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GBP/USD: UK Manufacturing Production
The Sterling edged lower against the US Dollar on the report showing mixed Britain's manufacturing and trade figures. The GBP/USD exchange rate fell 10 base points to continue depreciation in the 1.3400 area.
Britain's manufacturing expanded at its strongest annual pace in a year, while mixed trade figures and a downturn in construction left the market projections divided for the country's economy in 2018. The Office for National Statistics said that the UK factory output marked a 0.1% increase in October. Meanwhile, business surveys indicated that factories were enjoying higher demand from Europe, but also faced further rise in price pressures. The outcome of the country's quit from the EU is expected to be crucial for manufacturers' outlook.
EUR/JPY Potential Inverted Head And Shoulders On Intraday Charts
The EUR/JPY looks like it is forming an inverted head and shoulders pattern- Bullish SHS. The pair is currently sitting between H3 and H4, and there is still room to the upside. POC ( D L3/L4, EMA 89, ATR pivot) 133.18-35 and POC2 (W L3, historical support, D L5,ARE projection low) could reject the price towards higher resistance zones on a retracement. Targets are 134.05 and 134.47. 1h momentum and/or 4h close above 134.50 should open the door towards W H5 135.30. Break below 132.50 and EUR/JPY is bearish.
Trade Idea: GBP/USD – Stand aside
GBP/USD – 1.3375
Original strategy :
Exit long entered at 1.3410,
Position: - Long at 1.3410
Target: -
Stop: -
New strategy :
Stand aside
Position: -
Target: -
Stop:-
Despite rising to 1.3521 on Friday, lack of follow through buying and the subsequent retreat suggest recent upmove is not ready to resume and further consolidation below this month’s high at 1.3550 would be seen and pullback towards support at 1.3320 (last week’s low) cannot be ruled out, however, break there is needed to signal top has been formed at 1.3550, bring retracement of recent rise to 1.3300 but reckon downside would be limited to 1.3250-60 and previous support at 1.3221 should remain intact, bring rebound later.
In view of this, would be prudent to stand aside in the meantime. Above 1.3450 would bring another bounce towards 1.3520 resistance, however, only above this level would revive bullishness and signal correction from 1.3550 has ended, bring retest of this level first. Looking ahead, a break of 1.3550 would extend the rise from 1.3027 low to 1.3595-00, however, reckon recent high at 1.3658 (Sept high) would hold from here due to near term overbought condition, bring retreat later. Our preferred count is that (pls see the attached chart) the wave IV is unfolding as a complex double three (ABC-X-ABC) correction with 2nd wave B ended at 1.2774, hence 2nd wave C could have ended at 1.3658.
Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has ended at 1.7192, the subsequent selloff is the larger degree wave (C) which is still unfolding with minor wave (III) of larger degree wave 3 ended at 1.1986, hence wave (IV) correction is in progress which could either be a triangle wave (IV) of a complex formation but upside should be limited to 1.3500 and price should falter well below 1.4000, bring another decline in wave (V) of 3 for weakness to 1.1500, then 1.1200.
Gold Bearish In Short-Term, Remains Vulnerable But Immediate Downside Pressure Eases For Now
Gold has turned increasingly bearish and has shifted out of a range in which it has been trading in since early October. Prices broke below the 1270-1300 range to trade under 1250 since last Thursday.
On the 4-hour time frame, there was a bearish crossover of the 50 and 200-period moving averages. RSI has dipped into bearish territory and is slowly moving out of oversold levels. Gold prices are entering a consolidation phase due to the oversold conditions.
Immediate resistance is at 1250 which is currently being tested and could be quite a challenge to breach. A sustained break off this level could push prices towards the key 1260 area and then to the bottom of the recent range at 1270 with scope to re-enter the medium-term neutral phase.
Near-term support is expected between the 1243.48 low and 1247. Risk is tilted to the downside and there is potential for additional weakness for a move towards the 1235 area which was previously tested as support. From here a decline below 1230 cannot be ruled out.
The multi-month trend is bearish and the market remains vulnerable. But in the near term, congestion is expected to remain just below the 1250 area and above the 4-month low. Price action is soft but downside pressure is muted for now.
Technical Outlook: USDJPY – Hourly Cloud To Contain Corrective Dips
The pair probes below initial support at 113.37, provided by daily cloud top after Monday’s action posted marginally higher high at 113.68 (against Friday’s high at 113.58), but unable to sustain gains.
Strong rally on Thu/Fri generated bullish signal on close above daily cloud top, but corrective easing is signaled by reversal of RSI / slow stochastic from overbought zone on 4-hr chart.
Thick hourly cloud (spanned between 113.25 and 112.80) marks solid support which is expected to contain correction before broader bulls resume.
Hourly cloud base is reinforced by converged 30/55 SMA’s and should limit extended corrective dips.
Bulls eye initial target at 113.81 (Fibo 76.4% of 114.73/110.83 descend), ahead of recent peaks at 114.45/73 (the highest since March and marking the ceiling of broader 114.73/107.31 range).
Res: 113.68, 113.81, 114.45, 114.73
Sup: 113.25, 112.80, 112.52, 112.34
Trade Idea : USD/CHF – Buy at 0.9860
USD/CHF - 0.9911
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 0.9917
Kijun-Sen level : 0.9942
Ichimoku cloud top : 0.9945
Ichimoku cloud bottom : 0.9912
Original strategy :
Buy at 0.9890, Target: 0.9990, Stop: 0.9855
Position : -
Target : -
Stop : -
New strategy :
Buy at 0.9860, Target: 0.9970, Stop: 0.9825
Position : -
Target : -
Stop : -
As the greenback has retreated again after rising to 0.9780, suggesting consolidation below this level would be seen and pullback to 0.9885 (38.2% Fibonacci retracement of 0.9735-0.9978), however, reckon 0.9855-60 (50% Fibonacci retracement) would hold and bring another rise later, above 0.9950 would suggest the retreat from 0.9978 has ended, bring retest of this level, break there would signal recent upmove has resumed and extend gain to 1.0000 but price should falter below recent high at 1.0038.
In view of this, would not chase this rise here and we are looking to buy dollar on subsequent pullback as 0.9855 support should contain downside. Only below 0.9825-30 (61.8% Fibonacci retracement of 0.9735-0.9978) would abort and signal top has been formed, bring further fall to 0.9800.
Trade Idea : GBP/USD – Stand aside
GBP/USD - 1.3383
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 1.3397
Kijun-Sen level : 1.3426
Ichimoku cloud top : 1.3454
Ichimoku cloud bottom : 1.3421
New strategy :
Stand aside
Position : -
Target : -
Stop : -
As cable’s retreat from 1.3521 has kept sterling under pressure, suggesting near term downside risk remains for weakness to 1.3345-50, however, as outlook remains consolidative, reckon support at 1.3320 would limit downside and bring further choppy trading. Only a drop below this level would revive bearishness and signal top has been formed at 1.3550 earlier, bring retracement of recent rise to 1.3290-00 first.
On the upside, expect recovery to be limited to 1.3430-35 and the upper Kumo (now at 1.3454) should hold, bring another decline later. Above the upper Kumo would bring a stronger rebound to 1.3490-95 but still reckon resistance at 1.3521 would hold from here, bring retreat later. As near term outlook is mixed, would be prudent to stand aside for now.
Trade Idea : EUR/USD – Sell at 1.1835
EUR/USD - 1.1795
Most recent candlesticks pattern : N/A
Trend : Near term down
Tenkan-Sen level : 1.1784
Kijun-Sen level : 1.1764
Ichimoku cloud top : 1.1790
Ichimoku cloud bottom : 1.1765
Original strategy :
Sell at 1.1825, Target: 1.1725, Stop: 1.1860
Position : -
Target : -
Stop : -
New strategy :
Sell at 1.1835, Target: 1.1735, Stop: 1.1870
Position : -
Target : -
Stop : -
As the single currency found support at 1.1730 late last week and euro has rebounded, suggesting consolidation above this level would be seen and corrective bounce to 1.1810 (38.2% Fibonacci retracement of 1.1940-1.1730) cannot be ruled out, however, reckon upside would be limited to 1.1835 and bring retreat later, below 1.1760 would bring retest of 1.1730 but break of this support is needed to confirm recent decline has resumed and extend weakness to previous key support at 1.1713. Looking ahead, only break there would retain bearishness for subsequent decline towards 1.1660-70.
In view of this, we are looking to sell euro on further subsequent recovery as said resistance at 1.1815 should limit upside and bring another decline. Above 1.1845-50 would defer and suggest low is formed, bring a stronger rebound to 1.1875-80 first.
Trade Idea : USD/JPY – Buy at 112.90
USD/JPY - 113.39
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 113.52
Kijun-Sen level : 113.41
Ichimoku cloud top : 113.20
Ichimoku cloud bottom : 112.79
Original strategy :
Buy at 112.90, Target: 114.00, Stop: 112.55
Position : -
Target : -
Stop : -
New strategy :
Buy at 112.90, Target: 114.00, Stop: 112.55
Position : -
Target : -
Stop : -
As the greenback has retreated after rising to 113.69 earlier today, suggesting consolidation below this level would be seen and pullback to 113.00-05 (38.2% Fibonacci retracement of 111.99-113.69), however, reckon 112.80-85 (50% Fibonacci retracement) would hold and bring another rise later, above said resistance at 113.69 would extend recent rise from 110.84 low to resistance area at 113.91-114.07 but a sustained breach above this region is needed to signal early uptrend has resumed for headway to 114.34.
In view of this, would not chase this rise here and would be prudent to buy dollar again on pullback as 112.90-00 should limit downside and bring another rise later. Below the lower Kumo (now at 112.79) would defer and risk test of 112.55-60 but only break of latter level would signal top is formed instead, bring subsequent fall to 112.20-25.
Dollar Little Changed, Kiwi Surges, Nikkei Touches 26-Year High
Here are the latest developments in global markets:
FOREX: The dollar was trading down relative to a basket of currencies but still not far below a three-week high of 94.09 reached on Friday. The antipodean currencies – predominantly the kiwi – were advancing relative to the greenback. The New Zealand dollar’s gains came on the back of expectations of a more hawkish approach to monetary policy following the appointment of a new governor who’s seen as less of a dove by market participants.
STOCKS: The Nikkei 225 added 0.6% to finish the day at its highest since early 1992; major Asian indices were broadly on the rise with the Hang Seng being last up by 1.1%. Euro Stoxx 50 futures traded 0.1% up at 0755 GMT. Dow, S&P 500 and Nasdaq 100 futures were up by 0.2%, 0.15% and 0.3% respectively.
COMMODITIES: WTI and Brent crude were down but not much changed relative to Friday’s close. WTI was last at $57.30 per barrel and Brent at $63.38. Gold was 0.2% up, trading around $1,250.00 per ounce
Major movers: Dollar’s index not much changed; kiwi jumps on appointment of new governor
The dollar’s index against a basket of six currencies traded at 93.8, being 0.1% down on the day, while dollar/yen was little changed, trading close to the four-week high of 113.68 reached earlier in the day. The Fed is widely expected to raise interest rates as it completes it two-day meeting on monetary policy on December 13. Further monetary policy divergence between the Federal Reserve and the Bank of Japan is supportive of a stronger dollar.
Euro/dollar was 0.2% up and not far below the 1.18 handle after losing ground the preceding week. Pound/dollar was up by a similar proportion, trading slightly above the 1.34 level. Optimism on Brexit saw the pair exceed 1.35 during the previous week.
Adrian Orr being appointed as the Reserve Bank of New Zealand’s new governor spurred a rally in the local dollar. Kiwi/dollar was up by 1.2%, trading little below 0.6930, a two-week high touched earlier in the day. Markets apparently view Orr as being more on the hawkish rather than the dovish side. Aussie/dollar was also up, specifically by 0.4% and above the 0.75 handle.
In other news, the first bitcoin futures contracts started trading at 2300 GMT on the CBOE Futures Exchange.
Day ahead: JOLTs job openings attract attention; eyes on Fed & tax deliberations
Economic releases during the day would be light, with the US JOLTs job openings being the figures attracting most interest. Particularly, the report published by the Burau of Labor Statistics, is likely to show that 6,030 million positions opened in November compared to 6,093 million seen in the previous month.
However, news on monetary policy and tax legislation would also be of significance as the Fed is heading for its last policy meeting of the year on Tuesday-Wednesday – markets are widely anticipating policymakers to raise interest rates by 25 basis points to 1.50%. On the fiscal front, investors remain optimistic on the passage of tax cuts which Republicans hope to turn into law before the year-end, rendering this President Trump’s first major legislative achievement.
Technical Analysis: NZDUSD back to 0.6900 but neutral bias still intact
NZDUSD is trading at two-week high levels above 0.6900, as the outlook for monetary policy was altered after the appointment of a new hawkish RBNZ governor. However, in the short-term, the bias remains neutral given that the pair continues to trade between 0.6779 and 0.6978 since the end of October.
On the upside, immediate resistance could be found at the 50-day exponential moving average of 0.6948 before the upper bound of the range comes into view (0.6978). Breaking this point would turn the bias from neutral to bullish, opening the scope for a re-test of the 38.2% Fibonacci at 0.7029 of the downleg from 0.7433 to 0.6779. Additional resistance could emerge around the 0.7100 area (50% Fibonacci).
On the downside, the lower bound of the range (0.6779) could act as potential support. But any close below this could stretch the longer-term downleg started from 0.7557 to 0.6779 towards the 0.6600 area which has been repeatedly tested in the past. In case of sharp decreases, the focus would shift towards the two-year low of 0.6347.