Morning Report: USDJPY Up Up And Away

KEY DATA RELEASES TODAY:

0900GMT EUR Flash Services PMI exp 52.3 v 52.4
0900GMT EUR Flash Manufacturing PMI exp 50.9 v 50.7
1330GMT USD Core CPI m/m exp 0.2% v 0.1%
1330GMT USD CPI m/m exp -0.1% v 0.1%
1330GMT USD Unemployment Claims exp 286K v 290K
1445GMT USD Flash Manufacturing PMI exp 56.2 v 56.2
1500GMT USD Philly Fed Manufacturing Index exp 18.9 v 20.7
1500GMT USD Existing Home Sales exp 5.16M v 5.17M

OVERNIGHT:

All the focus on USDJPY this morning as it continues to make a series of new highs. Despite initial headlines from FOMC minutes being interpreted as somewhat doveish, the pair eventually managed to trigger option barriers through 118.

While the minutes ultimately did not yield anything particularly new, there were  three points of  interest: 1) The discussion related to inflation and inflation expectations was more doveish than suggested in the statement; 2) The section on guidance indicated that there were a wide range of views regarding what to do about the “considerable time” phrase – remove or neutralise. 3) Discussion related to the RRP program – including a new reference to the possible introduction of bank collateral accounts.

Post event, the Initial USD bearish price action was likely more a reflection on positioning and USD quickly went bid again all the way to a 118.71 high. It is now  difficult to identify significant resistance levels on the charts so I think attention will naturally lie with big figure  at 119 and 120 and projected trendline resistance at 1.22.

Elsewhere, from China we got HSBC PMI at exactly 50, the level that divides expansion and contraction, exp 50.2. Add to that falling Iron ore prices and it is unsurprising that AUD is back on a 0.85 handle.

OVERNIGHT PRICE ACTION:

EUR: Rejection candle at trendline resistance
GBP: Trading below descending trendline but lacking momentum
JPY: Breaks ascending trendline, new year to date highs
CAD: Supported near trendline support
AUD: Rejected from trendline resistance

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullish Buy / 19 Nov 1.2590 Open 1.2440
GBPUSDBearish Await new signal
USDJPYBullishAwait new signal
USDCADBullish  Buy / 19 Nov 1.1350 Open 1.12
AUDUSDBearish Sell / 17Nov8690Open.8690Risk Free

ANALYSIS:

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

  • Price continues to test trendline resistance, range contracting
  • Order Flow indicators; OBV bearish but ticking up form low levels, Linear Regression retesting midpoint from above and Psychology bullish
  • Counter trend longs in play, see key trades

EU2011

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

  • Price has broken descending trendline support but range continues to contract
  • Order Flow indicators; OBV bearish, Linear Regression and Psychology attempting midpoint test from below
  • Potential double bottom acting as support, downside price momentum fading 

GU2011

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

  • Price breaks ascending trendline resistance
  • Order Flow indicators; OBV bullish, Linear Regression and Psychology bullish
  • Monitoring trendline resistance now as support for new long positions

UJ2011

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

  • Price supported near trendline support
  • Daily Order Flow indicators; OBV bullish but retreating form extreme levels, Linear Regression and Psychology testing midpoints from below
  • Longs in play, see key trades

UC2011

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

  • Rejected on trendline test, downside follow through
  • Order Flow indicators; OBV turning lower, Linear Regression and Psychology re-testing midpoint from above
  • Rejection candle at trendline test, shorts in play, see key trades  

AU2011

 

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