15 Feb: Hawkish Janet Yellen underpins stocks, US$. Yellen part 2, US inflation and Retail Sales today’s focus.

By | February 15, 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.

Stocks have traded at new all time highs while the dollar is stronger on Tuesday after Janet Yellen indicated, in her hawkish testimony to Congress that the Fed will likely need to raise rates at the March or June FOMC meeting, although she conceded considerable uncertainty over economic policy under the Trump administration. She added that it would be unwise to wait too long before hiking due to the danger of falling behind the curve. Elsewhere, the US PPI beat expectations and helped support the dollar, while earlier in the session Cable had a tough day after UK inflation data for January missed expectation, falling -0.5% mm in January while rising 1.8% yy, below the expected 1.9% yy.  From Germany, the  ZEW economic sentiment dropped sharply, to 10.4 in February, down from 16.6, easily missing expectation of 15.1, with the report noting  that “political uncertainty regarding Brexit, the future U.S. economic policy as well as the considerable number of upcoming elections in Europe further depresses expectations”. In other action, the Kiwi remains heavy, while the commodities were mostly rangebound, but generally held their ground quite well despite the stronger dollar.

Wednesday has the makings of another busy one, with the key feature being Janet Yellen’s second half of her testimony to Congress. The January US Retail Sales (exp +0.1%), CPI figures (exp 0.3% mm, 2.0% yy), Industrial Production and Capacity Utilisation will also be released. Earlier in the session we have the Australian WBC Consumer Confidence and New Vehicle Sales and then in European time we will get the UK Unemployment (exp 4.8%, Claimant Count; +1k) and the EU Trade Balance.

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

EURUSD:  A poor ZEW outcome, a strong US PPI reading (+0.6%mm v exp +0.3%) and the hawkish comments from Janet Yellen in her testimony to Congress underpinned the dollar on Tuesday while weighing on the Euro and further losses for the Euro appear to be on the cards. There is no major EU data due today, and the focus will be on the US Jan CPI.

USDJPY: Janet Yellen gave the dollar a leg up, sending it to new 2 week highs, with further gains looking possible.

GBPUSD: Cable stumbled on the CPI miss and looks set to remain heavy over the ongoing Brexit concerns. UK Unemployment today.

AUDUSD: Aud remains within its recent 0.7610/7.7690 range.  WBC Consumer Confidence today’s focus.

NZDUSD: As before, it remains heavy but currently above strong technical support.

DXY: The DXY climbed to a 3 week high on Tuesday, reaching 101.38, following the slightly hawkish comments from Janet Yellen in her testimony to Congress. The daily charts suggest further gains lie ahead.

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

US STOCKS: Another blue sky day. More to come – until the Trump effect wears off.

ASX: Rangebound. A big day of corporate results ahead; CBA leading the charge.

METALS: Rangebound. Silver choppy.

OIL: Rangebound with concerns about rising supply from U.S. shale output offsetting the OPEC-led effort to cut global output.

CURRENCIES
EURUSD: 1.0573
Res  1.0590  1.0620  1.0635
Sup  1.0560  1.0530  1.0500
USDJPY: 114.21
Res  114.50  114.75  114.95
Sup  114.00  113.80  113.40
GBPUSD: 1.2462
Res  1.2485  1.2500  1.2550
Sup  1.2440  1.2400  1.2365
USDCHF: 1.0069
Res  1.0085  1.0095  1.0125
Sup  1.0045  1.0030  1.0010
AUDUSD: 0.7652
Res  0.7670  0.7695  0.7730
Sup  0.7625  0.7605  0.7575
NZDUSD: 0.7163
Res  0.7190  0.7215  0.7240
Sup  0.7135  0.7120  0.7100
INDICES / COMMODITIES
S+P: 2333
Res  2334  2340  2350
Sup  2326  2320  2312
DJI: 20438
Res  20455  20500  20600
Sup  20340  20250  20150
ASX SPI: 5723
Res  5740  5760  5788
Sup  5696  5674  5650
GOLD: 1229
Res  1236  1246  1256
Sup  1218  1210  1200
SILVER: 17.96
Res  18.05  18.20  18.45
Sup  17.75  17.55  17.45
OIL (WTI): 53.11
Res  53.35  53.90  54.30
Sup  52.75  52.35  51.20

 

Indices/commodities
S&P Futures 2333
US Stocks have had another solid session following the testimony from Janet Yellen in once again making all time highs, with the S+P reaching 2335. As before, while the “Trump effect” continues it would appear that the rally will carry on but he needs to deliver on his promises or there will be a nasty accident. Until then further blue sky looks likely. Stand aside
24 Hour: Neutral Medium Term: Neutral
Resistance Support
2500 Minor 2320 Session low
2450 Minor 2313 13 Feb low
2400 Minor 2300 Minor
2350 Minor 2287 10 Feb low
2335 Session high /All time high 2280 9 Feb low
DJI Futures 20438 Ditto S+P. Today’s all time high has been 20453

24 Hour: Neutral Medium Term: Neutral
Resistance Support
20650 Minor 20344 Session low
20600 Minor 20224 13 Feb low
20550 Minor 20100 Minor
20500 Minor 20000 Minor
20453 Session high /All time high 19981 10 Feb low
ASX SPI 5723 The ASX had a choppy session, reaching up to 5741 early in the day, before falling to 5697 and then bouncing to finish in the middle of the range.

The dailies are pointing a little higher, so as with yesterday’s stance, above Tuesday’s session high, look for a run toward 5760 and eventually to the 5789 9 Jan high. The 4 hour charts still warn against being overconfident on the topside though and we could see another reversal to 5700, but as with yesterday, buying the dip 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 5697 Session low
5789 9 Jan high 5675 Minor
5775 Minor 5650 Minor
5761 12 Jan high 5635 100 HMA
5741 Session high 5610 200 HMA
GOLD 1229 Gold has been rangebound on Tuesday, leaving the outlook unchanged.

The short term momentum indicators suggest the chance of further 1220/35 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 today’s high (1234) and the 10 Feb (1237) high would want to take another look at the 1244 trend high, although this seems unlikely in the near term given the strength of the dollar. 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: Neutral Medium Term: Neutral
Resistance Support
1263 200 DMA 1222 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
1234/37 Session high/10 Feb high 1180 27 Jan low

 

SILVER 17.96 Silver was volatile on Tuesday, tripping stops on the break above 18.00, reaching 18.07 before reversing sharply to the day’s low of 17.74 and then recovering again to close just below 18.00.

The short term momentum and the daily indicators are now all fairly neutral so a cautious stance is required although the dailies possibly remain mildly constructive, so if 18.00/05 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. The stronger dollar would seem to create plenty of headwinds to such a move and could eventually place further pressure on the downside, where the initial support will again 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 17.75.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
18.98 10 Nov high 17.75 13 Feb low/Session low
18.65 Minor 17.55 10 Feb 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)
18.00/08 200 WMA /Session high 17.23 3 Feb low
OIL (WTI) 53.11 WTI had another choppy session but is finishing back above 53.00, but well below the 53.69 day’s high.

Currently sitting at 53.15 the short term momentum indicators are flat and offer little hint in either direction, possibly suggesting a similar session today, using 53.00 as a pivot. Below Tuesday’s 52.89 low, the next support is 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 (53.69), the 13 Feb 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. The dailies are neutral and further rangebound trade looks likely.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
56.90 (38.2% of 1.0765/26.03) 52.74 13 Feb 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 10 Feb high /6 Feb high 51.20 7 Feb low/9 Feb low
53.92 13 Feb high 50.70 10 Jan low

EURUSD: 1.0573

The Euro has now broken down through 1.0590 support, and with the short term momentum and the daily momentum indicators all aligned lower it would seem that the dollar has further gains ahead of it. If so, look for the Fibo level at 1.0525 to provide some bids, but below that there is not too much to hold the pair up until the next decent support, found at the 1.0453, 11 Jan low.  Potential rallies appear to be somewhat limited, and 1.0590/1.0600 may well cap it, but if wrong, the descending trend resistance, now at 1.0620, and the session high at 1.0633 should prevent further gains. Look to sell into strength but keeps stops tight above 1.0640. US Retail Sales will be today’s focus.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
1.0709/13 10 Feb high/9 Feb high 1.0560 Session low
1.0661 (38.2% of 1.0829/1.0560) 1.0525 (61.8% of 1.0340/1.0829)
1.0633 Session high 1.0500 Minor
1.0620 (23.6% of 1.0829/1.0560) Descending Trend Resistance 1.0480 Minor
1.0590 Minor 1.0455/53 (76.4% of 1.0340/1.0829)/ 11 Jan low

Economic data highlights will include:

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

Meta Trader
EURUSD: 4 Hour


USDJPY: 114.21

US$Jpy  spiked above 114 following Janet Yellen’s testimony and headed on to 114.49 before stopping to  take a breath.

The short term momentum indicators and the daily momentum indicators are all leaning higher, and if 114.50 is taken out there is little to stop the dollar heading on to 115.00/15, above which 115.60 would attract. On the downside the initial, minor support will now be seen at the 114.00 and then at minor Fibo levels at 113.80/113.35, although this looks unlikely to be seen today.

24 Hour: Prefer to buy dips Medium Term: Mildly bullish
Resistance Support
115.13 (50% pivot of 118.66/111.61) 114.00 Minor
114.95 Minor 113.80 (23.6% of 111.58/114.49)
114.75 Minor 113.37 (38.2% of 111.58/114.49)
114.49 Session high 113.24 Session low
114.28 (38.2% of 118.66/111.61) /100 WMA 113.15 Minor

.

Meta Trader
USDJPY: 4 Hour


GBPUSD: 1.2462

Cable topped out at 1.2548 before falling sharply after the UK CPI missed expectations, reaching 1.2443 ahead of a minor bounce.

Once again, the charts remain indecisive and more of the same choppy trade looks likely on Wednesday, with the UK Unemployment likely to provide the direction as the UK data comes increasingly into focus with Brexit concerns seeming to be building with regards to the outlook for the economy. From a technical perspective, strong support in the 1.2435/40 area remains intact, but a break of which would allow a run back to 1.2400 and possibly back to 1.2345. On the topside, resistance will be seen at 1.2500, above which would open the way back towards the 1.2548 session high and on towards 1.2565 although the charts do not currently suggest that this is likely. While 1.2435 holds, buying dips is mildly preferred, but with a tight SL at around 1.2415.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
1.2565 (61.8% of 1.2706/1.2346) 1.2450 Minor
1.2548 Session high 1.2442/39/35 Session low/Daily cloud top /10 Feb low/100 DMA/55 DMA
1.2525 Minor 1.2400 Minor
1.2500 200 HMA 1.2365 Daily cloud base
1.2485 Minor 1.2345 Daily Kijun

Economic data highlights will include:

Unemployment.

Meta Trader
GBPUSD: 4 Hour


USDCHF: 1.0069

US$Chf had another relatively tight range and remains underpinned above parity but as yet, unable to make it to 1.0100 although the dailies suggest that this will eventually happen. If so,, beyond could then see the dollar head towards 1.0150 albeit that it looks as though progress may be slow. On the downside, support will be seen at the session low at 1.0030 and again in the 1.0010/20 area. Buying dips towards this support again remains preferred, but with a SL placed tight below parity.

24 Hour: Prefer to buy dips Medium Term: Mildly bullish
Resistance Support
1.0152 (61.8 % of 1.0335/ 0.9860) 1.0050 Minor
1.0136 16 Jan high 1.0030 Session low
1.0121 19 Jan high 1.0008/18 10 Feb low /13 Feb low
1.0094 20 Jan high/(50 % of 1.0335/ 0.9860) 0.9970 Minor
1.0084 Session high 0.9930/35 9 Feb low/ 10 Feb low

.

Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7652

The Aud made it up to 0.7696 on Tuesday before reversing sharply to a low of 0.7617 after Janet Yellen’s testimony, and thus remains stuck within its recent range, leaving the picture a little unclear and ensuring that a nimble stance is again required. While the dailies still appear to be rolling over but without actually going anywhere, the short term momentum indicators are also now looking a little heavy and we may see a test of the lows although as we said before, decent support remains in the 0.7600/10 area. A break of 0.7600 would suggest a run towards 0.7570 and further out, towards 0.7540/50. Note that the Iron Ore price is back at $90 per tonne, suggesting that the Aud generally seems set to remain fairly underpinned. As for today, similar to yesterday, selling into strength, with a tight SL, in case of a break of 0.7700 may still be the play. If we were to break above 0.7700 we could see a quick run to 0.7750. I prefer to think we are in for a test of 0.7600.

24 Hour: Prefer to sell rallies Medium Term: Neutral
Resistance Support
0.7777 8 Nov high 0.7617 Session low
0.7750 Descending trend resistance 0.7605 7 Feb low
0.7725 Minor 0.7590 Minor
0.7696/95 Session high /3 Feb high 0.7570 (23.6% of 0.7160/0.7695)
0.7680 Minor 0.7550 1 Feb low

Economic data highlights will include:

New Motor Vehicle Sales (Jan), WBC Consumer Confidence .

Meta Trader
AUDUSD: 4 Hour


NZDUSD: 0.7163

The Kiwi remains heavy, and having been unable to break above 0.7200 early in the day it turned lower, eventually falling to 0.7133 before a bounce, to finish the day at 0.7160.

While the short term momentum indicators look somewhat neutral, suggesting some near term consolidation, the daily indicators remain bearish and 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 to 0.7175/85 and if so, selling into this, with a SL placed at 0.7205 seems to be the plan.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
0.7282 (61.8% of 0.7375/0.7133) 0.7134 Session low
0.7255 (50% of 0.7375/0.7133) 0.7120/15 200 DMA/100 DMA/55 DMA Converging/(50% of 0.6857/0.7375)
0.7225 (38.2% of 0.7375/0.7133) 0.7100 Minor
0.7190 (23.6% of 0.7375/0.7133) 0.7070 13 Jan low
0.7170 Minor 0.7055 (61.8% of 0.6857/0.7375)

.

Meta Trader
NZDUSD: 4 Hour