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Italian Woes Hurt European Equities, UK Economy Takes Worst Hit Since 2012

August 10, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: EUR-USD, UK Economy, USD/JPY, Yen

European market closes the week on disappointing note over data and Italian political scenario driven momentum. US & Canadian data in focus for short term profit opportunities.

Summary: Global equity markets are seeing dovish picture in last trading session of the day. Asian market saw relatively mixed outcome with China and Singapore markets taking a dovish hit while other major economies such as Australia, Japan, India, Korea and Taiwan saw positive outcome. Later in the day, equities across Middle East and European markets saw dovish performance on geo-political cues. In European market, instability in Italian government as Matteo Salvini, Leader of ruling League party pulled back his support for country’s ruling coalition adding more dovish influence to market which was already suffering from increased odds of No-Deal Brexit scenario and prolonged Sino-U.S. trade war. Further, data driven momentum saw bears drive the price to fresh lows as both EU and UK data disappointed with UK GDP, trade balance and manufacturing production data outcomes pointing to worst economic hit since 2012 just as UK and EU are heading to hard Brexit outcome scenario. Forex market is seeing mixed activity with risk aversion giving bears the upper hand.

Precious Metals: As predicted earlier this week, safe haven demand pushed the price above $1500 handle as high as $1510.38 earlier this week. But lack of strength owing to easing trade war woes and profit booking activities resulted in the pair declining below $1500 handle. But prevalent risk aversion over issues in Europe helps keep price of gold above $1490 handle. Meanwhile Silver remains steady above $16 handle and is trading with positive bias today.

Crude Oil: Crude oil price is trading positive in the global market today with both major international benchmarks Brent and WTI seeing positive activity. While International Energy Association reported that demand growth for crude oil is at lowest level since financial crisis of 2008, influence from draw in US crude oil inventory and expectations of further production and supply cut from OPEC in near future caused crude oil bulls to remain fundamentally supported across today’s trading session so far.

USD/JPY: The pair is trading well in red today as risk aversion in the global market remains high. Demand for safe haven assets/currencies is spiking with each passing day as odds surrounding prolonged trade war and hard Brexit outcome are steadily increasing. USD remains week on decline in US. T.Yields meanwhile Yen is growing stronger. Traders are now awaiting US macro data for directional bias just as the pair is looking to break below $106 handle and enter $105 price level in early European session.

On The Lookout: As trading session comes to close for the week, yet another major event shocked the global market increasing dovish influence from geo-political woes. There are now new/fresh developments in major geo-political events that could influence a bullish breakout in global financial market. Meanwhile, instability in Italian politics following Salvini’s latest move is talk of the market as any further unfavourable developments in Italian politics could cripple European economy significantly. Meanwhile, despite lack of change in status quo surrounding hard Brexit outcome, Jeremy Corbyn is back to forefront again with his efforts to try and prevent Hard Brexit outcome as it seems highly unlikely for Boris Johnson to face a no-confidence vote scenario. In North American market hours today, traders are set to see release of US PPI data, Canadian Building Permits data, Employment change and Unemployment rate data.

Trading Perspective: In Forex market dovish activity is likely to continue but dovish outcome in US macro data could result in USD weakening further, giving major global currencies a small opportunity to reverse some of intra-day losses. US stock and index futures trading in the international market saw dovish activity ahead of US market hours despite yesterday’s session seeing US indices seeing positive activity as geo-political woes greatly affected investor sentiment. US Wall Street is likely to see subdued opening on last trading session of the week amid silent earnings calendar.

EUR/USD: The pair is trading positive in the global market today supported by USD’s weakness driven rally. But gains are capped and price remains well below 1.1200 handle as EURO bulls suffered sharp bearish influence from disappointing EU/UK macro data and Italian Political uncertainties. Traders now await US macro data for short term profit opportunities as trading session comes to close for the week.

GBP/USD: The pair suffered sharp losses today with price hitting new 2-year lows as UK macro data hinted that UK economy took worst hint since 2012 while GBP is already suffering from increasing odds of hard Brexit outcome scenario. The pair is trading above mid-1.20 handle for now but positive outcome in US macro data could lead to pair declining below 1.2050 handle as trading session comes to close for the week.

USD/CAD: The pair is trading flat in the European market hours with bias slightly favouring Canadian Loonie. The commodity linked currency Canadian Loonie is gaining positive momentum today as Crude oil is seeing positive price action in the global market while USD suffers from weak US T.Yields. Traders now await US and Canadian macro data for short term profit opportunities and directional bias as trading session comes to close for the week.

Please feel free to share your thoughts with us in the comments below.

Yen at 2 Week Highs, Pound Breaks Below 1.25

July 9, 2019 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: NFP data, Pounds, Yen

Asian indices finished mixed today as investors turn cautious after better NFP data from the USA last Friday and increased trade tensions around the globe. The Nikkei225 finished 0.14 percent higher at 21,565 the Hang Seng slipped 0.62 percent at 28,156. The Shanghai Composite finished 0.32 percent lower to 2,924, while in Singapore the FTSE Straits Times index finished 0.04 percent higher to 3,335. Australian equities and ASX200 ended down 0.25 percent to 6,655.

European equities also trading lower today. DAX30 is giving up 0.20 percent to 12,543 CAC40 is 0.08 percent lower at 5,589 while the FTSE MIB in Milan is trading 0.04 percent lower at 21,976. The London Stock Exchange is 0,05 percent lower to 7,549 amid non-deal Brexit worries.

In commodities markets, crude oil trades 0.31 percent lower at $57.41 as traders turn cautious on trade war headlines. Brent oil trades also lower at $64,09 per barrel despite major oil producers have agreed to cut output. Gold today trades lower at 1,393 keeping the bullish momentum as the price holds above all the major daily moving averages. On the upside, strong resistance will be met at 1,400 round figure and then at 1,437 recent high.

In cryptocurrencies market, bitcoin (BTCUSD) rallies above 12,000 at 12,650, hitting the daily low at 12,189 and the daily high at 12,808. Immediate support for BTC stands now at $12,000 while next support stands at 11,500. On the upside, strong resistance now stands at 12,808 the daily high and then at 13,000 round figure. Ethereum (ETHUSD) also trades higher at 312 with capitalization now to 33.50 billion, on the upside the immediate resistance stands at 317 daily high while the support stands at 243 the 50-day moving average, Litecoin (LTCUSD) also trades higher at 121. The crypto market cap now stands above $349.0 billion.

On the Lookout: The National Australia Bank’s Business Conditions came in at 3 in June matching expectations. Aussie business confidence index fell to 2 in June as analysts’ expected from 7 in May. The ANZ-Roy Morgan Australian Consumer Confidence index came in at 1.1% percent below the previous week reading.

In Canada, the housing starts and building permits data will be published at 12:30 GMT while the US JOLTS job openings data will be published at 14:00 GMT and API crude stockpiles at 20:30 GMT.

Trading Perspective: In forex markets, USD trades 0.18 percent higher at 97.54 after strong NFP data last Friday. The Aussie dollar consolidates trades lower at 0.6945, while Kiwi also trades lower at 0.6614.

GBPUSD Hourly (H1) Chart

GBPUSD is trading sharply lower breaking below the 1.25 mark at 1.2466 as traders are still cautious around the Brexit developments. Major support now stands at 1.24 which if broken might accelerate the slide further towards 1.23 round figure. On the upside, immediate resistance now stands at 1.2518, the 50-hour moving average while more offers will emerge at 1.2547, the 100-hour moving average.

Sterling futures markets open interest increased by 1.100 contracts while volume also decreased by 58,300 contracts.

EURUSD trades lower at 1.1200 after yesterday the German industrial production output rose 0.3% m/m in May, easing investors worries of a slowdown in Europe’s largest economy. On an annualized basis, the German industrial production came in at -3.7% versus -1.1% expected and -1.8% booked in April. Euro traders are awaiting Jerome Powell’s speech later today for fresh cues about the FED’s next move.

Euro futures markets open interest increased by 267 contracts while volume also decreased by 110,000 contracts.

USDJPY is trading 0.18 percent higher at 108.84 having hit the daily low at 108.65 and the daily high at 108.90. USDJPY pair will find support around 108 round figure and then at 107.50. On the upside, immediate resistance for the pair now stands at 108.90 the daily high and then at 109.07 the 50-day moving average.

USDJPY Daily Chart

USDCAD rebounds above the 1.31 level at 1.3130 amid broadly USD strength, the daily high was at 1.3132, despite the crude oil prices retreat, Canada’s main export item seems to have added further weakness in the Canadian Dollar (CAD). The pair will find immediate support at 1.3060 the low from February 1st while extra support stands at 1.30 round figure. On the upside immediate resistance now stands at the 1.32 zone before an attempt to 1.3450 recent high from 31st May.

Yen Outperforms, Dollar Climbs Off Lows, Ends Little-Changed

April 10, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Australian home loans, Brexit, Canadian dollar, Donald J. Trump, ECB, EUR-USD, FOMC, GBP-USD, IMF, Sterling, TLTRO, US-China Trade Talks, USD/DXY, USD/JPY, Yen

Summary: The Yen outperformed, rising 0.3% against the US Dollar as fears of a global recession resurfaced. The IMF downgraded its outlook on the global economy while the Trump administration threatened tariffs on the European Union. China-US trade talks are still unsettled. Risk appetite and the Dollar Yen took a hit. USD/JPY slid 0.30% to 111.16 from 111.48 yesterday. The Dollar Index (USD/DXY) recovered to end little-changed at 97.020 (97.062 yesterday) after falling to 96.858, two-week lows. Sterling slipped to 1.3055 from 1.3065 as the EU looked set to force the UK to delay Brexit for as long as a year. The Euro finished at 1.1265 (1.1262) after trading to 1.1284, a 2-week top. The risk-off mode hit Wall Street stocks, ending an 8-day rally. The DOW slid 0.74% to 26,143. The S&P 500 lost 0.6% to 2,878.
Treasuries rose pushing bond yields lower. The US 10-year bond yield slid back to 2.50% (2.52%).
US JOLTS (Job Openings and Labour Turnover Survey) for February fell to 7.09 million from 7.58 million in January, the lowest level since March 2018.

EUR/USD – The Single currency rallied to 1.1284, fresh 2-week highs where it faced strong resistance, slipping back to end flat at 1.1265. The ECB is expected to keep rates unchanged, but traders will be looking at the Press Conference after the meeting. Policymakers may further delay their 1^st rate hike to early 2020.

Trading View – 3M USD JPY Chart – 10 April 2019

USD/JPY – The Yen outperformed all currencies, climbing 0.3% against the US Dollar as risk appetite soured. US 10-year treasury yields slipped to 2.5% from 2.52%. USD/JPY closed at 111.16 after trading to 110.979.
GBP/USD – Sterling closed marginally lower at 1.3055 (1.3065). British PM May is set to meet with European political leaders to try and break the Brexit gridlock ahead of the EU’s crucial summit meeting on Brexit.
AUD/USD – The Aussie Dollar rallied to a high of 0.71527 mainly on the back of a generally weaker Greenback. Australian Home Loans for March saw an unexpected rebound, up 2% against a forecast fall of 3%. AUD/USD slid back to finish at 0.7125 in New York.

On the Lookout: A busy, first-tier event day lies ahead with the ECB’s policy meeting, US CPI report (March), the EU’s Council Summit meeting on Brexit and the FOMC’s March meeting minutes.
Other data releases are mostly second-tier. Japanese Bank Lending and Preliminary Machine Orders (March) start off the day. Euro-area data follow next with French and Italian Industrial Production reports for March. First-tier UK Manufacturing Production, Construction Output, Goods Trade Balance, and Industrial Production data follow next. All eyes will then be on the European Central Bank’s policy meeting, the EU Summit, US Inflation Report and March FOMC Meeting minutes release.

Trading Perspective: The Dollar Index (USD/DXY), of which almost 60% of its weight is the Euro, bounced off it’s lows to close mildly down at 97.020 (97.062). This is just above it’s immediate support. The Euro pared gains ahead of today’s ECB meeting where most analysts expect no change in policy. Traders will look for additional details on the ECB’s Longer Term Repurchase Operations (TLTRO).
Market positioning highlighted by Saxo Bank’s feature article on the Commitment of Traders report (week ended 2 April) saw Total Speculative (non-commercial) US Dollar longs rise to a 3-month high of +USD 27.5 billion. The Greenback saw rises against all 9 IMM currencies except the Canadian Dollar. The increase was primarily due to a 24% jump in Euro short contracts to -EUR 99,184 contracts, the equivalent of which is -EUR 12.4 billion according to the Saxo Bank report. This spells danger for USD longs, and Euro shorts. As the robot in the old 60’s television series “Lost In Space” used to warn Will Robinson – “danger, danger ..”

Saxo-Bank Bloomberg COT Report (week ended 2 Apr) – 10 APR 2019

EUR/USD – The Euro was unable to break up through immediate and strong resistance at 1.1285. This remains a barrier today, a break of which should see 1.1325 next. Immediate support lies at 1.1240 followed by 1.1200. With the ECB meeting looming, look for the Euro to consolidate between 1.1245-85 first up. Look to buy any dips toward 1.1200-40 area. The big short squeeze could be just around the corner.
USD/JPY – The Dollar is slip-sliding against the Yen in the current environment. The 2-basis fall in the US 10-year yields was not matched by its Japanese counterpart. The latest COT report for the week ended 2 April saw net speculative JPY shorts to their biggest since January (-JPY 62,741 vs previous week’s -JPY 62,121). USD/JPY has immediate support at 110.90-111.00 (overnight low 110.979). The next support level lies at 110.50. Immediate resistance can be found at 111.35 followed by 111.55. Look to sell rallies with a likely range today of 110.90-111.30.
AUD/USD – The Aussie slipped back to 0.7125 from its high of 0.71522 on the market’s risk-off stance and lower assets. At the end of the day, the Australian Dollar is quoted against the US Dollar. Any further general USD weakness will translate into Aussie strength. The latest COT report saw net speculative Aussie short contracts to their highest since November 2018 (-AUD 55,743 contracts). AUD/USD has immediate support at 0.7115 followed by 0.7090. Immediate resistance can be found at 0.7150 followed by 0.7180 and 0.7200. Look to buy AUD/USD on dips toward 0.7110 today.

Happy trading all.

Equities Bleed Across Asia & Europe, Mixed Macro Data Had Little Impact On Market

March 6, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: AUD, Dollar index, European equities, forex market, Impact On Market, Precious Metals, Sino-U.S., US Treasury, USD, USD/CAD, USDJPY, Wall Street, Yen

Mark Carney, Governor of the Bank of England

Dovish cues from US Wall Street and disappointing Chinese macro data caused equities to bleed, macro data from EU was positive but does little to change price action as investor sentiment shows bearish inclination.

Summary: Global market is seeing mixed price activity today influenced by macro data and cues from yesterday’s trading session. US Wall Street last night saw major indices and equities slide as construction spending data was way worse than expected. Further, the cheer with other major markets enjoyed on optimism surrounding Sino-U.S. trade talks failed to have any impact on Wall Street price rally as US investors have grown way of conflicting headlines hitting the streets time and again with no headlines containing any solid data on content trade talks between two nations. Further, disappointing macro data outcome from China and downgrading of growth target for the year ahead in China combined with dovish cues from Wall Street resulted in major Asian and European equities seeing sharp declines today. Meanwhile, forex market saw relatively positive performance as USD lost some ground in market following Wall Street performance last night. Positive investor sentiment and increased risk appetite influenced by optimism surrounding Sino-U.S. trade talks helped major global currencies capitalize on USD’s weakness and trade positive in global market today.

Precious Metals: Increased risk appetite over last two trading sessions has reduced demand for safe have assets in broad market significantly. Further profit booking activities also dragged the price to multi weeks low in recent past. However, Wall Street decline last night and dovish equity performance in Asian and European markets combined with weaker dollar helped precious metals find some peace. This led to both gold and silver trading flat near previous session lows across today’s trading session.

USD/JPY: The pair saw sharp fall during American session last night owing to disappointing US construction spending data and Wall Street decline. Disappointing Chinese macro data and declining Asian equities also added to Yen strength and kept it near overnight lows in early Asian market hours but better than expected EU macro data and healthy risk appetite in broad market helped the pair move back near previous session high where the pair has consolidated in European market hours.

AUD/USD: The pair is seeing two way price action today as bulls on both sides of currency pair have some level of fundamental support. While macro data in Australia was mixed the PMI’s were positive and RBA maintained neutral stance and comments mirrored last month’s sentiment. However, Dollar’s strength supported by US T.Yields and disappointing Chinese macro data added dovish influence to AUD resulting in pair falling from intra-day highs to lows and both sides waging war for control resulting in range bound price action.

On The Lookout: In American market hours today, macro data outcome and speech by Bank of England governor Mark Carney are the main events. But investors are also focused on price activity in US Treasury market as long term government bond yields dropped following Wall Street’s decline last night. This in turn weighed down US dollar in broad market helping forex market seeing positive price action today despite equities seeing sharp declines. In US market, the key release of the day as ISM Non-Manufacturing PMI, US Federal budget balance & New Home Sales data. Also in Pacific-Asian market hours speech from Bank of Japan’s board member Harada, Japanese house hold spending and Australian GDP data are expected to provide directional cues in Forex markets.

Trading Perspective: Given the fact that US Wall Street has proved itself resilient to headlines pertaining to Sino-U.S. trade talks, macro data outcome is likely to be key driving force behind price action in Wall Street tonight. Forex markets are likely to continue range bound action with positive bias ahead of US macro data updates while equities are likely to open positive as fundamentals remain in favor of market bulls.

US Indices: Ahead of US market opening, major index futures trading in international markets such as S&P500 and NASDAQ 100 futures were up nearly 0.15% and Dollar index which measures its strength against six major global currencies is trading positive. This suggests that markets bulls have strong fundamental support and US Wall Street is likely to see positive opening. Positive price action in major stocks will lead to US indices trading positive during today’s market hours.

EUR/USD: Bears seem to have a solid grip on common currency in global market as the pair failed to capitalize on better than expected macro data outcome and build a recovery rally. The pair continues to trade range bound ahead of US macro data update as USD remains strong in broad market despite suffering slight dovish influence earlier today on cues from Wall Street and US T.Yields going down from recent highs. A positive US macro data outcome will lead to pair taking a bearish nosedive.

USD/CAD: While US dollar suffered in global market, the pair continues to trade positive as CAD seems to lack fundamental support to establish positive rally despite crude oil trading with significant gains in spot and futures market as Friday’s disappointing GDP data from Canada seems to be still weighing on the loonie. Political tensions in Canada is also continuing to weigh down CAD meanwhile strong fundamentals for USD bulls adds strength to Greenback suggesting that regardless of macro data outcome the pair is expected to remain trading in green for rest of the day.

Dollar Climbs on Risk Appetite Build, Scorns Disappointing Data

March 4, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Dollar, EUR-USD, GBP-USD, Mario Draghi, USD/JPY, Yen

Summary: The Dollar rallied on Friday, surging against the Yen despite disappointing US Manufacturing PMI and Personal Spending data. Market’s risk appetite improved following upbeat China Caixin Manufacturing PMI (49.9 vs forecasts of 48.5) and new prospects of a trade deal. Wall Street stocks were up, yields rose. Benchmark US 10-year yield climbed to at 2.759% (2.73%), a 4-week high.

Forex Factory US ISM Manufacturing PMI Chart – 04 March 2019

USD/JPY surged to fresh 10-week highs at 112.077 Friday night before settling at 111.93 at the New York close. The Euro slipped 0.08% to close at 1.1365 (1.1380), Sterling fell to 1.3210 (1.3270), while the Australian Dollar dropped to 0.7069, settling to close at 0.7080. Emerging Market currencies were lower against the Greenback. USD/CNH (offshore Chinese Yuan) rose to 6.72 from 6.70 on Friday. The Dollar Index (USD/DXY) ended 0.22% higher at 96.436 (96.18).
On Saturday, President Trump criticised the US Federal Reserve and its monetary policy, saying it led to a strong Dollar, which hurts US competitiveness.

USD/JPY – the rise in the benchmark US ten-year yield to 2.759% (from 2.73%) saw USD/JPY surge to fresh 10-week and overnight highs at 112.077. The Dollar closed at 111.95 against the Yen. Japan’s 10-year JGB yield was up one basis point to -0.02%. Japanese data releases mostly beat forecasts on Friday. President Trump’s criticism of Fed policy and the resulting strong US Dollar hurting competitiveness should cap USD/JPY today.
EUR/USD – The Euro slipped back to 1.1363 on the generally stronger US Dollar. The ECB meets on policy later in the week (Thursday). Most traders and analysts are expecting a dovish hold as policy from Mario Draghi and his colleagues.
AUD/USD – Despite upbeat risk profile and better than forecast Chinese manufacturing PMI data, the Aussie slipped 0.35% to 0.7080 (0.7095 Friday). The RBA Cash Rate, policy meeting and rate statement is due tomorrow. Despite what will most probably be a neutral RBA, markets are looking for a rate cut in the second half of this year.

On the Lookout: Expect a bumpy start today ahead of a busy week ahead with lots of events and data to shake things up. On Saturday, US President Trump, speaking at the annual Conservative Political Action Conference in Maryland, took the opportunity to criticise the Federal Reserve and its monetary policy. Trump blasted Fed President Jerome Powell, saying that “we have a gentleman that likes a very strong Dollar at the Fed”. Trump added “I want a strong Dollar, but I want a Dollar that is great for our country, not a Dollar that is so strong that it is prohibitive for us to be dealing with other nations”. The trade war is also very much about the currencies.
An eventful and important week ahead is in store for us. Today starts off light on the economic data front. Australian Building Approvals and Company Operating Profits kick off today’s data for Asia. The Euro-Zone Sentix Investor Confidence Index follows. UK Construction PMI rounds up today’s data.
The RBA rates policy meeting is on tomorrow. The week ahead also sees the Bank of Canada (Wednesday evening GMT), and European Central Bank (Thursday evening GMT) policy meetings.
Australian Q4 GDP is out Wednesday with Retail Sales on Thursday. Friday sees China’s Trade data followed by the US Employment report for February, the most important and market moving event. With a big number from the previous report, there is much anticipation for this one.

Trading Perspective: Trump’s weekend rant against Fed policy and a strong Dollar should see initial selling in Asia today. On Friday the weak Emerging Market currencies were pointing to a stronger Dollar against the Majors. The benchmark US 10-year bond yield finished up at 2.759%. It was at 2.65% a little over a week ago. We should see a top between 2.78-2.8% given the mostly weaker-than-forecast US data on Friday and this week’s Employment report. This will limit overall Dollar strength, particularly against the Yen and Emerging Market currencies.

USD/JPY – The Dollar hit fresh 10-week highs at 112.077. Immediate and strong resistance lies at 112.30. Japanese economic data (Tokyo Core CPI, Capital Spending, and Final Manufacturing PMI) beat forecasts, while the Unemployment Rate rose to 2.5% from 2.4%. Immediate support can be found at 111.35-50. The next support level lies at 111.00. Look for a likely range today of 111.05-112.05. Look to sell any rallies above 111.00
AUD/USD – The RBA is expected to remain on hold with a neutral balance when they meet tomorrow. However, the market is looking for a rate cut in the 2^nd half of the year. Last Friday, Westpac’s Bill Evans forecast up to 2 rate cuts for H2 2019. This came after a much-stronger-than expected Australian Employment report. This has weighed on the Aussie which has remained soggy, failing to rise above 72 cents despite last week’s generally softer US Dollar. The bears are in for a surprise. Expect the Australian Dollar to grind higher into the RBA. Immediate support at 0.7060/70 is strong and should hold off any fresh selling. Immediate resistance can be found at 0.7100 and 0.7130. Look for a trading range of 0.7070-0.7140 today. Look to buy dips.

Investing.com EUR USD Daily Chart – 04 March 2019

EUR/USD – The ECB is expected to keep rates unchanged with a dovish hold. EUR/USD traded to an overnight high of 1.14085 before settling lower on the overall stronger US Dollar at 1.1365. The Euro has immediate resistance at 113.85 followed by 1.1405. Immediate support can be found at 1.1350 and 1.1335. At the end of the day, the direction of the US Dollar will determine the Single Currency’s plight. Look for a likely range today of 1.1350-1.1400. Prefer to buy dips.
GBP/USD – Sterling slid 0.5% to finish at 1.3212 in New York. The broad-based US Dollar rally took some steam out of the British currency which saw profit-taking and trimming of longs. GBP/USD has immediate support at 1.3200 and 1.3180. Immediate resistance can be found at 1.3260 and 1.3310. Look for the Pound to find a base today at 1.3210. Looking for a likely range of 1.3210-1.3290. Just trade the range shag on this one.

Have a good week ahead. Happy trading all

Dollar Rebounds Off Lows, Aussie, Yuan, EM, Asian Currencies Slide

December 24, 2018 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, CFTC, EUR-USD, USD/CNH, USD/DXY, USD/JPY, Yen

Trading View CBOE VIX (Volatility Index) Chart – 12/24/2018

Summary: The US Dollar bounced off its lows amid persistent investor fear even as Wall Street stocks extended their slump to 17-month lows. The S&P 500 plummeted 2.99% to 2411 (2477 yesterday). The VIX (CBOE Volatility Index), also known as the Fear Gauge, a measure of market risk and investor sentiment, jumped to 6.1 % to 30.11 February highs.
The Dollar Index (USD/DXY) rallied to 96.95 (96.268) as US treasury yields stabilized. The benchmark 10-year yield rose to 2.79% from 2.78%. Risk and Emerging Market currencies slid led by the Australian Dollar, down 1.16% to 0.7035 at the close. Signals of an easier monetary policy stance from China lifted the USD/CNH rose to 6.9250 (6.8950). The safe-haven Yen was little-changed.

AUD/USD – The Aussie suffered from a double whammy of extended poor risk sentiment and a rebounding US Dollar. AUD/USD slid to an overnight low of 0.7034, finishing on a soggy note at 0.7037.
USD/JPY – The Dollar was little-changed against the Yen, finishing at 111.22 (111.20 Friday). The Japanese currency remained buoyant as investors fears remained elevated. USD/JPY slid to 110.933 overnight before rallying at the New York close.
USD/CNH – The offshore Chinese currency slid after Chinese authorities said significant tax cuts would be enacted next year. They also signalled an easier monetary policy stance. China’s economy has seen a slowdown following the trade war with the US. USD/CNH closed at its highs at 6.9250, it’s the highest close this month.

On the Lookout: Markets will continue to focus on the latest drama in Washington with the likelihood of government shutdown. While this is nothing new to traders, particularly during December, it comes at a time of heightened investor fear and poor risk appetite. Most dealing rooms will close early on the 24^th and stay shut until the 27^th. Expect low trading volumes and wider pricing which would risk volatile markets.
Data released on Friday saw US Final Q3 GDP miss forecasts at 3.4% against 3.5%. US Durable Goods Orders fell below expectations at -0.3% from the previous months 0.2%. With most centres on holiday, there will be no data releases until the 27th of this month.

Trading Perspective: The possibility of a US shutdown in the past has always occurred at this time of the year. The currency markets have not been affected much. A shutdown this time though could see the US Dollar hold its strength at current levels. The Aussie, Loonie, EM and Asian currencies could suffer further.

FXCM AUD USD 1 Year Chart – 12/24/2018

AUD/USD – This currency suffered the brunt of the risk-off sentiment and heightened fear factor. The Aussie slid down to 070343, close to October lows. AUD/USD closed at 0.7035, not far from the lows, with the possibility of a test of the psychological 0.7000 cent mark. AUD/USD has good support at the 0.7010 level. Further support can be found at 0.6980, not seen since February 2016. Immediate resistance can be found at 0.7080 and then 0.7120. The latest CFTC report (week ended 18 December) saw speculators trim their Aussie short bets to -AUD 35,100 contracts from -AUD -46,000. The Aussie was at 0.74 cents at the beginning of this month. While a test of 0.700 cents cannot be ruled out, the Aussie is a decent buy at current levels.
USD/JPY – The Dollar finished flat against the Yen, despite a stronger overall Dollar. The Yen gained on the crosses against other global currencies. The safe-haven Japanese currency will continue to gain support given the markets current environment. Speculators remain short of JPY bets. The latest CFTC report saw net speculative JPY shorts increased to-JPY 102,800 contracts to -JPY 98,000. Immediate support lies at 111.00 followed by 110.80. Immediate resistance can be found at 111.40 and 111.60. Look to sell any Dollar rallies rather than buy dips on this currency pair. It is headed further south.
EUR/USD – The Single currency slumped back to 1.1368 from 1.1468 on Friday morning. The Euro traded to a low of 1.13561. Immediate support lies at that 1.1350/55 level. The next support level is 1.1320. Immediate resistance can be found at 1.1400 and then 1.1430. The latest COT/CFTC report saw net speculative Euro short bets trimmed to -EUR 53,100 from the previous weeks -EUR 56,000. Look to buy Euro dips to 1.1330 ideally with the Greenback gaining back lost ground. Prefer to buy dips near 1.1300 given the current events in the marketplace.
USD/DXY (Dollar Index) – The Dollar Index rallied off its lows yesterday after falling to 96.268 on Friday. USD/DXY rebounded to close at 96.950. Overnight high was 97.047 which is where today’s resistance lies (97.00/10). Immediate support can be found at 96.50 followed by 96.20. Expect further short-covering of Dollars against its Peers in Asia. Look to trade between 96.30-97.30 for now.

Italian Woes Hurt European Equities, UK Economy Takes Worst Hit Since 2012

Yen at 2 Week Highs, Pound Breaks Below 1.25

Yen Outperforms, Dollar Climbs Off Lows, Ends Little-Changed

Equities Bleed Across Asia & Europe, Mixed Macro Data Had Little Impact On Market

Dollar Climbs on Risk Appetite Build, Scorns Disappointing Data

Dollar Rebounds Off Lows, Aussie, Yuan, EM, Asian Currencies Slide

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