Morning Report: Unexpected Japan GDP Miss Pompts Pullback

KEY DATA RELEASES TODAY:

1400GMT EUR ECB President Draghi Give Quarterly Testimony in Brussels
1415GMT USD Industrial Production exp 0.2% v 1.0%
1415GMT USD Manufacturing Production exp 0.3% v 0.5%


OVERNIGHT:

Unexpected contraction in Japan Q3 preliminary GDP saw USDJPY drop 150pips from an early high print of 117.05. Q3 GDP unexpectedly contracted -0.4% qoq vs expectation of 0.5% qoq growth thus taking the world’s 3rd largest economy into another technical recession. The surprise Japan GDP contraction should effectively seal the decision to postpone the second round of sales tax increase. Indeed, local press has already reported PM Abe will hold a special press conference tomorrow formally announcing that delay, which might come with an early election to secure the support for this decision.

Looking ahead, main data comes in the US session with US empire state manufacturing, industrial production & capacity utilisation.


OVERNIGHT PRICE ACTION:


  • EUR: Testing initial trendline resistance
  • GBP: Breaking down testing descending channel support
  • JPY: New highs for the year, testing ascending channel resistance
  • CAD: Pulling back to test trendline support
  • AUD: Testing range and trend line resistance

KEY TRADES:

FX PairIntra DayPosition/DateEntry LevelTargetStopComments
EURUSDBullishAwait new signal
GBPUSDBearishSell / 14 Nov1.5650Open1.58
USDJPYNeutralAwait new signal
USDCADBearishAwait new signal
AUDUSDBullishAwait new signal

ANALYSIS:

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

  • Price is ticking up to test initial trendline resistance
  • Order Flow indicators; OBV bearish but ticking up form low levels, Linear Regression and Psychology bullish
  • Monitoring potential potential rejection or break of trendline for new trade set up

EURO

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

  • Sharp rejection from range lows testing lower end of descending channel
  • Order Flow indicators; OBV bearish, Linear Regression and Psychology reject mid points suggesting trend continuation
  • Shorts in play, see key Trades

CABLE

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

  • Price continues to be pressured to the upside testing ascending trendline resistance 
  • Order Flow indicators; OBV bullish, Linear Regression and Psychology retesting mid points 
  • Monitoring trendline resistance break or rejection for new trade set up

yen

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

  • Price continues to contract in high range
  • Daily Order Flow indicators; OBV bullish, Linear Regression and Psychology break midpoints to the downside
  • Monitoring trendline break or rejection for new trade set up

loonie

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

  • Testing key trendline resistance
  • Order Flow indicators; OBV tick up from bearish levels, Linear Regression and Psychology break higher
  • Monitoring price action at trendline for break or rejection for new trade set up

aussie

Posted in Forex Analysis, tagged with on