The US$ resumed its strong upside momentum on Thursday after the October Durable Goods orders jumped strongly, by 4.8% versus expectation of 0.8%, with the Ex-transport orders also much better than expected at 1.0% versus expectation of 0.1%. US stock indices made yet new all time highs, while the metals remained under pressure from the stronger dollar. With markets having already made their move, the release of the FOMC Minutes saw a relatively muted reaction, but the upshot was that most Fed voters agreed that the case for a rate hike continued to strengthen and said that such a move could well become appropriate ‘relatively soon’.
The coming session will largely be spent reassessing the FOMC Minutes outlook although being a long weekend in the US, both liquidity and interest will be diminished. Japan will have the Nikkei Flash Mfg PMI and Europe gets the Q3 GDP (exp 0.2% qq, 3.2%yy) and the German IFO Business Climate (exp 110.6)/Expectations (exp 106.3) but that is about it and it could end up being a fairly tight session, with the focus being on the “long dollar” trade.
|INDICES / COMMODITIES|
|ASX SPI: 5487|
|OIL (WTI): 47.92|
|1.0710||(23.6% of 1.1282/1.0525) /17 Nov high||1.0525/22||Session low/3 Dec 2015 low|
|1.0657||22 Nov high||1.0500||Minor|
|1.0615||100 HMA||1.0462||March 2015 low|
€/Usd was choppy in Europe, trading within a tight 1.0600/43 range. Once the US got in the dollar took off following the strong Durable Goods Orders, sending the Euro below the 1.0570/80 support, and which has since headed to a session low of 1.0525, pulling up at the December 2015 low. The 4 hour indicators have again turned to point lower, backing up the negative look of the daily charts, and below 1.0525 would open the way to the March 2013 low at 1.0461. Below there, there is very little to hold the Euro up ahead of 1.0300 and then again, not a lot until we reach parity. As before, trading from the short side and selling into near term strength, seems to be the plan, with resistance levels now seen at 1.0580, 1.0600 and at 1.0615. Selling into these areas with a SL placed above 1.0660 is the preferred strategy.
|24 Hour: Becoming Oversold -Prefer to sell rallies||
Medium Term: Bearish
Economic data highlights will include:
US Thanksgiving Day, German Q3 GDP, German IFO Business Climate/Expectations
|114.20||(61.8% of 121.05/98.94)||112.00||Minor|
|114.00||Minor||111.80||Weekly cloud base|
|113.80||29 March high||111.40||Minor|
|112.96||Session high||110.80||100 HMA|
The strong Durable Goods Orders has propelled US$Jpy strongly higher, with the pair reaching 112.96 before finding any selling interest, which has caused a minor pullback.
The daily momentum indicators still point higher and above 113.00, the next Fibo level is seen at 114.20 (61.8% of 121.05/98.94) beyond which, we could see a run towards 116.00 and even to 117.80 (76.4% of 121.05/98.94) As before, although the dollar remains strong and maintaining a core long dollar position seems desirable, the 4 hour momentum indicators are still overbought and continue to show a degree of bearish divergence so some caution is warranted as a correction could happen at any time and it could be quite a sharp one. If we do see a profit-taking dip, minor support will arrive at 112.00/111.80, at 111.30/40, with the first Fibo support not seen until 110.20, albeit that this looks unlikely to be seen again in the near term. With the Thanksgiving holiday now upon us, it may be a quieter day ahead as we take stock of the latest sharp rise.
|24 Hour: Becoming Overbought – Prefer to buy dips||
Medium Term: Bullish
Economic data highlights will include:
Nikkei Flash Mfg PMI
|1.2673||11 Nov high||1.2410||100 HMA|
|1.2511||22 Nov high/21 Nov high||1.2325||Rising trend support|
|1.2468||Session high||1.2301||18 Nov low|
Sterling remains choppy and but managed to make a stand against the dollar’s latest rally and has climbed from the session lows of 1.2360 to finish near the day’s high of 1.2468.
The 4 hour momentum indicators are flat, as are the dailies, suggesting a cautious stance is needed ahead of what looks likely to be another choppy session, but if the US$ rally continues Cable will find it hard to make too much positive headway. If wrong, above the session high could then head to the 1.2510, 22 Nov high, above which could then see Sterling head to the 14 Nov high of 1.2592, and beyond that, towards the mid November high at 1.2673. The downside will again see bids at 1.2360 and then again at various levels down to 1.2300, below which could then see another run towards 1.2245/50. Overall, a choppy sideways session would not really surprise.
|24 Hour: Neutral||
Medium Term: Neutral
|1.0255||29 Jan high||1.0100||100 HMA|
|1.0223||2 Feb high||1.0060||18 Nov low|
|1.0193||3 Feb high||1.0030||(23.6% of 0.9548/1.0091)|
Bias 16 Nov
US$Chf has performed well on Wednesday in heading up to a high of 1.1082, settling the end of the US session nearby.
The daily momentum indicators still look constructive and hint that we could head towards 1.0200 and possibly to 1.0250 at some stage. The shorter term the 4 hour charts suggest that we may need further, near term consolidation although they are also pointing towards the chance of further gains, so trading from the long side still seems to be the deal. With the weekly charts seemingly picking up steam, we could be in for something much bigger going into 2017, with 1.0325 (Nov 2105 high) now coming into view, above which could see a run towards 1.0700 and feasibly to 1.1380 ((38.2% of 1.8309/0.7080). That is a long way off, and in the meantime, on the downside, support will be seen at 1.0100/20 and then at 1.0030 and at 1.0000. Buying dips remains preferred.
|24 Hour: Prefer to buy dips||
Medium Term: Bullish
|0.7488||(38.2% of 7777/0.7310)||0.7372||Session low|
|0.7460||200 HMA||0.7361||22 Nov low|
|0.7444||Session high||0.7335||Weekly cloud base|
|0.7435||Minor||0.7310||21 Nov low|
|0.7420||Minor||0.7288/84||(76.4% of 0.7144/0.7834)/16 June low|
The Aud squeezed up to 0.7444 in late Asian trade but then reversed, moving sharply lower after the US Durable Goods Orders, in trading down to 0.7372 before finding any balance.
The 4 hour momentum indicators have run out of steam on the topside and look neutral so a cautious stance is required today, but the daily and weekly momentum indicators still point lower so further downside pressure would seem to be in store in the days ahead, where a break of minor support at 0.7360 could then head towards 0.7335 and then to 0.7300/10. Under there should find decent buyers at 0.7285, but below which there is little support to be seen until 0.7217 and below that, at 0.7200, although that will be for another day. On the topside, 0.7410/20 will provide intraday resistance ahead of the 0.7445/50 area although I don’t think we are heading back up here in the next 24 hours.
|24 Hour: Prefer to sell rallies.||
Medium Term: Mildly bearish
|0.7143/42||14 Nov high/ (38.2% of 0.7400/0.6983)||0.6993||Session low|
|0.7110||Minor||0.6983||21 Nov low|
|0.7090||Minor||0.6951||21 July low|
|0.7080/85||(23.6% of 0.7400/0.6983)/22 Nov high||0.6933||(50% pivot of 0.7743/0.7485)|
The Kiwi squeezed up to 0.7060 in late Asian trade but then reversed, moving sharply lower after the US Durable Goods Orders in trading down to 0.6994 before finding any balance and finishing the day back at just above 0.7000.
The 4 hour momentum indicators have now turned to point lower and seem to be aligning themselves with the dailies and weeklies so the downside does seem to be the focus again. A break below the session low would find bids at 0.6985 below which would open the way to 0.6950 beneath which, decent bids should arrive at 0.6935. If we break 0.6890 there is nothing to hold it up until we reach 0.6830 although this seems unlikely to be seen for a while. On the topside, resistance will be seen at 0.7040, and above there at 0.7060 and at 0.7085, which if seen would seem to be a sell area with a SL placed above 0.7100.As with yesterday, in the short term, some consolidation could be in order although I still think the downside will eventually be the direction to concentrate on.