Morning Report: US Election Results, USDJPY Higher

Key Data Releases Today

0930GMT – GBP Composite PMI exp 57 v 57.4
0930GMT – GBP Services PMI exp 58.5 v – 58.7
1000GMT – EUR Eurozone Retail Sales exp 1.4% v 1.9%
1200GMT – USD Mortgage Applications -6.6%
1315GMT – USD ADP Employment Change exp 220k v 213k
1500GMT – USD ISM Non Manufacturing Composite 58 v 58.6


Overview:

Overnight the USD was broadly supported by confirmation of a Republican victory in both the House and Senate in the US midterm elections. Global asset markets took this news positively as S&P futures and Japanese equities traded into positive territory. USDJPY broke the 113.80 area which had held well as resistance since yesterday, and it has since traded to a new 2014 high of 114.48.

EUR pressured overnight on Financial Times report regarding the European Commission cutting its economic outlook for the Eurozone, placing even more pressure on the ECB to expand its extraordinary measures aimed at halting the decling growth and arresting deflation concerns. Looking ahead UK Services will be out later this morning, key data point, but would take a print below 57.00 to concern the market. In the US we get ADP and ISM. On ISM front Employment component of services ISM may be closely watched following strength in manufacturing.

  • EUR pressured overnight by USD support post US mid term elections and FT report regarding growing pressure for more action from the ECB. 4.6B Euro’s worth of 1.25 option expiries at the New York cut today.
  • CAD prints fresh year to date highs overnight on broad USD support. Spec Longs triggered on yesterdays close.
  • GBP pressured overnight along with other USD majors eyes turn to Central Bank meeting on Thursday.
  • JPY continues to bear the brunt of the USD buying fresh year to date highs, stay long trial stops.
  • AUD suffers further with overnight USD strength again bringing range lows into view.

Key Trades

EURUSD: Neutral to Bearish – Revised (spec longs triggered yesterday)
USDCAD: Bullish – Revised (spec longs triggered yesterday)
GBPUSD: Neutral to Bearish – Revised (short stops to risk free)
USDJPY: Bullish – No Change
AUDUSD: Neutral – Revised (looking for spec longs)

EURUSD: Neutral to Bearish – No Change

  • Pin Bar at the year to date double bottom was confirmed on a break higher yesterday
  • Order Flow indicators remain negative and heavy, although Linear Regression continues ticking up off deflated bearish levels due to a pick up in supportive orders
  • Follow through on Mondays Pin Bar triggered spec longs yesterday, trailing stop now below yesterdays low

EURO

USDCAD: Neutral to Bullish – Revised

  • Price retests and breaks year to date highs printing fresh 2014 highs overnight
  • Daily Order Flow indicators are firmly to the upside here with OBV making new highs
  • Recent corrective price action looks set to act as base for a move higher
  • Break and close above previous highs has triggered new long positions. Stops placed below yesterdays low

loonie

GBPUSD: Neutral to Bearish – Revised

  • Pin bars and neutral bars continue to print in contracting range
  • Have moved stops on shorts to break even
  • Will try spec longs on break higher from pin bars targeting last week highs initially and then on to the major trend line
  • Order Flow indicators remain negative, although Linear regression is starting to tick up from deflated levels

CABLE

USDJPY: Bullish – No Change

  • Price action continues to be very bullish
  • Order Flow indicators retreating from bullish elevated levels.
  • Long positions intact with stops trailed up again below yesterdays low to lock in significant gains

yen

AUDUSD: Neutral – No Change

  • Range retest from above, finds support initially. Range lows being retested.
  • Order Flow indicators are struggling to recapture mid points
  • Will attempt spec longs on a break higher from yesterdays rejection of range lows, looking for upside follow through today

aussie

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