14 Nov: US$ firm on upbeat Trump factor. Commodities and commodity bloc currencies lower.

By | November 14, 2016

The US$ remained firm heading into the weekend as investors digested the monumental ramifications of a Trump administration, with the possibility of a pickup in inflation heading into 2017 on the back of a renegotiation of free-trade deals and an unleashing of large fiscal stimulus measures. Elsewhere, commodities collapsed, led by Silver (-7%), but followed in its wake by Gold and Oil and Copper, which relinquished 50% of last week’s gains, and which in turn hurt the commodity bloc currencies. Sterling was again in demand and looks set to remain underpinned. Stocks took a pause after their recent wild swings although the DJI did briefly make another new all time high and made a new record weekly close.

The coming week will see a fairly heavy data load, particularly from the US, which should go a long way to clarifying whether we are likely to see the Fed hike rates in December. I suspect it is more or less a done deal but a weak series of economic numbers could see a delay in any move from the Fed until early 2017. Of particular note from the US  this week will be the Retail Sales (Tues), Industrial Production/Capacity Utilisation (Wed) and the CPI (Thur). Elsewhere, the China Retail Sales, Urban Investment and, Industrial Production  will be in focus today, while other highlights this week will include the RBA Minutes, UK CPI and Provisional EU Q3 GDP (Tues) and the Australian Unemployment, UK Retail Sales and EU CPI (Thur). Have a good week.

CURRENCIES
EURUSD: 1.0854
Res  1.0875  1.0900  1.0925
Sup  1.0820  1.0800  1.0770
USDJPY: 106.60
Res  106.95  107.50  107.90
Sup  106.15  105.90  105.50
GBPUSD: 1.2595
Res  1.2640  1.2675  1.2700
Sup  1.2560  1.2525  1.2500
USDCHF: 0.9878
Res  0.9895  0.9950  1.0000
Sup  0.9840  0.9800  0.9775
AUDUSD: 0.7544
Res  0.7560  0.7585  0.7610
Sup  0.7525  0.7505  0.7475
NZDUSD: 0.7113
Res  0.7140  0.7155  0.7180
Sup  0.7105  0.7060  0.7035
INDICES / COMMODITIES
S+P: 2160
Res  2170  2180  2192
Sup  2148  2140  2130
DJI: 18780
Res  18830  18900  19000
Sup  18685  18575  18490
ASX SPI: 5342
Res  5350  5370  5402
Sup  5316  5300  5286
GOLD: 1227
Res  1240  1248  1256
Sup  1218  1210  1200
SILVER: 17.37
Res  17.55  17.75  18.00
Sup  17.20  17.05  16.90
OIL (WTI): 43.08
Res  43.70  44.40  45.20
Sup  43.00  42.20  41.10

 

Indices/commodities
S&P Futures 2160
Resistance Support
2210 Minor
2200 Psychological 2148/44/40 Friday high low/(23.6% of 2028/2180)/100 DMA
2191 All time high (23 Aug) 2130 Minor
2180 10 Nov high 2122 (38.2% of 2028/2180)
2170 Friday high 2105 (50% of 2028/2180)

Bias

Stocks consolidated last week’s gains into the thin, holiday long-weekend with the S+P ranging within 2148/70. Those who bought the dip towards 2150, as we suggested on Friday, should now leave a tight stop at break-even or just below 2140 (100 DMA) as the 4 hour charts now suggest that the upside may be a little limited early in the week although the dailies still maintain a degree of positive momentum. All up, a cautious stance to the week is needed as we continue to find out how the Trump administration unfolds itself.sp

24 Hour: Neutral

Medium Term: Mildly bullish

DJI Futures 18780
Resistance Support
19200 Minor 18682 Friday low
19100 Minor 18575 Minor
19000 Minor 18485 (23.6% of 17417/18817)
18900 Minor 18390 Minor
18832 Friday high /All time high 18285 (38.2% of 17417/18817)

Bias

The DJI again moved to uncharted territory on Friday in trading up to 18832 before returning to finish just below 18800. As with the S+P, the 4 hour momentum indicators are at overbought extremes and appear to be rolling over, so the near term upside potential looks limited. The dailies though remain positive, and buying dips towards the previous high at 18620 seems to be the plan although in the bigger picture it may be wise to see what the new US administration brings us as the current buoyant mood could disappear very quickly.dji

24 Hour: Neutral

Medium Term: Mildly bullish

ASX SPI 5342
Resistance Support
5435 (76.4% of 5568/5029) 5315 Friday low
5400 Minor 5290 (23.6% of 5029/5370)
5375/77 100 DMA/(76.4% of 5488/5029) 5270 10 Nov high low
5369/70 Friday high 10 Nov high )/Descending trend resistance 5250 Minor
5350 Minor 5235 200 HMA

Bias

While the 4 hour momentum indicators now appear to be running out of steam on the topside, the daily indicators still look constructive and if the 5370 top can be taken out a quick move to 5400+ may be on the cards.  For the next session or two I prefer to be long, but with a tight stop placed below 5300, although further out, with the weeklies still pointing lower I also like to look for rallies towards 5435 to sell into.spi

24 Hour: Neutral

Medium Term: Mildly bullish

GOLD 1227
Resistance Support
1264 (38.2% of 1337/1219) 1219 Friday low
1255 (23.6% of 1375/1219) 1210 (50% pivot of 1040/1375)
1247 (23.6% of 1337/1219) 1200 31 May low
1240 Minor 1190 16 Feb low
1235 Minor 1170 (61.8% of 1040/1375)

Bias

Gold headed sharply lower on Friday, and having taken out the 1240 level it headed quickly towards the next support level at 1210.The short term momentum indicators are now becoming oversold so some consolidation may be due but with dailies pointing lower further declines look to be in store, with support levels layered at 10 dollar increments down to 1170. The topside will find offers at 1135 and then again at 1145/50 and if seen would use this as an opportunity to get short, with a SL placed above 1265.gold

24 Hour: Prefer to sell rallies

Medium Term: Mildly bearish

SILVER 17.37
Resistance Support
18.28 (61.8% of 18.98/17.18) 17.18/10 Friday low/7 Oct low
18.08 (50% of 18.98/17.18) 17.05 (76.4% of 15.81/21.13)
17.85 (38.2% of 18.98/17.18) 16.93 9 June low
17.75 Minor 16.48 (61.8% of 13.64/21.13)
17.55/60 200 DMA/(23.6% of 18.98/17.18) 16.23 7 June low

Bias

Silver made a sharp break from the recent 18.00/19.00 range and plummeted by 8.5% from high to low on Friday before a rather dead-cat bounce, heading into the weekend. The short term momentum indicators are now oversold and the dailies are giving us little hint as to the next direction, but if Silver follows Gold then lower levels ahead look likely. There is decent support at 17.05/10 but below there not too much until 16.50. Selling rallies is mildly preferred, with a SL placed above 17.85, although I suspect there are easier traded out there at present.silver

24 Hour: Prefer to sell rallies

Medium Term: Mildly bearish

OIL (WTI) 43.08
Resistance Support
46.44 2 Nov high/100 DMA/100 WMA 43.02 Friday low
45.61 10 Nov high           42.98 1 Sept low
         45.20 (23.6% of 52.19/43.02) 42.20 (76.4% of 39.17/52.19)
44.40 Minor 41.08 11 Aug low
43.65 Minor 40.41 4 Aug low

Bias

Oil remained under pressure into the weekend after OPEC reported an increase in production in October – to a record high – and pointed to the possibility of an even larger global surplus for 2017. WTI fell by 3%, to meet the support at 43.00, and with the 4 hour/daily momentum indicators suggesting further downside ahead we could see a move back to 42.20, below which there is little support ahead of 41.00 and then 40.00. Selling near term rallies is preferred, with a chance to see 44.00/50, with a SL placed above 45.20.wti

24 Hour: Prefer to sell rallies

Medium Term: Mildly bearish


EURUSD: 1.0854
Resistance Support
1.0975 100 HMA 1.0830 Friday low
1.0940 (23.6% of 1.1299/1.0830) 1.0821 10 Mar low
1.0923 Friday high 1.0800 Minor
1.0900 Minor 1.0775 (76.4% of 1.0521/1.1616)
1.0875 Minor 1.0710 5 Jan low

Bias

Eur/Usd remained heavy on Friday, with the dollar still underpinned by Trumps victory, and headed into the good support that  lies in the 1.0820/50 area, making a low of 1.0830. A break below 1.0820 means that there is little to hold the Euro up until 1.0775 and with the dailies pointing in this direction it would seem that this is where our focus should lie. Trading from the short side and selling into short term strength seems to be the plan, with resistance to be seen today in the 1.0970/1.0920 area. SL should be left above Friday’s high.Note that Mario Draghi will be speaking today.

An important point to note is the price action in the US bond market since last week’s US election. I am not an interest rate trader but the charts look as though they are about to scream to the topside – in yield terms – (I have attached a weekly 30 year US T-bond chart below). The look of this chart would tend to be supportive of the theory that Trump will start spending in order to build the economy, stoking inflation and possibly causing the Fed to be quite active in managing monetary policy (higher rates), which will underpin the dollar in the medium/long term. 2017 is going to be an interesting year – I suspect with a new dollar bull trend ahead – we shall see.

24 Hour: Prefer to sell rallies

Medium Term: Mildly bearish

Economic data highlights will include:

M: German Wage Price Index, EU Industrial Production (Sept), ECB Draghi Speech,Feds Lacker Speech

T: EU Trade Balance (Sept), Provisional GDP (Q3), German/EU ZEW Economic Sentiment Survey , Feds Rosengren Speech, New York State Empire Mfg Index, US Retail Sales (Oct), Business Inventories, API Weekly Crude Oil Stock Inventory

W: EU Non MP Meeting, Feds Bullard Speech, US PPI, Industrial Production, Capacity Utilisation, NAHB Housing Market Index, Feds Harker Speech

T: EU CPI, Construction Output, ECB Minutes, US Housing Starts, Building Permits, Jobless Claims, CPI, Philadelphia Fed Mfg Survey,

F: ECB Governor, Mario Draghi Speech, EU Current Account, Feds Bullard Speech, BUBA’s Weidmann Speech, Kansas Fed Mfg Activity

Meta Trader
EURUSD: 4 Hour

euroeuro1

nzd1


USDJPY: 106.60
Resistance Support
108.30/37 55 WMA/200 WMA/(38.2% of 123.66/98.94) 106.50 200 DMA
108.00 Major descending trend resistance 106.02 Friday low / 55 MMA
107.89 7 June high 105.58 (23.6% of 106.94/101.18)
107.48 21 July high 104.95 Minor
106.95 10 Nov high 104.70 (38.2% of 106.94/101.18)

Bias

US$Jpy was unable to overcome the sellers camped at 107.00 on Friday, with 1 billion dollars supposedly on offer, but it recovered from a dip to 106.02 to finish in a relatively healthy condition at 106.60, and with the daily momentum indicators looking constructive another test of the topside would not surprise. The 4 hour charts are overbought though, so progress on Monday may be slow but there is plenty of data due, and Bank of Japan Governor, Kuroda will be speaking, so we can expect some decent volatility. Above 107.00 there is not a whole lot to stop it from heading to 108.00/30, while on the downside, the 200 DMA at 106.50 may act as a pivot ahead of Friday’s low of 106.02. Buying dips remains favoured, with a SL below 105.80.

24 Hour: Mildly bullish – Prefer to buy dips

Medium Term:  Bullish

Economic data highlights will include:

M: Provisional GDP (Q3), Bank of Japan Governor, Kuroda Speech, Industrial Production, Capacity Utilisation

T:

W:

T: Foreign Bond/Stocks Investment

F:

Meta Trader
USDJPY: 4 Hour

yenyen-1


GBPUSD: 1.2595
Resistance Support
1.2820 (61.8% of 1.3445/1.1821) 1.2500 Minor
1.2770 Minor 1.2450 Minor
1.2700 55 WMA 1.2425 100 HMA
1.2670 Minor 1.2400 (23.6% of 1821/1.2556)
1.2640 Minor 1.2300 Rising trend support

Bias

Sterling outperformed again on Friday, by heading up to 1.2673 as shorts were covered, before giving up some of the gains to finish the week at 1.2600. The 4 hour/daily momentum indicators still seem to hint at higher levels ahead, so buying dips towards 1.2500 would seem to be a plan, with little technical resistance beyond Friday’s high until we see 1.2800. Some heavyweight UK data is due midweek, so some consolidation ahead of that would not really surprise.

24 Hour: Mildly bullish – Prefer to buy dips

Medium Term:  Mildly bullish

Economic data highlights will include:

M:

T: CPI, PPI, RPI

W: Unemployment

T: Retail Sales

F:

Meta Trader
GBPUSD: 4 Hour

gbpgbp-1


USDCHF: 0.9878
Resistance Support
0.9999 25 Oct high 0.9831 Session low
0.9975 Descending trend resistance 0.9815 (23.6% of 0.9548/0.9895)
0.9950 Minor 0.9775 9 Nov low/100 DMA
0.9910 Minor 0.9760 (38.2% of 0.9548/0. 9895)/200 DMA
0.9893/95 (76.4% of 0.9999/0.9549)/10 Nov high, Friday high 0.9722 (50% pivot of 0.9548/0. 9895)

Bias

US$Chf  finished Friday more or less unchanged, after a tight 0.9832/92 range, and as with the previous update the 4 hour momentum indicators seem to suggest further dollar strength ahead  although the dailies are fairly flat. Overall,  I prefer to be long rather than short but it looks set to stay choppy today and there are better pairs to look at right now.

24 Hour: Prefer to buy dips

Medium Term: Neutral

Economic data highlights will include:

M:

T:

W: ZEW Expectations

T:

F:

Meta Trader
USDCHF: 4 Hour

chf


AUDUSD: 0.7544
Resistance Support
0.7650 (50% of 0.7777/0.7525) 0.7525 Friday low
0.7621 (38.2% of 0.7777/0.7525) 0.7505 13 Oct low/200 DMA
0.7600 Minor 0.7495 100 WMA
0.7585/88 (23.6% of 0.7777/0.7525)/100 DMA 0.7460 Minor
0.7560 Minor 0.7441 13 Sept low

Bias

Following last week’s spike up to a new 7 month high at 0.7777 the Aud$ has headed sharply in reverse, trading down to 0.7525 on Friday, not helped by the sharp move lower in the metals, led by Silver (-7.5%), Gold (-3.5%) and Copper.

The 4 hour charts are pointing towards a test of 0.7500, below which would hint at a move to 0.7470 and possibly to 0.7440, and with the dailies also looking negative I think that this is still the direction to lean on although momentum may be slow. For the time being , selling into short term strength seems to be the plan, where resistance will be seen at 0.7560/85, with SL to be left above the 200 DMA. Note that the Aud does seem to be breaking below the rising trend support that has contained the price action over the last few months.Today’s China data will provide the chance for some early volatility, as will Thursday’s domestic unemployment figures..

Note that Friday saw a 6% surge in the Dalian iron ore price, up 54% qtr to date, which although being ignored in the wake of Trump’s victory, will lend some support to the Aud if that rally continues. Also of note is the fact that copper, usually closely correlated to the Aud, had its biggest weekly rally in over 35 years ( +22% low/high although it ended up giving back 50% of those gains on Friday, but still finished the week +11%) as hopes of increased U.S. infrastructure spending on the back of Trump’s election win, and firming demand from China, propelled it higher. If the rally continues it will be another supportive fact for the Aud, so worth watching.

24 Hour: Mildly bearish

Medium Term: Mildly bearish

Economic data highlights will include:

M: China Retail Sales, Urban Investment, Industrial Production

T: WBC Leading Economic Index, RBA Minutes, RBA Governor Lowe Speech

W: New Motor Vehicle Sales, Wage Price Index

T: Unemployment

F:

Meta Trader
AUDUSD: 4 Hour

audaud-1


NZDUSD: 0.7113
Resistance Support
0.7220 (38.2% of 0.7401/0.7108) 0.7108 Friday low
0.7205 100 DMA 0.7100 Rising trend support
0.7177 (23.6% of 0.7401/0.7108) 0.7060 Head/Shoulder neckline
0.7155 Minor 0.7035 13 Oct low
0.7140 Minor 0.7010 200 DMA

Bias

As with the Aud, the Kiwi had a rocky ride on Friday in falling sharply below 0.7200 support, to reach a low of 0.7108 before pulling up just ahead of the important rising trend support at 0.7100. As with Friday, the technicals lean to the downside and trading from the short side, selling rallies towards 0.7150/70 is preferred, with a SL placed above the 100 DMA but looking for a downside move towards 0.7000 and lower. Note that in the longer term, the Kiwi could be building a decent sized head/shoulder formation, with a neckline at 0.7060 and an objective at 0.6570.

24 Hour: Mildly bearish

Medium Term: Mildly bearish

Economic data highlights will include:

M: BZ Retail Sales

T: Global Dairy Trade Index

W:

T:

F:

Meta Trader
NZDUSD: 4 Hour

nzdnzd1