Morning Report: USDJPY HIgher Still GBPUSD Lower Still

KEY DATA RELEASES TODAY:

1000GMT EUR Eurozone Gross Domestic Product (QoQ) exp 0.1% v 0.1%
1000GMT EUR Eurozone Gross Domestic Product (YoY) exp 0.7% v 0.8%
1000GMT EUR Eurozone Consumer Price Index Core exp 0.7% v 0.7%
1000GMT EUR Eurozone Consumer Price Index exp 0.4% v 0.4%
1330GMT USD Advance Retail Sales exp 0.2% v -0.3%
1455GMT USD University of Michigan Confidence exp 87.5 v 86.9
1500GMT USD Business Inventories exp 0.2% v 0.2%


OVERNIGHT:

JPY complex bid overnight. USDJPY taking out the offers through 116 to print a fresh 7-year high of 116.29 driven in part by reports of domestic pension funds demand. All week long, the JPY complex has been heavily influenced by commentary regarding the next round of sales tax and the possibility of snap elections. In this regard, Monday’s Q3 GDP release is key – a disappointing figure should seal the delay, while an upside surprise will support the case for a hike on schedule. Today’s Nikkei report indicated Abe is close to making a decision, with primary factors being the GDP report and subsequent meetings with economic advisors – the last of which should be done by Tuesday. In the meantime, the headlines keep coming, Finance Minister Aso acknowledged “stalling” private consumption in spite of improvement in employment and investment. Economy Minister Amari also indicating a delay remains possible, warning that economic stimulus steps may be needed if the hike is pushed back.

Elsewhere, the move in USDJPY has been felt across most of G10 with EURUSD, AUDUSD and GBPUSD all trading lower overnight. EURCHF meanwhile treads water between 1.2019-23.

Looking ahead, the focus this morning will be on Eurozone 3Q GDP. Hard economic data from the Eurozone has been weak in 3Q and therefore this is likely to be reflected in the preliminary release of GDP. Should Eurozone have contracted in 3Q then the market expects further downside for EURUSD. We also get Eurozone CPI while US will release Retail Sales, UoM Confidence & Business inventories later today.


OVERNIGHT PRICE ACTION:


  • EUR: Continues to rotate in a tight range at lows
  • GBP: Breaking down testing descending channel support
  • JPY: New highs for the year, testing ascending channel resistance
  • CAD: Supported post profit taking cycle
  • AUD: Testing range and trend line resistance

KEY TRADES:

FX PairIntra DayPosition/DateEntry LevelTargetStopComments
EURUSDNeutralAwait new signal
GBPUSDBearishSell / 14 Nov1.5650Open1.58
USDJPYBullishAwait new signal
USDCADBullishAwait new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • Tight rotation, price continues to test range from below
  • Order Flow indicators; OBV bearish, Linear Regression testing midpoint and Psychology rejects mid point on first test
  • Monitoring potential follow through on rejection of range support now as resistance to set shorts

EURO

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

  • Sharp rejection from range lows testing lower end of descending channel
  • Order Flow indicators; OBV bearish, Linear Regression and Psychology reject mid points suggesting trend continuation
  • Short orders set, see key Trades

CABLE

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

  • Price continues to be pressured to the upside testing ascending trendline resistance 
  • Order Flow indicators; OBV bullish, Linear Regression and Psychology supported at mid points and ticking up suggesting trend continuation
  • Monitoring trendline resistance break to set longs

yen

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

  • Price supported post profit taking cycle
  • Daily Order Flow indicators; OBV bullish, Linear Regression ticking up for mid point test and Psychology supported at mid point
  • Monitoring trendline support to set longs

loonie

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

  • Snap back into range monitoring price action for confirmation
  • Order Flow indicators; OBV tick up from bearish levels, Linear Regression bullish and Psychology testing mid point from above
  • Monitoring price action on range mid point retest and trendline resistance, will set longs on close above trendline resistance

aussie

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