18 Nov: US$, stocks underpinned as Yellen signals a rate hike coming soon.

By | November 18, 2016

The dollar remains firm heading into Friday as the market digests the comments of Janet Yellen, who was testifying to Congress, and who said that  the Fed could raise interest rates “relatively soon” , adding that the Fed is prepared to adjust its outlook as the new Trump administration takes shape. Stocks remained firm, at the top end of their recent range, while the metals remained under pressure on the back of the stronger dollar. In other data today, the CPI came in as expected at 1.6%yy, Building Permits and Housing Starts were both stronger than expected, while the weekly initial jobless claims dropped 19k to 235k, much better than expectation of 259k, for the lowest reading in 43 years. Initial claims also stayed below 300k for the 89th straight week, last seen back in 1970. The only negative was the Philadelphia Fed Mfg Survey, which dropped to 7.6 versus expectation of 8.0.

Friday will mostly be about central bank speakers, with not a lot else to go on. ECB Governor, Mario Draghi will lead things off ahead of the Fed’s Bullard and George, and the BUBA’s Weidmann. It could therefore be a reasonably stable end to the week with most traders probably keeping a close eye on who will make it into the Trump administration. Next week should heat up though, with the release of the November FOMC Minutes (Wednesday) which may give us a hint as to what to expect in the December meeting, with a rate hike looking increasingly to be on the cards, and now pretty much priced in.

CURRENCIES
EURUSD: 1.0622
Res  1.0665  1.0710  1.0745
Sup  1.0600  1.0585  1.0525
USDJPY: 109.96
Res  110.00  110.30  110.80
Sup  109.65  109.30  109.00
GBPUSD: 1.2414
Res  1.2470  1.2500  1.2525
Sup  1.2405  1.2380  1.2350
USDCHF: 1.0071
Res  1.0080  1.0100  1.0120
Sup  1.0045  1.0000  1.0030
AUDUSD: 0.7412
Res  0.7435  0.7450  0.7470
Sup  0.7385  0.7370  0.7335
NZDUSD: 0.7029
Res  0.7050  0.7080  0.7110
Sup  0.7000  0.6970  0.6935
INDICES / COMMODITIES
S+P: 2183
Res  2186  2190  2200
Sup  2170  2156  2144
DJI: 18853
Res  18920  19000  19050
Sup  18760  18680  18575
ASX SPI: 5350
Res  5360  5370  5400
Sup  5326  5300  5284
GOLD: 1214
Res  1220  1230  1240
Sup  1210  1200  1190
SILVER: 16.62
Res  16.85  17.00  17.15
Sup  16.50  16.25  16.00
OIL (WTI): 45.03
Res  45.50  46.00  46.50
Sup  44.75  44.30  43.90

 

Indices/commodities
S&P Futures 2183
Resistance Support
2210 Minor 2172 Session low
2205 Minor 2169 100 HMA
2200 Psychological 2148 (23.6% of 2028/2185)/100 DMA
2191 All time high (23 Aug) 2153 200 HMA
2185 Session high 2125 (38.2% of 2028/2184)

Bias

US stocks have again been rangebound on Thursday, although at the end of the session they are near the day’s highs following Janet Yellen’s hint of an imminent rate hike. In the meantime, the outlook for Friday remains unchanged and further range trading could be in store as traders look forward to next week’s FOMC Minutes.

The dailies still look constructive and it is not out of the question that we do head above the 2185 high and on towards the all time high of 2191, above which would see a tern test of 2200, and above, although I would be doubtful of seeing new highs today. On the downside, below the 2170 session low will find bids at 2160 and then there is strong support at 2145/50. For the time being a neutral stance is required, but given the look of the dailies buying near term dips in the 2160/45 area – if seen – seems to be the longer term plan.sp

24 Hour: Neutral Medium Term: Prefer to buy dips
DJI Futures 18853
Resistance Support
19300 Minor 18792 16 Nov low
19200 Minor 18755 15 Nov low
19100 Minor 18682 11 Nov low
19000 Minor 18560 (23.6% of 17417/18916)
18916 14 Nov high /All time high 18340 (38.2% of 17417/18916)

Bias

As with the S+P, the DJI has been rangebound, but underpinned by the firm US data and the comments from Janet Yellen. The 4 hour momentum indicators still point lower, so further near-term upside potential looks limited, although the dailies remain positive and buying dips seems to be the plan.  Ahead of the weekend, a cautious stance is required and further rangebound trade seems likely as we await next week’s FOMC Minutes.dji
24 Hour: Neutral Medium Term: Prefer to buy dips
ASX SPI 5350
Resistance Support
5440 (76.4% of 5568/5029) 5325 Minor
5400 Minor 5300 200 HMA
5375/80 (76.4% of 5488/5029)/100 DMA 5290/85 (23.6% of 5029/5370)
5369/70 11 Nov high, 10 Nov high 5270/65 10 Nov high low/200 DMA
5361 Session high 5240 (38.2% of 5029/5370)

Bias                

Having seen an early dip to 5276 the SPI has ended up having a strong session, taking out the previously mentioned descending trend resistance at 5345 and heading on to 5361, before returning to finish right on the trend line.  The daily indicators still look mildly constructive, so if the 5360/70 resistance can be taken out, a quick move to 5400+ may be on the cards although the 4 hour charts look less certain of this happening, and a sideways session may be in store, with a range of 5320/70 looking likely to cover it.spi
24 Hour: Neutral Medium Term: Neutral
GOLD 1214
Resistance Support
1259 (38.2% of 1337/1212) 1211/12 Session low/14 Nov low
1250 Minor 1210 (50% pivot of 1040/1375)
1241 (23.6% of 1337/1212) 1200 31 May low
1235 100 HMA 1190 16 Feb low
1233 16 Nov high 1181 10 Feb low

Bias

Gold is under pressure from the stronger dollar and has traded down to 1211.

With the dailies pointing lower further declines look to be in store in the days ahead, towards support levels which are layered at 10 dollar increments down to 1170 so any downside progress, if seen, may be slow. The topside will find offers at 1120 and then again 1130/35 and at 1145/50 although this is now looking over the horizon.gold

24 Hour: Neutral Medium Term: Mildly bearish
SILVER 16.62
Resistance Support
17.95 (38.2% of 20.06/16.63) 16.61/63 Session low/14 Nov 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
17.45 (23.6% of 20.06/16.63) 16.00 Minor
17.20/23 (23.6% of 18.98/16.63)/16 Nov high 15.81 1 June low

Bias

Silver has headed down to meet the 14 November low and given that the dailies still point lower, appears to be headed for a test the strong support at 16.48, below which would allow a run towards 16.00/15.80. Short term rallies should be limited to 16.85, possibly 17.00, which if seen would now appear to be a decent sell area. silver
24 Hour: Prefer to sell rallies Medium Term:  Mildly bearish
OIL (WTI) 45.03
Resistance Support
48.40 (61.8% of 52.19/42.18) 44.93 Session low
47.70 Daily cloud top 44.75  (38.2% of 42.18/45.46.38)
47.17 (50% of 52.19/42.18) 44.27 (50% of 42.18/46.38)
46.54 Session high 43.90/80 200 DMA/ (61.8% of 42.18/46.38)
46.00 100 DMA 43.15 (76.4% of 42.18/46.38)

Bias

Oil prices rose early in the Thursday session, with WTI reaching 46.54 on increasing expectations of an OPEC deal to limit production, although those gains have since disappeared as oversupply concerns and the stronger dollar weighed on the price, which has since fallen to below 45.00 pb.

Technically, with the 4 hour/daily momentum indicators now looking mixed, a cautious stance required.  The 100 DMA at 46.00 would seem to limit the upside, although if wrong, back above the 46.54 session high could lead to a larger squeeze towards 47.15 and even back to 48.40. A downside break of 44.70 could see a run back towards 44.25 and possibly to the stronger support at 43.90/80. The dailies remain mildly positive so the structural view of buying dips remains intact.wti

24 Hour: Neutral Medium Term: Prefer to buy dips

EURUSD: 1.0622
Resistance Support
1.0786 (23.6% of 1.1282/1.0628) 1.0619 Session low
1.0758 16 Nov high 1.0600 Minor
1.0745 Session high 1.0585 Major rising trend support
1.0710 Minor 1.0522 3 Dec 2015 low
1.0670 Minor 105.00  Minor

Bias                                                                                         

The dollar remains strong following the batch of firm US data on Thursday, which was backed up by Janet Yellen’s comments to Congress, seemingly confirming that a rate rise is on its way sooner rather than later, with a December hike now more or less priced in.

As before, although the 4 hour momentum indicators remain oversold and appear to be trying to turn higher, 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 2105 low at 1.0522 and then possibly to the March 2013 low at 1.0461. We could see a bounce to 1.0680 and even possibly back to 1.0700/1.0720, above which could then bring about a move towards the session high at 1.0745 and even the previous day’s high at 1.0758 although this looks unlikely today. Trading from the short side and selling into rallies, with a SL above 1.0745 seems to be the plan, although there is a risk of pre-weekend profit taking which could see the dollar come under some pressure late in the day.

24 Hour: Becoming Oversold -Prefer to sell rallies Medium Term: Bearish

Economic data highlights will include:

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

Meta Trader
EURUSD: 4 Hour

euro

euro1


USDJPY: 109.96
Resistance Support
111.00 Psychological 109.35 Minor
110.82 1 June high 109.00 Minor
110.30 Minor 108.55 Session low
110.00 Psychological 108.30 55/200 WMAs
109.97 Session high 107.85 16 Nov low

(23.6% of 101.18/109.88)

Bias

After a choppy session which saw an early dip to 108.55, US$Jpy is now at new trend highs at 110.00, underpinned by the comments from Janet Yellen, and appears to be headed higher still in the days ahead.

The daily momentum indicators still point higher, and on a break of 110.00, which seems imminent there is little to stop the dollar from heading to 110.80/111.00, above which the next resistance is seen at 111.25 (50% pivot of 123.66/98.94) although that remains over the horizon at this stage. Although the dollar remains strong, the 4 hour momentum indicators are overbought and showing a degree of bearish divergence, so some caution is warranted in case of a pre-weekend bout of profit taking, which could drive it a little lower. If so, minor support will arrive at 109.35/40, below which, would open the way to 109.00 and even to the session low of 108.55, albeit that this looks unlikely. Buying dips still seems the longer term plan.

24 Hour: Becoming Overbought – Prefer to buy dips Medium Term:  Bullish
Meta Trader
USDJPY: 4 Hour

dji

yen-1


GBPUSD: 1.2414
Resistance Support
1.2605 (76.4% of 1.2673/1.2380) 1.2410/08 Session low /16 Nov low
1.2560/65 (61.8% of 1.2673/1.2380)/200 HMA 1.2380 15 Nov low
1.2525 (50% pivot of 1.2673/1.2380) 1.2350 (38.2% of 1.1821/1.2673)/Rising trend support
1.2504 Session high 1.23525 Minor
1.2470 Minor 1.2300 Minor

Bias                                                                         

 Good UK October retail sales helped Sterling to session highs of 1.2504 (+1.9% vs +0.4% exp m/m) although that was as good as it got, and under pressure from the strong dollar it is now back towards the lows but remains within the overall 1.24/1.25 range of recent days.

As with yesterday, the short term momentum indicators remain flat, hinting at more of the same in the session ahead, so a neutral stance is required. Further out, I still mildly prefer to buy dips given that the daily momentum indicators remain positive (although they may be running out of steam), but with a SL placed tight under the rising trend support, now at 1.2380 -not so far away – on all positions. The topside will see sellers at 1.2470 and then again at 1.2500, and above there should we see it, at the 14 Nov high of 1.2592.  For now, a range of 1.2380/1.2480 would seem to have it covered, but keep an eye out for today’s UK Retail Sales data.

24 Hour: Neutral Medium Term:  Neutral

Economic data highlights will include:

UK Retail Sales

Meta Trader
GBPUSD: 4 Hour

gbp


USDCHF: 1.0071
Resistance Support
1.0180 Minor 1.0045 Minor
1.0117 (76.4% of 1.0327/0.9443) 0.9993 Session low
1.0092 10 Mar high 0.9945 (23.6% of 0.9548/1.0069)
1.0080 Descending trend resistance 0.9910 Minor
1.0069 Session high 0.9865 (38.2% of 0.9548/1.0057)

Bias                                                                                                                                16 Nov

US$Chf remains underpinned and has made a new trend high at 1.0069, pretty much where it currently sits.

The 4 hour/daily momentum indicators remain constructive and hint that we could head towards the descending trend resistance at 1.0080, above which could head on towards 1.0120 and then possibly on towards 1.0250, albeit that this is a long way off right now. On the downside, should we head back below parity, then 0.9945/50 will provide support ahead of 0.9900/10, which, if seen would be a buying area, with a SL placed under 0.9865.

24 Hour: Prefer to buy dips Medium Term: Mildly Bullish
Meta Trader
USDCHF: 4 Hour

chf

capture


AUDUSD: 0.7412
Resistance Support
0.7525 Minor 0.7396 Session low
0.7510 200 DMA 0.7385 (61.8% of 0.7144/0.7777)
0.7485/90 100 WMA/(23.6% of 0.7777/0.7395) 0.7370 30 June low
0.7470 Minor 0.7350 Minor
0.7450 Minor 0.7335 Weekly cloud base

Bias

The Aud has been under pressure through the session, hitting a low of 0.7395 late in the day before a bounce into the close to sit at 0.7410. With the momentum indicators aligning to point lower, further downside pressure would seem to be in store in the days ahead, where 0.7385 should see decent buyers but below which there is little support to be seen until 0.7335 and below that, at 0.7290. I think we are probably heading there and eventually lower, where distant targets would be at the May low at 0.7145.

As with yesterday, selling into short term strength seems to be the plan, where resistance will now be seen at 0.7445/50, with SL to be left above 0.7495, or ideally above the 200 DMA at 0.7510.

24 Hour: Mildly bearish -Prefer to sell rallies. Medium Term:  Bearish

Economic data highlights will include:

China House Price Index

Meta Trader
AUDUSD: Daily

aud


NZDUSD: 0.7029
Resistance Support
0.7140 14 Nov high 0.7015/12 200 DMA/Session low
0.7110 (23.6% of 0.7401/0.7035) 0.7000 Psychological
0.7090 Minor 0.6951 21 July low
0.7060 Head Shoulder Neckline 0.6933 (50% pivot of 0.7743/0.7485)
0.7040 Minor 0.6915 (50% pivot of 0.6345/0.7485)

Bias

The Kiwi is under pressure on the back of the firm US dollar and has today broken lower, to trade at 0.7012 (200 DMA) ahead of a minor bounce to 0.7030. The downside still seems to be the direction to concentrate on, and a break below 0.7000 will head towards 0.6950, below which decent bids should arrive at 0.0.6915/35. As I said before, note that in the longer term the Kiwi appears to be building a decent sized head/shoulder formation, with a neckline at 0.7060 which, now broken, would have an objective at 0.6570. On the topside, sellers will again arrive at 0.7060 and then again at 0.7100/10, which if seen (doubtful) would again be a sell area, with a SL placed above 0.7140.

Note that the Q3 Retail Sales are due shortly.

24 Hour: Mildly bearish –Prefer to sell rallies Medium Term: Bearish

Economic data highlights will include:

Q3 PPI, Retail Sales (Oct)

Meta Trader
NZDUSD: Daily

nzd