Originally published by AxiTrader
The US$ is mixed, possibly mildly firmer today, underpinned by the Q2 GDP which expanded at 1.4% annualised, up from the 1.1% reported last month and higher than analysts' expectations. Oil has remained firm following on from the surprise OPEC announcement of the previous session, while US stocks are lower, weighed down by Apple Inc (NASDAQ:AAPL) as well as the banks, as investors continue to worry about the health of Deutsche Bank AG (DE:DBKGn) NA O.N. (NYSE:DB). The Deutsche headlines hit risk sentiment and saw a run back into the Yen and Chf, and out of the risk related currencies such as the AUD/USD and NZD/USD.
Friday will see a steady flow of secondary data, kicking off with the NZ ANZ Business Confidence/Outlook and followed later in the Asian session by a whole dump of economic numbers from Japan, including the August CPI, Housing Starts, Construction Orders, Industrial Production and Unemployment. The Caixin China Manufacturing and Services PMIs and Australian Housing Starts and Private Sector Credit are also due. Europe will look to the UK Q2 GDP and the EU CPI & Unemployment for guidance, while from the US we get the Personal Consumption /Expenditure, Personal Income/Spending, Chicago Purchasing Managers Index and the Rts/Michigan Consumer Sentiment Index.
EURUSD: 1.1220
The EUR/USD is unchanged at the end of the session after another tight range – a little surprising given the reaction seen in the stock markets to the negative Deutsche Bank headlines - but once again underpinned by the converging 100 DMA/200 DMAs. The 4 hour charts are now flat, as are the dailies, so at current levels I would not be getting too involved as there are better things to trade right now. As before, there is decent support all the way down to 1.1100 so don’t expect any accelerated move lower. On the topside, the session high has been at 1.1249, above which would run into trouble at the weekly Kijun at 1.1260, which looks likely to cap any near term rally. A break of 1.1260 could yet see a run up towards 1.1300 but with the daily charts looking completely flat it would seem likely that we are in for more of the same, choppy, sideways trade. If the noise around Deutsche increases, expect some downside pressure for the Euro.
As before, I would be looking to sell into the strength as I don’t think the Euro has the legs to make too much of a run to the topside and which certainly would not suit the ECB. If wrong, a break of 1.1300 would see a bit of a squeeze higher, towards 1.1400, so leave a tight SL, but I would again be concerned at getting caught long near the top of the range and would rather be looking for levels to sell into.
In the bigger picture nothing has changed, as the major support/resistance levels are narrowing, to a rough 5 big figure range, between 1.1075/1.1550, and further consolidation looks set to continue, given that the weekly momentum indicators currently absolutely flat. With the apparently diverging monetary policies of the Fed and the ECB, it is hard to see the Euro rallying too far and any approach to the topside resistance at around 1.1550 would seem a decent sell opportunity, with a SL placed at around 1.1600.
24 Hour Bias: Neutral
Medium Term Bias: Neutral
Economic data highlights will include:
German Retail Sales, EU Unemployment, Provisional CPI (August), US Personal Consumption/Expenditure – Price Index, Personal Income/Spending, Chicago Purchasing Managers Index, Rts/Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count
USDJPY: 101.02
24 Hour Bias: Prefer to sell rallies
Medium Term Bias: Mildly Bearish
The early upbeat risk sentiment on the back of the OPEC deal saw the JPY/USD weaken (less need for safe haven assets) although this has since been reversed in NY as the stock markets headed lower due to increasing concerns over the health of Deutsche Bank, in particular, and the EU banking system in general. Technically, the rally headed towards the sell zone that we have previously mentioned (high 101.86) but did not take out the descending trend resistance at 102.25, which would have caused us to be stopped out. The trend resistance now lies at 102.15, so reduce stops accordingly. The momentum indicators are fairly flat so at current levels I would tend to leave the pair alone although selling rallies is again preferred with a stop placed just above 102.15, reducing in line with the trend line as it comes down over the next few days. On the downside, if we do break 100.00 then we could see a quick visit to the previous lows at 99.53 and 98.94.
Economic data highlights will include:
August CPI, Housing Starts, Construction Orders , Industrial Production, Unemployment, Foreign Bond/Stocks Investment
GBPUSD: 1.2975
24 Hour Bias: Neutral
Medium Term Bias: Neutral
Cable was steady in Europe but then drifted lower in US trade, not helped by some dovish BOE comments or from the continuing fears over the chance of a “hard Brexit”. A neutral stance now seems wise as we head towards the base of the triangle formation, a break of which could see an acceleration to 1.2900 and then possibly lower. As long as 1.2930 holds though, the triangle will remain valid and should eventually allow a squeeze back into the 1.30/1.31 area
Economic data highlights will include:
UK GDP (Q2), Total Business Investment (Q2)
USDCHF: 0.9660
24 Hour Bias: Mildly Bearish
Medium Term Bias: Neutral
USD/CHF is lower today, with the Chf in some demand after traders focused on the negative Deutsche Bank headlines and began to look for a safe haven. The short term momentum indicators look mixed so further choppy trade seems likely but the daily indicators may be attempting to point lower, so if anything I would prefer to be short although there is decent support ahead at 0.9580.
Economic data highlights will include:
n/a
AUDUSD: 0.7635
24 Hour Bias: Mildly Bearish
Medium Term Bias: Neutral
The AUD/USD did its best to break above 0.7700, but as we thought yesterday, it failed to gain any momentum and is now lower again, not helped by the “risk-off” sentiment brought about by the Deutsche Bank headlines, and is currently sitting near session lows after having tested the support at 0.7620. With the 4 hour charts now pointing lower we could see a more sustained test of 0.7620, a break of which would then see a move towards 0.7600/05 where decent support lies. Under 0.7600 would suggest that we have seen a medium term top and could then see the next leg lower although that looks unlikely today. The dailies are yet to show any downside momentum so we could yet see another topside squeeze, where, on the topside sellers will emerge above 0.7650 and again at 0.7680 and at 0.7700/10. Above here seems unlikely for a while but further decent sellers would emerge in the 0.7735/50 area.
As we said before, with the Fed now likely to stay on hold until December, and the RBA for even longer, the downside for the AUD would seem to be somewhat limited and overall, the choppy conditions look set to remain in place.
Economic data highlights will include:
New Home Sales, Private Sector Credit, Caixin China Manufacturing/Services PMIs,
NZDUSD: 0.7252
24 Hour Bias: Prefer to sell rallies
Medium Term Bias: Neutral
The NZD/USD is a little lower today as risk sentiment soured after the Deutsche Bank headlines. The momentum indicators are mixed, so a choppy sideways session may lie ahead, but with a mild downside bias.
As before, with the Fed now likely to stay on hold until December, the downside for the Kiwi would seem to be somewhat underpinned by yield seekers although the dovish outlook from the RBNZ last week, hinting at a potential rate cut next month will come increasingly into focus. It seems unlikely that we are going to see a run to much above the recent highs at around 0.7365 any time soon and I suspect that selling into strength still remains the longer term plan.
Economic data highlights will include:
ANZ Business Confidence/Outlook