13 Feb: Trump tax cut talk and upbeat China data underpin risk sentiment. Stock at new highs -again!

By | February 13, 2017
This article is available for Free Subscription members. As we continue to transform FXCharts this content is available to all visitors for a trial period. However, from February 19 we will be introducing restricted access and you may be asked to log in to view this and similar articles. If you are already a subscriber and are receiving our daily newsletter you will already have access. If you are not already registered as a subscriber you can register here. For continuing information about the changes please see this forum topic where you can get updates and reply with questions or comments.

 

 Markets remained mostly buoyant on Friday, with the US$ firm and stock markets hitting another record high as investors remained upbeat about the tax reform plan that President Donald Trump has promised  to unveil in the coming weeks. Despite the dollar remaining underpinned, commodities were also in favour after the strong Chinese trade data, seen earlier in the day, with both the metals and oil making some gains.

The coming week is going to be busy, with mid-week seeing a heavy data load although today should be fairly quiet, as will Friday unless Donald Trump’s Twitter account is busy! Politics aside, note that Janet Yellen appears before Congress in her semiannual monetary policy testimony on Tuesday/Wednesday, which will be a major focus. Economic highlights will include German CPI/HICP, German/EU Provisional GDP (Q4) and the EU Economic Growth Forecasts (Tue), US Retail Sales, and CPI (Wed), EU Monetary Policy Meeting  Minutes and Philadelphia Fed Mfg Survey (Thur). In the Asian time zone, today kicks off with the Provisional Japanese Q4 GDP, while Tuesday sees the China CPI and the Australian NAB Business Conditions/Confidence figures, and then Thursday we get the Australian, January Unemployment numbers.

——————————————————————————————————————————————

EURUSD: The Euro remains under pressure from the strengthening dollar and the soft outlook for the EU economy. It is a quiet data day today but the EU Q4 GDP, Industrial Production (Dec) and the German, EU and US Jan inflation are all due in the next couple of days

USDJPY: The pair initially headed higher on Friday on upbeat hopes of Trumps tax plan, before reversing sharply later on after a weak Michigan Consumer Sentiment Index, and then rallying to end up in the middle of the day’s range.  Trump/Abe meeting changed nothing. Japan Q4 GDP today.

GBPUSD: Choppy, but generally heavy on Friday, weighed down by the stronger dollar and Brexit concerns. UK CPI, Unemployment, Retail Sales are all due this week.

AUDUSD: The Aud remained rangebound on Friday but finished on a firm note into the weekend, underpinned by the strong Chinese trade data released earlier in the session. The China inflation data (Jan) will be in focus early in the week and then, on Thursday, the Australian jobs data will be released.

NZDUSD: Rangebound near 0.7200 on Friday. NZ Jan Electronic card retail sales (today) and the China Jan CPI (Tue) data will be the focus early in the week

—————————————————————————————————————————————–

STOCKS: US stocks set fresh record highs again on Friday, underpinned by a spike in oil prices which supported the  energy  sector – and also helped on their way by the optimism surrounding Donald Trump’s economic policy agenda.

METALS: Gold initially fell on Friday, before a late bounce, as the US$ remained broadly supported following the comments by Donald Trump on tax reform. Silver raced to new trend highs and appears to have the legs to head above 18.00.

OIL (WTI): WTI rose nearly 2% on Friday after reports that OPEC members delivered more than 90% of the output cuts that took effect following the January meeting.

CURRENCIES
EURUSD: 1.0639
Res  1.0670  1.0710  1.0755
Sup  1.0605  1.0580  1.0550
USDJPY: 113.18
Res  113.50  113.70  113.95
Sup  113.00  112.85  112.65
GBPUSD: 1.2487
Res  1.2505  1.2525  1.2550
Sup  1.2465  1.2440  1.2400
USDCHF: 1.0026
Res  1.0060  1.0095  1.0125
Sup  1.0000  0.9970  0.9930
AUDUSD: 0.7674
Res  0.7695  0.7725  0.7750
Sup  0.7650  0.7635  0.7605
NZDUSD: 0.7201
Res  0.7220  0.7250  0.7275
Sup  0.7170  0.7140  0.7115
INDICES / COMMODITIES
S+P: 2313
Res  2315  2320  2325
Sup  2305  2300  2295
DJI: 20220
Res  20250  20300  20350
Sup  20150  20115  20050
ASX SPI: 5678
Res  5682  5700  5720
Sup  5660  5645  5625
GOLD: 1233
Res  1244  1255  1265
Sup  1222  1210  1200
SILVER: 17.93
Res  18.00  18.20  18.45
Sup  17.85  17.70  17.55
OIL (WTI): 53.83
Res  54.10  54.30  55.00
Sup  53.10  52.35  51.20

 

Indices/commodities
S&P Futures 2313
Stocks seem to be heading into permanent blue sky territory on the enthusiasm over Donald Trump’s upcoming economic agenda and the hope for meaningful tax reform. It makes it very hard to give accurate technical analysis and for the time being I suspect it is wise to stand aside.
24 Hour: Neutral Medium Term: Neutral
Resistance Support
2335 Minor 2300 Minor
2330 Minor 2287 10 Feb low
2325 Minor 2280 9 Feb low
2320 Minor 2270 3 Feb low
2315 Friday high /All time high 2264/2262 3 Feb low/1 Feb  low
DJI Futures 20220
Ditto S+P.
24 Hour: Neutral Medium Term: Neutral
Resistance Support
20450 Minor 20050 Minor
20400 Minor 20000 Minor
20350 Minor 19981 10 Feb low
20300 Minor 19931 6 Feb low
20247 Friday high/All time high 19782 3 Feb low
ASX SPI 5678
The ASX headed up to meet the initial area of resistance on Friday and according to the short term momentum indicators, appears set for further gains in the days ahead, where the immediate targets would be at 5700 and then at around 5725

The dailies remain neutral though, and I would not be getting too carried away on the topside but dips today seem likely to hold 5645/50, and for the time being trading from the long side and buying dips is mildly preferred, with a SL placed at 5630.

24 Hour:  Prefer to buy dips Medium Term: Neutral
Resistance Support
5761 12 Jan high 5660 Minor
5725 (76.4% of 5789/5526) 5645 Minor
5700 Minor 5625 Minor
5688 (61.8 of 5789/5526) 5595 200 HMA
5682 Friday high 5577 10 Feb low
GOLD 1233
Gold dipped back to the 100 DMA on Friday (1222), as we expected it might, before recovering to finish the week at 1233.  A nimble stance is now required and while the dailies still suggest further strength may be in store, the 4 hour charts today look fairly neutral and a rangebound session seems likely. Above Friday’s high would want to take another look at the 1244 trend high, above which could see a run towards 1255 and 1265. On the downside, support will be seen at 1220, below which could open the way back to 1210/00. Overall, buying dips is preferred but with a tight SL placed under 1200.
24 Hour: Prefer to buy dips Medium Term: Mildly bullish
Resistance Support
1263 200 DMA 1222 Friday low /100 DMA
1255 (61.8% of 1337/1222) 1207 3 Feb low
1248 (50% pivot of 1375/1222) 1200/1198 100 WMA /2 Feb low
1244 200 WMA /10 Feb high 1188 30 Jan low
1237 Friday high 1180 27 Jan low
SILVER 17.93
Silver did its own thing on Friday, and after doing nothing for much of the day, it soared from 17.65 straight through the previous 17.85 resistance and on to 18.00, where the 200 WMA has so far capped it. No idea why; I guess a decent sized buy order in thin Friday conditions.

The dailies remain constructive and if 18.00 can be overcome then we could see a move to 18.20 and to 18.45, above which could then see a quick move to 19.00 although a stronger dollar would create headwinds for further positive momentum. On the downside, support will be seen at 17.85 and again at 17.50/55, and for the time being, buying dips for another leg higher may be a plan, with a SL placed below 17.45.

24 Hour: Prefer to buy dips Medium Term:  Mildly bullish
Resistance Support
18.98 10 Nov high 17.55 Friday low
18.65 Minor 17.45 6 Feb low
18.45 Descending Trend Resistance 17.35 (23.6% of 15.63/17.85)
18.20 (76.4% of 18.98/15.63) 17.23 3 Feb low
18.00 200 WMA /Friday high 17.00 (38.2% of 15.63/17.85)
OIL (WTI) 53.83
WTI reached the 54.10 resistance on Friday, with only a mild retreat from there and further gains look possible so buying dips remains the favoured strategy.   On the downside, support will now arrive at 53.00/52.90 and again at 52.23, so buying into a move towards 53.00 with a SL place sub 52.25 seems t be a plan. On the topside, resistance will be seen at 54.10/30 but above which could see quite an acceleration towards 55.20, above which there is again not too much to stop it heading to 56.90/57.00.  Further out, as long as 50.10 holds, the reverse Head/Shoulder formation is valid, with a target at 82.00.
24 Hour: Prefer to buy dips Medium Term: Cautiously long
Resistance Support
56.90 (38.2% of 1.0765/26.03) 53.10 200 HMA
56.00 Minor 52.88 Friday low
55.21 3 Jan high 52.34 10 Feb low
54.19/31 3 Feb high /6 Jan high 51.20 7 Feb low/9 Feb low
54.10 Friday high /6 Feb high 50.70 10 Jan low

EURUSD: 1.0639
The Euro remained under pressure on Friday, taking out the previous lows at 1.0640/20 in heading to 1.0607 before a mild bounce into the close.

More choppy trade could be in order today given the lack of data but the dailies still look heavy, so below 1.0600 would head towards decent support in the 1.0680/90 area, a break of which would find little to stop it heading to Fibo support at 1.0525 and possible lower in the days ahead.  The shorter term charts look a little mixed, so any near term recovery would find offers at the descending trend resistance, now at 1.0670, above which would see further sellers in the 1.0700/15 area. Above there, unlikely today, would run into decent offers at around 1.0750, but beyond which there is not too much to stop it heading towards 1.0800. Although it may be rangebound today, a sterner test of 1.0600 would not surprise although I would be surprised to see the Euro head below 1.0580. Keep an eye out for any Down Trump statements which look likely to be the key driver today.

24 Hour: Neutral Medium Term: Prefer to sell rallies
Resistance Support
1.0829 2 Feb low 1.0607 Friday low/55 DMA
1.0797/90 3 Feb high /6 Feb high 1.0588 19 Jan low
1.0749 7 Feb high 1.0582/78 (50% pivot of 1.0340/1.0829)/ 16 Jan low
1.0709/13 10 Feb high/9 Feb high 1.0550 Minor
1.0670 Descending Trend Resistance 1.0525 (61.8% of 1.0340/1.0829)

Economic data highlights will include:

M:  BuBa Monthly Report

T: German CPI/HICP, German/EU Provisional GDP (Q4), EU Economic Growth Forecasts, Industrial Production, German/EU ZEW Economic Sentiment Survey, US NFIB Business Optimism Index, PPI, NAHB Housing Market Index, API Weekly Crude Oil Stock Inventory

W:  EU Non-Monetary Policy Meeting, EU Trade Balance, US Retail Sales, New York State Empire Mfg Index, CPI (Jan), Capacity Utilisation, Industrial Production, Business Inventories, EIA Crude Oil Stocks Weekly Change

T: German Wage Price Index, EU Monetary Policy Meeting  Minutes, US Building Permits, Jobless Claims, Philadelphia Fed Mfg Survey

F: EU Leaders Summit, EU Current Account, US CB Leading Indicator, Baker Hughes Oil Rig Count .

Meta Trader
EURUSD: 4 Hour


USDJPY: 113.18
US$Jpy initially headed higher on Friday in attempting to take out the descending trend resistance, reaching 113.85, before giving up and finishing the week at 113,.25.

The 4 hour and the daily momentum indicators are now leaning higher and if Friday’s high is taken out we could then see a run towards 114.00 and possibly to 114.30, above which there is little to stop the dollar heading on to 115.00. On the downside, support will be seen at 113.00 and again at Friday’s low at 112.85. The indicators now seem to suggest trading from the long side, and buying dips with a SL placed under 112.60 seems to be the plan.

24 Hour: Mildly bullish – Prefer to buy dips Medium Term: Neutral
Resistance Support
115.12 (50% pivot of 118.66/111.61) 113.00 Minor
114.75 Minor 112.85 Friday low
114.28 (38.2% of 118.66/111.61) /100 WMA 112.65 200 HMA
113.94 1 Feb high 112.00 Minor
113.85 Friday high 111.62/58 9 Feb low/7 Feb low

Economic data highlights will include:

M:  Provisional GDP (Q4)

T:  Industrial Production, Capacity Utilisation (Jan)

W:

T: Foreign Bond/Stocks Investment

F:

Meta Trader
USDJPY: 4 Hour


GBPUSD: 1.2487
Cable had a choppy end to the week and finished Friday in the middle of its 1.2440/1.2520 range.

More of the same looks likely at the start of the week as the charts remain indecisive. A similar range to Friday’s looks likely although Cable will remain under pressure if the US$ continues to remain firm, and below Friday’s low would then head back into the daily cloud, which continues down to its base, currently at 1.2400. On the topside, resistance will be seen at 1.2500 and at 1.2520. Above here looks doubtful in the short term, but if wrong, would open the way to 1.2560.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
1.2600 Minor 1.2465 Minor
1.2582 10 Feb high 1.2442/39/35 Daily cloud top /Friday low/100 DMA/55 DMA
1.2565 (61.8% of 1.2706/1.2346) 1.2400 Daily cloud base
1.2525 Friday high/200 HMA /Daily Tenkan 1.2380 Minor
1.2500 Minor 1.2345 Daily Kijun

Economic data highlights will include:

M:

T: UK CPI, PPI, RPI

W: Unemployment

T:

F: UK Retail Sales (Jan).

Meta Trader
GBPUSD: 4 Hour


USDCHF: 1.0026
Having held on above parity on Friday US$Chf headed up to 1.0061 before closing at 1.0030. With the 4 hour/daily momentum indicators generally looking constructive another test of the topside would not surprise, and above 1.0060 we could see a run towards 1.0100 and possibly on to 1.0135, albeit probably not yet.

On the downside, support will be seen at 1.0000/10, below which could head to 0.9970 and to 0.9930. If seen, buying dips in this area is preferred.

24 Hour: Prefer to buy dips Medium Term: Mildly bullish
Resistance Support
1.0136 16 Jan high 1.0008 Friday low
1.0121 19 Jan high 0.9970 Minor
1.0094 20 Jan high/(50 % of 1.0335/ 0.9860) 0.9930/35 9 Feb low/ 10 Feb low
1.0075 Minor 0.9903 7 Feb low
1.0061 Friday high 0.9869/75 3 Feb low/200 DMA.
Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7674
The Aud remained within its recent range at the end of the week although it did finish on a firm note, bucking the trend of the slightly stronger US$ seen elsewhere, to reach 0.7688 before finishing at 0.7675.

The technicals are somewhat mixed, leaving the picture a little unclear, so a nimble stance is currently required. While the dailies still appear to be rolling over, the 4 hour charts are beginning to hint at another test to the topside and for the time being the 0.7610/90 range may continue to dominate. Selling into strength, with a tight SL, in case of a break of 0.7700 may still be the play, but once above 0.7700 we could see a quick run to 0.7750. The downside still looks well supported in the 0.7590/0.7610 area. Neutral.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7777 8 Nov high 0.7650 Minor
0.7750 Descending trend resistance 0.7635 100 HMA/200 HMA
0.7725 Minor 0.7605 7 Feb low
0.7695 3 Feb high/3 Feb high 0.7590/92 19 Jan low/(38.2% of 0.7160/0.7695)
0.7688 Friday high 0.7570 13 Jan low

Economic data highlights will include:

M:  China Foreign Direct Investment

T:  WBC Consumer Confidence, NAB Business Conditions/Confidence, China CPI, PPI (Jan)

W: New Motor Vehicle Sales (Jan)

T:  Consumer Inflation Expectation, Unemployment (Jan)

F:.

Meta Trader
AUDUSD: 4 Hour


NZDUSD: 0.7201
The Kiwi traded a tight 0.7173/0.7209 range on Friday, consolidating its losses from the previous session.

While the short term momentum indicators now look a little more supportive, the daily indicators hint that further downside potential could lie ahead. Fibo support lies at Friday’s low and this may hold it up again today, but a break of which could see a run towards the very strong support at 0.7120/15, and beyond that, to 0.7100. The 1 and 4 hourly charts do hint at the chance of a run back to 0.7210/20 and if so, selling rallies is preferred, with a SL placed at 0.7260.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
0.7295 (61.8% of 0.7375/0.7270) 0.7173/72 Friday low/10 Feb low /(38.2% of 0.6857/0.7375)
0.7275 (50% of 0.7375/0.7270) 0.7145 Minor
0.7250 (38.2% of 0.7375/0.7270) 0.7120/15 200 DMA/100 DMA/55 DMA Coverging/(38.2% of 0.6857/0.7375)
0.7220 (23.6% of 0.7375/0.7270) 0.7100 Minor
0.7210 Friday high 0.7070 13 Jan low

Economic data highlights will include:

M:  Electronic Card Retail Sales (Jan), Food Price Index

T:

W:

T: Business PMI (Feb)

F: Retail Sales (Q4).

Meta Trader
NZDUSD: 4 Hour