31 / 01 / 2017 | Technical Analysis

USD/CHF heads for 200 day MA

USD weakness is also favouring the Swiss Franc with the pair having broken convincingly below parity this week. Look for convergence with the 200 day MA around 0.9850 then pre-election lows at 0.9700



EUR/JPY failed to break recent highs and is now heading for 23.8% Fibonacci retracement of the post-Brexit rally. Look for support at 120.6, then 118.6.



Please note: The content in this daily technical analysis article should not be taken as investment advice. It comprises our personal view.
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31 / 01 / 2017 | Market News

Yen finding fresh support

Although the Bank of Japan has left its monetary policy unchanged, the Yen has been gaining yet more ground in the last few hours. There’s mounting suspicion that the ultra-lax approach cannot be sustained for much longer especially given the bullish growth forecasts, but on top of this the Yen stands to win from a safe haven perspective too, with growing concern over the way US policies are unfolding under the new presidential administration. Japanese economic data released overnight can perhaps be best described as something of a mixed bag too, suggesting that unless we see some quick change in sentiment surrounding the US then this could be an extended run of gains for the Yen.
 
EUR/USD is holding close to the 1.07 level, although we have a raft of data due for release at 10am GMT including Eurozone GDP for Q4, unemployment from December and the January inflation reading. Between these three prints it seems likely that we’ll see some fresh direction for the common currency and given the negativity surrounding the greenback right now, the risk bias could well be on the upside.
 
GBP/USD is coming under pressure with the market seemingly adopting a risk off stance ahead of the Bank of England’s “Super Thursday”, where the latest quarterly inflation report will be very much in focus. The challenge here is that the collapse of the pound since the Brexit referendum may have delivered a modest boost in terms of living standards for the general public, but inflationary pressures are now set to start building and how the bank intends to manage these will be critical. Previously the expectation had been that cable should hold on to 1.25 but this has now lapsed suggesting further weakness could be seen in the short term.
 
Despite questions over future trade agreements, the Canadian dollar is holding up well against the greenback and although details over the future of policies such as NAFTA stand to hold a great deal of sway for the Loonie, in the shorter term we do have a Canadian GDP release scheduled for 1.30pm GMT this afternoon. The Bank of Canada has made it quite clear that it is in no race to follow the Federal Reserve’s interest rate policy and indeed a rate cut still remains feasible. Any shortfall in the GDP print could give the greenback something cheer.
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30 / 01 / 2017 | Technical Analysis

Euro-Yen hitting resistance?

EUR/JPY made another push higher last week, but territory beyond 123.35-123.75 has been presenting resistance over the last six weeks or so. Failure to break  higher would pave the way for a return to territory around 121.
 

 
AUD/USD remains rangebound but look for support around the 200 day moving average of 0.7500, with resistance likely to be evidenced around the late 2016 highs of 0.7785



Please note: The content in this daily technical analysis article should not be taken as investment advice. It comprises our personal view.
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30 / 01 / 2017 | Market News

Dollar weakness in evidence

It has been a story of bread-based dollar weakness overnight with selling being seen against many major crosses – a move that has in some cases defined the fundamentals. Japan posted a sharp drop in December retail sales – 0.6% versus expectations of 1.3% - but this didn’t stop the Yen marching higher shortly after the open, pushing out as far as 114.25 before posting a modest reversion. With more data out of Japan around 11.50pm GMT this evening and the latest two day BoJ policy meeting now underway we may get a better indication in 24 hours time, but 114.25 appears to be the level to watch for.
 
German CPI is due for release at 1pm GMT this afternoon and a bumper figure of 2% is forecast. For many economies this would be seen as a desirable figure, but essentially it will simply expose the imbalances that continue to exist across the Eurozone. That said, if this 2% target is met then look for some further Euro support to emerge at least from a psychological aspect, with the objective being to build on territory above 1.07 in the days ahead.
 
At 1.30pm GMT we have December’s US PCE deflator, the metric that is seen as the Federal Reserve’s preferred measure of inflation. Over the last month there has been little to provide fresh direction over the stance the Fed said it would take in 2017, but any signs of a slow down here could appeal to the policy doves. After an upbeat start to the week, GBP/USD is unwinding and given the absence of UK economic data on the table today, it’s numbers like this that could provide the next momentum for cable. 
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27 / 01 / 2017 | Market News

Greenback in vogue once more?

A combination of factors are at play pushing the DXY dollar index clear of the 100 level once again, although key to this appears to be a weakening Japanese Yen. Despite some marginally better than expected inflation data being released a few hours ago, there are indications that the BoJ’s stimulus measures will continue for some time yet. On top of this we also have equities being snapped up with the Nikkei tracking Wall Street’s move higher and this is also seen as weighing on the currency. 

We have two key economic releases from the US due today, namely Q4 flash GDP and also durable goods order data for December. Expectations are for two opposing signals here, with GDP expected to rise at a slower pace, whilst goods order data is tipped to jump back into growth. With both releases due at 1.30pm, any divergence from forecasts can be expected to create some meaningful reaction for dollar crosses, and at these levels it’s difficult to see any specific bias in terms of risk here. 

On the political agenda, the focus is again surrounding the new US President. Yesterday a meeting with the Mexican Prime Minister was called off in the wake of who will pay for the proposed wall between the two countries, marking an end to the brief spell of respite that had been seen for USD/MXN. Trump is also scheduled to meet the UK’s PM today for talks and the sentiment here will closely followed – outwardly the tone has been painted as conciliatory, but there are some tough issues that need to be addressed and any inference that new trade deals between the US and UK will attempt to take advantage of the UK’s diminished position as it edges out of the EU could heap further downside pressure on cable. 
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27 / 01 / 2017 | Technical Analysis

Cable still heading North

GBP/USD continuing its trend higher from the start of last week with upside target of December highs at 1.2785, support at 1.2425

 

EUR/JPY has been rangebound for last two months; look for support at 121 or 23.6% Fibonacci retracement of post Brexit rally, resistance at recent highs of 124.


 
Please note: The content in this daily technical analysis article should not be taken as investment advice. It comprises our personal view.
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26 / 01 / 2017 | Market News

GBP still causing excitement

Sterling has been gaining ground against both the greenback and the Euro in recent trade, as expectations over two key announcements continue to build. First up we have the flash UK GDP release for Q4 – and with it the preliminary reading for 2016 as a whole – at 9.30am GMT. There’s a risk that we are seeing buying of the expectation here, with the consequent risk that there will be selling off the back of the fact. Expectations are a relatively modest 2.1% vs 2.2% for 2015 – it might be good enough to beat the rest of the G7 countries, but it still looks a bit lacking. 

Following this, we also have tomorrow’s meeting between Donald Trump and Theresa May that could throw the UK a valuable lifeline as Brexit proceedings gain traction, but again who is going to be calling the shots here? These steady gains for the pound on the week so far could be simply paving the way for profit taking ahead of the weekend break.  

The US Advanced Goods Trade Balance reading is due to be published at 1.30pm GMT today and this is going to be precisely the sort of figure that Donald Trump’s America First agenda will be judged on. For now, we have a sharply negative print expected and one that will be little changed from November, but the reality is that with high domestic costs and a strong dollar, getting a meaningful correction here is going to be challenging. The big risk today would be a notable increase in the deficit and this may serve to rock the greenback as a result.

At 11.30pm GMT this evening we have Japanese CPI data due for release. Injecting meaningful inflation back into the economy has been a core aim of government and the BoJ for some years now but forecasts suggest that the year-on-year figure will dip from 0.5% to 0.2% in this update. That’s a big drop and also raises the prospect of another negative print. If we do see something come in much below expectations then this could act as a rallying call for USD/JPY, which for now remains close to two month lows. 
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26 / 01 / 2017 | Technical Analysis

USD/ZAR descending triangle nearly complete

USD/ZAR has been on our radar for some time and support has been found at base of descending triangle around 13.2. if this breaks, look for 12.75, the 61.8% retracement of the April ’14-Dec ’15 move higher.

 

GBP/USD continues to nudge its way higher; look for resistance at December highs around 1.2785 then post-referendum highs of 1.3450.




Please note: The content in this daily technical analysis article should not be taken as investment advice. It comprises our personal view.
 
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25 / 01 / 2017 | Market News

Looking beyond Brexit, BoE bond buying skews GBP

The pound was certainly on the receiving end of a degree of volatility yesterday, but the Supreme Court ruling over Article 50 was quite literally only half of the story. The market initially interpreted this as a negative for GBP despite it doing little more than confirming the status quo – the parliamentary debate had already been promised. However the Bank of England saw limited cover for its weekly bond buying exercise, government gilt futures prices rallied and the pound was driven higher in its wake. Brexit will continue to cast a shadow over Sterling, but it’s not the only show in town.

Further direction for the pound may be seen off the back of Mark Carney’s speech at 4pm GMT or indeed tomorrow’s flash Q4 UK GDP reading, due at 9.30am GMT. There’s definitely an element of uncertainty when it comes to business investment as a result of the Brexit overhang – the question is just how badly this is biting.

The Aussie dollar found itself on the back foot in the last few hours, following the release of CPI data that came in some way short of expectations. There’s real concern that the Australian economy may find itself drifting into recession later this year and falling consumer prices will do little to help convince the market otherwise. Granted the biggest risk arguably stems from a marked slow down in China, but the run higher for AUD/USD that has been in play since the start of the year is now stalling.

Crude continue to flatline with increased production in the US continuing to eclipse attempts by other producer nations to prop up prices by limiting supply. We have the weekly US inventory figure due for release at 3.30pm GMT so this could provide some fresh direction in the short term, but the market is making notable reactions to these regular updates and today will be no exception. Donald Trump’s aggressive stance towards those controversial new pipeline developments suggests that production out of the US will continue to buid in the medium term. 
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25 / 01 / 2017 | Technical Analysis

AUD/USD rally out of steam?

The move higher since early January for AUD/USD has faltered, opening up the way for a retreat to mid-month support around 0.7475. Look for resistance n upside at 0.7600

 

USD/CAD is close to breaking below the 200-day moving average. Success here would open the way for a slide to September lows around 1.30.




Please note: The content in this daily technical analysis article should not be taken as investment advice. It comprises our personal view.
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