3 Nov: Fed on hold, setting the stage for a December hike? BOE in focus today.

By | November 2, 2016

The dollar remains under pressure but relatively calm, while stocks are heavy following the FOMC decision to leave rates unchanged, with traders traders seemingly more concerned about next week’s election result. The FOMC statement gave little away as to whether we might yet see a hike in December, noting that while “ the labor market, economic activity and household spending have all grown moderately, business fixed investment has remained soft. Inflation has increased somewhat but is still below long term objectives”. All up it seems to leave the option of a rate hike completely open although the market is still pricing in an 80% chance of the Fed pulling the trigger.

Having got the FOMC Meeting out of the way, the market will now concentrate on tomorrow’s US Jobs data and then on next Tuesday’s election result. In the mean time today starts out with the Australian Trade Balance and the Caixin China Services PMI. Then, from the EU comes the Unemployment and Economic Bulletin while from the UK we get the BOE Meeting/Statement/Minutes/Vote Count/APP Facility, where no change is expected this month. Later on, from the US, the Factory Orders, Markit Services/Composite and ISM Non-Manufacturing PMIs are all due, although much of the session will be spent disseminating the FOMC decision while looking ahead to tomorrow’s, all important NFP result, which should provide an added hint as to whether, or not, we should expect a December rate hike from the Fed.

CURRENCIES
EURUSD: 1.1095
Res  1.1120  1.1150  1.1175
Sup  1.1060  1.1040  1.1020
USDJPY: 103.33
Res  103.60  103.95  104.25
Sup  103.00  102.80  102.50
GBPUSD: 1.2304
Res  1.2350  1.2365  1.2400
Sup  1.2250  1.2200  1.2175
USDCHF: 0.9731
Res  0.9765  0.9800  0.9830
Sup  0.9695  0.9670  0.9650
AUDUSD: 0.7660
Res  0.7675  0.7690  0.7710
Sup  0.7640  0.7620  0.7600
NZDUSD: 0.7286
Res  0.7310  0.7330  0.7365
Sup  0.7265  0.7240  0.7210
INDICES / COMMODITIES
S+P: 2090
Res  2106  2120  2130
Sup  2086  2080  2066
DJI: 17865
Res  17955  18000  18050
Sup  17840  17790  17710
ASX SPI: 5164
Res  5180  5200  5226
Sup  5150  5130  5110
GOLD: 1296
Res  1308  1314  1320
Sup  1290  1280  1274
SILVER: 18.45
Res  18.70  18.90  19.10
Sup  18.35  18.10  17.90
OIL (WTI): 45.48
Res  46.15  46.50  47.30
Sup  45.00  44.30  43.00

 

Indices/commodities
S&P Futures 2090
Resistance Support
2144/49 Minor descending trend resistance/25 Oct high 2087 Session low
2139 100 DMA 2080 200 DMA
2130 31 Oct high /200 HMA 2066 6 July low
2115 (23.6% of 2191/2090) 2056 30 June low/100 DMA/100WMA
2106 Minor 2050 Minor

Bias                                                                                                           

US stocks remain heavy but above their lows following the FOMC announcement, and not too far removed from the levels see this time yesterday.

 The S+P has been down to 2087, and a break of this could see a run towards the 200 DMA at around 2080 and then towards 2050/60, although the 4 hour momentum indicators are now becoming oversold so I suspect we may be in for a choppy session while waiting on tomorrow’s NFP reading.Resistance will be found at 2105/10 and again at 2120, which if seen would appear to be a decent area to sell into, with a SL placed above the 100 DMA, which has capped it recently.

24 Hour: Neutral

Medium: Prefer to sell rallies   

DJI Futures 17865
Resistance Support
18171 28 Oct high 17840 Session low
18145/50 31 Oct high /100 DMA 17790 (50% of 16957/18622)/(23.6% of 15163/18622)
18110 (50% of 18364/17854) 17710 200 DMA
18050 (38.2% of 18364/17854) 17617 6 July low
17958/75 Session high/(23.6% of 18364/17854) 17590 (61.8% of 16957/18622)

Bias

Ditto S+P. The Dow traded down to 17840, before a bounce to close at 17885 following the FOMC decision. While the dailies remain fairly flat, they do seem t be picking up some downside momentum, and with the 4 hourlies pointing lower, I suspect that selling into strength towards 17950/18000 may again be the plan, with a SL now placed above 18050.Below the 17840 low, we could then see a move towards 17800, and possibly 17700 although much will depend on the election headlines and then on the NFP.
24 Hour: Neutral Medium Term: Prefer to sell rallies
ASX SPI 5164
Resistance Support
5245 200 DMA 5162 Session low
5238 (23.6% of 5288/5162) 5152 13 Sept low
5225 (23.6% of 5435/5162)/Session high 5110 (50% pivot of 4643/5568)
5200 Minor 5100 6 July low
5180 Minor 5071 29 June low

Bias            

The ASX reached the 5170 target and currently sits nearby. The momentum indicators still point lower so staying short is preferred although the 4 hour charts are becoming oversold so we could see a bit of a bounce towards 5200, which if seen should present another sell opportunity.On the topside, back above current levels will find offers at 5180/5200, and then again at 5220/30 although this looks over the horizon for now.  Structurally, I still prefer to be short and to sell into strength, looking for an eventual run below 5150 level for a look at 5110/00.

24 Hour: Prefer to sell rallies

Medium Term: Mildly bearish

GOLD 1296
Resistance Support
1337 Descending trend resistance 1295 Minor
1324 (61.8% of 1375/1240) 1287 Session low
1319 (76.4% of 1343/1240) 1274 200 DMA
1315 100 DMA 1271 31 Oct low
1308 Session high 1262 25 Oct low/4 Oct low /28 Oct low

Bias                              

Gold headed higher again on Wednesday, taking advantage of the soft dollar, in reaching 1308 although it has since retreated back below 1300. The dailies remain positive, so further gains could see a run back to the highs and on the decent resistance at 1315/20 although the short term momentum indicators suggest that this is unlikely today, with a chance of a move back towards 1285/90. If seen, with the dailies looking positive, buying the dips with a SL placed below the 200 DMA could be a plan.

24 Hour: Prefer to buy dips

Medium Term: Neutral

SILVER 18.45
Resistance Support
19.55 (61.8% of 21.13/17.10) /Descending trend resistance 18.35 (23.6% of 17.10/18.73)/Session low
19.35 (76.4% of 20.06/17.10) 18.11 (38.2% of 17.10/18.73)
19.10 (50% pivot of 21.13/17.10) 17.92 (50% pivot of 17.10/18.73)
18.92/95 (61.8% of 20.06/17.10)/100 DMA 17.75 (38.2% of 17.10/18.73)
18.73 Session high 17.55 28 Oct low

Bias                                                                                                 

Silver reached 18.73 today but has since reversed a little lower and the short term momentum indicators suggest we could see a test of 18.35 support and possibly of 18.00/10. The dailies still look constructive though, so buying dips is preferred for the time being, looking for an eventual run back towards the session highs and then possibly on towards the 100 DMA at 18.95.

24 Hour: Prefer to buy dips

Medium Term: Neutral

OIL (WTI) 45.48
Resistance Support
48.60 (50% pivot of 52.19/44.95) 45.25/15 (76.4% of 42.98/52.19)/Daily cloud top
47.75 (38.2% of 52.19/44.95) /100 HMA 44.95 Session low
46.65 (23.6% of 52.19/44.95) 44.33 28 Sept low
46.44 Session high/100 DMA/100 WMA 44.10 (61.8% of 39.12/52.19)
46.15 Minor 42.98 1 Sept low

Bias

WTI fell to a low of 44.95 after the EIA reported that crude supplies in the U.S. rose by the most since at least 1984 last week. Its weekly report showed that oil inventories rose by 14.4 million barrels in the week ended October 28, against an expected gain of 1 million barrels, while the American Petroleum Institute late Tuesday reported a supply increase of 9.3 million barrels.

With the 4 hour/daily momentum indicators both still pointing lower, a break of the session low could see a further acceleration to the downside, where the next decent target is at around 44.10 and then at around 43.00. On the topside, the session high has been 46.44, where the 100 WMA/DMAs have capped it and thus should remain strong resistance. As with yesterday, selling rallies seems the name of the game, where, above 46.50, further offers should arrive at 46.65 and again towards 47.75, albeit unlikely to be seen today. Note that WTI has today broken below the 9 month rising trend support which could be an early warning of further losses to come.

24 Hour: Prefer to sell rallies

Medium Term: Mildly bearish


EURUSD: 1.1095
Resistance Support
1.1212 (76.4% of 1.1325/1.0850) 1.1058 (23.6% of 1.0850/1.1222)
1.1175 200 DMA 1.1018 (38.2% of 1.0850/1. 1222)
1.1150 100 WMA/Weekly cloud top/Weekly Kijun 1.0986 (50% pivot of 1.0850/1. 1222)
1.1135/40 100 DMA /(61.8% of 1.1325/1.0850) 1.0953 (61.8% of 1.0850/1. 1222)
1.1115/22 Weekly cloud base/Session high 1.0915 (76.4% of 1.0850/1. 1222)

Bias

The  FOMC did as expected, leaving rates unchanged and not having any huge impact on currency markets, with the US$ already under pressure ahead of the announcement, which largely remains the case,

EurUsd reached the 1.1115 target (high 1.1122), where the weekly cloud base has prevented further gains, and is currently trading a little lower. With the short term momentum indicators having now become overbought, and apparently on the point of turning lower, the upside momentum may slow down and the immediate risk seems to be to the downside, where buyers should be seen at 1.1050 and at 1.1020.  The dailies though remain positive and the longer term momentum indicators still favour an eventual test of the session high, above which would run into sellers in the 1.1140/50 area and then increasingly so as we approach 1.1200.The EU Unemployment will be in focus today, and then later on the US data may provide some volatility, but it could end up being choppy and rangebound ahead of tomorrow’s US Jobs data.

24 Hour:  Mildly bearish

Medium Term: Prefer to buy dips

Economic data highlights will include:

EU Economic Bulletin, EU Unemployment, US Jobless Claims, Markit Composite PMI, ISM Non- Mfg PMI, Factory Orders

Meta Trader
EURUSD: 4 Hour

Nzd


USDJPY: 103.33
Resistance Support
104.57 (61.8% of 105.52/103.01) 103.01 Minor
104.40 200 HMA 102.80 (50% pivot of 100.05/105.52) /Daily Kijun /100 DMA
104.24 (50% of 105.52/103.01) 102.50 Minor
103.95 (38.2% of 105.52/103.01) 102.15 (61.8% of 100.05/105.52)
103.60 (23.6% of 105.52/103.01) 101.80 Daily cloud base

Bias

Risk aversion & the soft US data took US$Jpy lower today, breaking below the daily cloud top and invalidating our “buy the dips” scenario. We have so far been down to 103.01 before a minor bounce to current levels which now sees the hourly charts suggesting a further short term recovery, and we could see 103.60/104.00. However with the 4 hour/daily momentum indicators pointing lower, selling rallies seems to be the plan looking for a test of the decent support at 102.80, a break of which would open the way towards 102.00/15.With the momentum indicators currently aligning to point lower, selling intraday rallies seems the plan for the next 24 hours.Back above 104.00 would invalidate the immediate downside theory and would entail some consolidation ahead of tomorrow’s NFP reading.

24 Hour: Prefer to sell rallies

Medium Term: Mildly bearish

Meta Trader
USDJPY: 4 Hour

Yen


GBPUSD: 1.2304
Resistance Support
1.2470 7 Oct high 1.2215/19 200 HMA /Session low
1.2440 (38.2% of 1.3444/1.1821) 1.2175 Minor
1.2400 Minor 1.2143 31 Oct low
1.2365 Descending trend resistance 1.2113 28 Oct low
1.2352 Session high 1.2088/81 11 Oct low/25 Oct low

Bias                                                                                     

Cable rallied to a high of 1.2356 as fears of a Trump victory weighed on the dollar, although it is now back below 1.2300, while we await the outcome of the big day ahead which will include the BOE Meeting/Statement /Minutes/Vote Count/APP Facility and some words of wisdom from BOE Governor, Mark Carney in his Quarterly Inflation Report.  No change is expected from the BOE and it will be Carney’s outlook that provides the volatility.

Technically as before, the 4 hour charts are flat but possibly pointing a little higher, and further choppy trade near 1.2300 may be in order, particularly given that there are some large 1.2300 option expiries due today.  Once again, there are better pairs to trade but the dailies still look mildly constructive and if we can make a sustained run above 1.2300, we could see a run towards 1.2430/75.  Buying dips is mildly preferred but there are better trades out there.

24 Hour: Neutral

Medium Term: Prefer to buy dips.

Economic data highlights will include:

UK Markit Services PMIs, BOE Meeting/Statement/Minutes/Vote Count/APP Facility, BOE Governor, Mark Carney Speech, Quarterly Inflation Report  –Inflation Outlook

Meta Trader
GBPUSD: 4 Hour

Gbp


USDCHF: 0.9731
Resistance Support
0.9864 (50% pivot of 0.9999/0.9728) 0.9695 Session low
0.9832 (38.2% of 0.9999/0.9728) 0.9670 Minor
0.9790 (23.6% of 0.9999/0.9728) 0.9650 (76.4% of 9538/0.9999)
0.9780 200 DMA 0.9630 26 Aug low
0.9765 100 DMA 0.9600 Minor

Bias                                                                             

US$Chf remains heavy but has made a mild bounce off the low of 0.9695.

With the momentum indicators looking mixed it could be a choppy session ahead so I would not be too involved although the daily momentum indicators do hint at lower levels in the days ahead.Technically, having broken below the 200 DMA/100 DMA supports, these will act as resistance ahead of 0.9800. With the momentum hinting at further downside pressure, a retest of 0.9695/0.9700 below which could see a run towards 0.9650.If we do see a break above 0.9800, then sellers should arrive at 0.9840/60, although I am doubtful of seeing it up here again today.

24 Hour: Prefer to sell rallies

Medium Term: Neutral

Meta Trader
USDCHF: 4 Hour

Chf


AUDUSD: 0.7660
Resistance Support
0.7756 10 Aug low 0.7625 200 HMA
0.7733 20 Oct 0.7612 Session low
0.7708 26 Oct high 0.7587/82 Daily Cloud top /31 Oct low
0.7688 1 Nov high 0.7570/65 Daily cloud base /100 DMA
0.7677 Session high 0.7557/54 28 Oct low/(61.8% of 0.7441/0.7733)

Bias

The Aud has been largely left out of the action today, and after a tight 0.7612/0.7677 range the outlook remains unchanged. Today’s Trade Balance, Services data and Caixin Chinese Services figure may provide some directional move but with the momentum indicators looking pretty flat another choppy session seems the most likely outcome.Further out, a continuation of the choppy trade within the broad 0.7500/0.7700 range seems likely. As before, selling into 0.7700, with a SL above 0.7733, or preferably above 0.7760 is preferred.The downside looks a little limited today and good support lies below 0.7600, in the 0.7570/85 area, a break of which would find further decent support all the way down to 0.7500.

24 Hour: Neutral

Medium Term : Prefer to sell rallies      

Economic data highlights will include:

AIG Performance of Services Index, Trade Balance, Caixin China Services PMI

Meta Trader
AUDUSD: 4 Hour

Aud


NZDUSD: 0.7286
Resistance Support
0.7413 9 Sept high 0.7265 Minor
0.7380 (76.4% of 0.7485/0.7035) 0.7244 (23.6% of 0.7035/0.7309)
0.7368 22 Sept high 0.7205 (38.2% of 0.7035/0.7309)
0.7333 27 Sept high 0.7179/70 Session low/ (50% of 0.7035/0.7309)
0.7309/12 (61.8% of 0.7485/0.7035) 0.7160 200 HMA

Bias                                                   

Yesterday’s extremely strong employment data and the improved Fonterra Milk auction kicked the Kiwi above 0.7200 and then, later in the session, above 0.7300, invalidating our “sell the rally” scenario  as it finishes the day in a strong position at around 0.7290.

With the short term indicators now having become overbought, the upside momentum should slow down and it could be a choppy session ahead, close to current levels. The daily indicators though look constructive, so further gains in the days ahead could see a run towards the mid- September high at 0.7368 and even towards 0.7400. Much will depend on the NFP/US election, and then later next week on the RBNZ, where the consensus is that they will cut rates at the Nov 10th meeting as there is still no sign of impending CPI inflation pushing up towards the RBNZ target, and which would limit further upside momentum.On the downside, support will be seen at 07265 and at 0.7240 although below there looks doubtful. If wrong look for a run back to 0.7200, where it would seems to be a buy area, with a SL placed sub 0.7170.

24 Hour: Neutral Medium Term : Prefer to sell rallies    

Economic data highlights will include:

ANZ Commodity Price Index

Meta Trader
NZDUSD: 4 Hour

Nzd