6 Feb:US$ mixed, stocks firm on mixed jobs data. RBA, RBNZ meetings ahead but the Trump effect will remain the focus.

By | February 6, 2017
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 Markets ended the week on a mixed note following the release of the US jobs data on Friday. While the NFP showed 227k growth in the job market in January, much stronger than the expectation of 175k and up from the previous month’s 157k, the headline unemployment rate also rose 0.1% to 4.8%, above expectation of remaining unchanged, while the bigger concern was seen in wage growth, where the average hourly earnings rose 0.1% mm in January, much lower than expectation of 0.3% mm. The dollar saw an immediate spike higher but then took a second look and ended up at close to previous levels against most counterparts, which stocks liked what they saw and ended at close to 3 Feb highs, but below the nearby all time highs. The commodities generally remained within their recent ranges.

The coming week will feature interest rate decisions from both the RBA and the RBNZ. No change to policy is expected from either although both banks are likely to complain at the current levels of their respective currencies. The markets have heard it too many times before to take much notice although the statements will be carefully watched. Elsewhere, it is a little thin on the ground, with the other major highlight being the EU extraordinary meeting to discuss current issues. There will be no shortage of topics of conversation, but Brexit is likely to be near the top of the agenda. Note that there will be a fair bit from China this week, including the Foreign Exchange Reserves, Caixin Services PMI (Tue), Trade Balance (Wed), CPI, PPI  (Thur) and New Loans (Fri). It is a NZ holiday today but the Aud could be a bit busy with the Retail Sales, the TD Inflation figures and the ANZ Job Ads all due.

CURRENCIES
EURUSD: 1.0780
Res  1.0800  1.0830  1.0875
Sup  1.0740  1.0710  1.0685
USDJPY: 112.61
Res  113.05  113.45  113.60
Sup  112.30  112.05  111.65
GBPUSD: 1.2479
Res  1.2500  1.2535  1.2560
Sup  1.2460  1.2430  1.2410
USDCHF: 0.9925
Res  0.9960  0.9985  1.0000
Sup  0.9905  0.9880  0.9860
AUDUSD: 0.7676
Res  0.7695  0.7735  0.7775
Sup  0.7645  0.7620  0.7590
NZDUSD: 0.7309
Res  0.7330  0.7350  0.7365
Sup  0.7275  0.7240  0.7220
INDICES / COMMODITIES
S+P: 2291
Res  2294  2300  2310
Sup  2280  2270  2262
DJI: 19986
Res  20010  20070  20100
Sup  19900  19825  19780
ASX SPI: 5596
Res  5612  5626  5644
Sup  5576  5562  5550
GOLD: 1220
Res  1226  1230  1240
Sup  1208  1200  1190
SILVER: 17.49
Res  17.75  17.85  18.00
Sup  17.25  17.15  17.00
OIL (WTI): 53.82
Res  54.30  55.00  55.20
Sup  53.30  52.60  52.10

 

Indices/commodities
S&P Futures 2291 U.S. stocks rose Friday, with the S+P trading up to 2293, finishing the week near the day’s highs, led by the financial sector as Donald Trump took steps to roll back the Dodd-Frank industry reforming regulation, and underpinned by the stronger than expected January NFP figure which contributed to the upbeat sentiment.

While the outlook finished on a positive note, caution is warranted on the topside and it could all turn around rather quickly as pressure seems to be rising on the geopolitical front following various spats between Donald Trump and key foreign allies, while also ramping up the tension with Iran/North Korea etc. We shall see.

This leaves the outlook unchanged and a fairly neutral stance is still required, with little hint of anything directional from the near term indicators. As we said before though, while the daily momentum indicators remain flat, the weekly charts are overbought so the risk would seem to lie on the downside. If so, back below Friday’s low of 2270 would find further bids in the 2260/50 area. This currently looks remote although below 2250 would open the way towards 2235 and on to the 30 Dec low of 2227. On the topside, above Friday’s high will retest 2300 and if that can be taken out, we are in blue sky territory. At this stage, trading from the short side is slightly preferred, with a SL placed tight above the all time high of 2299.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
2315 Minor 2280 200 HMA
2310 Minor 2270 Friday low
2305 Minor 2264/2262 3 Feb low/1 Feb  low
2299 27 Jan high 2248 12 Jan low
2293 Friday high 2235/40 (23.6% of 2028/2299)/daily Cloud top
DJI Futures 19986
Ditto S+P. The DJI finished on a positive note, back above 20000 and in doing so it filled in the minor chart gap to 27 Jan.  Further gains could see another assault on the 20071 all time high, beyond which would head into blue sky territory.

As with the S+P, caution is warranted and I would not be betting too much either way at present given the volatile political situation. On the downside, support will be seen at 19800/900 and for now trading the range, with a tight SL placed above the all time high or below the 19782 Friday low.

24 Hour: Neutral – Prefer to sell rallies Medium Term: Neutral
Resistance Support
20200 Minor 19900 200 HMA
20150 Minor 19825 100 HMA
20100 Minor 19782 Friday low
20071 Friday high /All-time high 19734/12 3 Feb low/1 Feb  low
20006 Friday high 19650 Daily Cloud top
ASX SPI 5596
The ASX is once again sitting on the 5600 pivot leaving the outlook largely unchanged.

Further choppy trade near current levels looks likely again on Monday, and we could see yet another squeeze back towards 5625, and beyond that, further strength could take us to close the chart gap at 5645. With the daily indicators continuing to point a little lower though, a break of minor support at 5575/80 could take us back to 5560/50, 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 5630/5580 may cover it.

24 Hour:  Prefer to sell rallies Medium Term: Mildly bearish – Prefer to sell rallies
Resistance Support
5685 Minor 5562 Friday low
5668/70 27 Jan high/19 Jan high/50% of 5789/5555 5555/51 2 Feb low/1 Feb  low
5645 Chart Gap 5520 Minor
5625/23 2 Feb high /3 Feb high 5498 (38.2% of 5029/5789)
5612 Friday high 5462 16 Dec low
GOLD 1220
Gold again tried to take out the 1220 resistance (high 1221) but has so far failed to carry on with it, although it finished right at the top of its range and could make a more concerted effort to do so in the week ahead.

The overall recent range seems to have moved slightly higher, and with the short term momentum indicators looking mildly constructive, a break above last week’s 1225 high would open up 1230 and 1240 and possibly 1255 although this remains some way off. On the downside, 1207/10 will see buyers ahead of the 100 WMA pivot seen at 1200. Under here, 1188/93 and 1180 would provide support although right now it seems unlikely that we are heading back below 1200. The mild preference to trading from the long side remains intact although I am not looking for any big move and if we see a stronger dollar, then the upside will find increasing headwinds.

24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
1255 (61.8% of 1337/1222) 1207 Friday low
1248 (50% pivot of 1375/1222) 1200/1198 100 WMA /2 Feb low
1238/41 11 Nov high 1193 1 Feb  low
1230/33 50% pivot of 1337/1222/ 16 Nov high/Daily Cloud top 1188 30 Jan low
1225 3 Feb high 1180/82 27 Jan low/(38.2% of 1122/1218)
SILVER 17.49
Silver has had another rangebound session to finish the week (17.24/17.54) leaving the outlook unchanged.

The momentum indicators are mixed so more of the same would seem likely today. The 4 hour momentum indicators look a little heavy although the dailies still point to higher levels, and if last week’s high of 17.73 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 17.20/25could see a return to levels sub 17.00 although this seems unlikely to be bothered today. From the look of the daily charts, buying dips seems to be the plan, with SL probably now placed under 17.00.

24 Hour: Neutral Medium Term:  Neutral
Resistance Support
18.20 (76.4% of 18.98/15.63) 17.25 (23.6% of 15.63/17.73) /Friday low
18.00 Minor 17.00 Minor
17.85 200 DMA 16.93 (38.2% of 15.63/17.73)
17.70/73 (61.8% of 18.98/15.63)/3 Feb high 16.63/70 27 Jan low /100 WMA
17.53 Friday high 16.50 Minor
OIL (WTI) 53.82
WTI had another choppy session using 54.00 as a pivot (53.38/54.19), finishing once again at 53.80 and leaving the outlook unchanged.

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. From a more structural perspective, on the downside, although looking somewhat distant, we could yet see 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 last Thursday’s 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 and the preference remains to buy dips, but with a tight downside SL in place at around 52.25.

24 Hour: Neutral Medium Term: Cautiously long
Resistance Support
56.85 (38.2% of 107.65/26.03) 53.33 Friday low/3 Feb 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
54.19/31 Friday high /6 Jan high 50.70 Reverse Head/Shoulders Neckline

EURUSD: 1.0780
The dollar spiked briefly higher after the US jobs data, Friday, with the Euro finding a low of 1.0710 before recovering to sit in the middle of the recent range, finishing the week at 1.0780 and leaving the outlook rather clouded.

A cautious stance is therefore required to start the week, and while the daily momentum indicators still mildly hint that the risk is probably leaning towards further gains for the Euro, it may be that the MACDs are reaching a tipping point so I would not be betting too much either way. If the Euro can remain underpinned, then once back above 1.0800 and the 1.0829, 3 Feb 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. On the other side of the coin, the 4 hour momentum indicators are neutral and may be hinting at slightly lower levels, where the 200 HMA will provide minor support at 1.0740, ahead of the 1.0710 Friday low and the Fibo level at 1.0700. Below there may be tricky today in the absence of any major data other than the EU Sentix Investor Confidence Survey, and further support will arrive at the 1 Feb low, at 1.0684.  A rangebound session of trade between Friday’s parameters seems to be the most likely outcome unless Mr Trump blindsides the market again.

Lastly, aside from US politics, keep an eye on Greece. Bailout negotiations between Athens and its creditors have stalled, and the possibility of a  Grexit has re-emerged, with Greek bond yields soaring higher over the last fortnight. 2 year yields on Greek government bonds have shot up from 6% to 10% in less than two weeks and investors are once again becoming very nervous.  If this gains pace, the upside for the Euro will be very limited indeed. In July Greece faces debt repayments of €7.4bn, raising the spectre of a default because state coffers by then will have run dry.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
1.0873 8 Dec high 1.0740 200 HMA
1.0855 Weekly Kijun 1.0710 Friday low
1.0825/28 38.2% of 1.1616/1.0340 /Daily cloud top / 2 Feb high 1.0700 (61.8% of 1.0620/1.0829)
1.0811/06 1 Feb  high /2 Feb high 1.0684 1 Feb  low / Rising trend support
1.0797 Friday high 1.0670 (76.4% of 1.0620/1.0829)

Economic data highlights will include:

M: German Factory Orders, EU Sentix Investor Confidence Survey, US Labor Market Conditions

T:  German Industrial Production, US NFIB Business Optimism Index, Trade Balance, Consumer Credit, API Weekly Crude Oil Stock Inventory

W:  EIA Crude Oil Stocks Weekly Change

T: German Trade Balance, US Jobless Claims, Wholesale Inventories

F: EU Extraordinary Summit, US Import/Export Index, Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count .

Meta Trader
EURUSD: 4 Hour


USDJPY: 112.61
US$Jpy was choppy, without breaking any new found on Friday, and will now look towards the meeting between Donald Trump and the Japanese PM, Abe, on Feb 10.

Until then conditions may remain similar, although the dailies still hint that we could head a little lower. If so, decent support lies in the 112.00/30 area, but below which could see a run towards 111.35/40 below which there is little major support seen until 111.00/10. On the topside, resistance will be seen at Friday’s high of 113.45, above which could see another run to 113.95/114.00 although unlikely at this stage. Selling rallies is mildly preferred.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
114.55 (38.2% of 118.66/112.04) 112.30 Friday low
113.95 2 Feb high 112.05 2 Feb low
113.57 (23.6% of 118.66/112.04) /200 HMA 111.95 (38.2% of 101.18/118.66)
113.45 Friday high 111.61 29 Nov low
113.00 Minor 111.35 28 Nov low

Economic data highlights will include:

M:

T:  Japan Trade Balance

W: Eco Watchers Survey

T: Provisional Machine Tool Orders

F: Tertiary Industry Index.

Meta Trader
USDJPY: 4 Hour


GBPUSD: 1.2479
Cable continued to under-perform on Friday as the market continued to reassess the BOE outlook from Thursday’s BOE meeting.

Having broken below 1.2500 support, Cable headed down to 1.2458, where the 100 DMA prevented further losses, before a minor bounce, to close at 1.2480. With the 4 hour/daily momentum indicators now both leaning lower further weakness may be on its way, and below Friday’s low we could head back to last Monday’s low of 1.2411. Under 1.2400, there is not too much to hold Cable up until 1.2345/50 although that remains some way off. A return to the topside will find offers at 1.2500/10 and then at 1.2540 and at the 100 HMA/200 HMA at 1.2560. Above this looks unlikely for a while, but further offers would arrive at 1.2600 and 1.2640. Note that while the 4 hour/daily momentum indicators do look mildly negative, the weeklies are now strongly bullish so a return to last week’s high of 1.2705 should not be entirely ruled out at some stage.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
1.2640 Minor 1.2458 100 DMA / Friday low
1.2600 Minor 1.2430 (38.2% of 1.1980/1.2705)/ Daily Cloud top
1.2560 200 HMA/100 HMA 1.2411 31 Jan low
1.2537 Friday high 1.2380 Minor
1.2500 Minor 1.2345 (50% pivot of 1.1980/1.2705)

Economic data highlights will include:

M:

T:

W: NIESR GDP Estimate

T:

F: Manufacturing/Industrial Production, Trade Balance .

Meta Trader
GBPUSD: 4 Hour


USDCHF: 0.9925
US$Chf traded a choppy range of 0.9906/0.9985 on Friday leaving the outlook unchanged although any real directional mover looks unlikely early in the coming week.

The 4 hour momentum indicators still look supportive, suggesting another topside squeeze, which would see sellers at Friday’s high of 0.9985, beyond which would allow a move, potentially, back to parity. The dailies still point slightly lower – although they may be attempting to find a base – , so if we do head back below 0.9900,  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 and Friday’s range could well cover it today.

24 Hour: Neutral Medium Term: Prefer to sell rallies
Resistance Support
1.0045 30 Jan high/Descending trend resistance 0.9906 Friday low
1.0000 Psychological 0.9869 3 Feb low
0.9985 Friday high 0.9865/60 200 DMA/1 Feb  low
0.9975 (23.6% of 1.0327/0.9860) 0.9850 61.8% of 0.9549/1.1343
0.9945 Daily cloud base 0.9785 (76.4% of 0.9549/1.1343)

.

Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7676
AudUsd traded a choppy range of 0.7620/95 on Friday, leaving the outlook unchanged, and any real directional mover looks unlikely until the RBA Meeting on Tuesday. No change is expected to policy and it will be the wording of the Statement that traders are likely to focus on.  The recent trade and jobs data may see the RBA take a more positive outlook, which would underpin the Aud, possibly taking it above 0.7700.

Technically, we now have a minor double top at 0.7695, which will see sellers ahead of 0.7700, but a break above this area would then allow a move towards the descending trend resistance at 0.7755 and to the November high of 0.7777. I don’t see this happening yet, although the dailies still remain supportive so it should not yet be totally ruled out. The downside will find support at Friday’s low at 0.7620 and then again in the 0.7590/0.7600 area, although I doubt that we see it for the time being.  The Aud could be a bit busy with the Retail Sales (exp +0.3% – Dec), the TD Inflation figures and the ANZ Job Ads. If the Retail Sales comes out at close to expectation, then look for another 0.7620/0.7700 session while waiting on the RBA tomorrow.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7834 21 April ’16 high 0.7640 Minor
0.7777 8 Nov high 0.7620 Friday low
0.7755 Descending trend resistance 0.7590/92 19 Jan low/(38.2% of 0.7160/0.7695)
0.7735 Minor 0.7570 13 Jan low
0.7695 3 Feb high/Friday high 0.7550/41 2 Feb low/1 Feb  low

Economic data highlights will include:

M:  TD Inflation (Jan), ANZ Job Ads (Jan), Retail Sales (Dec), Construction PMI

T: China Foreign Exchange Reserves, Caixin China Services PMI, RBA Interest Rate Decision/Statement

W:  China Trade Balance

T:  HIA New Home Sales China CPI, PPI

F:  Investment Lending for Homes, Home Loans, RBA Monetary Policy Statement, China New Loans .

Meta Trader
AUDUSD: 4 Hour


NZDUSD: 0.7309
The Kiwi traded a choppy 0.7247/0.7336 session on Friday but finished above 0.7300 and looks as though it wants to take another look at last week’s 0.7350 high, although the daily momentum indicators are becoming overbought, so caution is warranted.

It is a NZ holiday today, and the Kiwi looks likely to remain rangebound (0.7280/0.7350?) but if we do head higher, then above 0.7350 would allow a move towards the 8 Nov high of 0.7400, and above that, towards the 9 Sept high of 0.7413. On the downside, support will be seen at 0.7280, a break of which would allow another run towards 0.7250/40 and then on towards 0.7200 although I don’t think we get there today. In the absence of any new data, expect another choppy day ahead, but note that we get the Q4 RBNZ Inflation Expectations tomorrow and then the RBNZ Interest Rate Decision on Thursday, so it could be a busy week.  The RBNZ are expected to keep policy unchanged but may come up with a dovish outlook following last week’s miss in the unemployment figures, which would take the Kiwi quickly lower  so be nimble.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7400 20 Aug high 0.7275 200 HMA
0.7380 Minor 0.7241/42/46 2 Feb low/3 Feb low  /Friday 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
0.7330/37 Friday high/3 Feb high 0.7175 23 Jan low

Economic data highlights will include:

M:  Waitangi Day Holiday

T:  RBNZ Inflation Expectations (Q4), Global Dairy Trade Index

W:

T:  RBNZ Interest Rate Decision/Statement/Press Conference, Building Permits

F:.

Meta Trader
NZDUSD: 4 Hour