31 Oct: A big week ahead. RBA, BOJ, FOMC, BOE all due + US Jobs/NFP Friday.

By | October 30, 2016

Despite some robust data on Friday, the US dollar and stock markets both finished on a weak note after the FBI announced that it had uncovered and is reviewing new evidence in connection with its investigation of Hillary Clinton’s email server, adding further doubt to the upcoming election result. Ahead of the announcement, markets had been relatively buoyant on the back of the better than expected US GDP, which grew 2.9% annualised in Q3, above expectation of 2.5%, and more than doubled Q2’s 1.4%. The GDP price index slowed to 1.5% but also beat expectation of 1.3%. The Rts/Michigan Consumer Sentiment Index was slightly below expectations of 88.1, at 87.2.

Last week may have generally been fairly rangebound but that is about to change with a tsunami of data coming on board this week, headed by Central Bank Interest Rate Decisions from the BOJ and RBA (Tuesday), FOMC (Wednesday) and BOE (Thursday) although no change to policy is expected from any of them. In addition to this, the US Employment data/NFP is due on Friday, making for a big week. There is plenty else besides, including the monthly PMIs which will be released through the week, and on Thursday look out for a possible statement  from BOE Governor Mark Carney who may be in the process of preparing for his own personal Brexit. The UK Press are reporting that he could announce that he intends to step down as governor of the BOE in 2018, amid a barrage of criticism from Euro-sceptic MPs over his approach to the UK Brexit.

Today kicks off with the NZ Building Permits and the Australian TD Inflation and Private Sector Credit, but with little else due in Asian time. From the EU we get the German Retail Sales and the EU Provisional Q3 GDP, while from the US we will have the the September Personal Income/Spending Index, the Dallas Fed Mfg Business Climate and the Chicago Purchasing Managers Index. Elsewhere, watch out for further political statements from the US, with any negative news for Hillary likely to keep the pressure on the dollar and on stocks. Have a good week.

CURRENCIES
EURUSD: 1.0981
Res  1.1000  1.1040  1.1085
Sup  1.0945  1.0915  1.0875
USDJPY: 104.73
Res  105.00  105.30  105.55
Sup  104.45  104.20  104.00
GBPUSD: 1.2149
Res  1.2230  1.2270  1.2300
Sup  1.2115  1.2080  1.2050
USDCHF: 0.9848
Res  0.9900  0.9935  0.9960
Sup  0.9855  0.9820  0.9800
AUDUSD: 0.7589
Res  0.7610  0.7625  0.7645
Sup  0.7575  0.7555  0.7535
NZDUSD: 0.7151
Res  0.7165  0.7185  0.7200
Sup  0.7140  0.7110  0.7085
INDICES / COMMODITIES
S+P: 2123
Res  2130  2138  2146
Sup  2112  2106  2100
DJI: 18091
Res  18150  18200  18250
Sup  18050  18000  17965
ASX SPI: 5251
Res  5280  5300  5320
Sup  5234  5200  5180
GOLD: 1274
Res  1284  1290  1300
Sup  1266  1260  1250
SILVER: 17.73
Res  17.90  18.00  18.15
Sup  17.65  17.55  17.35
OIL (WTI): 48.64
Res  49.70  50.05  51.00
Sup  48.40  47.65  47.00

Stocks started off brightly enough after economic data showed the U.S. economy grew 2.9% in Q3, its fastest pace in two years, and on the back of some upbeat earnings from Google parent company Alphabet Inc. Things turned sour though after the news that the FBI will review more emails related to Hillary Clinton’s private email use although the indices were able to make a partial recovery from the lows heading into the close. That may change on Monday given the ongoing uncertainty ahead of the election and further downside action may be in store on the back of it.

WTI headed lower on Friday after OPEC officials meeting in Vienna failed to reach agreement over production cuts after objections by Iran, which has been reluctant to even freeze its output. OPEC is due to hold a formal meeting on November 30 in Vienna to seal a deal to address a global supply glut.

Gold and Silver spiked up on Friday’s FBI announcement but later returned to more familiar levels heading into the week’s close

Indices/commodities
S&P Futures 2123
Resistance Support
2180 Minor 2120/12 18 Oct low /Friday low
2172/74 22 Sept high/(76.4% of 2191/2120) 2107/06 14 Oct low  /9 Sept low
2160 11 Oct high 2100 (23.6% of 1847/2191)
2146/49 Minor descending trend resistance/25 Oct high 2090 Minor
2137/34 100 DMA /Friday high 2075 200 DMA

Bias                                                                                                           

US stocks pulled back from early Friday gains after the FBI said that it was reviewing new evidence in connection with its investigation of Hillary Clinton’s email server. The S+P fell sharply to a low of 2112 but did stage a minor recovery to finish the week at 2123. Given the ongoing uncertainty following the FBI statement, further downside momentum in the stock markets would not surprise as the week gets under way.

The momentum indicators remain pretty much flat, so a neutral stance is again required although, as before, with the increasing chance of a Fed rate hike I prefer to err on the side of trading from the short side and selling into rallies. The 100 DMA (2137) looks as though it will continue to act as resistance, with any further strength above there likely to find sellers at 2145/50. Above 2155 may see a squeeze towards 2170 although in the near term this seems a little unlikely and the choppy conditions look set to persist. On the downside, below Friday’s low will find buyers at the strong support at 2105/10. A break of this area could see a quick run below 2100 towards the 200 DMA at around 2070 albeit that this is some way off right now but I think it may be the direction that we eventually head in.S+P

24 Hour: Mildly bearish Medium: Prefer to sell rallies   
DJI Futures 18091
Resistance Support
18445 (76.4% of 18622/17880) /Descending trend resistance 18009 Friday low
18336 (61.8% of 18622/17880) 17972/65 18 Oct low/21 Oct low
18273 11 Oct high 17867 13 Oct low
18171 Friday high 17790 (50% of 16957/18622)/(23.6% of 15163/18622)
18150 26 Oct high /100 DMA 17590 (61.8% of 16957/18622)/200 DMA

Bias

The DJI again finished at 18100 (18009/18171) leaving the outlook unchanged.

As before, while I prefer to be structurally short, the near term momentum indicators suggest that it may be a little too early for any real downside momentum and more of the same sideways choppy action looks likely. On the topside, a daily close above the 100 DMA (18150)  would suggest a continuation of the choppy sideways trade within the 18000/350 area and would delay any hope of increased downside momentum and means the DJI is probably best left alone, or used as a range trade. Any decent rally though would appear to be a sell opportunity, looking for an eventual move below the 17970 support area and on towards the 13 Oct, 17867 low, and then further out towards 17800, and possibly 17600. In the meantime, the 17960/80 area seems to offer reasonable support.DJI

24 Hour: Mildly bearish Medium Term: Prefer to sell rallies
ASX SPI 5251
Resistance Support
5344 27 Oct high 5234/30 Friday low/ 200 DMA/(76.4% of 5152/5488)
5335 (50% of 5435/5234) 5219 15 Sept low
5310 (38.2% of 5435/5234) 5200 Minor
5300 Minor 5174 15 Sept low
5280 (23.6% of 5435/5234) 5152 13 Sept low

Bias            

 

The SPI had another tough day on Friday, heading down to meet the support offered by the 200 DMA before a minor bounce heading into the weekend.

Some short term consolidation above 5230 may be in store, but further out the momentum indicators are pointing lower so I don’t think we have seen the lows yet and below 5230 would allow a run towards 5200 and towards 5170. On the topside, back above current levels will find offers at 5280/85 and again at 5300/10, above which we could head to 5335/40 although this looks over the horizon for now.  Structurally, I still prefer to sell into strength, looking for an eventual run below 5230 level for an eventual look at 5200 and lower.SPI

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
GOLD 1274
Resistance Support
1305 (61.8% of 1343/1240) 1271 200 DMA
1300 Minor 1262 25 Oct low/4 Oct low  Friday low
1292 (50% of 1343/1240) 1254 18 Oct low
1284 Friday high 1246 14 Oct low
1280 200 WMA/ (38.2% of 1343/1240) 1240 7 Oct low/(76.4% of 1199/1375)

Bias                              

Gold spiked sharply higher, albeit briefly, to 1284 as traders sought a safe haven asset following Friday’s FBI announcement on Clinton.

If we see a return to the topside, 1285 will again see offers, above which, could see a run to 1290/1300 although this currently looks unlikely. On the downside, 1260/65  still provides support  ahead of 1250 and the recent low at 1246, below which, the next downside target would allow another run towards 1240. This should again be strong, but below which there is not much to prop it up until 1210. Right now there are better things to trade and Gold is probably best left alone, as we could well continue the current sideways action, using the 200 DMA (1267) as a pivot.Gold

24 Hour: Neutral-Prefer to sell rallies Medium Term: Looking for eventual downside move
SILVER 17.73
Resistance Support
18.56 (50% of 20.06/17.10) 17.55 Friday low
18.38 29 Aug low 17.45 24 Oct low
18.23 (38.2% of 20.06/17.10) 17.39 21 Oct low
18.05 (23.6% of 21.13/17.10) 17.30 14 Oct low/200 DMA
17. 90 Friday high 17.10 7 Oct low/(76.4% of 15.81/21.13)

Bias                                                                                                 

Silver traded in tandem with Gold on Friday, briefly spiking up to 17.90 on the FBI statement, but finished off its highs, at 17.75.

The 4 hour momentum indicators are flat, suggesting further consolidation, but  if 17.90 can be taken out we may see a run to 18.00, above which would see a squeeze towards previous support – now resistance – at the August low at 18.38. In the longer term, with the possibility of a stronger dollar (although probably not over the next session or two), I prefer to be structurally short, looking for an eventual downside break, albeit probably not yet, as the dailies are now turning slightly more positive and appear to be losing a little of their potential downside momentum, so it maybe that we continue the current choppy, sideways trade this week. If we do head lower though, we may yet see a return to test the downside targets, which will initially be at 17.55 (minor rising trend support ), the 200 DMA (17.35/major rising trend support ) and then at the Fibo support at 17.10, but below which could see a run towards 16.50. A sustained retest of the downside looks unlikely in the near term and further choppy sideways trade seems to be the most likely outcome. Gold

24 Hour: Neutral Medium Term: Looking for eventual downside move
OIL (WTI) 48.64
Resistance Support
52.19 19 Oct high 48.65 (38.2% of 42.98/52.19)
51.60 Minor 48.40 Friday low
50.95/51.00 24 Oct high/21 Oct high 47.60/50 (50% pivot of 42.98/52.19)/H/S Neckline
50.03 27 Oct high 47.02 30 Sept low
49.79 Friday high 46.45 (61.8 of 42.98/52.19)/100 DMA

Bias

WTI traded in heavy fashion on Friday  following the failure of OPEC to reach agreement on production cuts although it has so far held on to 48.20/50 support.

The momentum indicators seem to be aligning to point lower so a deeper test of the 48.20/50 area seems possible, below which would put the important 47.50/60 area under pressure. Buying 47.50 with a tight SL may be a plan, although the dailies do hint that there may be further downside ahead. On the topside, we need to regain Friday’s top of 49.79 and then the 26 Oct high of 50.07 in order to allow another test of the resistance at 50.95/51.00. Above this will find further sellers at around 51.50/60, beyond which could see us back at the Wednesday high at 52.19, a break of which will not find too much resistance  to stop it from heading towards the Fibo resistance level seen at 53.90 although this now looks a little unlikely right now. As before, the bigger picture appears to point towards a reverse head shoulder move, so while above the 47.50 neckline I still err on the side of buying dips. If the head/shoulder move proves correct, the longer term objective is going to be around 57.00. A break below the neckline would negate the head shoulder theory, possibly sending WTI sharply lower, towards 46.00/50, so keep stops tight.WTI

24 Hour: Mildly Bearish Medium Term: Prefer to buy dips

EURUSD: 1.0981
Resistance Support
1.1140 100 DMA 1.0945 Minor
1.1115 Weekly cloud base 1.0915 200 HMA
1.1085 55 WMA/Weekly Tenkan 1.0874 26 Oct low
1.1038 20 Oct high/(38.2% of 1.1326/1.0858) 1.0850 25 Oct low
1.0991 Friday high 1.0821 10 March low

Bias

The US dollar was hit hard by Friday’s FBI announcement, with EurUsd quickly taking out the minor resistance that had previously contained the topside and heading to a session high of 1.0991.

The shorter-term momentum indicators are mixed and thus it could be another choppy session ahead, with the hourlies finishing the week at mildly overbought levels suggesting some consolidation, at least for the first half of Monday. The 4 hourlies are leaning higher though, so a test of 1.1000+ could eventually be on the cards. The dailies also look more positive,  so for the time being I suspect we should hold off from selling into the current Euro strength as we could yet see a run towards 1.1040, above which would put the near term downtrend into some doubt, with the possibility of a bigger short squeeze towards 1.1085 and even to 1.1140. On the downside, support will be seen at 1.0950 and then again at 1.0900, below which looks unlikely to be seen today. If wrong, we could then head back to 1.0870/80 and then to 1.0850, below which would seem to open the way to the March low at 1.0821. Under here there is again only minimal support until 1.0775 and then again, little until the 2016 low at 1.0710 (Jan 5).  The Q3 EU GDP will be the main event today, although a range of 1.0940/1.1040 may cover it as we wait on the Fed announcement on Wednesday. Look out though for further political announcements that may cause increased election doubts, and which would keep the dollar under pressure.

24 Hour: Mildly bullish but prefer to sell rallies Medium Term: Mildly bearish

Economic data highlights will include:

M: German Retail Sales, EU Provisional Q3 GDP, CPI (Oct), US Personal Income/Spending, US Personal Consumption/Expenditure Index, Dallas Fed Mfg Business Climate, Chicago Purchasing Managers Index

T: All Saints Day Partial EU Holiday, US ISM/Markit Mfg PMIs, ISM Prices Paid, API Weekly Crude Oil Stock Inventory

W: ECB Non-Monetary Policy Meeting, EU Markit Manufacturing PMIs, US ADP Jobs data, ISM NY Index, EIA Crude Oil Stocks Weekly Change FOMC Meeting

T: EU Economic Bulletin, EU Unemployment, US Jobless Claims, Markit Composite PMI, ISM Non- Mfg PMI, Factory Orders,   EIA Crude Oil Stocks Weekly Change

F: EU Services/Composite PMIs, US Jobs data/NFP/Average Hourly Earnings data, Baker Hughes Oil Rig Count

Meta Trader
EURUSD: 4 Hour

Euro


USDJPY: 104.73
Resistance Support
105.80 200 /55 MMAs 104.40 Rising trend support
105.61 29 July high 104.22 (23.6% of 100.05/105.52)/200 HMA
105.52 Friday high 104.00 Minor
105.30 Minor 103.80 Minor
105.00 Minor 103.50 Daily cloud top/21 Oct low

Bias

Friday’s FBI announcement caused a sharp reversal in the strength of US$Jpy from the highs of 105.52 as it fell quickly back to the rising trend support at 104.45, before any stability was seen ahead of the weekly close at 104.75.

It would seem from the 4 hour/daily momentum indicators that we may have put in a near term top now, just ahead of the previously mentioned resistance seen at 105.60, but beyond which would head towards further offers at  105.80, (200 MMA) and 106.00. On the downside, support will be seen at the rising trend support at 104.40/45, with stops likely to be triggered below there which could see a test of 104.00 and potentially to 103.50, although I would be looking to buy the dollar at these levels if we see it down there.  There is a bit of Japanese data due today, but it will be the BOJ (tomorrow – no change expected) and the FOMC (Wed) that attracts all the attention.

24 Hour: Prefer to buy dips Medium Term: Mildly bullish

Economic data highlights will include:

M: Industrial Production, Retail Sales, Nikkei Mfg PMI, Construction Orders, Housing Starts

T: BOJ Interest Rate Decision, Press Conference, Statement, Outlook Report

W: Consumer Confidence

T:

F: Foreign Bond/Stocks Investment

Meta Trader
USDJPY: 4 Hour

Yen


GBPUSD: 1.2149
Resistance Support
1.2470 7 Oct high 1.2113 Friday low
1.2400 (38.2% of 1.3444/1.1821) 1.2100 Minor
1.2332 19 Oct high 1.2088/81 11 Oct low/25 Oct low
1.2297 20 Oct high 1.2050 Minor
1.2271 27 Oct high 1.2000 Minor

Bias                                                                                     

Cable was choppy on Friday, particularly after the Northern Ireland court ruling challenging Brexit and in favor of UK Government over Article 50, which caused a quick dive to 1.2080 before and equally quick recovery.

As before, the 4 hour charts are flat, and further choppy trade within the recent 1.2050/1.2250 range may be in order 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.

Watch out for the main event on Thursday, when the BOE Meeting takes place. No change is expected and the focus seems likely to be on the Quarterly Inflation Report, and whether BOE Governor, Mark Carney will announce that he intends to resign at the end of his contract following the criticism over his approach to Brexit.

24 Hour: Neutral Medium Term: Neutral.

Economic data highlights will include:

M: UK Daylight Saving ends, Gfk Consumer Confidence, Consumer Credit, Net Lending to Individuals

T:

W:

T: UK Markit Services PMIs, BOE Meeting/Statement/Minutes/Vote Count/APP Facility, BOE Governor, Mark Carney Speech

F:

Meta Trader
GBPUSD: 4 Hour

Gbp


USDCHF: 0.9848
Resistance Support
0.9998 25 Oct high 0.9857 Friday low
0.9985 (61.8% of 1.0327/0.9443) 0.9820 Weekly Tenkan
0.9958 26 Oct high 0.9800 Minor
0.9935 Descending trend resistance 0.9785 200 DMA
0.9900 Minor 0.9765 100 DMA

Bias                                                                             

 

US$Chf did not like the FBI announcement on Friday and quickly took out the 0.9900 support by heading to a low of 0.9857 before finding some stability.

Technically, it looks as though we have put in a short term top at 0.9999 on Tuesday, and further tests of 0.9850 may lie ahead given the look of the 4 hour indicators. I would be looking to buy into any such weakness but with a tight stop loss, left below 0.9820. The topside today looks likely to be contained at 0.9900, with further offers likely to be seen at 0.9940/50. Eventually I am looking for a run above the 25 Oct high (0.9999) and beyond parity, although this seems unlikely today and we could see better levels to buy dollars.

24 Hour: Neutral Medium Term: Prefer to buy dips  with tight SL

Economic data highlights will include:

M:

T: Retail Sales SVME Purchasing managers’ index

W:

T:

F:

Meta Trader
USDCHF: 4 Hour

Chf


AUDUSD: 0.7589
Resistance Support
0.7708 26 Oct high 0.7587 Daily Cloud top
0.7675 Minor 0.7570/65 Daily cloud base /100 DMA
0.7645 200 HMA 0.7557/54 Friday low/(61.8% of 0.7441/0.7733)
0.7625 100 HMA 0.7535 Rising trend support
0.7607 Friday high 0.7505 13 Oct low

Bias

The Aud headed lower, to test the support area in the 0.7850/60 area on Friday, before a late bounce as the US$ came under pressure following the FBI announcement.

The 1 hour and 4 hour momentum indicators are now aligning to point a little higher so it would appear that on the day, buying dips for a minor topside squeeze is going to be the play, but which would run into sellers at 0.7625/35, should we see it up there. Further strength, if we were to see it (doubtful), could take us back towards 0.7670 and to 0.7700/10, where I would again be looking to sell, with a SL above the recent high at 0.7733. The dailies still look heavy, so further downside action seems to lie ahead, although with the RBA and the Fed both due this week it may end up being a choppy but rather directionless session today. No change is expected from the RBA and a neutral tone from the RBA Governor, Lowe seems likely.If we do end up heading lower, decent support lies all the way down from 0.7570 to 0.7500, so progress, if seen, may be slow.

24 Hour: Prefer to sell rallies Medium Term : Prefer to sell rallies     

Economic data highlights will include:

M: TD Inflation, Private Sector Credit

T: China Official/Caixin Manufacturing, Non- Mfg PMIs, RBA Interest Rate Decision, Statement, RBA Commodity Index

W: Building Permits,

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

F: Retail Sales, RBA Monetary Policy Statement

Meta Trader – AxiTrader
AUDUSD: 4 Hour

Aud


NZDUSD: 0.7151
Resistance Support
0.7240 Neckline 0.7140 100 HMA
0.7220 Minor 0.711/1107 Friday low/27 Oct low
0.7200 Minor 0.7087 (76.4% of 0.7034/0.7265)
0.7183/86 26 Oct high /100 DMA 0.7076 17 Oct low
0.7166/70 Friday high/27 Oct high/200 HMA 0.7060 Rising trend support

Bias                                                   

 

The Kiwi held on above 0.7100/10 support on Friday and closed the session at its highs of 0.7160.

The 1 and 4 hour momentum indicators have now turned higher and thus a test of the 200 HMA would seem possible, above which would allow a run back towards 0.7200/10, where I would again be looking to sell it, with a SL placed above 0.7265. Further choppy trade could be the outcome today as we wait on the central bank activity Tues/Wed but a break below 0.7100 could head towards support at 0.7085 and below there at 0.7060, which I expect to see eventually, although progress may be slow, Below 0.7060 would open 0.7035 (13 Oct low) but not yet. Selling rallies towards 0.7200 is preferred today, with a SL placed above 0.7220, or preferably above 0.7265, is preferred.

24 Hour: Neutral Medium Term : Prefer to sell rallies    

Economic data highlights will include:

M: NZ Building Permits, ANZ Activity Outlook

T: Global Dairy Trade Index

W: NZ Unemployment, RBNZ Inflation Expectations

T:

F: Labor Cost Index

Meta Trader
NZDUSD: 4 Hour

Nzd