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Aussie Dollar Trading Higher In The Morning Session
For the 24 hours to 23:00 GMT, the AUD declined 0.8% against the USD and closed at 0.7814 on Friday.
LME Copper prices rose 1.3% or $88.5/MT to $7008.5/MT. Aluminium prices rose 1.4% or $30.5/MT to $2159.0/MT.
In the Asian session, at GMT0300, the pair is trading at 0.782, with the AUD trading 0.08% higher against the USD from Friday’s close.
The pair is expected to find support at 0.7796, and a fall through could take it to the next support level of 0.7772. The pair is expected to find its first resistance at 0.7850, and a rise through could take it to the next resistance level of 0.7880.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
Trade Idea: AUD/USD – Hold short entered at 0.7875
AUD/USD – 0.7825
Original strategy:
Sold at 0.7875, Target: 0.7700, Stop: 0.7890
Position: - Short at 0.7875
Target: - 0.7700
Stop:- 0.7935
New strategy :
Hold short entered at 0.7875, Target: 0.7700, Stop: 0.7890
Position: - Short at 0.7875
Target: - 0.7700
Stop:- 0.7890
Aussie met resistance at 0.7884 and has retreated, retaining our bearishness and consolidation with downside bias remains for weakness to support at 0.7771, however, break there is needed to signal the rebound from 0.7733 has ended at 0.7897, bring a retest of said support at 0.7733, below there would confirm recent fall from 0.8125 top has resumed for weakness to 0.7700-10 and later towards 0.7660-65.
In view of this, we are holding on to our short position entered at 0.7875. Only above previous support at 0.7908 (now resistance) would defer and risk a stronger rebound to 0.7950 but resistance at 0.7986 should remain intact and bring another decline later.
On the 4-hour chart, recent upmove from 0.7329 is unfolding as an impulsive rise with wave 3 as well as smaller degree wave (iii) extending, only minor wave v of (iii) has ended at 0.8125, hence bullishness remains for this move to extend headway to 0.8200, then towards 0.8300, however, reckon upside would be limited to 0.8400 and the final wave 5 should falter below 0.8500, bring correction later.
Euro-Zone’s Current Account Surplus Rose To A 15-Month High In August
For the 24 hours to 23:00 GMT, the EUR declined 0.65% against the USD and closed at 1.1770 on Friday.
In economic news, the Euro-zone's seasonally adjusted current account surplus notched its highest level since May 2016 in August, after it widened to €33.3 billion, boosted by larger exports of goods. The region had registered a revised surplus of €31.5 billion in the prior month.
The greenback advanced against its major counterparts, on the back of renewed optimism over the US President, Donald Trump's tax reforms plans, after the US Senate approved a budget blueprint.
On the macro front, existing home sales in the US unexpectedly rebounded 0.7% on a monthly basis to a level of 5.39 million in September, defying market expectations for a fall to a level of 5.30 million and after registering a level of 5.35 million in the previous month.
Meanwhile, the Federal Reserve (Fed) Chairwoman, Janet Yellen, warned that there is an “uncomfortably high” risk that the central bank may have to deploy crisis-era unconventional policy tools again if the US economy remains stuck in a low interest-rate regime. Further, Yellen also noted that the Fed is making “good progress” in reducing its massive portfolio of bond holdings.
In the Asian session, at GMT0300, the pair is trading at 1.1768, with the EUR trading marginally lower against the USD from Friday's close.
The pair is expected to find support at 1.1737, and a fall through could take it to the next support level of 1.1707. The pair is expected to find its first resistance at 1.1812, and a rise through could take it to the next resistance level of 1.1857.
Moving ahead, investors would eye the Euro-zone's flash consumer confidence index for October, slated to release later today. Further, the US Chicago Fed national activity index for September, due to release later in the day, will be on investors' radar.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
EUR/USD Candlesticks and Ichimoku Analysis
Weekly
• Last Candlesticks pattern: Shooting star
• Time of formation: 31 Jul 2017
• Trend bias: Near term up
Daily
• Last Candlesticks pattern: Shooting star
• Time of formation: 2 Aug 2017
• Trend bias: Up
EUR/USD – 1.1770
Although the single currency retreated to as low as 1.1730 last week, as euro found support there and rebounded, retaining our bullishness for near term rise from 1.1669 low to resume after consolidation, above strong resistance at 1.1858 would add credence to this view and bring test of previous resistance at 1.1880. Once this level is penetrated, this would confirm and encourage for headway to the upper Kumo (now at 1.1922) but a daily close above there is needed to retain bullishness and extend gain to indicated resistance at 1.2005 but upside would be limited to resistance at 1.2035 and price should falter below key level at 1.2093.
On the downside, as long as support at 1.1730 holds, prospect of another rebound remains. A daily close below there would suggest the rebound from 1.1669 low has ended instead, risk another test of this level, break there would extend the erratic decline from 1.2093 top for retracement of early upmove to 1.1595-00, break there would bring subsequent fall to 1.1550, then towards 1.1500, having said that, previous support at 1.1479 should limit downside and 1.1466 (50% Fibonacci retracement of 1.0839-1.2093) should hold on first testing.
Recommendation: Hold long entered at 1.1775 for 1.1975 with stop below 1.1675.
On the weekly chart, the single currency remains confined within recent range and further sideways trading is in store, however, reckon downside would be limited to 1.1730 and bring another rebound later, above last week’s high at 1.1858 would bring test of 1.1880 would suggest the pullback from 1.2093 top has possibly ended and extend gain to 1.1935-40, then towards 1.2035-40. Having said that, break there is needed to provide confirmation, bring retest of 1.2093. A break above there would extend recent rise from 1.0340 low to 1.2160-70 (50% Fibonacci retracement of 1.3993-1.0340) but loss of upward momentum should limit upside to 1.2220-30 and reckon 1.2300-10 would hold from here, price should falter well below 1.2390-00, bring another retreat later
On the downside, below support at 1.1730 would risk another test of this month’s low at 1.1669 but only break there would signal a temporary top has been formed at 1.2093, bring retracement of recent rise to 1.1610-15 (38.2% Fibonacci retracement of 1.0839-1.2093) and possibly towards 1.1550, having said that, downside should be limited to 1.1510-20 and 1.1460-70 (50% Fibonacci retracement) should remain intact, price should stay well above support at 1.1312, bring another rise.
UK’s Public Sector Net Borrowing Registered A Deficit In September
For the 24 hours to 23:00 GMT, the GBP rose 0.24% against the USD and closed at 1.3187 on Friday, amid hopes of constructive talks over Brexit, after the UK Prime Minister, Theresa May, called on EU leaders for a new dynamic that would allow Brexit talks to progress.
Macroeconomic data indicated that Britain's public sector net borrowing posted a less-than-anticipated deficit of £5.3 billion in September, following a revised deficit of £4.1 billion in the prior month, while markets were expecting public sector net borrowing to post a deficit of £5.7 billion.
In the Asian session, at GMT0300, the pair is trading at 1.3193, with the GBP trading marginally higher against the USD from Friday's close.
The pair is expected to find support at 1.3120, and a fall through could take it to the next support level of 1.3048. The pair is expected to find its first resistance at 1.3233, and a rise through could take it to the next resistance level of 1.3274.
With no major macroeconomic releases in the UK today, investor sentiment would be governed by global macroeconomic factors.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
USD/JPY Candlesticks and Ichimoku Analysis
Weekly
• Last Candlesticks pattern: Dark cloud cover
• Time of formation: 10 Jul 2017
• Trend bias: Down
Daily
• Last Candlesticks pattern: Evening doji
• Time of formation: 7 Aug 2017
• Trend bias: Down
USD/JPY – 113.74
The greenback found renewed buying interest at 111.65 early last week and has staged a strong rebound from there, dampening our near term bearishness and upside risk remains for the rise from 107.32 low to extend further gain to towards 114.30-35 (61.8% Fibonacci retracement of 118.66-107.32), however, a daily close above resistance at 114.50 is needed to retain bullishness and suggest the fall from 118.66 has ended, then upside bias remains for headway to 115.00 and then towards 115.50-55.
On the downside, whilst pullback to 113.00 cannot be ruled out, reckon the Tenkan-Sen (now at 112.61) would limit downside and extend further gain later. Below 112.30 would bring weakness to 112.00 but only break of said support at 111.65 would revive bearishness and suggest top is possibly formed, bring retracement of recent rise to 111.10-15, having said that, reckon downside would be limited to the upper Kumo (now at 110.91) and 110.00 should hold, price should stay well above previous support at 109.55, bring rebound later.
Recommendation : Stand aside for this week.
On the weekly chart, last week’s rebound after finding decent demand at 111.65 formed a white candlestick, suggesting the rise from 107.32 low is still in progress and mild upside bias is seen for this move to bring at least a retracement of the fall from 118.66 to 114.30-35 (61.8% Fibonacci retracement) but a sustained break above resistance at 114.50 is needed to signal the aforesaid decline has ended, bring further rise to psychological level at 115.00, then test of resistance at 115.51, break there would add credence to this view and encourage for headway to 116.50-60 first.
On the downside, expect pullback to be limited to 113.00 and 112.30 should hold, bring another rise later. Only below 111.65 would suggest a minor top is possibly formed, bring weakness to the Kijun-Sen (now at 110.91), however, only a weekly close below there would confirm the rebound from 107.32 has ended, bring further fall to 109.90-95 but still reckon support at 109.55 would contain downside and bring another rise later.
Japanese Prime Minister Retains Two-Third Majority In National Elections
For the 24 hours to 23:00 GMT, the USD rose 0.84% against the JPY and closed at 113.51 on Friday.
In the Asian session, at GMT0300, the pair is trading at 113.75, with the USD trading 0.21% higher against the JPY from Friday’s close, following the outcome of a snap election in Japan.
The Japanese Prime Minister, Shinzo Abe’s ruling coalition secured a resounding victory after winning 312 out of 465 seats at Sunday’s election.
The pair is expected to find support at 113.18, and a fall through could take it to the next support level of 112.61. The pair is expected to find its first resistance at 114.21, and a rise through could take it to the next resistance level of 114.67.
Moving ahead, traders would focus on Japan’s flash Nikkei manufacturing PMI for October, slated to release overnight.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
Canada’s Annual Inflation At A 5-Month High In September, Retail Sales Unexpectedly Fell In August
For the 24 hours to 23:00 GMT, the USD rose 1.08% against the CAD and closed at 1.2620 on Friday.
The Canadian Dollar lost ground against the USD, after Canadian retail sales surprised with an unexpected drop in August and inflation growth missed expectations in September.
Data showed that Canada's retail sales unexpectedly eased 0.3% on a monthly basis in August, pointing to a slowdown in the nation's retail sector growth and confounding market consensus for a rise of 0.5%. In the prior month, retail sales had climbed 0.4%.
Meanwhile, the nation's consumer price index (CPI) rose 1.6% on an annual basis in September, falling short of market expectations for an advance of 1.7%. However, it was the highest reading since April 2017. The CPI had advanced 1.4% in the previous month.
In the Asian session, at GMT0300, the pair is trading at 1.2628, with the USD trading 0.06% higher against the CAD from Friday's close.
The pair is expected to find support at 1.2525, and a fall through could take it to the next support level of 1.2422. The pair is expected to find its first resistance at 1.2686, and a rise through could take it to the next resistance level of 1.2744.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
Swiss Franc Trading A Tad Higher In The Asian Session
For the 24 hours to 23:00 GMT, the USD rose 0.9% against the CHF and closed at 0.9850 on Friday.
In the Asian session, at GMT0300, the pair is trading at 0.9847, with the USD trading slightly lower against the CHF from Friday’s close.
The pair is expected to find support at 0.9807, and a fall through could take it to the next support level of 0.9768. The pair is expected to find its first resistance at 0.9875, and a rise through could take it to the next resistance level of 0.9904.
Amid a lack of major macroeconomic release in Switzerland today, investors will look forward to global macroeconomic events for further direction.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
GBP/JPY Daily Outlook
Daily Pivots: (S1) 148.45; (P) 149.14; (R1) 150.32; More
GBP/JPY's rebound from 146.92 extends higher today. Break of 149.73 support turned resistance suggests that pull back from 152.82 has completed at 146.92 already. Intraday bias is turned back to the upside for retesting 152.82 first. Firm break there will resume whole medium term rise from 122.36. On the downside, break of 148.13 minor support will turn bias to the downside and extend the correction from 152.82. In that, we'd expect strong support from 61.8% retracement of 139.29 to 152.82 at 144.45 to bring rebound.
In the bigger picture, medium term rebound from 122.36 is still expected to resume after corrective pull back from 152.82 completes. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. However, break of 139.29 will indicate rejection from 150.43 key fibonacci level. And the three wave corrective structure of rebound from 122.36 will argue that larger down trend is resuming for a new low below 122.26.
