Global currencies saw a relatively quiet session on Monday with the USD ending mixed. EUR rose very slightly, boosted by the marginally better than expected Eurozone manufacturing PMI report and balanced comments from both Draghi and Nowotny. Draghi said that a December stimulus was an open question whilst Nowotny noted that although the expansion of the bond purchase program should be considered, caution was required.
EUR/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR reached a daily high of 1.1051 at the beginning of New York session and slowly retreated to the 1.1015 zone afterwards. The USD managed to recover little bit after the better-than-expected US Manufacturing PMIs while the next focus on the list will be the Fed’s Chair congressional testimony and payroll figures on Friday in the US.
Technical: Today while 1.0950 continues to caps intraday downside reactions anticipate a broader corrective pattern targeting 1.1130. Failure at 1.0950 sets up a retest of last weeks lows en route to 1.0860
Interbank Flows: Bids 1.0950 stops below. Offers 1.11 Stops above.
Retail Sentiment: Neutral to bullish
Trading Take-away: Long against 1.0950 targeting 1.1130
GBP/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: GBP reached a high of 1.5497 after the better-than-expected UK Manufacturing PMI data. The BoE will also be announcing its latest monetary policy decision, and publishing the minutes of the monthly meeting as well as quarterly Inflation Report on Thursday.
Technical: The upside rotation back through 1.5330 resets bullish expectations for a test of the 1.56 symmetry objective. Another failure at 1.53 targets stops sub 1.52 next.
Interbank Flows: Bids 1.53 stops below. Offers 1.55 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Long from 1.5330 targeting 1.56
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: JPY desks offline due to national holidays. Japan October Nikkei Manufacturing PMI came in at 52.4, just shy of the prior reading of 52.5. Markets are patiently waiting for important data such as Consumer Confidence Index and Monetary Base which will be released on Wednesday
Technical: Bulls target a sustained break of 121 to target range highs at 121.85 an intraday failure at 120.00 would suggest return to range.
Interbank Flows: Bids 119.50/30 stops below. Offers 121.50 stops above
Retail Sentiment: Neutral
Trading Take-away: Buy pullbacks against 120.50 targeting upside range break
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Onshore markets are closed for Cultural Day and re-opens tomorrow. Pair remained bid overnight, helped by cross flows aiding the sell-off in the JPY against the EUR. October monetary base, composite/service PMI, consumer confidence (Wed); BOJ minutes (Thu); BOJ Kuroda speaks; Sep leading and coincident index (Fri) on tap this week.
Technical: Bears now target equality corrective objective at 131.20, only a close above 133.50 eases immediate bearish pressure.
Interbank Flows: Bids 131.00 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: The RBA left the policy rate unchanged at 2.0%, versus market pricing for 30% probability of a 25bp rate cut. However, there was a dovish change to the language around inflation, noting “the inflation outlook may afford scope for further easing of policy”. The combination of unchanged rates but a slightly dovish statement is likely to be a mild positive for the AUD.
Technical: Buyers emerge at retest of pivotal .7030/50 next, a close above .7230 eases bearish pressure a refocuses bulls to test offers towards .7350. While .7230 caps the upside expect rotation lower targeting year to date lows next
Interbank Flows: Bids .7050 stops below. Offers .7230 stops above
Retail Sentiment: Bullish
Trading Take-away: Shorts against .7230 targeting .7030
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: CAD traded softer overnight in response to the renewed decline in oil prices as WTI retreated from last Friday’s two-week highs around $47 per barrel. Oil prices faced a double whammy as Russian oil output hit a post-Soviet peak while Caixin Manufacturing PMI remaining below 50 suggested a gloomy outlook of China’s demand.
Technical:1.3260 provides decent resistance as anticipated as this area contains upside potential for another leg of corrective downside. A close above 1.3280 eases bearish pressure and resets focus on the 2015 highs and stops above.
Interbank Flows: Bids 1.3030 stops below. Offers 1.32 stops above
Retail Sentiment: Bearish
Trading Take-away: If short from failed retest of 1.3260, move positions to risk free
