Littlefish FX | Dec 16, 2014 05:31AM ET
KEY DATA RELEASES TODAY:
0900GMT EUR Flash Services PMI exp 51.6 v 51.3
0900GMT EUR Flash Manufacturing PMI exp 50.5 v 50.4
1000GMT EUR German ZEW Economic Sentiment exp 19.8 v 11.5
1000GMT EUR ZEW Economic Sentiment exp 20.1 v 11.0
1330GMT USD Housing Starts exp 1.04M v 1.01M
1330GMT USD Building Permits exp 1.06M v 1.08M
1445GMT USD Flash Manufacturing PMI exp 56.1 v 54.7
OVERNIGHT:
USDJPY moved lower in Asian trade with the Nikkei off large at the open and continuing lower in the afternoon. USDJPY peaked at 118.01 before another leg down as Nikkei losses increased. Good support is eyed ahead of 117.00, $2.744 bln in vanilla option expiries at the strike also look to be supportive. EURJPY traded similarly, off from 146.71 to 146.20. Sentiment here looks to be more bearish given Eurozone negatives and suggestions of deflation.
EURUSD opened in Asia at 1.2437 after being pressured overnight on widening US Treasury-Bund interest rate differentials as well as dovish comments from ECB’s Nowotny, uncertainty over Greece and EURJPY sales. Asian trade saw it consolidate between 1.2434-51 before a late move up to 1.2463 on fresh USDJPY weakness. Central bank expectations look to remain a major focus for EURUSD into Wednesday’s FOMC meeting. E1.397 bln in 1.2500-strike option expiries will be seen at the New York cut today.
Elsewhere, GBPUSD was the worst performing G10 currency against the dollar. It fell towards a 15-month low yesterday as concerns regarding the FOMC meeting also weighed on the pair.The Aussie dropped to 4-1/2-year lows overnight and slipped to 0.8198, the lowest since mid 2010 on the back of RBA minutes which reiterated the AUD remained above most estimates of its historical standards, with more depreciation likely needed to achieve balanced growth. USDCAD broke 1.16 to print its highest level in 5-1/2 years yesterday as crude prices hit multiyear lows after OPEC remained firm on its production stance.
Looking ahead key data points in the European session will be the German ZEW sentiment release and in the US more housing data with Nov housing starts and building permits.
OVERNIGHT PRICE ACTION:
EUR: Still holding for another 1.25 test
GBP: Retreats to mid range, trendline resistance still eyed
JPY: Stern test of 117 support under way
CAD: 5 year highs, consolidating
AUD: 4 year lows, consolidating
KEY TRADES:
FX Pair | Short Term | Position/Date | Entry Level | Target | Stop | Comments |
EURUSD | Bullish | BUY 13 DEC | 1.2495 | OPEN | 1.2345 | |
GBPUSD | Neutral | Await new signal | ||||
USDJPY | Neutral | Await new signal | ||||
USDCAD | Bullish | BUY 9th DEC | 1.1495 | 1.1695 | 1.1545 | Risk Free |
AUDUSD | Bearish | Await new signal |
ANALYSIS:
EUR/USD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
GBPUSD: Short Term (1-3 Days): Neutral – 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): Bullish - Medium Term (1-3 Weeks) Bullish
AUD/USD: Short Term (1-3 Days): Bearish - Medium Term (1-3 Weeks) Bearish
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