2 Feb: FOMC Unchanged. Markets flat while waiting on tomorrows US jobs data.

By | February 2, 2017

 

The FOMC outcome has seen the Fed leave rates unchanged, the result of which has been the dollar chopping around, going nowhere fast, but currently looking a little soft, while stocks have traded a little higher but remain within their range.

Ahead of the FOMC Meeting it was a busy session for economic data. The ADP jobs figures, coming ahead of Friday’s official US jobs data/NFP, were much better than expected, coming in at 246K as opposed to the expected 165K, possibly suggesting at a firm number on Friday. Elsewhere, U.S. factory activity accelerated to more than a two-year high in January, with the ISM Manufacturing figure beating expectations although the Construction Spending figure fell by -0.2% (exp +0.2%). From the EU, the manufacturing PMIs were mixed, with the EU PMI revised up by 0.1 to 55.2 in January. Germany was revised down -0.1 to 56.4, France PMI was revised up by 0.2 to 53.6, while Italy dropped -0.2 to 53.0. The UK fell 0.2 to 55.9 in January, meeting expectations.

Much of Thursday will be spent dissecting the outcome of the FOMC Meeting, and there is not too much data from the EU or the US to get in the way of this although Mario Draghi is slated to speak around Europe lunch time. Economic data highlights will be the EU Economic Bulletin and the weekly US Jobless Claims. Ahead of that, Australia has the December Building Permits and Trade Balance, while in European trade the focus will be on the BOE Meeting, where no change to policy is anticipated, and the Quarterly Inflation Report, which might be the greater focus. It could be a rangebound session while awaiting tomorrow’s US employment data.

CURRENCIES
EURUSD: 1.0780
Res  1.0810  1.0825  1.0870
Sup  1.0730  1.0700  1.0685
USDJPY: 112.99
Res  113.60  113.80  113.95
Sup  113.00  112.60  112.40
GBPUSD: 1.2674
Res  1.2675  1.2700  1.2730
Sup  1.2610  1.2580  1.2550
USDCHF: 0.9917
Res  0.9955  0.9975  1.0000
Sup  0.9900  0.9880  0.9860
AUDUSD: 0.7591
Res  0.7595  0.7610  0.7635
Sup  0.7570  0.7550  0.7525
NZDUSD: 0.7289
Res  0.7310  0.7330  0.7350
Sup  0.7240  0.7220  0.7200
INDICES / COMMODITIES
S+P: 2274
Res  2284  2288  2300
Sup  2268  2262  2252
DJI: 19814
Res  19865  19900  20000
Sup  19710  19665  19610
ASX SPI: 5602
Res  5626  5644  5672
Sup  5580  5552  5520
GOLD: 1211
Res  1220  1230  1240
Sup  1198  1194  1180
SILVER: 17.57
Res  17.60  17.85  18.00
Sup  17.35  17.15  17.00
OIL (WTI): 53.72
Res  54.05  54.40  55.00
Sup  53.00  52.20  51.65

 

Indices/commodities
S&P Futures 2274
The FOMC did not phase stocks a great deal and they remain at close to previous levels, with the S+P currently at 2270.

A fairly neutral stance is therefore still required, although the 4 hour and daily momentum indicators may be hinting at slightly lower levels ahead and as we said before, the weekly charts are overbought and appear to be rolling over, so further downside action in the days ahead would not now really surprise. If so, below the 1 Feb  low could see a quick run to 2250, a break of which would open the way towards the 30 Dec low of 2227, and below that, eventually, to 2180. That is a long way off at this stage, and on the topside, if 2285 can be taken out, we could yet see another run to 2300. At this stage, selling rallies is slightly preferred.

24 Hour: Neutral – Prefer to sell rallies Medium Term: Neutral
Resistance Support
2310 Minor 2268 Session low
2305 Minor 2262 1 Feb  low /30 Jan low
2299 27 Jan high 2252 19 Jan low /23 Jan low
2296 Friday high 2234 (23.6% of 2028/2299)
2285 30 Jan high /Session high 2227 30 Dec low
DJI Futures 19814
Ditto S+P. The DJI also seems to be turning a bit lower although, as with the S+P, a fairly nimble stance is required. Back above 19900 (session high: 19894) could see a quick return to 20000 and another assault on the 20071 all time high, although this seems unlikely today. Selling into strength, looking for a run towards 19600 and eventually to 19450 is preferred.
24 Hour: Neutral – Prefer to sell rallies Medium Term: Neutral
Resistance Support
20100 Minor 19773 Session low
20071 Friday high /All-time high 19712 1 Feb  low
20005 Chart Gap 19607 19 Jan low
19991 30 Jan high 19500 Minor
19894 Session high 19440 (23.6% of 17417/20071)
ASX SPI 5602
As we thought yesterday, the 5550 level held and allowed a recovery to a high of 5625 before settling the day at 5600.

Further choppy trade near current levels looks likely for now, and we could see another squeeze back towards 5625 although this should provide a decent area to sell into if we see it. If wrong on this, further strength could take us to close the chart gap at 5645.

With the daily indicators continuing to point lower though, a break of 5550 could see another run towards minor support at 5535/40 and then to 5500. Look to sell rallies, I suspect. But for today, something like 5625/5570 may cover it.

24 Hour:  Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
5700 Minor 5580 Minor
5685 Minor 5555/51 Session low/1 Feb  low
5668/70 27 Jan high/19 Jan high/50% of 5789/5555 5520 Minor
5645 Chart Gap 5498 (38.2% of 5029/5789)
5625 Session high 5462 16 Dec low
GOLD 1211
Gold has had another rangebound session (1198/1213) leaving the outlook unchanged.

The overall recent range between 1180/1220 continues, and a cautious stance is required as it seems that the 100 WMA is again going to continue to act as a pivot. Strong resistance exists at 1220, a break of which would then open up 1230 and 1240.

On the downside, a sustained break back below 1200, will find support at the 1 Feb low of 1194 and then at Friday’s 1180 low. Look for the 1200 area to act as a pivot, with the mild preference to trading from the long side, but wary of the strong resistance at 1220 which may again cap it.

24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
1250 Minor 1200/1198 Pivot/200 WMA /Session low
1238/41 100 DMA /11 Nov high 1193 1 Feb  low
1230/33 50% pivot of 1337/1222/ 16 Nov high 1188 30 Jan low
1220 24 Jan high /38.2% of 1375/1122 1180/82 Friday low/(38.2% of 1122/1218)
1213 1 Feb  high/Session high 1177 11 Jan low
SILVER 17.57
Silver has had a rangebound session (17.35/63), heading to its highs following the FOMC decision, but leaving the outlook unchanged

The 4 hour/daily momentum indicators seem aligned to point to higher levels still, and beyond current resistance, 17.85 may come under pressure, above which there is only minor resistance until 18.25. On the downside, back below 17.30, support will arrive at around 17.15 and at 16.85 although this seems unlikely to be bothered today. From the look of the charts, buying dips seems to be the plan with SL probably now placed under 17.10.

24 Hour: Mildly bullish Medium Term:  Neutral
Resistance Support
18.20 (76.4% of 18.98/15.63) 17.35 Session low
18.00 Minor 17.15 (23.6% of 15.63/17.61)
17.85 200 DMA 17.00 Minor
17.70 (61.8% of 18.98/15.63) 16.85 (38.2% of 15.63/17.61)
17.61 1 Feb  high/Session high 16.63/70 Friday low /100 WMA
OIL (WTI) 53.72
WTI has headed higher at the end of the session, following the FOMC decision, shrugging off the news that the crude glut may persist, despite signs that Russia and OPEC producers are delivering on promised supply reductions. U.S. crude stockpiles for the week rose by 6.47 million barrels, nearly double the expected increase, but after a dip to 52.62 WTI is now near the highs of 53.89, leaving the overall outlook unchanged.

As before, the range within the wider 50.70/54.00 area looks set to continue for some time and in the near term, 52.00/54.00 once again seems to have it covered, although the topside is currently under some pressure..  On the downside, although looking somewhat distant and increasingly unlikely, we could yet be in for a re-test of the H/S neckline at 50.70 (targeting 82.00), which should be strong support if we see it, but back under 50.00 could then open the way to 49.00 and possibly towards the 200 DMA at 47.00. On the topside, sellers will again be seen at the Friday high of 54.00 and then at the 6 Jan high at 54.29. Although unlikely today, a topside break of this area would then look to target the 55.21 January high. As before, keep SL on structural long positions, either on a break below 50.70 or at around 49.20. Shorter term stops should be placed under the minor rising trend support at 52.00. As for today, 52.00/54.00 may again cover it again while waiting on tomorrow’s NFP reading. Prefer to buy dips although the dailies are flat, so caution is warranted.

24 Hour: Neutral Medium Term: Cautiously long
Resistance Support
55.21 3 Jan high 52.62 Session low
55.00 Minor 52.22 1 Feb  low
54.29 6 Jan high 52.11/19 20 Jan Low /23 Jan low
54.03/05 27 Jan high /Friday high 51.78 19 Jan low
53.73 Session high 50.70 Reverse Head/Shoulders Neckline

EURUSD: 1.0780
EurUsd is trading at close to yesterday’s levels following the FOMC outcome, leaving the overall outlook unchanged.

A cautious stance is therefore required as we now await tomorrow’s NFP reading although the daily momentum indicators do hint that the risk is probably leaning towards further gains for the Euro. If so, above the 1.0811 trend high and the Fibo resistance at 1.0825, there is not too much to stop it heading on to 1.0900 and possibly higher, with the next Fibo level being at around 1.0940.Support now lies at the 1.0730 session low, ahead of 1.0700, with the 1 Feb low being seen at 1.0684. The short term momentum indicators continue to unwind their previous overbought condition, so the upside may be limited to 1.0810/25 for now, but buying dips into weakness would again seem to be the plan, with stops kept tight below 1.0730 or below 1.0685. It could remain rangebound today, while waiting on tomorrow’s jobs data.

24 Hour: Prefer to buy dips Medium Term: Mildly bullish
Resistance Support
1.0900 Minor 1.0730 Session low
1.0873 8 Dec high 1.0700 100 HMA/200 HMA
1.0855 Weekly Kijun 1.0684 1 Feb  low
1.0825 38.2% of 1.1616/1.0340 /Daily cloud top 1.0650 Rising trend support
1.0811/06 1 Feb  high /Session high 1.0605 38.2% of 1.0340/1.0774

Economic data highlights will include:

T: EU Economic Bulletin, PPI, US Jobless Claims

Meta Trader
EURUSD: 4 Hour


USDJPY: 112.99
US$Jpy briefly spiked to the day’s high of 113.93 after the strong ADP jobs data but that didn’t last long, and it was quickly back at 112.80 after the FOMC decision and now hovers at close to the 113.00 pivot.

It looks set to remain volatile but the momentum indicators do seem to be aligning lower, so selling into strength does again seem to be the plan. 113.50/114.00 would seem to cover the topside today, while the downside will find decent bids around 112.50/60, below which 112.00 will be strong support, if seen. Under there, previous minor lows lie at 111.60/30 but there is little major support seen until 111.00/10. As for today, it may be one of again trading either side of 113.00 as we wait on tomorrow’s US jobs data.

24 Hour: Prefer to sell rallies Medium Term: Neutral
Resistance Support
114.60 (38.2% of 118.66/112.07) 112.63 Session low
114.25 Minor 112.40 Minor
113.95 Session high 112.07 1 Feb  low
113.80 200 HMA 111.95 (38.2% of 101.18/118.66)
113.60 (23.6% of 118.66/112.07) 111.61 29 Nov low

Economic data highlights will include:

Consumer Confidence Index

Meta Traderr
USDJPY: 4 Hour


GBPUSD: 1.2670
Cable had another good day, heading up to a high of 1.2679 following the FOMC decision. The UK government voted to move towards triggering the Article 50 legislation to next stage, and was released at roughly the same time but had little overall effect, with Cable currently sitting just below the session highs. Looking ahead, Thursday will be important, with the BOE Meeting expected to keep rates on hold, while the QIR will need to address the above-target inflation rate.

Today’s move has met the target at the trend high of 1.2673, and further strength could now open the way to 1.2725 and eventually to 1.2800. On the downside, minor support will be seen at 1.2600 and at around 1.2550. If seen, buying into weakness is preferred, as I suspect 1.2800 eventually lies ahead.  The momentum indicators are generally aligned to point higher.

24 Hour: Mildly bullish Medium Term: Mildly bullish
Resistance Support
1.2818 (61.8% of 1.3444/1.1821) 1.2605 Minor
1.2774 6 Dec high 1.2585 Minor
1.2727 13 Dec high 1.2550 100 HMA
1.2700 Minor 1.2430 200 HMA
1.2673/75 27 Jan high /Session high 1.2515 23.6% of 1.1981/1.2675

Economic data highlights will include:

BOE Interest Rate Decision/APP/Quarterly Inflation Report/MPC Vote/Minutes

Meta Trader
GBPUSD: 4 Hour


USDCHF: 0.9917
US$Chf recovered to a high of 0.9956 today, and while the short term momentum indicators remain supportive the dailies still point to a return to the 0.9850/60 level at some stage, below which could open the way to 0.9800 and even towards 0.9785.  The topside will see sellers at 0.9955, beyond which, 0.9975 will prove tough to break, but above which would allow a move, potentially, back to parity – although this looks unlikely. As before, selling rallies remains preferred, with a SL now placed above 0.9980.
24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
1.0045 30 Jan high/Descending trend resistance 0.9900 Minor
1.0025 Minor 0.9865/60 200 DMA/1 Feb  low
1.0000 Psychological 0.9850 61.8% of 0.9549/1.1343
0.9975 (23.6% of 1.0327/0.9860) /200 HMA 0.9825 Minor
0.9956 Session high 0.9785 (76.4% of 0.9549/1.1343)

Economic data highlights will include:

Retail Sales

Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7585
The Aud has had another choppy session (0.7550/96), leaving the outlook unchanged.

Currently sitting in the middle of the day’s range, a similar day may lie ahead in the absence of any major data to drive it, although the Building Permits and the Trade Balance could provide some volatility if too far from expectations. A break of 0.7595 and of 0.7610 resistances could see a quick run to 0.7535 and possibly on to 0.7550, although this seems unlikely. On the downside, support will be seen at the recent lows, lined up between 0.7510/50, below which could see a run towards strong support at 0.7490. Be nimble, but slightly favour the downside unless we can take out 0.7600 on a sustained basis.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7685 Minor 0.7550/41 Session low/1 Feb  low
0.7650 Minor 0.7526 30 Jan low
0.7635 76.4% of 0.7777/0.7160 0.7511 Friday low
0.7605/08 1 Feb  high /24 Jan high 0.7503 23.6% of 0.7160/0.7608
0.7590/96 Descending trend resistance /Session high 0.7492/90 19 Jan low/100 DMA/200 DMA

Economic data highlights will include:

Building Permits, Trade Balance (Dec)

Meta Trader
AUDUSD: 4 Hour


NZDUSD: 0.7289
Yesterday’s poor NZ Jobs data ensured that the Kiwi was capped at the 0.7350 high, and it is now back at 0.7280 after  having traded down to 0.7240 following the strong ADP jobs data.

In the absence of any new data, expect a choppy day ahead although the 4 hour momentum indicators are pointing lower and the dailies may be topping out. If so, we may see another run to 0.7240 and then on towards 0.7200 although I don’t think we get there today. On the topside, resistance will be seen at 0.7300/10 and again at 0.7350. Look for a rangebound session while waiting for tomorrow’s jobs data.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7400 20 Aug high 0.7241 Session low
0.7380 Minor 0.7232 Friday low/(23.6% of 0.6857/0.7350)
0.7364 9 Nov high 0.7220 26 Jan low
0.7349 1 Feb  high 0.7200 Minor
0.7310 Session high 0.7175 23 Jan low
Meta Trader
NZDUSD: 4 Hour