Morning Report: EUR, AUD, GBP, CHF, CAD


Weidmann’s comments yesterday underscored the divisions at the governing council on QE. Second day of Eurogroup meeting could produce more headlines today with some scope for disappointment for those looking for fiscal stimulus signals. ECJ will hold its hearing on OMT focusing on issues like OMT’s unlimited size raised by the GCC. No decision is expected today but the discussion could offer some early hints about the direction of the debate and the ultimate decision. Data weakness may not trigger sustained EUR weakness given the uncertainty about ECB QE and in light of this I will look to play a break higher from these levels using the lower timeframes for tighter entry, confirmed by Daily Order Flow Indicators crossing to the upside.


The Aussie started the week positively having registered a Bullish Daily candle on improved data our of China. However, RBA’s Debelle was talking down AUD overnight, drawing attention to risks of volatility and in light of this AUD weakness may have further to run amidst moderation of growth expectations. Whilst we hold the current levels, short term outlook is still mixed though Daily Order Flow Indicators have crossed downward and so will I look to play a confirmed break through NFP lows.


AUDCAD has been chopping in a fairly congested range at this low level. With On Balance Volume starting to creep back up from lows and Daily Order Book Regression having crossed to the upside I will be looking to see price make a confirmed break back up this consolidation with a supporting bullish cross on the Psychology Indicator to set longs targeting a retest of the .9931 broken support level followed by a retest of the descending trendline from highs.


EURAUD has broken out of its descending trendline from January highs and is currently holding horizontal resistance at the 1.4590 level. With On Balance Volume moving up nicely and Daily Order Book Regression having pushed to the upside I will be looking for a break higher through this level in line with a bullish crossover on the Psychology Indicator targeting initially, the broken support at 1.50 . I will look to the lower timeframes for added confirmation and will play a more aggressive stop just below this recent consolidation, sitting back inside the broken descending trendline.


GBPCHF Is looking vulnerable here, finally coming away from highs we pegged for possible reversal last month.  With market expectations around a BoE rate hike mixed now, further so in light of recent Fed dovishness, data releases  see key importance. This morning’s CPI came in weak –  Core (YoY) (Sep): 1.5% actual; 1.8% estimated; 1.9% prior. and will do little to bolster the view of those expecting an earlier rates rise.   If we can break ascending trendline I will be looking to set shorts and will look to add if price breaks horizontal support just below.