Stocks, US$ soft, on debate as to the timing of the next Fed rate hike. Empty calendar could see a quiet Friday

By | February 17, 2017
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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.

CURRENCIES
EURUSD: 1.0672
Res  1.0680  1.0710  1.0740
Sup  1.0640  1.0600  1.0620
USDJPY: 113.19
Res  113.50  113.80  114.05
Sup  113.05  112.85  112.60
GBPUSD: 1.2491
Res  1.2520  1.2550  1.2565
Sup  1.2460  1.2440  1.2400
USDCHF: 0.9972
Res  1.0010  1.0045  1.0085
Sup  0.9960  0.9925  0.9900
AUDUSD: 0.7691
Res  0.7715  0.7730  0.7750
Sup  0.7675  0.7650  0.7620
NZDUSD: 0.7226
Res  0.7240  0.7255  0.7280
Sup  0.7200  0.7180  0.7145
INDICES / COMMODITIES
S+P: 2343
Res  2350  2360  2370
Sup  2336  2330  2320
DJI: 20589
Res  20630  20650  20700
Sup  20535  20465  20395
ASX SPI: 5761
Res  5778  5790  5814
Sup  5740  5728  5700
GOLD: 1239
Res  1244  1256  1266
Sup  1230  1216  1206
SILVER: 18.07
Res  18.15  18.20  18.45
Sup  17.95  17.75  17.55
OIL (WTI): 53.80
Res  54.05  54.30  55.00
Sup  53.00  52.70  52.30

 

Indices/commodities
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.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
2390 2331 16 Feb low
2380 Minor 2320 14 Feb low
2370 Minor 2313 13 Feb low
2360 Minor 2300 Minor
2350 16 Feb high /All time high 2287 10 Feb low
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.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
20800 Minor 20535 Session low
20750 Minor 20466 16 Feb low
20700 Minor 20344 14 Feb low
20650 Minor 20224 13 Feb low
20624 16 Feb high /All time high 20100 Minor
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.

24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
5814 May 2015 high 5740 Minor
5700 Minor 5733/29 16 Feb low/15 Feb low
5789 9 Jan high 5697 14 Feb low
5778 Session high 5675 Minor
5770 Minor 5650 Minor
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.

24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
1263 200 DMA 1232 Session low
1255 (61.8% of 1337/1222) 1216 16 Feb low /100 DMA
1248 (50% pivot of 1375/1222) 1207 3 Feb low
1244 10 Feb high 1200/1198 100 WMA /2 Feb low
1242 200 WMA /Session high 1188 30 Jan low
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.

24 Hour: Mildly bullish Medium Term: Neutral
Resistance Support
18.98 10 Nov high 18.00 200 WMA
18.65 Minor 17.90 200 DMA
18.45 Descending Trend Resistance 17.75 13/14/15 Feb lows
18.20 (76.4% of 18.98/15.63) 17.55 10 Feb low
18.14 Session high 17.45 6 Feb low
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.

24 Hour: Mildly bullish Medium Term: Neutral
Resistance Support
56.90 (38.2% of 1.0765/26.03) 52.96 Session low
55.21 3 Jan high 52.71 16 Feb low
54.19/31 3 Feb high /6 Jan high 52.34 10 Feb low
54.10 10 Feb high /6 Feb high 51.20 7 Feb low/9 Feb low
54.03 Session high 50.70 10 Jan low

EURUSD: 1.0672

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
Resistance Support
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.

Meta Trader
EURUSD: 4 Hour


USDJPY: 113.19

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
Resistance Support
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)

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Meta Trader
USDJPY: 4 Hour


GBPUSD: 1.2491

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
Resistance Support
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

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Meta Trader
GBPUSD: 4 Hour


USDCHF: 0.9972

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
Resistance Support
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

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Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7691

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
Resistance Support
0.7800 Minor 0.7684 Session low
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

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Meta Trader
AUDUSD: 4 Hour


NZDUSD: 0.7226

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
Resistance Support
0.7317 (76.4% of 0.7375/0.7133) 0.7205 Session low
0.7300 Minor 0.7190 100 HMA
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)

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Meta Trader
NZDUSD: 4 Hour