14 Feb: Hopes of tax cuts again underpin stocks, US$. A big data day ahead China/Germany/UK CPI, EU GDP, ZEW

By | February 14, 2017
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 Stock markets have made new record highs again as traders gear up for Donald Trump’s proposed tax cuts which he has promised will boost the US economy. The dollar has been choppy but generally ended on a firm note which has not really helped commodities, with WTI in particular coming under some downside pressure as a result.

Tuesday will be busy throughout the session, starting off with the NZ Food Price Index, the Australian NAB Business Conditions/Confidence, the Japan (Dec) Industrial Production/Capacity Utilisation and the China CPI/PPI figures for Jan (exp 0.7%mm, 2.4%yy).  From Europe, a very busy session will include the German CPI (exp -0.6mm, +1.9%yy) , the Provisional Q4 GDP (exp 0.5%mm, 1.7%yy), the German/EU ZEW Economic Sentiment Survey, EU Q4 GDP(exp 0.5%mm)  and the UK CPI (exp -0.5%mm, +1.9%yy) , PPI, RPI. Finally, from the US, the highlight will be Janet Yellen’s testimony to Congress which will probably be a positive but cautious outlook, continuing the mantra from last week’s FOMC statement although traders will look for any hint of a March rate hike.

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EURUSD: Early upbeat EU growth forecasts initially underpinned the Euro (EU GDP projected to be 1.8% in 2017 and 2018, up from November estimate of 1.6% and 1.7%. CPI is projected to rise to 1.8% in 2017 and to drop back to 1.7% in 2018).  The EU though did cite some concerns, noting Trump, Brexit as risks. Any early enthusiasm for the Euro quickly eroded, with the dollar making gains on the back of the stronger stock market. A heavy calendar of EU data lies ahead so it could be a busy session.

USDJPY: Early gains on follow-through buying after the Abe/Trump weekend meeting were quickly given up and a range bound session has ensued.

GBPUSD: Rangebound around 1.2500. UK CPI today.

AUDUSD: Rangebound within 0.7600/0.7700 again. China CPI to be the key driver today

NZDUSD: Heavy.

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STOCKS: All time highs. DJI, S+P; +0.7%

METALS: Unable to make further gains and pressured a little lower by the stronger dollar.

OIL:  WTO reversed Friday’s gains, falling 1.7% after an OPEC compliance report on last year’s production- cut deal underwhelmed investors. The stronger US$ and growing signs of rising U.S. crude output also weighed on the downside on Monday.

CURRENCIES
EURUSD: 1.0596
Res  1.0645  1.0680  1.0715
Sup  1.0585  1.0550  1.0500
USDJPY: 113.66
Res  114.00  114.20  114.50
Sup  113.40  113.15  113.00
GBPUSD: 1.2528
Res  1.2540  1.2565  1.2580
Sup  1.2500  1.2480  1.2440
USDCHF: 1.0058
Res  1.0070  1.0095  1.0125
Sup  1.0020  1.0000  0.9970
AUDUSD: 0.7645
Res  0.7665  0.7695  0.7730
Sup  0.7630  0.7605  0.7575
NZDUSD: 0.7174
Res  0.7190  0.7215  0.7240
Sup  0.7155  0.7140  0.7120
INDICES / COMMODITIES
S+P: 2326
Res  2328  2340  2350
Sup  2320  2310  2300
DJI: 20372
Res  20400  20450  20500
Sup  20300  20225  20150
ASX SPI: 5730
Res  5736  5760  5788
Sup  5700  5674  5650
GOLD: 1226
Res  1236  1246  1256
Sup  1220  1210  1200
SILVER: 17.82
Res  18.00  18.20  18.45
Sup  17.75  17.55  17.45
OIL (WTI): 52.86
Res  53.35  53.90  54.30
Sup  52.75  52.35  51.20

 

Indices/commodities
S&P Futures 2326
Stocks have had another solid session in once again making all time highs with the S+P reaching 2328. While the “Trump effect” is maintained it would appear that the rally will continue. He needs to deliver on his promises though or there will be a nasty accident. Until then further blue sky looks likely. Stand aside is a more prudent trade I suspect.
24 Hour: Neutral Medium Term: Neutral
Resistance Support
2500 Minor 2313 Session low
2450 Minor 2300 Minor
2400 Minor 2287 10 Feb low
2350 Minor 2280 9 Feb low
2328 Session high /All time high 2270 3 Feb low
DJI Futures 20372
Ditto S+P
24 Hour: Neutral Medium Term: Neutral
Resistance Support
20450 Minor 20224 Session low
20400 Minor 20100 Minor
20350 Minor 20000 Minor
20300 Minor 19981 10 Feb low
20247 Friday high/All time high 19931 6 Feb low
ASX SPI 5730
The ASX broke up through the 5700 resistance and has made further decent gains in reaching 5736, and appears as though it has the legs to head higher still although the short term momentum indicators are now in danger of becoming overbought.

The dailies are beginning to point a little higher though, so if we can see some positive progress look for a run toward 5760 and eventually to the 5789 9 Jan high. The 4 hour charts warn against being overconfident on the topside and if they begin to turn down, we could quickly see a reversal to 5700 and lower although this is currently not being flagged. Buying dips towards 5700, with a SL placed below 5680 seems to be the plan for the day.

24 Hour:  Prefer to buy dips Medium Term: Neutral
Resistance Support
5814 May 2015 high 5700 Minor
5789 9 Jan high 5675 Minor
5775 Minor 5650 Minor
5761 12 Jan high 5635 100 HMA
5735 Session high 5610 200 HMA
GOLD 1226
Unable to make any gains on Friday’s high, Gold today topped out at 1232 before falling sharply to 1220 and then consolidating near 1225 into the close.

The short term momentum indicators suggest the chance of further 1220/30 trade, with support being provided by the 100 DMA, although the dailies may be rolling over and a break to the downside could see us back at 1200, especially if the dollar remains strong. On the topside, above Monday’s high (1232) and Friday’s high (1237) would want to take another look at the 1244 trend high, although this seems unlikely today. If wrong, above here could see a run towards 1255 and 1265. A neutral stance seems best for now, but with a mild preference to sell into strength with a SL placed above 1244.

24 Hour: Prefer to buy dips Medium Term: Mildly bullish
Resistance Support
1263 200 DMA 1220 Session 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
1232/37 Session high/Friday high 1180 27 Jan low
SILVER 17.82
Silver ran into a brick wall at 18.00 (200 WMA) and backed off to 17.75 before settling the day mid-range.

The short term momentum indicators are neutral today, so a cautious stance is required although the dailies remain mildly constructive, so 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. A stronger dollar would create headwinds and would most likely place further pressure on the downside, where the initial support will be seen at 17.75 and again at 17.50/55. For the time being, buying dips is mildly preferred, looking for another leg higher although I remain cautious because of the chance of another dollar rally. Keep stops tight  below 17.55

24 Hour: Prefer to buy dips Medium Term:  Mildly bullish
Resistance Support
18.98 10 Nov high 17.75 Session low
18.65 Minor 17.55 Friday low
18.45 Descending Trend Resistance 17.45 6 Feb low
18.20 (76.4% of 18.98/15.63) 17.35 (23.6% of 15.63/17.85)
18.00 200 WMA /Session high 17.23 3 Feb low
OIL (WTI) 52.86
WTI had a tough session, unable to build on Fridays gains and is now back at 52.85, down around 1.7% on the day.

Currently sitting just above session lows of 52.75 the short term momentum indicators look heavy and could allow a move towards the next support seen at 52.23 (Feb 10 low) below which there is little to hold it up until we reach 51.29. On the topside, resistance will be seen at the session high (53.92) and again at 54.10/30. Above here seems unlikely today, but above which could see quite an acceleration towards 55.20. Beyond that there is again not too much to stop it heading to 56.90/57.00 although this is now a long way off.

24 Hour: Mildly Bearish Medium Term: Cautiously long
Resistance Support
56.90 (38.2% of 1.0765/26.03) 52.74 Session low
55.21 3 Jan high 52.34 10 Feb low
54.19/31 3 Feb high /6 Jan high 51.75 Minor
54.10 Friday high /6 Feb high 51.20 7 Feb low/9 Feb low
53.92 Session high 50.70 10 Jan low

EURUSD: 1.0596
The Euro is heavy, reversing early gains to 1.0658, having traded down to 1.0591. It  currently holds above the decent support in the 1.0580/90 area although a downside break would find little to stop it heading to Fibo support at 1.0525 and possible lower in the days ahead, where the next decent support would be found at the 1.0453, 11 Jan low.  The shorter term charts once again look a little mixed, so any near term recovery would find offers at the descending trend resistance, now at 1.0645, above which would see further sellers at the session high  at around 1.0658 ahead of the chance of a squeeze to the 1.0700/15 area albeit that this seems unlikely today. It is going to be a busy economic calendar today, but overall, a sterner test of the 1.0580/90 area would not surprise and a move towards 1.0500 could then follow. The EU outlook remains relatively soft, and for the time being at least the “Trump effect” seems set to underpin the dollar. The EU has a big session of data coming up, so stay alert!
24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
1.0797/90 3 Feb high /6 Feb high 1.0591/88 Session low /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
1.0682 (38.2% of 1.0829/1.0591) 1.0525 (61.8% of 1.0340/1.0829)
1.0645 (23.6% of 1.0829/1.0591) Descending Trend Resistance 1.0500 Minor

Economic data highlights will include:

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

Meta Trader
EURUSD: 4 Hour


USDJPY: 113.66
US$Jpy made an early break above 114.00, reaching 114.16, but that was as good as it got for the dollar and it has spent the rest of the session chopping around in a 113.43/114.00 range.

The 1 and 4 hour charts do appear to be running out of steam on the topside, which may again remain capped, although the daily momentum indicators are leaning higher and if the 114.16 session high is able to be taken out we could then see a run towards 114.30, above which there is little to stop the dollar heading on to 115.00. On the downside, support will be seen at the 113.43 session low and at a minor chart gap down to 113.35. Below this would head back towards 113.00 and to Friday’s low at 112.85. A nimble stance is required but buying dips seems t be the plan.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
114.75 Minor 113.43 Session low
114.50 Minor 113.15 Minor
114.28 (38.2% of 118.66/111.61) /100 WMA 113.00 Minor
114.16 Session high 112.85 Friday low
114.00 Minor 112.75 200 HMA

Economic data highlights will include:

Industrial Production, Capacity Utilisation (Jan).

Meta Trader
USDJPY: 4 Hour


GBPUSD: 1.2528
 Cable did much as we thought it might and remained stuck in a range either side of 1.2500 although it is finishing the day on a slightly firmer note, above 1.2500

Once again, the charts remain indecisive and more of the same choppy trade looks likely on Tuesday although there is plenty of data from the EU coming up, as well as the UK inflation figures, to provide some volatility. A similar range to Monday’s currently looks likely although Cable will remain under pressure if the US$ continues to remain firm, and below Monday’s low would then head back  to the strong support in the 1.2435/40 area, a break of which would allow a run back to 1.2400. On the topside, resistance will be seen at the session high, above which would open the way to 1.2565 and then possibly back to 1.2600 and higher, although the charts do not currently suggest that this is likely. 1.2470/1.2560 may cover it today.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
1.2600 Minor 1.2472 Session low
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
1.2550 Minor 1.2380 Minor
1.2539 Session high 1.2345 Daily Kijun

Economic data highlights will include:

UK CPI, PPI, RPI.

Meta Trader
GBPUSD: 4 Hour


USDCHF: 1.0058
US$Chf remains underpinned above parity although the range has been fairly tight.  Technically, on the downside, support will again be seen at 1.0010/20 area, below which could head to 0.9970 and to 0.9930. On the topside, the initial resistance will be seen at the session high a 1.0068. Beyond here could then see a run towards 1.0100 and eventually higher. The short term momentum indicators are not telling us much but the dailies point higher, so structurally; buying dips, with a SL placed below 1.0000 is preferred.
24 Hour: Prefer to buy dips Medium Term: Mildly bullish
Resistance Support
1.0152 (61.8 % of 1.0335/ 0.9860) 1.0008/18 Friday low /Session low
1.0136 16 Jan high 0.9970 Minor
1.0121 19 Jan high 0.9930/35 9 Feb low/ 10 Feb low
1.0094 20 Jan high/(50 % of 1.0335/ 0.9860) 0.9903 7 Feb low
1.0068 Session high 0.9869/75 3 Feb low/200 DMA

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Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7645

The Aud remains stuck within its recent range leaving the picture a little unclear, so a nimble stance is again required. While the dailies still appear to be rolling over, without actually going anywhere, the short term momentum indicators are once again looking neutral so it seems that the recent 0.7610/90 range may continue to dominate today. As before, selling into strength, with a tight SL, in case of a break of 0.7700 may still be the play although if we were to break above 0.7700 we could see a quick run to 0.7750. The downside still looks well supported at around 0.7600, but a break of which could see a run back to 0.7570- and then to 0.7540/500. Keep an eye on the Chinese CPI – and also on the Kiwi which is very heavy and may be telling us something.

24 Hour: Prefer to sell rallies Medium Term: Neutral
Resistance Support
0.7777 8 Nov high 0.7630 Session low
0.7750 Descending trend resistance 0.7605 7 Feb low
0.7725 Minor 0.7590 Minor
0.7695 3 Feb high/3 Feb high 0.7570 (23.6% of 0.7160/0.7695)
0.7688 Friday high 0.7550 1 Feb low

Economic data highlights will include:

NAB Business Conditions/Confidence, China CPI, PPI (Jan).

Meta Trader
AUDUSD: 4 Hour


NZDUSD: 0.7174
Having seen an early squeeze into the 0.7210/20 resistance area, the Kiwi has since traded heavily in having broken down through the 0.7170 support to head to a low of 0.7155, ahead of a minor bounce.

While the short term momentum indicators look somewhat neutral, the daily indicators hint that further downside potential could lie ahead. If so look for a move 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 towards 0.7200 and if so, selling into this, with a SL placed at 0.7220.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
0.7295 (61.8% of 0.7375/0.7270) 0.7155 Session low
0.7275 (50% of 0.7375/0.7270) 0.7140 Minor
0.7250 (38.2% of 0.7375/0.7270) 0.7120/15 200 DMA/100 DMA/55 DMA Converging/(38.2% of 0.6857/0.7375)
0.7220 (23.6% of 0.7375/0.7270) 0.7100 Minor
0.7217 Session high 0.7070 13 Jan low

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Meta Trader
NZDUSD: 4 Hour