Littlefish FX | Feb 26, 2015 05:32AM ET
KEY DATA RELEASES TODAY (GMT) :
0930 GBP Prelim Business Investment q/q exp 2.0% v-0.7%
0930 GBP Second Estimate GDP q/q exp 0.5% v 0.5%
1330 USD Core CPI m/m exp 0.1% v 0.0%
1330 USD CPI m/m exp -0.6% v -0.4%
1330 USD Unemployment Claims exp 288K v 283K
1330 USD Core Durable Goods Orders m/m exp 0.6% v -0.8%
OVERNIGHT:
Tight G10 ranges pervade, but broad USD weakness which sees the DXY slipping down towards the weekly lows at 94.13. The current combination of a soft USD, low vol, and the Fed on hold (10yr unable to break back above 2%), should however be supportive of the wider risk environment with the Nikkei printing a fifteen year high overnight.
Once again the Nikkei strength this does little to inspire the USD/JPY as the tight range trade persists. Yellen’s more heated exchange with House Republicans on Wednesday offered little int eh way of guidance as to the rates as the debate was more orientated towards FED oversight, again this did little to inspire USD bulls and the USD/JPY remains entrenched in the recent 118.50/119.50 battleground.
With the lack of any meaningful guidance from FED Chair Yellen during yesterdays testimony the EUR/USD has continued its modest drift higher although constrained by the broader range still of 1.1250-1.1450 the markets focus will likely start to shift towards next weeks Non Farm payrolls data as a potential catalyst to break the deadlock.
GBPUSD continues to be the out performer printing a high overnight of 1..5554 GBP continues to garner support as the BOE are increasingly eyed as heir apparent to the FOMC’s normalisation throne, as BOE members continue to strike a more hawkish tone. THis mornings GDP data will be monitored as potential further support for the hawkish rhetoric.
Overnight saw Australian Capex (4Q) Down -2.2% qoq (and -3.6% over the year), in between consensus (-1.6%) and MS (-2.7%). The 5th Estimate for 2014-15 came in at AUD153bn, a little less than the AUD155bn expected. However, there was a material downside surprise on the 1st estimate for 2015-16, which came in at AUD110bn – implying double-digit declines overall. 1st estimate flagged a -9% cut in non-mining capex in FY16, which challenges the recovery view and supports the markets call that the RBA will need to cut rates to 1.75% through the year. In AUD/USD, there was, surprisingly, only a moderate sell off down to a low 0.7836. Immediate support comes in at yesterday’s low, 0.7825, with topside resistance still around the 0.79 figure mark
Looking ahead this morning headline will be UK GDP, while important data releases from the US today come in the form of CPI and durable goods.
PRICE ACTION OVERVIEW:
EUR: While 1.1270 supports focus on 1.17 upside corrective equality target, below 1.12 targets 1.10
GBP: Testing 1.55/5550 corrective target area, upside break targets 1.58 next
JPY: While 117.50 supports expect break of 120.50
CAD: While 1.2350 trendline supports 1.28 next upside objective ahead of key 1.30
AUD: 0.79 remains the key hurdle to further corrective upside objective of .8050
KEY TRADES:
FX Pair | Short Term | Position/Date | Entry Level | Target | Stop | Comments |
EUR/USD | Neutral | Await new signal | ||||
GBP/USD | Bullish | Await new signal | ||||
USD/JPY | Neutral | Await new signal | ||||
USD/CAD | Bullish | Await new signal | ||||
AUD/USD | Neutral | Buy/ 16Feb | 0.78 | 0.8050 | 0.78 | Counter-trend |
ANALYSIS:
EUR/USD Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish
GBP/USD: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
USD/JPY: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish
USD/CAD: Short Term (1-3 Days): Neutral - Medium Term (1-3 Weeks) Bullish
AUD/USD: Short Term (1-3 Days): Neutral - Medium Term (1-3 Weeks) Bearish
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