Morning Report: USD Hampered By Less Hawkish FOMC

KEY DATA RELEASES TODAY (BST) :                                                                                                                                                                   
09:00 EUR Flash Services PMI 53.9 v 53.7
09:00 EUR Flash Manufacturing PMI 51.8 v 51.9
09:30 GBP Retail Sales m/m 0.4% v -0.5%
12:30 EUR ECB Monetary Policy Meeting Accounts
13:30 USD Unemployment Claims 271K v 264K
14:45 USD Flash Manufacturing PMI 54.6 v 54.2
15:00 USD Philly Fed Manufacturing Index 8.1 v 7.5
15:00 USD Existing Home Sales 5.23M v 5.19M
18:30 USD FOMC Member Fischer Speaks
18:30 EUR ECB President Draghi Speaks
00:00 USD FOMC Member Williams Speaks

OVERNIGHT:

FOMC minutes demonstrated a reluctance by the FED to raise rates at the June meeting due to weak first quarter economic data although the board do view current weakness as transitory. USD was mixed in post minutes trading initially pulling back before settling around pre minutes levels and currently trades above pivotal 95.30 support.

EURUSD weighed by continuing Greek concerns with Greek Fin Min Varoufakis stating that Greece would pay state pensions and workers ahead of IMF. Moody’s sees a growing risk of capital controls and deposit freezes in Greece as savers seek to withdraw cash ahead of a feared Greek Eurozone exit.

GBPUSD decline ran into bids on the first dip below 1.55 on the back of more hawkish than expected MPC minutes, interbank reports suggest decent bids down to 1.5450 level with sellers camped out towards 1.56.

USDJPY broke its eight week range to the topside printing 121.49 before some profit taking post FOMC minutes as a decline in UST yields began to weigh on the USD advance.Another factor in the stalling was a Nikkei release claiming that the BOJ may raise economic view post Q1 GDP which many traders feel would see a push back in further monetary easing expectations

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearish Await new signal
GBPUSDNeutralAwait new signal
USDJPYBullishAwait new signal
USDCADBullish Await new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • Bids towards 1.1030/60 support on the initial probe as this area supports expect retest of 1.1200/50 from below.
  • Order Flow indicators; OBV sideways, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow indicators to set shorts against 1.1550

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

  • Testing ascending trendline support at the 1.5450 level while bids support this area potential to set base for 1.60 attempt, failure here opens 1.5350
  • Order Flow indicators; OBV sideways, Linear Regression and Psychology pulling back to test midpoints from above
  • Monitoring price action and Order Flow for long positions targeting 1.60

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USDJPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 WeeksBullish
  • While 120.50 supports intraday pullbacks bulls target a break of 122 en route to 124 target. Below 119.50 concerns near term bullish bias.
  • Order Flow indicators; OBV ticks down, Linear Regression and Psychology bullish but stalling at elevated levels.
  • Monitoring price action and Order Flow indicators to set longs against 118 targeting 124

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

  • Descending trendline resistance at 123 arrest the upside advance while this area contains the bulls potential to retest the pivotal 120 level.
  • Daily Order Flow indicators; OBV ticking down, Linear Regression and Psychology bullish but rolling over to test midpoints from above
  • Monitoring price action and Order Flow indicators at 123/24

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

  • While .7850 supports downside reactions expect a break of .82 en route to test offers at .83, below .78 invalidates bullish bias
  • Order Flow indicators; OBV sideways, Linear Regression and Psychology bearish but stalling at depressed levels
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8350

au2015-05-21 08_11_53-

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