Wednesday’s data certainly got things moving again with the on target GDP print from the UK pushing GBP/USD through major resistance. The bullishness of stocks also kept USD/JPY afloat with a strong rally up through 102.00. US Unemployment Claims and the University of Michigan survey both came in better than forecast too, so the bullishness of risk currencies was patchy, with Cable holding onto most of it’s gains while EUR/USD reversing most of it’s earlier rally, ending the day relatively flat. AUD found it’s feet slightly after positive Capex data although was a long way from looking bullish.
German CPI and Unemployment Change are the only moderately important data points on Thursday, with BOE Governor Carney’s speech not expected to throw up anything new, although trading will likely be very light because of US Thanksgiving.
USD% Index
A mixed day for the Dollar really, with the bullishness of the Pound and to some extent the Euro and Swiss Franc weighing on the greenback. This was offset somewhat by the weakness seen in Yen, AUD and CAD. As such the index failed to break convincingly in either direction. With the index seemingly well supported at the critical red support line shown at EUR/USD 1.3600 it remains to be seen whether we will get a convincing break to the downside yet. Thin volumes on Thanksgiving Thursday will not likely give us any meaningful clues either. For now, mostly as a continuation of the current sentiment, and in the expectation of a Santa rally in risk pairs I remain bearish USD, although I wouldn’t be shocked to see a break through resistance and perhaps a rally to hold within the current range until there is more clarity regarding the Taper.
USD% Index Resistance (EUR/USD support): EUR/USD 1.3570, 1.3550, 1.3512, 1.3500
USD% Index Support (EUR/USD support): EUR/USD 1.3597, 1.3600, 1.3650, 1.3700
EUR% Index
Wednesday ended the day largely flat, with a minor pick up in the Asian session from support. The upward moment for the Euro is far from dazzling, with the index failing to hold onto bullish sentiment caused by an on target UK GDP print, before EURGBP selling took hold to bring things flat again. Regardless, our bias remains bullish EUR
EUR% Index Resistance: EUR/USD 1.3600, 1.3650
EUR% Index Support: EUR/USD 1.3550, 1.3500
JPY% Index
Further weakening from the Yen with Japanese stocks rallying to fresh highs. This has pushed the JPY% index through the important 200% fib expansion level slightly, although not yet convincingly. Momentum is firmly to the downside and the Nikkei has plenty of room above before double top resistance. The JPY index is now approaching the yearly lows shown at approximately USD/JPY 103.00 so a test of that level seems likely if 102.50 trend line support is beaten. I remain bearish JPY until USD/JPY 103.00
JPY% Index Resistance (USD/JPY Support): USD/JPY 101.41, 101.41, 101.00
JPY% Index Support (USD/JPY Resistance): USD/JPY 102.50, 103.00
GBP% Index
Strong GBP performance has pushed the index slightly above the major resistance shown in red before meeting sellers and momentum remains to the upside, but the breakout is not that convincing yet so continuation of buying is needed to convince the market that the pound can hold onto these elevated prices without reversing from strong resistance. As such the rally seems slightly vulnerable to a drop currently, given the unsure outlook of the dollar which looks like possibly breaking to the upside once more. EUR/GBP looks vulnerable though and seems likely to break support after numerous tries. I remain cautiously bullish GBP
GBP% Index Resistance: GBP/USD 1.6324
GBP% Index Support: GBP/USD 1.6250, 1.6190, 1.6150, 1.6086
AUD% Index
A slight bounce from multi-month lows for the AUD% index saw some profit taking after a better than expected CapEx release, although this was hardly the most major news so it seems that the market was looking for a catalyst to take some profit. As such we may have posted a medium term bottom in the index just shy of the 161.8% fib expansion. If we rally up to 0.9173, the ability to break above will be important to decide medium term direction. I remain bearish AUD although we may see a slight bounce
AUD% Index Resistance: AUD/USD 0.9162, 0.9172, 0.9200
AUD% Index Support: AUD/USD 0.9150, 0.9100, 0.9057
CHF% Index
Wednesday was a down day for the index which rallied initially, just pushing slightly ahead of the trend line resistance before a drop back down to support. Very unconvincing price action but until we see downward pressure of significance, momentum remains to the upside. I remain cautiously bullish CHF.
CHF% Index Resistance (USD/CHF support): USD/CHF 0.9050, 0.9000
CHF% Index Support (USD/CHF resistance): USD/CHF 0.9089, 0.91000, 0.9143
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