Morning Report: UK Elections, NFP’s Eyed

KEY DATA RELEASES TODAY (BST) :                                                                                                                                                                   
09:30 GBP Parliamentary Elections
13:30 USD Unemployment Claims 277K v 262K

OVERNIGHT:

EURUSD rallied to a two-month high of 1.1370, continuing to pull away from a 12-year trough of 1.0456 plumbed in March. Market believes the Euros resilience is mainly due to an swelling in Bund yields, which have jumped nearly 50 basis points in just a week as the European QE trade which was very crowded (Long Dax, Long Bund, Short Euro) has been somewhat unwound.

GBPUSD was given a small boost by a better-than-expected survey of purchasing managers in Britain’s dominant services sector in European session Sterling bid against USD after the miss in ADP but shed one percent against a broadly stronger euro, hitting a three-month low before the national elections today.

USDJPY tumbled to day low after an economic report showed that US private sector added fewer jobs than expected in April. Japan’s 10-year bond yield rose 7 bps, the biggest increase in three months. JPY crosses quiet, mostly bid, big players still on holiday, looks like we will head into the NFP’s mid range making it harder for players to position into the data so most will be in wait and see mode.

USDCAD weakened as crude prices surged to 2015 highs while the US dollar fell on soft economic data. Oil’s move appeared to overshadow any market reaction from an historic election in the oil-producing province of Alberta, in which the left-wing New Democrats won a crushing victory,ending the Progressive Conservatives’ 44-year hold on power.

PRICE ACTION OVERVIEW:

EUR: Testing 1.1350 offers as anticipated expect bids at a retest of 1.1250 intraday, only below 1.1150 concerns immediate bullish bias
GBP: While 1.5050 supports the advance expect a retest and break of 1.55 en route to 1.5560
JPY:  Rejected at the 120 descending trendline, now mid range as price contracts to the apex of the triangle
CAD: Bids at 120 continue to support on a closing basis, while this level survives anticipate a retest of 123/24 from below
AUD:  Offers at .8050 reject on the first attempt while .78 supports potential for another run at .8050

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullish Await new signal
GBPUSDNeutralAwait new signal
USDJPYNeutralAwait new signal
USDCADNeutral Buy/May 7 1.2090 Open1.1990
AUDUSDNeutralSell/May 7.7930Open.8030

ANALYSIS:

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

  • Testing 1.1350 offers as anticipated expect bids at a retest of 1.1250 intraday, only below 1.1150 concerns immediate bullish bias
  • Order Flow indicators; OBV ticking up, Linear Regression and Psychology retest midpoints from above
  • Monitoring price action and Order Flow indicators to set shorts against 1.1350/1.14

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

  • **Caution Event Risk** While 1.5050 supports the advance expect a retest and break of 1.55 en route to 1.5560. Below 1.5050 sees retest of 14990 base, failure here renews medium term down trend and retest of year to date lows.
  • Order Flow indicators; OBV consolidates recent gains, Linear Regression and Psychology bullish but rolling over to retest midpoints from above
  • Monitoring price action and Order Flow for shorts targeting 1.45 initially and 1.42 in extension against 1.5560

gu2015-05-07 07_38_06-

USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • Rejected at the 120 descending trendline, now mid range as price contracts to the apex of the triangle, while below 119.70 expect retest of ascending trendline at 118.70/50.
  • Order Flow indicators; OBV ticking back down Linear Regression and Psychology pierce midpoints from above
  • Monitoring price action and Order Flow indicators to set longs against 118 targeting 124

uj2015-05-07 07_42_25-

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

  • Bids at 120 continue to support on a closing basis, while this level survives anticipate a retest of 123/24 from below. A break of 120 target 118 next
  • Daily Order Flow indicators; OBV ticking up, Linear Regression rejected at midpoint,Psychology attempts midpoint tests from below
  • Monitoring price action and Order Flow indicators on retest of 123/124

uc2015-05-07 08_17_14-

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

  • Offers at .8050 reject on the first attempt while .78 supports potential for another run at .8050, below .78 concerns near term bullish bias
  • Order Flow indicators; OBV continues ticking up, Linear Regression and Psychology pierce midpoints from below
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8050

au2015-05-07 08_39_04-

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