Morning Report: USD Profit Taking Post NFP’s

Key Data Releases Today

0930GMT – EUR Sentix Investor Confidence exp -13.8 v 13.7
1315GMT – CAD Housing Starts exp 200k v 197.3k


Overview:

Over extended USD longs remained under pressure at the beginning of the week following Friday’s payroll report. AUDUSD started the week stronger helped by the positive economic data from China released over the weekend. CPI was unchanged at 1.6% yoy in October while PPI dropped to -2.2% year over year. Trade surplus widened to USD 45.5b in October, versus expectation of USD 41b and prior month’s USD 31b. Exports grew 11.6% year over year. While that was slower than prior month’s 15.3% year over year, it beat expectation of 10%. Imports grew 4.6% year over year, slowed from prior month’s 7.0% year over year. Nonetheless, that’s two consecutive months of growth that wasn’t seen since February. Gold is also managing to hold onto the bulk of Friday’s impressive $46 rally but technically we need to see gains back above the triple-bottom $1180 level to confirm a reversal.

Looking ahead, the economic calendar is relatively light this week, in particular with Veterans Day holiday in US & Remembrance Day in Canada tomorrow. The main focus this week include BOE’s inflation report and job data on Wednesday. Eurozone will release GDP on Thursday while US will release retail sales on Friday.

EUR USD profit taking supports, large option expiries €2B of strikes expiring at 1.25 with a further €3.4B at 1.2550 for the New York cut today.
CAD pull back from fresh year to date highs on profit taking.
GBP snap back into range, monitoring confirmation for spec longs.
JPY strengthens on USD profit taking.
AUD snap back into range, monitoring for confirmation.

Key Trades:

EURUSD: Bearish – Revised (monitoring price action range retest from below)
USDCAD: Bullish – Revised (trailing stops on spec longs triggered)
GBPUSD: Bearish – Revised (trailing stops on spec shorts triggered)
USDJPY: Bullish – No Change (trailing stops triggered)
AUDUSD: Bearish – Revised (monitoring confirmation of range break)

Analysis: 

EURUSD: Bearish – Revised

  • USD profit taking post NFP’s support
  • Order Flow indicators recovering from very bearish levels, Linear Regression and Psychology are ticking up to test mid points
  • Monitoring retest of broken support to act as resistance, especially if Order Flow indicators turn down from their midpoints to set spec shorts

EURO

USDCAD: Bullish – Revised

  • USD profit taking, price retreats from fresh 2014 highs
  • Daily Order Flow indicators are pulling back from bullish levels to retest mid points from above
  • Monitoring trendline support and Order Flow indicators to signal bullish trend resumption

loonie

GBPUSD: Bearish – Revised

  • Contracting range break lower reversed sharply
  • Trailing stops on shorts triggered to secure profits
  • Order Flow indicators correct from bearish levels, ticking up to retest mid points

CABLE

USDJPY: Bullish – No Change

  • Price retreats from year to date highs
  • Order Flow indicators retreating from bullish elevated levels on USD profit taking.
  • Monitor Order Flow indicators for retest and hold of midpoints to suggest next rally attempt for new highs
  • Trailing stops triggered to secure significant profits on longs

yen

AUDUSD: Neutral – No Change

  • Snap back into range monitoring price action for confirmation
  • Order Flow indicators testing midpoints
  • Monitoring range low retest from below, If price is rejected from range lows and Order Flow indicators hold midpoint retest will set new shorts
  • If price recaptures range and Order Flow indicators confirm will set counter trend longs

aussie

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