1 Nov: RBA, BOJ today. Focus on tomorrow’s FOMC, Friday’s NFP + the US election.

By | October 31, 2016

Although much volatility is anticipated in the week ahead it has been a relatively steady start, with the US$ putting in a mixed session, pretty much confined within Friday’s ranges. The main action was in the oil market, with WTI down sharply, falling by 4% to settle at around 46.75, the lowest level in a month.  The decline is on the back of doubts about OPEC’s planned production cuts, with no agreement reached over the weekend although they will reconvene ahead of the next official OPEC Meeting (Nov 30).  On the data front, the US person income rose 0.3% in September while spending rose 0.5%, better than expected. Headline PCE rose to 1.2% yy but core PCE was unchanged at 1.7% yy. The October US Dallas Fed manufacturing index was at -1.5 vs 2.0 expected. Earlier in the day the EU GDP rose 0.3% in Q3, in line with consensus while EU CPI rose to 0.5% yy and core CPI was unchanged at 0.8% yy. German retail sales dropped -1.4% mm in September.

Despite much of the focus being on the US data due later in the week (FOMC/NFP), and then next Tuesday’s US election, today could be busy if the RBA or the BOJ spring a surprise, although both are generally expected to keep policy on hold. The focus elsewhere will be on the China Manufacturing and Non Manufacturing PMIs, the UK Mfg PMI, the US ISM and Markit Manufacturing PMIs and the API Weekly Crude Oil Stock Inventory. It is a partial holiday in Europe so liquidity will be thinner than normal

CURRENCIES
EURUSD: 1.0980
Res  1.0990  1.1040  1.1085
Sup  1.0935  1.0900  1.0875
USDJPY: 104.82
Res  105.00  105.25  105.50
Sup  104.60  104.40  104.20
GBPUSD: 1.2243
Res  1.2250  1.2270  1.2300
Sup  1.2200  1.2145  1.2115
USDCHF: 0.9891
Res  0.9905  0.9935  0.9960
Sup  0.9865  0.9845  0.9820
AUDUSD: 0.7610
Res  0.7620  0.7645  0.7675
Sup  0.7585  0.7560  0.7535
NZDUSD: 0.7150
Res  0.7165  0.7185  0.7200
Sup  0.7140  0.7110  0.7085
INDICES / COMMODITIES
S+P: 2123
Res  2130  2138  2146
Sup  2112  2106  2100
DJI: 18087
Res  18150  18200  18250
Sup  18035  18000  17965
ASX SPI: 5277
Res  5294  5318  5350
Sup  5250  5220  5180
GOLD: 1278
Res  1284  1290  1300
Sup  1266  1256  1246
SILVER: 17.89
Res  17.90  18.00  18.15
Sup  17.75  17.55  17.35
OIL (WTI): 46.65
Res  49.70  50.05  51.00
Sup  45.75  45.00  43.95

 

Indices/commodities
S&P Futures 2123
Resistance Support
2172/74 22 Sept high/(76.4% of 2191/2120) 2120/12 18 Oct low /28 Oct low
2160 11 Oct high 2107/06 14 Oct low  /9 Sept low
2146/49 Minor descending trend resistance/25 Oct high 2100 (23.6% of 1847/2191)
2139 100 DMA 2090 Minor
2130 Session high 2075 200 DMA

Bias                                                                                                           

US stocks had another choppy but directionless session leaving the outlook unchanged ahead of tomorrow’s FOMC Meeting and next week’s election.

The daily momentum indicators remain pretty much flat, so a neutral stance is again required although, as before, with the increasing chance of a Fed rate hike I still prefer trading from the short side and selling into rallies. The 100 DMA (2139) looks as though it will continue to act as resistance, with any further strength above there likely to find sellers at 2145/50. Above 2155 may see a squeeze towards 2170 although in the near term this seems a little unlikely. On the downside, below Friday low of 2112 will find buyers at the strong support at 2105/10. A break of this area could see a quick run below 2100 towards the 200 DMA at around 2070 albeit that this is some way off right now but I think it may be the direction that we eventually head in.S+P

24 Hour: Mildly bearish Medium: Prefer to sell rallies   
DJI Futures 18087
Resistance Support
18445 (76.4% of 18622/17880) /Descending trend resistance 18009 28 Oct low
18336 (61.8% of 18622/17880) 17972/65 18 Oct low/21 Oct low
18273 11 Oct high 17867 13 Oct low
18171 28 Oct high 17790 (50% of 16957/18622)/(23.6% of 15163/18622)
18145/50 Session high /100 DMA 17590 (61.8% of 16957/18622)/200 DMA

Bias

Ditto S+P.

As before, while I prefer to be structurally short, the near term momentum indicators suggest that it may be a little too early for any real downside momentum and more of the same sideways choppy action looks likely ahead of the FOMC/NFP. On the topside, a daily close above the 100 DMA (18150)  would suggest a continuation of the choppy sideways trade within the 18000/350 area and would delay any hope of increased downside momentum and means the DJI is probably best left alone, or used as a range trade. Any decent rally though would appear to be a sell opportunity, looking for an eventual move below the 17970 support area and on towards the 13 Oct, 17867 low, and then further out towards 17800, and possibly 17600. In the meantime, the 17960/80 area seems to offer reasonable support.DJI

24 Hour: Mildly bearish Medium Term: Prefer to sell rallies
ASX SPI 5277
Resistance Support
5344/50 27 Oct high /100 WMA 5243 Session low
5335 (50% of 5435/5234) 5234/30 28 Oct low/ 200 DMA/(76.4% of 5152/5488)
5304/10 Session high/(38.2% of 5435/5234) 5219 15 Sept low
5290 200 WMA 5200 Minor
5280 (23.6% of 5435/5234) 5174 15 Sept low

Bias            

The ASX squeezed up from the 200 DMA support at 5230 to reach 5304 before a mild retreat to sit just below the 200 WMA which should provide some decent medium term resistance. Today’s direction will come via the RBA although no major surprise is expected. It is Melbourne Cup day so conditions will be thin. The 4 hour chart looks underpinned so we may see a squeeze back to the 5304 highs, above which we could head to 5335/40 although this looks over the horizon for now.  Structurally, with the dailies still looking negative, I still prefer to sell into strength, looking for an eventual run below 5230 level for a look at 5200 and lower, albeit probably not yet.SPI
24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
GOLD 1278
Resistance Support
1305 (61.8% of 1343/1240) 1271 200 DMA/Session low
1300 Minor 1262 25 Oct low/4 Oct low  28 Oct low
1292 (50% of 1343/1240) 1254 18 Oct low
1284 28 Oct high 1246 14 Oct low
1280 200 WMA/ (38.2% of 1343/1240) 1240 7 Oct low/(76.4% of 1199/1375)

Bias                              

Gold had another choppy but directionless session (1271/79) leaving the outlook unchanged ahead of tomorrow’s FOMC Meeting, Friday’s NFP and next week’s election.

Another squeeze to the topside will again see offers at around 1285, above which could see a run to 1290/1300 although this currently looks unlikely.On the downside, 1260/65  still provides support  ahead of 1250 and the recent low at 1246, below which, the next downside target would allow another run towards 1240, which should again be strong, but below which there is not much support until 1210. Right now there are better things to trade and Gold is probably best left alone, as we could well continue the current sideways action, using the 200 DMA (1267) as a pivot.Gold

24 Hour: Neutral-Prefer to sell rallies Medium Term: Looking for eventual downside move
SILVER 17.89
Resistance Support
18.56 (50% of 20.06/17.10) 17.75 Session low
18.38 29 Aug low 17.55 28 Oct low
18.23 (38.2% of 20.06/17.10) 17.39 21 Oct low
18.05 (23.6% of 21.13/17.10) 17.30 14 Oct low/200 DMA
17. 90 Session/28 Oct high 17.10 7 Oct low/(76.4% of 15.81/21.13)

Bias                                                                                                 

As with Gold, Silver had another choppy but directionless session (17.75/90) leaving the outlook unchanged ahead of tomorrow’s FOMC Meeting, Friday’s NFP and next week’s election.

The 4 hour momentum indicators are flat (possibly leaning a little higher), suggesting further consolidation, but if 17.90 can be taken out we may see a run to 18.00, above which would see a squeeze towards previous support – now resistance – at the August low at 18.38. On the downside, we may yet see a return to test the downside targets, which will initially be at 17.55 (minor rising trend support), the 200 DMA (17.35/major rising trend support) and then at the Fibo support at 17.10, but below which could see a run towards 16.50. A sustained retest of the downside looks unlikely in the near term and further choppy sideways trade seems to be the most likely outcome. Silver

24 Hour: Neutral – Possible mild squeeze higher Medium Term: Looking for eventual downside move
OIL (WTI) 46.65
Resistance Support
49.850 (50% pivot of 52.19/46.75) 46.75 Session low
49.15 100 HMA 46.45 (61.8 of 42.98/52.19)/100 DMA/100 WMA
48.80 (38.2% of 52.19/46.75) 46.00 Minor
48.05 (23.6% of 52.19/46.75) 45.65 (50% pivot of 39.17/52.19)Weekly Kijun
47.50 Minor 45.25/15 (76.4% of 42.98/52.19)/Daily cloud top

Bias

WTI headed sharply lower on Monday, falling to a fresh one-month low amid mounting scepticism over the implementation of any deal by OPEC to limit production. The neckline of the Head shoulder has now been broken, invalidating any thoughts of a stronger move to the topside. With the 4 hour/daily momentum indicators now both pointing quite sharply lower, a break of the strong support at around 46.45/50 could see a further acceleration to the downside, where the next decent target is at around 45.65 and the at around 45.15. Selling rallies now seems the name of the game, where offers should arrive at 47.50 and then at 48.00.It looks unlikely that we see WTI back up here, although any sudden agreement by OPEC would bring about a sharp squeeze higher.WTI
24 Hour: Mildly bearish Medium Term: Prefer to buy dips

EURUSD: 1.0980
Resistance Support
1.1140 100 DMA 1.0935 Minor
1.1115 Weekly cloud base 1.0915 200 HMA
1.1085 55 WMA/Weekly Tenkan 1.0874 26 Oct low
1.1038 20 Oct high/(38.2% of 1.1326/1.0858) 1.0850 25 Oct low
1.0991/90 28/31 Oct high 1.0821 10 March low

Bias

Monday was a choppy session (1.0935/1.0990), providing nothing new.

As with yesterday, the shorter-term momentum indicators are mixed and thus it could be a similar session ahead while awaiting the FOMC/NFP data.The hourlies are now flat although the 4 hourlies are still leaning higher, so a test of 1.1000+ could eventually be on the cards.The dailies still look positive, so for the time being I prefer to look towards the up-side for the Euro, for a retest of 1.1000, above which could see a run towards 1.1040. Beyond this would put the medium term downtrend into some doubt, with the possibility of a bigger short squeeze towards 1.1085 and even to 1.1140 although I am not sure that we see these levels for a while, if at all. On the downside, support will be seen at 1.0935 and then again at 1.0900. Below that we could then head back to 1.0870/80 and then to 1.0850, beneath which would seem to open the way to the March low at 1.0821.  Further out, on a break of 1.0820 there there is again only minimal support until 1.0775 and then again, little until the 2016 low at 1.0710 (Jan 5).

24 Hour: Mildly bullish. Prefer to sell rallies near 1.1040 Medium Term: Mildly bearish

Economic data highlights will include:

All Saints Day Partial EU Holiday, US ISM/Markit Mfg PMIs, ISM Prices Paid, API Weekly Crude Oil Stock Inventory

Meta Trader
EURUSD: 4 Hour

Euro


USDJPY: 104.82
Resistance Support
105.80 200 /55 MMAs 104.60 Rising trend support
105.61 29 July high 104.38 Session low
105.52 28 Oct high 104.22 (23.6% of 100.05/105.52)/200 HMA
105.23 Session high 103.80 Minor
105.00 Minor 103.50 Daily cloud top/21 Oct low

Bias

US$Jpy maintains its equilibrium above the rising trend support, now at around 104.60, after a session of consolidation either side of 105.00 while awaiting today’s BOJ meeting, at which no change to policy is generally expected.

It would seem from the 4 hour momentum indicators that we may struggle on the topside today and we could yet have put in a near term top just ahead of the resistance seen at 105.60, but beyond which would head towards further offers at  105.80, (200 MMA), which should be strong resistance, and to 106.00.On the downside, support will be seen at the rising trend support at 104.60, with stops likely to be triggered below there which could see a test of the early-Monday low of 104.38 and then of 104.00. Beyond that could see a move to the daily cloud base 103.50, although I would be looking to buy the dollar at these levels if we see it down there. The dailies still look constructive so I prefer to be long rather than short from a structural viewpoint.

24 Hour: Prefer to buy dips Medium Term: Mildly bullish

Economic data highlights will include:

BOJ Interest Rate Decision, Press Conference, Statement, Outlook Report

Meta Trader
USDJPY: 4 Hour

Yen


GBPUSD: 1.2243
Resistance Support
1.2470 7 Oct high 1.2143 Session low
1.2400 (38.2% of 1.3444/1.1821) 1.2113 28 Oct low
1.2332 19 Oct high 1.2088/81 11 Oct low/25 Oct low
1.2297 20 Oct high 1.2050 Minor
1.2271 27 Oct high 1.2000 Minor

Bias                                                                                     

Cable is back at the top end of its recent range today, assisted by BOE Governor, Mark Carney who said that he would stay at the helm until June 2019 to help smooth the flow into Brexit.

Technically, as before, the 4 hour charts are fairly flat and further choppy trade within the recent 1.2100/1.1.2300 range may be in order again today. Once again, there are better pairs to trade, but the dailies still look mildly constructive and if we can make a sustained run above 1.2300, we could see a run towards 1.2430/75.

24 Hour: Neutral – Mildly bullish Medium Term: Mildly bullish.
Meta Trader
GBPUSD: 4 Hour

Gbp


USDCHF: 0.9891
Resistance Support
0.9998 25 Oct high 0.9866 Session low
0.9985 (61.8% of 1.0327/0.9443) 0.9857 28 Oct low
0.9958 26 Oct high 0.9820 Weekly Tenkan
0.9935 Descending trend resistance 0.9785 200 DMA
0.9907 Session high 0.9765 100 DMA

Bias                                                                             

US$Chf has had a tight 0.9866/0.9907 range, leaving the outlook unchanged.

As we said before, it looks as though we put in a short term top at 0.9999 on Tuesday, and further tests of 0.9850 may lie ahead. I would be looking to buy into any such weakness but with a tight stop loss, left below 0.9820. The topside today looks likely to be contained at 0.9920, with further offers likely to be seen at 0.9940/50. Eventually I am looking for a run above the 25 Oct high (0.9999) and beyond parity, although this seems unlikely today and we could see better levels to buy dollars. Given the partial EU holiday it may be another rangebound session while waiting on the main action from the US later in the week.

24 Hour: Neutral Medium Term: Prefer to buy dips  with tight SL
Meta Trader
USDCHF: 4 Hour

Chf


AUDUSD: 0.7610
Resistance Support
0.7708 26 Oct high 0.7587/82 Daily Cloud top /Session low
0.7675 Minor 0.7570/65 Daily cloud base /100 DMA
0.7650 Minor 0.7557/54 28 Oct low/(61.8% of 0.7441/0.7733)
0.7630 200 HMA 0.7535 Rising trend support
0.7620/18 100 HMA/Session high 0.7505 13 Oct low

Bias

The Aud has had a tight Monday session (0.7582/0.7648) while waiting on today’s China Manufacturing PMIs and then the RBA Meeting. The RBA are expected to remain on hold although if the RBA Governor Lowe refrains from being at all dovish on his economic outlook in his statement the Aud may pick up a bit of a bid tone. It is Melbourne Cup day, so liquidity will be thin.

The 4 hour momentum indicators do point a little higher, and thus a test of the 200 HMA would seem possible, so buying dips looking for a minor topside squeeze seems to be the play. Further strength, if we were to see it, could take us back towards 0.7650, 0.7670 and to 0.7700/10, where I would again be looking to sell, with a SL above the recent high at 0.7733. The dailies look flat now, so further downside action seems a bit limited for the time being, but if we do head below the Monday low, decent support lies all the way down from 0.7570 to 0.7500. Downside progress, if seen, may be slow.

24 Hour: Mildly bullish -Prefer to sell rallies Medium Term : NeutralPrefer to sell rallies     

Economic data highlights will include:

China Official/Caixin Manufacturing, Non- Mfg PMIs, RBA Interest Rate Decision, Statement, RBA Governor Lowe Statement, RBA Commodity Index

Meta Trader
AUDUSD: 4 Hour

Aud


NZDUSD: 0.7150
Resistance Support
0.7240 Neckline 0.7136 Session low
0.7220 Minor 0.711/1107 28 Oct low/27 Oct low
0.7200 Minor 0.7087 (76.4% of 0.7034/0.7265)
0.7183/86 26 Oct high /100 DMA 0.7076 17 Oct low
0.7165/70 Session high/27 Oct high/200 HMA 0.7060 Rising trend support

Bias                                                   

The Kiwi has had a tight session (0.7168/0.7165), leaving the outlook unchanged. The momentum indicators do seem mildly bid, so if we were to break above the session high we could see a run back towards 0.7200/10, where I would again be looking to sell it, with a SL placed above 0.7265. Further choppy trade looks to be the more likely outcome today although the RBA, the China manufacturing data and then later in the day the Global Dairy Trade Index could create some volatility. On the downside, a break below the good support at 0.7100/10 could head towards support at 0.7085 and below there at 0.7060, A break of 0.7060 would open 0.7035 (13 Oct low) but not yet.
24 Hour: Neutral Medium Term : Prefer to sell rallies  towards 0.7200

Economic data highlights will include:

Global Dairy Trade Index

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Meta Trader
NZDUSD: 4 Hour

Nzd