3 Feb: Mixed markets on Thursday. Aud$ up, Cable down. Now waiting on the US Jobs data.

By | February 3, 2017
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 Currency markets have seen some sharp moves during the latest session, led by the Aud$ which headed sharply higher after the latest, record trade surplus The Aud has traded to two month highs. Cable has headed the other way, falling sharply  after the BOE left rates unchanged, despite the latest sharp increase to the forecast for UK economic growth in 2017, up from 1.4% to 2.0%, although Mark Carney appears to be in no rush to raise interest rates, warning of “twists and turns” on the road out of the EU. Elsewhere, the dollar remains mixed, recovering from early lows, stock markets are rangebound, while commodities generally remain firm.

Friday will be all about the US jobs data and NFP, and following this week’s very strong ADP outcome we might expect a strong result, putting the market on alert for another rate hike from the Fed, sooner rather than later although Janet Yellen did not hint at any such possibility on Wednesday. We shall see. Elsewhere, the Australian Services PMI, the Caixin China Manufacturing PMIs and the BOJ Minutes will be the main events in Asia. From the EU, the Services/Composite PMIs will be released ahead of the EU Retail Sales. No one will notice though, and it could be a long day waiting on the US employment numbers (exp 4.7%, 175K, AHE; +0.2%.

CURRENCIES
EURUSD: 1.0764
Res  1.0785  1.0810  1.0830
Sup  1.0730  1.0700  1.0685
USDJPY: 112.75
Res  112.95  113.35  113.65
Sup  112.40  112.05  111.70
GBPUSD: 1.2537
Res  1.2565  1.2600  1.2640
Sup  1.2520  1.2500  1.2460
USDCHF: 0.9923
Res  0.9955  0.9975  1.0000
Sup  0.9900  0.9880  0.9860
AUDUSD: 0.7662
Res  0.7680  0.7700  0.7735
Sup  0.7635  0.7610  0.7570
NZDUSD: 0.7289
Res  0.7310  0.7335  0.7350
Sup  0.7265  0.7240  0.7220
INDICES / COMMODITIES
S+P: 2276
Res  2284  2288  2300
Sup  2268  2262  2252
DJI: 19809
Res  19865  19900  20000
Sup  19710  19665  19610
ASX SPI: 5603
Res  5626  5644  5672
Sup  5576  5552  5520
GOLD: 1216
Res  1224  1230  1240
Sup  1210  1200  1190
SILVER: 17.48
Res  17.70  17.85  18.00
Sup  17.35  17.15  17.00
OIL (WTI): 53.69
Res  54.30  55.00  55.20
Sup  53.00  52.20  51.65

 

Indices/commodities
S&P Futures 2276
U.S. stockmarkets struggled for momentum today, as concerns about the new administration’s diplomatic rifts with key allies and trade partners weighed on market sentiment. Wait for the NFP to look for any directional move. Despite the rangebound session, the S+P is closing towards the day’s highs.

This leaves the outlook unchanged and a fairly neutral stance is still required, with little hint of anything directional from the near term indicators, with the US jobs data to provide the next directional move. As we said before though, the weekly charts are overbought and appear to be rolling over, so further downside action in the days ahead would not really surprise. If so, below 2260 low could see a quick run to 2250, a break of which would open the way towards 2235 and on to 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 2264 Session low
2305 Minor 2262 1 Feb  low /30 Jan low
2299 27 Jan high 2248 12 Jan low
2296 Friday high 2235 (23.6% of 2028/2299)
2285 30 Jan high /2 Feb high 2227 30 Dec low
DJI Futures 19809
Ditto S+P. The DJI has also had a sideways session and, as with the S+P, a fairly nimble stance is required. Back above 19900 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 mildly preferred. Wait for the NFP to find out.
24 Hour: Neutral – Prefer to sell rallies Medium Term: Neutral
Resistance Support
20100 Minor 19734 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 2 Feb high 19440 (23.6% of 17417/20071)
ASX SPI 5603
The ASX has had a choppy but sideways session on Thursday, ending at 5600, pretty much where it started and leaving the outlook unchanged.

Further choppy trade near current levels looks likely again, and we could see yet 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 the session low at 5575 could take us back to 5550, below which could see another run towards minor support at 5535/40 and then to 5500. Look to sell rallies, I suspect but once again, for today, something like 5625/5570 may cover it.

24 Hour:  Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
5700 Minor 5575 Session low
5685 Minor 5555/51 2 Feb 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)
5625/23 2 Feb high /Session high 5462 16 Dec low
GOLD 1216
Gold broke above the 1220 resistance, reaching 1125 on Thursday, but was unable to carry on and is now back at 1215, leaving the overall outlook unchanged.

The overall recent range seems t have moved slightly higher but leaves the outlook unchanged and a cautious stance is required as it seems that the 100 WMA at around 1200 will continue to act as a pivot. If we do head above 1225, this would then open up 1230 and 1240, and I doubt we head above this area for a while, so selling into strength is preferred.

On the downside, a sustained break back below the good support seen at around 1200 will find support at the 1 Feb low of 1194 and then at last Friday’s 1180 low. Look for the 1200 area to act as a pivot, with the mild preference to trading from the long side.

24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
1255 (61.8% of 1337/1222) 1200/1198 Pivot/200 WMA /2 Feb low
1248 (50% pivot of 1375/1222) 1193 1 Feb  low
1238/41 11 Nov high 1188 30 Jan low
1230/33 50% pivot of 1337/1222/ 16 Nov high 1180/82 Friday low/(38.2% of 1122/1218)
1225 Session high 1177 11 Jan low
SILVER 17.48
Silver made it up to 17.73 today before a quick reverse, to finish just above session lows of 17.41.

The 4 hour momentum indicators now look a little heavy although the dailies still point to higher levels, and if the daily peak can be overcome then 17.85 may come under pressure, above which there is only minor resistance until 18.25. On the downside, back below 17.25/35 could see a return to levels sub 17.00 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 17.20.

24 Hour: Mildly bullish Medium Term:  Neutral
Resistance Support
18.20 (76.4% of 18.98/15.63) 17.35 2 Feb low
18.00 Minor 17.25 (23.6% of 15.63/17.73)
17.85 200 DMA 16.93 (38.2% of 15.63/17.73)
17.70/73 (61.8% of 18.98/15.63)/Session high 16.63/70 Friday low /100 WMA
17.60 Minor 16.50 Minor
OIL (WTI) 53.69
WTI remained firm on Thursday, reaching its highest level in about a month as traders noted that global supply is beginning to bite in the wake of the agreement by major OPEC/Non-OPEC producers to cut output.

Although it reached a high of 54.31 today, it is now back at 53.50 and therefore remains pretty much within the range of recent sessions, with the momentum indicators suggesting that this could continue in the sessions ahead.

As before, the broad range, roughly within the 50.70/54.50 area looks set to continue and in the near term, 52.50/54.50 once again seems to have it covered. 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 Thursday high of 54.31 and although unlikely today, a topside break 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 raised to 52.50. As for today, 52.50/54.50 may again cover it again while waiting on the NFP reading. Prefer to buy dips although the dailies are flat, so caution is warranted.

24 Hour: Neutral Medium Term: Cautiously long
Resistance Support
56.85 (38.2% of 107.65/26.03) 53.33 Session low
56.00 Minor 52.62 2 Feb low
55.21 3 Jan high 52.11/19 20 Jan Low /23 Jan low
55.00 Minor 51.78 19 Jan low
54.31 6 Jan high 50.70 Reverse Head/Shoulders Neckline

EURUSD: 1.0764
Having tested the resistance at 1.0825 (high:1.0829) in early US trade, the Euro is now back at 1.0760, unchanged from yesterday, as short dollar positions are squared up ahead of the US jobs data.

A cautious stance is required as we now await the NFP reading although the daily momentum indicators still mildly hint that the risk is probably leaning towards further gains for the Euro. If so, once back above 1.0800 and the 1.0829 session high, 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. Below today’s 1.0755 low, support lies at the 1.0730, 2 Feb 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, with the hourlies showing some bearish divergence, so the upside may again be limited, but buying dips into weakness would again seem to be the plan, with stops kept tight below 1.0730 or below 1.0685. On a potentially more negative note, be aware that the daily candlesticks show a gravestone doji today, suggesting that a medium term top could be in place. As for today, it could remain fairly tight while waiting on the jobs data. Be square before the numbers and then go with the flow.

24 Hour: Prefer to sell rallies Medium Term: Neutral
Resistance Support
1.0900 Minor 1.0761 Session low
1.0873 8 Dec high 1.0730 2 Feb low
1.0855 Weekly Kijun 1.0700 100 HMA/200 HMA
1.0825/28 38.2% of 1.1616/1.0340 /Daily cloud top / 2 Feb high 1.0684 1 Feb  low
1.0811/06 1 Feb  high /2 Feb high 1.0670 Rising trend support

Economic data highlights will include:

EU Services/Composite PMIs, Retail Sales, US Employment Report/NFP/Average Hourly Earnings, Services/Composite PMIs, Fed’s Lacker Speech, ISM Non-Mfg, Factory Orders, Baker Hughes Oil Rig Count

Meta Trader
EURUSD: 4 Hour


USDJPY: 112.75
US$Jpy briefly headed to a new trend low on Thursday, reaching 112.05 when the US$ was under general pressure, ahead of a bounce that sees it currently sit at 112.60.

The pair looks set to remain volatile but the daily momentum indicators do seem to be heading lower, so selling into strength does again seem to be the plan. 113.00/113.50 would seem to cover the topside again today, while the downside will again find decent support at 112.00. 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 a tight range as we wait on the US jobs data. Be square before then and then go with the flow.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
113.95 2 Feb high 112.40 Minor
113.80 200 HMA 112.05 Session high
113.60/65 (23.6% of 118.66/112.07) /200 HMA 111.95 (38.2% of 101.18/118.66)
113.35 Minor 111.61 29 Nov low
112.95 Minor 111.35 28 Nov low

Economic data highlights will include:

BOJ Minutes

Meta Trader
USDJPY: 4 Hour


GBPUSD: 1.2537
Having reached a 2 month high of 1.2705 on Thursday, Cable has now collapsed to finish the US session at 1.2525 following the suggestion from the BOE that rates are not likely to move any time soon despite a strong upgrade in the UK growth outlook, from 1.4% to 2.0% for 2017.

Today’s move has taken some of the steam out of the bullish scenario although the uptrend remains intact, as long as we stay above 1.2500, albeit that this is currently looking a little precarious and the US jobs data will likely be the arbiter. If we break back below 1.2500, then look for some choppy trade ahead, with not too much to hold it up ahead of 1.2460 (100 DMA)and Monday’s low of 1.2411.

A return to the topside will find plenty of offers at 1.2600 and then at various minor levels to the session high of 1.2705 although that looks unlikely again for a while. If wrong we could eventually continue to 1.2800, which I suspect eventually lies ahead although it could take a while.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
1.2727 13 Dec high 1.2518 Session low
1.2705 Session high 1.2500 Rising trend support
1.2640 Minor 1.2460 100 DMA
1.2600 Minor 1.2430 (38.2% of 1.1980/1.2705)
1.2560/70 200 HMA/100 HMA 1.2411 31 Jan low

.

Meta Trader
GBPUSD: 4 Hour


USDCHF: 0.9923
US$Chf is back towards session highs after having earlier dipped to 0.9870, since when we have seen a slow squeeze higher.

The short term momentum indicators now look supportive, suggesting a further topside squeeze, which would see sellers at 0.9955 and 0.9975, beyond which would allow a move, potentially, back to parity. The dailies still point slightly lower though, so a return to the 0.9850/60 is possible, below which could open the way to 0.9800 and even towards 0.9785.  For now a fairly nimble stance is required.

24 Hour: Neutral Medium Term: Prefer to sell rallies
Resistance Support
1.0045 30 Jan high/Descending trend resistance 0.9869 Session low
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) 0.9825 Minor
0.9956 2 Feb high 0.9785 (76.4% of 0.9549/1.1343)

Economic data highlights will include:

Retail Sales.

Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7662
The strong Trade Balance yesterday has lit a fuse under the Aud which has taken it to 0.7695 before settling the day at 0.7660.

Having made the sustained break of the descending trend resistance at around 0.7600, the momentum indicators now look as though we could head towards 0.7700 and possibly on to the November high of 0.7777 although that would seem to depend on general US$ weakness in the days ahead. A soft NFP later today could be a catalyst. We shall see. Ahead of that, look out for the AIG Services Index and the Caixin China Manufacturing PMI.

0.7695/0.7700 seems likely to cap it ahead of the US data, which the downside will now find support at 0.7635 and again at 0.7600/10.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7834 21 April ’16 high 0.7635 Minor
0.7800 Minor 0.7610 Minor
0.7777 8 Nov high 0.7570 200 HMA/(23.6% of 0.7160/0.7695)
0.7735 Minor 0.7550/41 2 Feb low/1 Feb  low
0.7695 Session high 0.7526 30 Jan low

Economic data highlights will include:

AIG Services Index, Caixin China Manufacturing PMI.

Meta Trader
AUDUSD: 4 Hour


NZDUSD: 0.7289
The Kiwi has remained below the previous day’s trend high of 0.7349, and although it reached 0.7336 today it is finishing in heavy fashion at 0.7285, but well above the early lows of 0.7242.

In the absence of any new data, expect another choppy day ahead although the 4 hour momentum indicators are suggesting some mild bearish divergence 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 0.7335/50. Look for a rangebound session while waiting for the US jobs data, with the Chinese Caixin Manufacturing numbers possibly creating some waves.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7400 20 Aug high 0.7266 200 HMA
0.7380 Minor 0.7241/42 2 Feb low/Session low
0.7364 9 Nov high 0.7232 Friday low/(23.6% of 0.6857/0.7350)
0.7349 1 Feb  high 0.7220 26 Jan low
0.7337 Session high 0.7175 23 Jan low

Economic data highlights will include:

ANZ Commodity Price Index.

Meta Trader
NZDUSD: 4 Hour