Despite some solid data, both the US$ and stocks are a bit weaker today as traders wonder as to the timing of the next Fed rate hike, with speculation growing that it may be delayed beyond March as had previously been hoped. The initial jobless claims rose 5k to 239k, better than expectation of 245k while the housing starts dropped -2.6% mm to 1.25 mio in January, but above expectation of 1.23 mio. Building permits were also firm, rising by 4.6% mm to 1.29 mio, above expectation of 1.23mio. The Philly Fed survey jumped sharply to 43.3 in February. Commodities were generally firmer in taking advantage of the softer dollar.
Friday should be a reasonably quiet end to the week, with not too much on the agenda aside from any possible political soundbites coming mostly from Donald Trump. The Kiwi may see a bit of action with the release of the Business PMI and the Q4 Retail Sales, but that aside there is no data due in the Asian time zone. The Jan UK Retail Sales (exp +1%mm, 3.5%yy) will be the highlight in Europe, along with the EU Current Account, while there is nothing to come from the US aside from the Leading Indicator and the Baker Hughes Oil Rig Count, which may provide some volatility in the oil market. Have a good weekend.
|INDICES / COMMODITIES|
|ASX SPI: 5761|
|OIL (WTI): 53.80|
|S&P Futures||2343||The recent strong run to successive all time highs has finally ended, with US stocks taking a mild pause for breath and with the S+P easing back from 2350 to 2336 before finishing the day at 2340.
The short term charts are overbought and turning lower, so further losses towards 2330 and then 2320 would not really surprise today, but as before, while the “Trump effect” continues it would appear that the rally may carry on until we see some clarity on his economic plans. The dailies point higher still, so do not rule out a continuation of the rally to new all time highs in the days ahead. Stand aside.
|DJI Futures||20589||Ditto S+P. The DJI has eased back from another all time high (20624) to a low of 20535 before finishing at 20580. The short term momentum indicators point a bit lower, while the longer term momentum indicators remain underpinned.
|ASX SPI||5761||The ASX had a choppy session but closed on a firm note, at 5760, although given the look of the short term momentum indicators the day’s high of 5778 may prove tough to overcome on Friday.
The 4 hour charts are now pointing lower, although the dailies are still constructive so a similar session to Thursday’s (5733/78) seems possible. Above 5778, look for a run towards the 5789, 9 Jan high, to 5800 and then to the May 2015 high at 5814, although I am doubtful of seeing any of these today given the slide in US stocks. On the downside, support will be seen at 5740 and then again at around 5730. As with yesterday, buying dips still seems the plan, with a SL placed below today’s 16 Feb low of 5729.
|GOLD||1239||Gold has taken advantage of the softer dollar and headed up to a high of 1242 but so far unable to overcome the strong resistance offered by the 200 WMA.
The 4 hour momentum indicators are positive though, so we could yet see a topside break and if so, we could see a run towards 1255 and 1265. On the downside, support will be seen at 1230 and then again at 1215/20 and right now buying dips does seem to be the preferred option.
|SILVER||18.07||Silver finally headed above 18.00 on Thursday, reaching 18.14, and managed to hold on to its gains.
The momentum indicators are all looking supportive and we could now be in for a move to 18.20 and to 18.45, above which could then see a quick move to 19.00. On the downside, the initial support will now be seen at 18.00/17.90, and again at 17.75 and at 17.50/55. Buying dips is mildly preferred, looking for another leg higher although I remain cautious because of the chance of another dollar rally. Keep stops tight below 17.90.
|OIL (WTI)||53.80||WTI was choppy on Thursday but finished on a positive note at 53.75 having traded a range of 52.96/54.03.
A cautious stance is again required given that the momentum indicators are generally flat and offer little hint in either direction, possibly suggesting a similar choppy day ahead. Above the day’s high would find further offers nearby, at 54.10/30. The 4 hour momentum indicators do look mildly positive and above here could see quite an acceleration towards 55.20 although the daily charts give little indication of such a move. Beyond that though, there is again not too much to stop it heading to 56.90/57.00 although this is a long way off. On the downside, support will be seen at 53.00 and again at 52.70/30 although equally, this seems unlikely to be bothered today. While pretty much neutral, I still mildly prefer to trade from the long side and buying dips is mildly preferred.
The Euro did as we thought it might and squeezed higher on Wednesday and the 4 hour charts suggest that this could continue today, and above the session high could see a run above 1.0700 and possibly towards 1.0750. The dailies are rapidly losing their previous downside momentum and thus it looks as though we are in for a choppy few sessions ahead so I would not be too married to either side at these levels. On the downside, support will be seen at the various minor Fibo support levels of the rise from yesterday’s 1.0520 low. A break of 1.0500 would allow for a quick move lower as there is not too much below their ahead of 1.0453 although this looks some way off. For the coming session, look for 1.0620/1.0720 to cover it.
|24 Hour: Mildly bullish||Medium Term: Prefer to sell rallies|
|1.0797||3 Feb high||1.0641||(23.6% of 1.0520/1.0678)|
|1.0755||(76.4% of 1.0829/1.0520)||1.0618||(38.2% of 1.0520/1.0678)|
|1.0740||Minor||1.0600||(50% pivot of 1.0520/1.0678)|
|1.0710||(61.8% of 1.0829/1.0520)||1.0580||(61.8% of 1.0520/1.0678)|
|1.0675/78||(50% of 1.0829/1.0520) /Session high||1.0555||(76.4% of 1.0520/1.0678)|
Economic data highlights will include:
EU Leaders Summit, EU Current Account, US CB Leading Indicator, Baker Hughes Oil Rig Count.
The short term indicators still point lower on Friday, and despite the dailies still leaning higher it looks as though we could be in for a more sustained test of 113.00, below which, 112.85 and even 112.40 could come into view although buying dips would then be preferred. On the topside, today will see sellers at the various minor Fibo levels heading back to the Thursday high at 114.95. If 114.95 is taken out, unlikely today, there is little to stop the dollar heading on to 115.15/20, above which 115.60 would attract. Selling rallies with a tight SL above 113.80 seems the plan today although for a more structural view, buying any dip to around 112.50/60 seems a possibility.
|24 Hour: Mildly bearish||Medium Term: Prefer to buy dips|
|114.95||(76.4% of 114.95/113.12)||113.12||Session low|
|114.25||(61.8% of 114.95/113.12)||113.00||Minor|
|114.04||(50% pivot of 114.95/113.12)||112.86||(61.8% of 111.58/114.95)|
|113.80||(38.2% of 114.95/113.12)||112.60||Minor|
|113.55||(23.6% of 114.95/113.12)||111.38||(76.4% of 111.58/114.95)|
Cable managed to squeeze up to 1.2523 on Thursday but was unable to maintain those levels in the wake of the firm US data and is now back below 1.2500, with more choppy trade looking likely today although the UK Retail Sales may provide some direction.
Once again, the charts remain indecisive and more choppy trade looks likely. On the topside, resistance will be seen at the session high, above which would open the way back towards the 1.2548, 14 Feb high and on towards 1.2565 and to 1.2600, although the charts do not currently suggest that this is likely. On the downside, support will be seen at the 1.2454 session low, below which 1.2440 will again provide decent back up support. Below there sees 1.2400 and possibly lower although probably not today. Look for 1.2450/1.2550 to cover it today. There are easier trades out there.
|24 Hour: Neutral||Medium Term: Neutral|
|1.2582||9 Feb high||1.2453||Session low|
|1.2565||(61.8% of 1.2706/1.2346)||1.2440||Daily cloud top/100 DMA/55 DMA|
|1.2548||14 Feb high||1.2400||Minor|
|1.2523||Session high||1.2382||16 Feb low|
|1.2500||Minor||1.2365||Daily cloud base|
In line with the higher Euro, US$Chf headed back below parity on Thursday, finishing the day at the session lows at 0.9973, and looking heavy.
Although the hourlies are now oversold, the 4 hour momentum indicators still point lower, and on the downside support will arrive at around 0.9950/60, 0.9920 and 0.9900, below which would open 0.9870 although I doubt we head below 0.9900 today. If we do see further weakness though, buying dips still seems to be the plan given that the dailies still look positive. Back above 1.0000/10 would then allow a run toward 1.0045/50 and eventually back towards 1.0100 although not yet. Buying dips near 0.9900 is preferred.
|24 Hour: Mildly bearish||Medium Term: Prefer to buy dips|
|1.0136||16 Jan high||0.9975||Session low|
|1.018/121||16 Feb high/19 Jan high||0.9958||(61.8% of 0.9861/1.0118)|
|1.0085||Minor||0.9921||(76.4% of 0.9861/1.0118)|
|1.0045||100 HMA||0.9903||6 Feb high|
|1.0010||200 HMA||0.9870||2 Feb low|
The Aud was ahead of the market in rallying during the previous US session, and then carrying on in Asia to reach a high of 0.7732 following yesterday’s mixed Australian jobs data. It has since been unable to build on those gains and has traded a little heavily in drifting back to currently sit at 0.7690.
The momentum indicators look a little mixed and further choppy trade near current levels would not really surprise, and it could be that 0.7600 acts as a pivot. On the topside sellers will appear at 0.7715/20 and again at the 0.7732 high, but above which would allow for a run to 0.7750 where the descending trend resistance will provide a strong cap. Above here could head to the early November high of 0.7777, but not today I think. On the downside, support will be seen at 0.7680/85 and then at the rising trend support currently at 0.7650, ahead of the strong area below 0.7635 heading down to 0.7600.
|24 Hour: Prefer to sell rallies||Medium Term: Neutral|
|0.7777||8 Nov high||0.7650||Rising trend support|
|0.7750||Descending trend resistance||0.7636||16 Feb low|
|0.7731||Session high||0.7617||14 Feb low|
|0.7715||Minor||0.7605||7 Feb low|
The Kiwi is well underpinned today near session highs of 0.7243, with the Retail Sales and the Business PMI coming up shortly to provide the direction.
The short term momentum indicators are mixed but possibly leaning slightly positive, and if we get above the session high we could then head towards 0.7255, and above that brings 0.7280/0.7300 into view, but possibly not today. On the downside, the daily indicators remain bearish, so selling into near term strength is preferred. Minor support lies at 0.7200/05, at 0.7190 and at 0.7150/60. Below here looks unlikely today, but if wrong, look for a move towards the very strong support at 0.7120/15, and beyond that, to 0.7100.
|24 Hour: Prefer to sell rallies||Medium Term: Prefer to sell rallies|
|0.7317||(76.4% of 0.7375/0.7133)||0.7205||Session low|
|0.7282||(61.8% of 0.7375/0.7133)||0.7155||Minor|
|0.7255||(50% of 0.7375/0.7133)||0.7134||14 Feb low|
|0.7242||Session high||0.7120/15||200 DMA/100 DMA/55 DMA Converging/(50% of 0.6857/0.7375)|
Economic data highlights will include:
Business PMI, Retail Sales (Q4)