15 Nov: Surging bond yields push the dollar to 11 month highs. EU GDP/US Retails Sales in focus.

By | November 15, 2016

US$ strength has been the main theme at the start of the week, underpinned by the spike up in bond yields, where the 10 Year is now holding above 2%, while to 30 year has broken above 3% for the first time since early January. In the currency markets, the Yen, Euro and Chf have been under particular pressure, while the commodity bloc currencies have managed to hold their ground. The Dollar Index breached 100.00 (high 100.22) for the first time since early December and looks set to break to the topside. Elsewhere, while the DJI made yet another all time high, US stocks have traded mostly sideways, while in the commodity markets, Silver in particular took a hit, as did oil, although it has since seen a decent bounce off its lows to finish the day at just above last week’s close.

Tuesday will be busy, with a fair bit of economic activity, beginning with the RBA Minutes and a speech from the new RBA Governor, Lowe. Europe will be eventful, with the release of the UK CPI, PPI, RPI, the Provisional German/EU GDP and the German/EU ZEW Economic Sentiment Survey, while from the US we get the Retail Sales (Oct), Business Inventories and a speech from the Fed’s Rosengren. Oil traders should look out for the weekly API Weekly Crude Oil Stock Inventory.

CURRENCIES
EURUSD: 1.0734
Res  1.0775  1.0800  1.0845
Sup  1.0710  1.0660  1.0600
USDJPY: 108.39
Res  108.55  108.75  109.10
Sup  107.90  107.70  107.30
GBPUSD: 1.2491
Res  1.2535  1.2570  1.2600
Sup  1.2450  1.2415  1.2380
USDCHF: 0.9982
Res  1.0000  1.0035  1.0080
Sup  0.9940  0.9910  0.9895
AUDUSD: 0.7544
Res  0.7565  0.7585  0.7610
Sup  0.7525  0.7505  0.7475
NZDUSD: 0.7094
Res  0.7120  0.7140  0.7160
Sup  0.7065  0.7035  0.7010
INDICES / COMMODITIES
S+P: 2158
Res  2170  2180  2192
Sup  2148  2140  2130
DJI: 18791
Res  18830  18915  19000
Sup  18760  18680  18570
ASX SPI: 5333
Res  5356  5370  5402
Sup  5316  5300  5280
GOLD: 1220
Res  1230  1240  1250
Sup  1210  1200  1190
SILVER: 16.84
Res  17.05  17.20  17.50
Sup  16.65  16.50  16.25
OIL (WTI): 43.47
Res  43.70  44.40  45.20
Sup  43.00  42.20  41.20

 

Indices/commodities
S&P Futures 2158
Resistance Support
2210 Minor 2152 Session low
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)
2174 Session high 2105 (50% of 2028/2180)

Bias

US Stocks once again consolidated last week’s gains on Monday, with the S+P ranging within 2152/74. The 4 hour charts now suggest that the upside may be a little limited and actually point towards the downside, where decent support lies in the 2145/50 area, but a break of which would then open the way towards 2120. The dailies still maintain a degree of positive momentum and thus it is not out of the question that we do head above 2180 and on towards the all time high of 2191, particularly given the price action that we are seeing in the Dow. All up, a cautious stance is still required, but in the short term, the momentum does appear to be mildly lower.sp

24 Hour: Mildly bearish

Medium Term: Prefer to buy dips

DJI Futures 18791
Resistance Support
19300 Minor 18760 Session low
19200 Minor 18682 Friday low
19100 Minor 18565 (23.6% of 17417/18916)
19000 Minor 18390 Minor
18916 Session high /All time high 18340 (38.2% of 17417/18916)

Bias

The DJI again headed into uncharted territory on Monday, trading up to 18916 before correcting a little to finish back at 18800. As with the S+P, the 4 hour momentum indicators are at overbought extremes and do appear to be turning lower, so further 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. In the meantime, selling into strength appears to be the intraday plan, looking for a run towards 18700/600.dji

24 Hour: Mildly bearish

Medium Term: Prefer to buy dips

ASX SPI 5333
Resistance Support
5435 (76.4% of 5568/5029) 5316/15 Session low 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
5356 Session high 5235 200 HMA

Bias

The ASX is unchanged today after a rangebound session of 5316/5356, leaving the outlook unchanged. While the 4 hour momentum indicators now appear to be running out of steam on the topside, the daily indicators still look constructive, so if the 5370 resistance can be taken out a quick move to 5400+ may be on the cards.  For the next session or two I prefer to be cautiously long, but with a tight stop placed below the 5316 session low. Further out, with the weeklies still pointing lower I also like to look for rallies towards 5435 to sell into although that may be a stretch too far.spi

24 Hour: Neutral

Medium Term: Mildly bullish

GOLD 1220
Resistance Support
1259 (38.2% of 1337/1212) 1212 Session low
1250 Minor 1210 (50% pivot of 1040/1375)
1241 (23.6% of 1337/1212) 1200 31 May low
1235 Minor 1190 16 Feb low
1231 Session high 1170 (61.8% of 1040/1375)

Bias

Gold remains heavy at the start of the week but remains above the nearby 1210 support by pulling up at 1212. The short term momentum indicators are oversold so some consolidation near current levels may be due but with dailies pointing lower further declines look to be in store in the sessions ahead. Support levels are layered at 10 dollar increments down to 1170 so any downside progress, if seen, may be slow. The topside will again find offers at 1130/35 and then again at 1145/50 although this is beginning to look over the horizon.gold

24 Hour: Mildly bearish

Medium Term: Neutral

SILVER 16.84
Resistance Support
18.10 (61.8% of 18.98/16.63) 16.63 Session low
17.80 (50% of 18.98/16.63) 16.48 (61.8% of 13.64/21.13)
17.55 200 DMA (38.2% of 18.98/16.63) 16.23 7 June low
17.20 (23.6% of 18.98/16.63) 16.00 Minor
17.05 Minor 15.81 1 June low

Bias

Silver broke below the 17.05/10 support and headed quickly to 16.63 on Monday, with only a slight bounce heading into the close. The short term momentum indicators are now oversold and thus the downside momentum may slow somewhat, with some decent support to be seen at 16.50, although below there, there is not too much support to be seen until 15.80/16.00. On the topside 17.05/10 should now be near term resistance, but beyond which could see a squeeze towards 17.50. Given that the dailies appear to be picking up downside momentum, selling into rallies seems to be the plan.silver

24 Hour: Becoming Oversold -Prefer to sell rallies

Medium Term:  Mildly bearish

OIL (WTI) 43.47
Resistance Support
46.00 (38.2% of 52.19/42.18) 43.00 Minor
45.61 10 Nov high 42.50 Minor
         45.10 Minor 42.20/18 (76.4% of 39.17/52.19)/Session low
44.50 (23.6% of 52.19/42.18) 41.08 11 Aug low
43.69 Session high 40.41 4 Aug low

Bias

Oil fell to its lowest level in 3 months on Monday, with WTI falling to 42.18, as prospects of a stronger dollar, keeping downside pressure on the price, and global oversupply overshadowed the chances that OPEC will reach a deal to cut output at their upcoming meeting. WTI has actually seen a decent bounce off its lows, late in the day, to finish at 43.50 on the back of some profit taking although the longer term momentum indicators do still point to further losses. The bounce means that the short term momentum indicators now point a little higher, so we could yet see another run back to 44.50. Selling near term rallies is preferred, with a chance to see 44.00/50, with a SL placed above 45.20. A return to the 42.18 lows would not eventually surprise, below which there is little support ahead of 41.00 and then 40.00.wti

24 Hour: Mildly bullish -Prefer to sell rallies

Medium Term: Mildly bearish


EURUSD: 1.0734
Resistance Support
1.0900 Minor 1.0710/08 5 Jan low/Session low
1.0840/45 Session high /(23.6% of 1.1282/1.0708) 1.0660 Minor
1.0825 Minor 1.0600 Minor
1.0800 Minor 1.0585 Major rising trend support
1.0775 Minor 1.0522 3 Dec 2015 low

Bias

The Euro traded in heavy fashion all day, breaking below 1.0800 in Asia and then continuing to the downside in Europe/US trade, hitting the 1.0710 January low at 1.0710 before a dead-cat bounce going into the session close. Although the short term momentum indicators are now becoming oversold, further downside looks likely in the days ahead where the next realistic target would now be at the rising trend support at 1.0585, a break of which would head to the Dec low at 1.0522 and then possibly to the March 2013 low at 1.0461. Near term strength looks limited to 1.0800, although it may take an effort to reach it. Selling into rallies, with a SL above 1.0850 seems to be the plan. There is a lot of data today, so we could see a fair bit of volatility.

24 Hour: Becoming Oversold -Prefer to sell rallies

Medium Term: Mildly bearish

Economic data highlights will include:

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

Meta Trader
EURUSD: 4 Hour

euroeuro1


USDJPY: 108.35
Resistance Support
109.75 Minor 107.90 Minor
109.10 Minor 107.70 Minor
108.75 Minor 107.30 Minor
108.53 Session high 107.00 Minor
108.30/37 55 WMA/200 WMA/(38.2% of 123.66/98.94) 106.80 (23.6% of 101.18/108.53)

Bias

The Yen stays under heavy pressure thanks to the Trump factor and rising US bond yields. Having reached the 108.30 long term target, we may now need some consolidation to allow the short term charts to unwind, after having become extremely overbought, but buying dips remains the theme given the constructive look of the daily momentum indicators. The first reasonable support is seen at around 106.80/50, where I would be looking to buy the dollar, although at this stage it looks unlikely to be seen. On the topside, above 108.60, there is not an awful lot to stop it heading to 110.00 and beyond there to 111.25 (50% pivot of 123.66/98.94), although that remains over the horizon at this stage
24 Hour: Becoming Overbought – Prefer to buy dips Medium Term:  Bullish
Meta Trader
USDJPY: 4 Hour

yenyen-1


GBPUSD: 1.2491
Resistance Support
1.2673 Friday high 1.2460 Minor
1.2650 Minor 1.2443/50 Session low/200 HMA
1.2600 Minor 1.2415 Minor
1.2570 Minor 1.2400 Minor
1.2540 Minor 1.2350 (38.2% of 1.1821/1.2673)

Bias                                                                         

Cable drifted steadily lower through the day, under pressure from the general dollar strength, but has finished the day at close to 1.2500 after bouncing off the lows of 1.2443. For the time being I still prefer to structurally buy dips given that the daily momentum indicators look positive, although in the near term the 4 hour charts do suggest that we could see a retest of the session lows and then possibly of 1.2380/1.2400 where I would be looking to add to longs, with a SL placed under 1.2350. The topside looks a little limited in the short term and a break above the session high of 1.2592 would be a bit of a surprise, although if wrong we could then see a return to Friday’s top at 1.2673, above which there is little technical resistance until we see 1.2800. Watch out for today’s UK inflation data.

24 Hour: Neutral

Medium Term:  Mildly bullish

Economic data highlights will include:

T: CPI, PPI, RPI

Meta Trader
GBPUSD: 4 Hour

gbp


USDCHF: 0.9982
Resistance Support
1.0117 (76.4% of 1.0327/0.9443) 0.9940 Minor
1.0092 10 Mar high 0.9910 Minor
1.0080 Descending trend resistance 0.9895 (23.6% of 0.9548/1.001)
1.0035 Minor 0.9865 Minor
1.0001 Session high 0.9845 Minor

Bias

US$Chf made a break to the topside in reaching parity, closing the US session nearby and looking as though we could head towards the descending trend resistance at 1.0080, above which could head on towards 1.0120. The daily charts still look k pretty neutral though so I would not get too carried away with this pair as there are better things to look at. On the downside 0.9900 will provide decent support, which, if seen would be a buying area, with a SL placed under 0.9820

24 Hour: Prefer to buy dips

Medium Term: Mildly bearish

Meta Trader
USDCHF: 4 Hour

chfchf


AUDUSD: 0.7544
Resistance Support
0.7650 (50% of 0.7777/0.7525) 0.7525/23 Friday low/Session 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
0.7565 Session high 0.7441 13 Sept low

Bias

The Aud has spent Monday in consolidation mode on Monday, and it could be a similar session today given that the 4 hour momentum indicators look to be rather oversold, potentially limiting any downside movement. The dailies though do point lower so I prefer to remain structurally short, and if we do see a break of the 0.7423 session low, then we could see a run towards 0.7500, below which would hint at a move to 0.7470 and possibly to 0.7440. As with yesterday, selling into short term strength seems to be the plan, where resistance will again be seen at 0.7560/85, with SL to be left above the 200 DMA. As I said on Monday, 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, and if we do break sub 0.7500, we could see an acceleration lower. Watch out for the RBA Minutes today, although they are unlikely to tell us anything new.

24 Hour: Mildly bearish -Prefer to sell rallies.

Medium Term:  Mildly bearish

Economic data highlights will include:

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

Meta Trader
AUDUSD: 4 Hour

aud


NZDUSD: 0.7094
Resistance Support
0.7205 100 DMA 0.7085 Minor
0.7195 (38.2% of 0.7401/0.7070) 0.7069 Session low
0.7158 (23.6% of 0.7401/0.0.7070) 0.7060 Head/Shoulder neckline
0.7140 Session high 0.7035 13 Oct low
0.7120 Minor 0.7010 200 DMA

Bias

The Kiwi fell to a low of 0.7070 on Monday but has since bounced to hold its ground at around 0.7100. With the 4 hour charts looking oversold and possibly turning higher, we could see a further recovery towards 0.7150, where I would again be looking to sell into strength, with a SL placed above 0.7200. The downside will again find decent bids at 0.7070, but 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. Watch for the Global Dairy Trade Index, due in European trade.

24 Hour: Mildly bearish

Medium Term: Mildly bearish

Economic data highlights will include:

Global Dairy Trade Index

Meta Trader
NZDUSD: Daily

nzd