Morning Report: USD Offered As GDP Disappoints, FED On Hold

KEY DATA RELEASES TODAY (BST) :                                                                                                                                                                   
10:00 EUR CPI Flash Estimate y/y 0.0% v -0.1%
10:00 EUR Core CPI Flash Estimate y/y 0.6% v 0.6%
10:00 EUR Unemployment Rate 11.2% v 11.3%
13:30 USD Core PCE Price Index m/m 0.2% v 0.1%
13:30 USD Employment Cost Index q/q 0.6% v 0.6%
13:30 USD Unemployment Claims 290K v 295K
13:30 USD Personal Spending m/m 0.6% v 0.1%
14:45 USD Chicago PMI 50.1 v 46.3

OVERNIGHT:

USD was heavily offered yesterday after Q1 GDP disappointed traders offloaded USD’s as bulls began to throw in the towel. EURUSD was a big beneficiary yesterday as it breached both the 1,10 and 1.11 handles in quick succession, the trade appeared to be an unwind of the European QE play that has worked so well for the past 12 months. Earlier Moody’s announced a Greek downgrade but no one paid any attention to the rating firm. For now it appears that the principal concern for global investors is hedging their exposures in the Bunds and DAX which means buying Euro’s.

Japanese market reopened today and EURJPY has gained more than 250 pips as Japanese traders walked in. Exporters were obvious sellers of the cross. This puts pressure on USDJPY into the fix and forced the pair into 118.90’s. Interbank reports suggest exporters sold into the nineties. Another reason for the soggy USDJPY sentiment was the Nikkei which started negative and was -1.9% by end of the Asian morning session.

Interbank global positioning index reports are telling a painful story in GBP. Strategic money managers are short GBP, not maximum but substantial. Yesterday surge through 1.54 and the subsequent 1.55 print will have seen some big positions cut, It is likely that next weeks action will more dominated by political concerns and we will likely see some further position adjustment which should add to volatility

PRICE ACTION OVERVIEW:

EUR: 1.10 gives way 1.12 the next upside objective, close below 1.10 refocuses bears
GBP: Pivotal 1.55 test underway expect test of offers above 1.5550, below 1.53 refocuses bears
JPY:  While 118.60/80 contains downside target 121.00 en route to retest of year to date highs, only below 118.30 concerns bullish view
CAD: 120 test underway failure here opens  pivotal 118
AUD:  .8050 pivotal resistance being tested above here remove medium term downside pressure. While .8050 holds potential for medium term down trend resumption

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullish Await new signal
GBPUSDBullishAwait new signal
USDJPYNeutralAwait new signal
USDCADNeutral Await new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • 1.10 duly gave way and we quickly tested the 1.1150 equality swing objective. While 1.10 supports intraday downside reaction expect a break of 1.12 en route to 1.13. Bears require a dail close below 1.10 to renew focus
  • 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 shorts against 1.12

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

  • Pivotal 1.55 test under way as 1.5350 supports intraday expect a test of 1.5550 stops above the former high. A close below 1.53 renews medium term bearish bias
  • Order Flow indicators; OBV consolidates recent gains, Linear Regression and Psychology bullish but stalling at elevated levels
  • Monitoring price action and Order Flow for shorts targeting 1.45 initially and 1.42 in extension against 1.5550

gu2015-04-30 07_45_11-

USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • 118.80/60 trendline support continues to be tested, a break here sets up another run at 118.30 bids as range trade persists, trading toward the lower end of the recent range so caution shorting into the 118.80/60 zone
  • Order Flow indicators; OBV consolidating at lower levels, Linear Regression pierces midpoint from below, Psychology bearish
  • Monitoring price action and Order Flow indicators to set longs against 118 targeting 124

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

  • Failure at 120 will open a 118 test, while 120 survives on a closing basis potential for upside correction towards 124 previous support now resistance
  • Daily Order Flow indicators; OBV ticking up from recent lows, Linear Regression bearish, Psychology bearish but ticking up to test midpoint form below
  • Monitoring price action and Order Flow indicators on retest of 123/124 from below

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

  •  .8050 pivotal trend resistance failure here opens a move towards .8350. While .8050 survives on a closing basis potential for medium term down trend resumption
  • Order Flow indicators; OBV ticking down from recent highs, Linear Regression and Psychology bullish but stalling to retest midpoints form above
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8050

au2015-04-30 08_38_24-

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