Morning Report: Upbeat Retail Sales Support USD

KEY DATA RELEASES TODAY:

1000GMT EUR Industrial Production m/m exp 0.2% v 0.6%
1330GMT USD PPI m/m exp -0.1% v 0.2%
1330GMT USD Core PPI m/m exp 0.1% v 0.4%
1455GMT USD Prelim UoM Consumer Sentiment exp 89.6 v 89.4

OVERNIGHT:

The rebound in the USD from yesterday’s lows on the back of upbeat retail sales has seen the DXY consolidate around 88.50 overnight. US equity markets also stabilised with the DJIA up 0.36% & S&P500 UP 0.45% which in turn has provided a degree of comfort to Asian markets which are mostly in positive territory.

Elsewhere, WTI crude oil briefly tested below 59 overnight, which saw USD/CAD print a high of 1.1551 and putting the CAD on track to be the worst performing ccy this week. USD/JPY meanwhile, is struggling to hold onto gains above 119.00, despite a more risk-on feel and a higher Nikkei. US yields are certainly not helping the bullish case and  players are looking to lock in profits ahead of the election weekend. China data overnight was mixed to negative – most notably, industrial production missed consensus by 0.3pct to mark the 2nd worst y/y rate of growth in 5 years. Silver lining in the industrial output is that power generation rose sequentially for the first time in 4 months. Fixed Asset investment is in line with consensus but still at a 13-year low, while retail sales showed a modest improvement.

Looking ahead, we get Eurozone industrial production, US PPI and UoM sentiment. We also have the LTRO repayment data at 11am (GMT) which will be keenly watched following yesterday’s €129b take-up of the TLTRO.

OVERNIGHT PRICE ACTION:

EUR: Holds 1.25 on first test retesting trendline resistance as support
GBP: Pressuring trendline resistance with range resistance eyed above
JPY: 117 holds on first test, profit taking ahead of election weekend
CAD: New year to date highs
AUD: New year to date lows

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullishAwait new signal
GBPUSDNeutralAwait new signal
USDJPYNeutralAwait new signal
USDCADBullishBUY 9th DEC1.1495 OPEN 1.1345
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • 1.25 rejects on the first test now retesting previous trendline resistance as support
  • Order Flow indicators; OBV consolidating at lower levels, Linear Regression and Psychology test midpoints from above
  • Watching for a a retest of trendline resistance as support to set counter trend long positions

eu2014-12-12 06_55_53-

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

  • Continues to pressure trendline resistance, recent range resistance eyed above 
  • Order Flow indicators; OBV continues ticking up, Linear Regression and Psychology are bullish
  • Watching for trend line resistance break and retest to enter new positions

gu2014-12-12 07_09_12-

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

  • Ascending trendline resistance rejects testing support at 117 area attracts buyers
  • Order Flow indicators; OBV bullsih consolidating at elevated levels, Linear Regression and Psychology testing midponts form below
  • 117 support holds setting new longs for potential retest and break of highs

uj2014-12-12 07_08_38-

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

  • New year to date highs watching for snap back to retest previous resistance as support for trend continuation
  • Daily Order Flow indicators; OBV bullish retesting recent highs, Linear Regression and Psychology bullish and ticking back up
  • Long order triggered, please see key trades

uc2014-12-12 07_18_04-

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

  • New lows, watching for follow through psychological 0.80 eyed 
  • Order Flow indicators; OBV ticking down to new lows confirm price action, Linear Regression and Psychology bearish, but ticking up from support areas
  • Monitoring trendline resistance and previous spike lows to set new shorts

au2014-12-12 07_17_39-

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