Morning Report: USDJPY Whipsaw As Abe Wins Election

KEY DATA RELEASES TODAY:

1330GMT USD Empire State Manufacturing Index exp 12.1 v 10.2
1415GMT USD Industrial Production m/m exp 0.8% v -0.1%
1415GMT USD Capacity Utilization Rate exp 79.4% v 78.9%
1500GMT USD NAHB Housing Market Index exp 59 v 58

OVERNIGHT:

Japan PM Abe/LDP landslide win at Sunday polls, record low turnout though, markets see Abe’s stimulus measures continuing. JPY  saw large swings in Asia on event risk and moves in other financial markets. Thin conditions in the run-up to Christmas/New Year’s helped with many hedge funds in particular sidelined after the end of their financial year in November. USDJPY ran up from 118.73 to 119.13 in very early trade. It plunged to 117.78 as the rest of the region began trading in typical buy-the rumor/sell-the-fact trading after Japan PM Abe/LDP’s landslide victory.

Elsewhere, EURUSD opened at 1.2465 after gains Friday popping up to 1.2485 early as USDJPY plunged, EURUSD drifted back down to 1.2434 as USDJPY reversed higher. EURUSD could remain firm early in the week but volatility is likely to return into the FOMC meeting Wednesday. EUR could currently be on the precipice of further moves down if the FOMC looks past falling crude oil prices and the implications for inflation and focuses instead on improving US growth, and especially so with the ECB expected to ease aggressively in the new year.

Looking ahead we have a light data calendar with Empire State Manufacturing and the Dec NAHB Housing Index the highlights during the US session.

OVERNIGHT PRICE ACTION:

EUR: Attempting to recapture 1.25 as previous trendline resistance acts as support
GBP: Range contracting as price pressures trendline resistance
JPY: Whipsaw price action thin conditions , price consolidates above support
CAD: New year to date highs,  consolidating at highs
AUD: New year to date lows, consolidating at lows

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullish BUY 13 DEC1.2495 OPEN1.2345
GBPUSDNeutralAwait new signal
USDJPYNeutralAwait new signal
USDCADBullishBUY 9th DEC1.1495 OPEN 1.1495Risk Free
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • 1.25 being retested as previous descending trendline resistance now supports
  • Order Flow indicators; OBV ticking back up, Linear Regression testing midpoint form above and Psychology is bullish
  • Counter trend long orders in play, please see key trades

eu2014-12-15 07_27_51-

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

  • Range contraction as price continues to pressure trendline resistance, recent range resistance eyed above 
  • Order Flow indicators; OBV consolidating off recent lows, Linear Regression retesting midpoint from above and Psychology is bullish
  • Watching for trendline resistance break and retest to enter new positions

gu2014-12-15 07_30_20-

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

  • 117 area horizontal support continues to attracts buyers
  • Order Flow indicators; OBV bullish consolidating at elevated levels, Linear Regression ticking back up piercing midpoint and Psychology attempting to recapture midpoint from below
  • 117 support holds setting new longs for potential retest and break of highs

uj2014-12-15 07_38_23-

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

  • New year to date highs previous resistance held as support for trend continuation
  • Daily Order Flow indicators; OBV bullish just off recent new highs, Linear Regression bullish and Psychology retesting midpoint form above
  • Long order triggered, trade now risk free, please see key trades

uc2014-12-15 08_05_28-

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

  • New lows, watching for follow through psychological 0.80 still eyed 
  • Order Flow indicators; OBV bearish ad consolidating at depressed levels, Linear Regression and Psychology bearish, but ticking up from support areas
  • Monitoring trendline resistance and previous spike lows to set new shorts

au2014-12-15 08_10_36-

 

Posted in Forex Analysis, tagged with on