Morning Report: USD Supported By Robust NFP’s

KEY DATA RELEASES TODAY:

1315GMT CAD Housing Starts exp 195.0k v 183.6k
1330GMT CAD Building Permits exp 3.0% v 12.7%

OVERNIGHT:

USDJPY printed new highs of 121.85 in the early part of the Asian session ahead of Q3 GDP release which was revised lower to -0.5% qoq, down from prior estimate of -0.4% qoq and compared to expectation of 0.1% qoq. Corporate Capex was again the culprit, contracting -0.4% vs -0.2% preliminary estimate and 0.9% consensus. This brought about a 50pip pull-back in USDJPY to a low of 121.34, with the $2 billion of 121.50 strikes expiring today helping steady the market.

Elsewhere, China trade figures were mixed – November surplus hit a record high, but imports fell y/y for the first time in three months. Iron ore imports were particularly soft at 67.4M tons v 79.4M prior. Export growth was also unimpressive, as shipments to US slowed to 2.6% from 10.9% and exports to Japan continued to contract y/y.

Looking ahead, a light data calendar with Eurozone Sentix investor confidence this morning . The highlight of the afternoon session is Canadian housing starts and permits

OVERNIGHT PRICE ACTION:

EUR: Breaks lows 1.22 eyed
GBP: Breaking range lows monitoring potential snap back
JPY: Pressuring ascending trendline resistance
CAD: Retesting double top resistance
AUD: Breaks lows, psychological .80 eyed

KEY TRADES:

FX Pair Short Term Position/Date Entry Level Target Stop Comments
EURUSD Bearish Await new signal
GBPUSD Bearish Await new signal
USDJPY Bullish Await new signal
USDCAD Bullish Await new signal
AUDUSD Bearish Await new signal

ANALYSIS:

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

  • Price pressuring lows retesting descending trendline, levels not seen since August 2012
  • Order Flow indicators; OBV consolidating at lower levels, Linear Regression and Psychology rotating below midpoints.
  • Watching for a break and retest of 1.2270 from below for new shorts

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

  • Breaking range lows, watching for potential snap back as with previous topside range break
  • Order Flow indicators; OBV consolidating at lower levels, Linear Regression and Psychology struggling to recapture midpoints
  • Watching for range break and retest to enter shorts

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

  • Price pressuring ascending trendline resistance
  • Order Flow indicators; OBV bullish new highs, Linear Regression and Psychology bullish
  • Watching for rejection of previous resistance to set new long positions

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

  • Price retesting potential double top resistance again, range contracting
  • Daily Order Flow indicators; OBV bullish no new highs, but ticking back up, Linear Regression and Psychology rotating at midpoints
  • Monitoring double top resistance break and retest to set new longs 

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

  • Trend continuation, targeting lower end of projected channel
  • Order Flow indicators; OBV ticking lower confirming price action, Linear Regression and Psychology bearish, testing lower level support areas
  • Monitoring trendline resistance and previous spike lows to set new shorts

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