London FX: Range Trade In Thin Markets
Littlefish FX | Nov 27, 2015 05:34AM ET
Market activity was thin amid US Thanksgiving holidays. European equities rose as markets expect further monetary easing next week. UK has 3Q GDP due for release today. The US markets return after the Thanksgiving Holiday. Black Friday could probably see more position adjustments ahead of a busier week that leads into RBA, ECB and US NFP release.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR traded sideways in thin trade with US markets shut for Thanksgiving Holiday. EUR/USD found some supports at 1.0600, but it is still under a pressure. The outlook of more easing from the ECB at next week’s policy meeting has been keeping the Euro offered. Today we will have Germany Import Prices and Euro Zone Business Climate
Technical: While 1.07 caps intraday upside corrections, bears target a test of 1.05 next ahead of an assault on year to date lows. Only a close above 1.08 eases immediate downside pressure.
Interbank Flows: Bids 1.0550 stops below. Offers 1.07 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Target achieved cover shorts +265pips, sidelines
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: GBP fell back towards a seven-month low against the USD, with upbeat UK forecasts and a spending review by the finance minister not changing the opinion that interest rates will not rise any time soon. The pound had initially climbed on Wednesday after George Osborne’s “Autumn Statement” but failed to maintain its bid afterwards.
Technical: While 1.5160 contains upside reactions expect a test of of bids at 1.50 as the next bearish objective. Only a close above 1.5250 eases immediate bearish bias
Interbank Flows: Bids 1.5050 stops below. Offers 1.5250 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
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USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: Yesterday was a quiet day for JPY. USD hit a day high of 122.73, remaining in consolidation mode after reaching a three month peak of 123.77 last week. Japan Core CPI (YoY) was released as -0.1% which did not surprise the market’s expectations. On the other hand, Japan’s unemployment rate was 3.1%, better than the market expectations. However, JPY seems unaffected by the data and it is now trading at around 122.63
Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next. A failure at 122 opens a test of 121.40 support next ahead of pivotal 120.
Interbank Flows: Bids 122 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Ahead of next weeks ECB meeting and the high probability of further easing measures to be announced by the ECB the Euro remains under pressure and the negative cros flows continue to weigh on the pair.
Technical: While 131.30 caps upside reactions expect a sustained break below 130 to confirm a retest of 2015 lows. Only a close above 132.50 eases immediate bearish pressure. Intraday initial upside hurdle is 130.50 while this caps upside corrections expect further grind lower to retest and break 129.70 lows.
Interbank Flows: Bids 130.50 stops below. Offers 132.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: AUD continued to grind lower after touching one-month high at 0.7283 on Wednesday, following the release of Q3 capital expenditure data which posted a reading of -9.2% against -2.9% expected. With limited liquidity flows given the US Thanksgiving holiday, AUDUSD was trading very quietly in the range between 72.10 and 72.50 US Cents as markets look to next Tuesday’s RBA rate decision meeting.
Technical: While .7170/50 remains the bid zone expect grind higher to test .7350 area next, only a close below .7150 concerns near term bullish bias.
Interbank Flows: Bids .7150 stops below. Offers .7300 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: CAD edged slightly higher against the USD, showing resilience in the face of lower crude oil prices during the US Thanksgiving Day holiday. The focus turns to a Bank of Canada rate decision next week while it is widely expected to remain on hold. Oil prices fell after six sessions of gains, as concerns faded that escalating violence in the Middle East would disrupt supply.
Technical: Bulls have the ball while 1.3280 supports intraday downside. A close below 1.3220 would ease the near term bullish bias and suggest a broader correction is underway.
Interbank Flows: Bids 1.3250 stops below. Offers 1.34 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
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