Flow Indicators mixed here as Order Book Regression has crossed up whilst Psychology remains just below it’s midline. On Balance Volume is ticking up slightly

A quiet day for the pair yesterday with more rangebound action. We have been in this consolidation for just over a month now and FOMC on Wednesday should likely see new direction established.

00a

USDJPY: Bullish – No Change

  • Still holding longs from the rebound off the mid 105 breakout area retest.
  • Positions increased on break higher last week and will be looking for a retest of that level to act as support for continued upside this week
  • Order Flow indicators have crossed to the downside here though On Balance Volume remains at highs. 

Overnight Retail Sales data came in at  +2.3% y/y, best pace since March this year. Reuters also reported comments from BoJ’s Kuroda who says he won’t hesitate to ease more if price target goals are at risk, inflation is slower but half-way to objective, the economy is showing weakness but cycle remains positive, sales tax hike effect beginning to fade, jobs and incomes improving, QQE working, no pre-set deadline, negative yields at auctions reflection of policy efficacy , JPY weakness viewed as positive, correction of past strength and finally he warns against second sales tax hike delay.

jpy

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