Guest post by Jay Hawk at Orbex
Fundamental Currency Analysis
USD: The U.S. Dollar Index is currently off -0.0780 or -0.09% after opening at 85.8220 in Asia earlier today. The Greenback is again mixed against most majors, with the U.S. currency steady against Sterling, the Euro and the Swissy, lower against the Kiwi, and higher against the Australian and Canadian Dollars. Yesterday’s U.S. economic releases had Weekly Initial Jobless Claims increase to 283K from 266K versus a consensus of 269K, while Flash Manufacturing PMI printed at 567.2 compared to an expected reading of 57.2. Today’s economic data is limited to New Home Sales (+473K).
EUR: The Euro is steady against the U.S. Dollar today after Italian Prime Minister Matteo Renzi announced he would make public the costs of European institutions, which resulted in a row at the EU Economic Summit. “We will publish data on everything that is spent by these palaces. We’re going to have some fun,” Renzi stated at the Eurogroup meetings in Brussels. Elsewhere, the GfK German Consumer Climate survey printed at 8.5 compared to an expected reading of 8.1.
GBP: Sterling is trading steady against the U.S. Dollar today after yesterday’s release of UK Retail Sales, which declined -0.3% m/m versus -0.1% expected, while BBA Mortgage Approvals dropped to 39.3K from 41.4K with a consensus of 41.5K, and CBI Industrial Order Expectations, which printed at -6 versus an expected reading of -3. Today’s sole significant UK data point is Preliminary Quarterly GDP.
JPY: The Japanese Yen is up a fraction against the Greenback today, gaining for the first time in a week after safe haven Yen buying was spurred by a New York City doctor testing positive for the Ebola virus. No economic numbers are expected from Japan until next week.
CHF: The Swiss Franc is trading steady against the U.S. Dollar today in the absence of any Swiss economic data.
AUD: The Aussie is trading slightly lower against the Greenback today in the absence of any significant economic data out of Australia until next week.
CAD: The Canadian Dollar is trading steady against the U.S. Dollar today with no significant economic releases out of Canada.
NZD: The Kiwi is up a fraction against the U.S. Dollar today in the wake of yesterday’s release of the New Zealand Trade Balance, which showed a deficit of -1.35B versus an expected deficit of-620M, with the previous number upwardly revised from -472M to -489M. No significant economic data is expected from New Zealand later today.
The currency pair shows the declining rate within a medium term descending wedge pattern. In addition, the rate is trading below its falling 200 day Moving Average, and its 14 day RSI in the indicator box has flattened out in central neutral territory. (See additional technical analysis in the section below.)
Technical Analysis for the Majors
EUR/USD: The Euro is down slightly this morning after falling to 1.2613 but closing unchanged yesterday. The rate has sustained its downside break from its corrective short term up trend after its recent 1.2500 low. Medium term declining trendline resistance is now drawn at the 1.2840 level. Resistance is seen at 1.2705 and 1.2730, with support seen at 1.2605/24 and 1.2500. Its falling 200 day MA now lies at 1.3435, and its 14 day RSI has stabilized within central neutral territory at the 42.37 level. Its outlook is bearish near term and medium term.
USD/JPY: USD/JPY has fallen modestly this morning after rising sharply yesterday in the wake of an upside break above the resistance line of the corrective down channel following its 110.08 high. Support appears at 107.38/52 and 107.05, with resistance noted at 108.34 and 108.00. The rate’s 14 day RSI has risen within central neutral territory to read at the 57.24 level, and the rate is trading above its rising 200 day MA currently at 103.49. Its outlook is bullish near term and medium term.
GBP/USD: Cable rose slightly this morning after falling modestly yesterday, as it corrects lower off its recent high at 1.6183 near the upper resistance line of its medium term descending wedge pattern now drawn at 1.6169. The rate just touched but remains above its 50.0% Fibonacci retracement level of its long term rally from 1.4812 to 1.7190 at 1.6001, with its 38.2% Fibo level providing theoretical resistance at 1.6282. Furthermore, the rate’s 200 day MA lies at 1.6672 with a falling slope, and its 14 day RSI remains in central neutral territory and reads at the 42.59 level. Its outlook is bearish near term and medium term. (See highlighted chart above.)
USD/CHF: The Swissy was a bit lower this morning after rising to 0.9559 yesterday, as the rate consolidates after correcting higher off its recent 0.9360 low toward its 0.9683 high. The rate re-tested the lower line of its recently broken near term up channel that is now drawn at 0.95460, and which held. In addition, the rate remains above its rising medium term trendline support line now drawn at 0.9254. Support is seen at 0.9467/68 and 0.9395/97, with resistance noted at 0.9559/61 and 0.9592/96. The rate’s 14 day RSI remains in central neutral territory and reads at the 56.07 level, and the rate is trading above its rising 200 day MA now situated at the 0.9047 level. Its outlook is bullish near term and medium term.
AUD/USD: The Aussie fell to 0.8717 this morning before recovering after falling slightly yesterday, as it continues to consolidate above its recent 0.8641 low and below 0.8897 in a near term triangular pattern with a 256 pip initial width that will be used to compute its pattern objective after a breakout occurs. Resistance is seen at 0.8811/59 and 0.8897, with support noted at 0.8743/46 and 0.8674/0.8717. The rate remains below its mildly falling 200 day MA now at 0.9210, and its 14 day RSI reads in central neutral territory at the 44.48 level. Its outlook is neutral near term and bearish medium term.
USD/CAD: USD/CAD declined mildly this morning and yesterday, as it consolidates with a mild downside bias below its recent five year high at 1.1384 and above its rising near term support trendline now drawn at 1.1205. A gently rising medium term support line is drawn below that at the 1.1028 level. Its 14 day RSI remains within central neutral territory and reads at the 55.09 level, and the rate is trading above its mildly rising 200 day MA now at 1.0952. Its outlook is bullish near term and medium term.
NZD/USD: The Kiwi rose modestly today, after falling to 0.7791 yesterday, as it corrects sharply lower from its recent high at the 0.8032 level. The rate has been rising correctively from its recent similar lows of 0.7706 and 0.7712 within a near term channel pattern and has just tested the lower support line now re-drawn at 0.7799, which held thus far. Support is noted at 0.7781/0.7804 and 0.7735, with resistance seen at 0.7830 and 0.7876. Also, its 14 day RSI remains within central neutral territory and reads at the 42.08 level. The rate remains below its falling 200 day MA now at 0.8451. Its outlook is bullish near term and bearish medium term.