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Gold Trading Week Ahead 20th April 2015

 

Gold Trading Week Ahead – 20 April 2015

Gold treaded water last week with gold finishing the week almost identical to where it closed the previous week. Last week was all about CPI data while this week we have a number of economic, political and cultural factors that will drive sentiment.

European indices have seen sentiment begin to turn after the initial enthusiasm for Mario Dragi’s QE. Greece is also back in the spotlight, the Eurozone has a crucial meeting later this week regarding Greece. A Greek default is certainly figuring in traders’ minds, with this increased concerns I expect demand for gold to increase.

Demand from both India and China has been weak in recent trading sessions, not entirely surprising given the recent strength of the U.S. dollar and the fact that many Indian buyers have been awaiting Akshaya Tritiya which is Tuesday 21st April. I expect Indian demand will increase this week as Akshaya Tritiya is considered auspicious for starting new businesses, investments and the like.

This week is packed with economic data that could set the direction for precious metals.

Monday the Chicago Federal Reserve National Activity Index data for March is released.

Tuesday sees the Reserve Bank of Australia (RBA) meeting minutes released, if the RBA signals that is moving closer to a rate cut then we may see gold in AUD edge higher.

Wednesday will see the release of the Bank of England (BoE) minutes, Australian CPI, US Existing Home Sales and Crude Oil Inventories.

Thursday is full of economic data with Manufacturing PMI data out for Japan and China, UK Retail Sales, US New Home Sales and importantly US Jobless Claims. Westpac is forecasting a drop in Jobless Claims to 286,000, down from 294,000 as at the last reading.

Friday the Eurozone will meet to discuss Greece and its further reforms that it needs to provide by Friday. The odds of a Greek default are certainly shortening with Friday being the next critical hurdle for Greece and the Eurozone. US Durable Goods Order data is also out later on Friday, the market is expecting a rise of 0.6%.

This week also sees the release of a number of key US company announcements which will give investors a better understanding of the strength of these key companies. The companies with announcements include Wal-Mart, Yahoo, IBM, Morgan Stanley, AT&T, Boeing, Coca-Cola, Facebook, Microsoft, 3M, Procter & Gamble, Costco and Starbucks.

It could be a volatile week across all markets this week, with gold set to benefit, I expect to see gold test the US$1,220/oz resistance level, a level gold needs to consolidate above this level before moving higher.

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Courtesy of:  www.bullionindex.com.au

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Markets advance as China announces new stimulus measures

 

US stocks advanced on Monday as investors’ confidence was boosted by announcements of new merger deals and dovish remarks by the head of China’s central bank and new policy measures to stimulate China’s housing market. UnitedHealth Group Inc. agreed to buy pharmacy benefit manager Catamaran Corp for $12.78 billion in cash. Teva Pharmaceutical Ltd. said it would buy Auspex Pharmaceuticals Inc for $3.5 billion. China reduced required down payment for second homes to 40 percent from 60 percent and broadened a sales-tax exemption on Monday for homeowners if they sell after holding a property for two years or more. The S&P 500and Dow Jones Industrial Average advanced 1.2% and 1.5% respectively. They had lost more than 2 % last week. Economic data indicated that US consumers barely increased spending, which rose a less-than-expected 0.1% in February. This is another sign that US economy slowed in the first quarter. Personal incomes, meanwhile, rose 0.4% in February for the fourth time in five months and the saving rate climbed for the third straight month. Pending home sales for February reached their highest level since June 2013. The ICE US dollar index, a measure of the dollar’s strength against a basket of six major currencies, ended up about 0.6% at 97.98. Today at 13:50 CET Fed’s Lockhart gives welcome at Georgia conference on Monetary Policy and Financial Stability. At 14:00 CET January Case-Shiller Home Price Index will be released. At 14:45 CET Chicago PMI for March will be released. The tentative outlook is positive for the dollar. At 16:00 CET March Consumer Confidence will be released by the Conference Board. The tentative outlook is neutral.

 

European stocks rose on Monday as investor optimism was bolstered by encouraging economic data, the prospect of more easing in China and sliding euro. The Stoxx Europe 600 index climbed 1.1%. Germany’s DAX 30 index rallied 1.8%, helped by weakening euro. Inflation data showed consumer prices in Germany grew 0.3% year-over-year in March, up from 0.1% in February. Economic confidence in the euro-zone rose markedly in March to the highest level since the summer of 2011. At 07:00 CET retail sales were released in Germany, showing a decline on a monthly basis for the first time since September. At 08:55 CET labor market data for March will be released in Germany. At 10:00 CET March consumer price index for euro-zone will be released by Eurostat. The tentative outlook is positive.

Nikkei fell today as investors took profits on the last trading day of the quarter and the last day of the fiscal year. Notwithstanding a sharp drop last week, the benchmark has gained 2.2 percent for the month and posted its three straight monthly gains. Yen continued the slide against the US dollar, which gained 0.8 percent vs yen on Monday for its biggest one-day rise in more than a month. Tomorrow at 00:50 CET in the morning the Bank of Japan’s Tankan survey results will be published. The tentative outlook is positive.

Oil prices are falling today on expectations that a possible deal over Iran’s nuclear program could result in easing of sanctions and increased exports, exacerbating global oversupply.

 

Gold prices are falling after dropping for two consecutive days on Monday as stronger dollar and rising equities are dulling investor demand for the safe haven asset.

http://www.ifcmarkets.com

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Gold bulls are thanking the Fed

 

Bullion Index report that, leading into the Federal Reserve March monetary policy meeting last week investors dumped gold sending it to a 4 month low, while at the same time trades went long dollars on expectation the Fed would suggest it will move as early as June on raising interest rates. While the Fed dropped the highly anticipated word ‘patient’ from their statement following the meeting, the statement however contained a number of surprises which have sent gold higher and the US dollar lower since its release. The Fed statement saw it lower the GDP growth forecast and importantly also lower its forecast for inflation. This is important to financial markets as the Fed has said it will look to tighten rates when it is “reasonably confident” that inflation will hit its 2% objective over the medium term. With the lowering of its inflation forecast this will see it take even longer to get back to its 2% inflation objective. The Fed now sees inflation running at between 0.6-0.7% for 2015 and between 1.6-1.7% in 2016, still materially lower than the 2% figure the Fed has said it needs to be confident of hitting before it pulls the trigger on rates.

 

 

Export growth in the U.S. is also weakening according to the Fed which is an acknowledgement by the Fed of the recent strength of the US dollar. Even taking into account the dollars biggest weekly fall since 2011 the dollar is still strong by any standard. According to the Bloomberg Dollar Index, a measure against a basket of 10 currencies, the US dollar is trading near its highest level in at least 10 years. The dollar strength is something that is coming into consideration by the Fed, traditionally it steers clear of commenting on the dollar. Any rate increase by the Fed is expected to send the dollar even higher. The strong dollar is making imports cheaper, reducing inflationary pressures, something the Fed is trying to lift, while at the same time making exports more expensive which puts pressure on GDP growth. A high dollar should be of a concern to the Fed.

 

The consensus in financial markets suggests the Fed is on track to raise rates in 2015, however it now seems the market is expecting rates to move later (e.g. September instead of June) and possible not hit the high levels previously expected.  Leading Banks such as Bank of America Merrill Lynch and Deutsche Bank suggest the Fed will increase rates in September, while a recent Reuters poll of top Wall Street banks also favour a September rate increase. I still believe we will not see a US rate increase in 2015 and even more so after the Fed statement and continuing weak data that seems to be coming out of the US such as the recent worse than expected durable goods data. The Fed noted in its statement that “economic growth has moderated somewhat” since its January meeting, that is not a foundation for a near term rate increase. Federal Reserve Bank of Chicago President and a voting member of the Federal Open Market Committee Charles Evans said in a speech this week that he thinks “economic conditions are likely to evolve in a way such that it will be appropriate to hold off on raising short-term rates until 2016”. He suggests that inflation will not hit the 2% target until 2018 and that inflation is currently “uncomfortably low”.

 

The Fed’s monetary policy is very much driven by data flow and what is expected and what is actually delivered and at the moment most of the data coming out is not setting the markets alight. The longer the Fed holds off moving on rates the better it will be for gold demand given it reduces the opportunity cost between holding non-interest bearing gold and investing in interest bearing assets or term deposits. Gold also performs well in times of uncertainty so with the increased confusion as to when and by how much the Fed will increase rates, it is only going to add support to the price of gold.

 

With weak data coming out of the US along with exceptionally low inflation rates, well below the Fed’s target of 2%, the Fed would be reckless to move on rates until they see solid evidence of underlying economic growth, positive wage growth and inflation heading to 2%. I do see that happening in 2015. The risks on moving too soon on rate hikes are too significant while the benefits remain relatively low which leads me to believe the Fed will be very conservative and hold off on raising rates until 2016. In the meantime while interest rates remain low and uncertainty is at the forefront of investors’ minds gold demand is going to increase.

 

Now that gold has broken through US$1,200/oz, the next upside target to watch is US$1,208/oz which is the 100 day simple moving average followed by US$1,22o/oz the 50 day simple moving average.

 

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Courtesy of: http://www.bullionindex.com.au/

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EURUSD long-term risks should still be on the downside

 

Credit Agricole report “some downside risks for EUR could linger as well. In particular, uncertainty about Greece should continue to haunt the single currency, with concerns about the country’s debt-sustainability likely to escalate as the bailout extension draws to an end in June.

Long-term risks should still be on the downside, however, and we expect EUR/USD to hit parity in Q3 with the USD-rally resuming as we get closer to the Fed’s first hike”.

Source: Credit Agricole

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Credit Suisse revise EUR/USD forecast lower

 

Credit Suisse report “we are now of the view that the market is increasingly willing to hold short EUR positions on crosses in G10 space. If EUR really does replace JPY as the funding currency of choice due to negative rates, this trend can have a lot further to run, to EUR’s overall detriment.

We are revising our EURUSD forecast set to 1.05 in 3m (1.09 prior) and 0.98 in 12m (1.02 prior)”.

Source: Credit Suisse

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Credit Agricole remain short EUR/USD

 

In a note to clients, Credit Agricole report that “in order to push EUR/USD considerably lower from current levels Fed rate expectations may need to rise further. As there seems to be scope for the Fed to consider higher rates as soon as mid-year, we anticipate further diverging monetary policy expectations to the detriment of the pair.

We remain short EUR/USD targeting a move towards 1.06″.

Source: Credit Agricole

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Buy GBP/CHF on dips – Capital Trust Markets

 

Capital Trust Markets reports the “recent price action in the GBPCHF pair suggests that it has more upside in the near term as buyers are here to stay.

Technical Analysis

The GBPCHF pair recently climbed towards the 1.4760 resistance area where the British pound sellers defended the upside. However, there is a major bullish trend line on the 4 hour chart of the GBPCHF pair, which might act as a catalyst in the near term if the pair moves lower from the current levels. The most important point is the fact that the 50 simple moving average on the 4 hour chart is also around the highlighted trend line. In short, there is a major support around the 1.4640 area where the British pound buyers might appear in the near term. The 4H RSI is above the 50 level, which is one more bullish sign moving ahead.

GBPCHF 03.03.2015

If the GBPCHF pair moves higher from the current levels, then the last high of 1.4760 level where buyers might continue to struggle in the near term. A break above the same might call for more gains.

The next area of interest can be seen around the 1.4800 area.

Swiss GDP

Later during the London session, the Swiss Gross Domestic Product will be released by the State Secretariat for Economic Affairs SECO. The forecast is slated for an increase of 1.7% in the fourth quarter of 2014, compared to the last gain of 1.9%.

Trade Idea

One might consider buying dips around the highlighted trend line in the GBPCHF pair.

Source: Capital Trust Markets

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Gold price forms a base at US$1,194

 

Gold prices have been range bound in recent trading session as traders await the nonfarm payroll data. Bullion Index report to its clients that while  the ADP Employment numbers for February are out later today in the U.S. that they do not expect to see any surprises and expect Friday’s nonfarms to be the key to driving gold in the short term. Bullion Index notes that spot gold is range bounce between US$1,194 and US$1,224. They maintain a buy limit at US$1,188oz.

Source: http://www.bullionindex.com.au

 

 

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Sell NZD/USD at 0.7600 limit – UBS

 

Swiss Bank UBS has suggested to clients to go short NZD. They report “NZD/USD should head lower. Sell rallies to 0.7600 with stops above 0.7720, targeting an eventual retest of 0.7300/0.7175″. Selling NZD against the USD is popular among brokers at the moment with BNZ also suggesting a short trade on NZD/USD.

Sell on limit at 0.7600, stop above 0.7720 with a limit at 0.7300 or lower.

Source: UBS

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SwissQuote buy USD/CAD recommendation

 

SwissQuote report to clients that the “USD/CAD has seen a pickup in buying interest near the key support area between 1.2352 and 1.2314. However, the succession of lower highs remains thus far intact. Hourly resistances can
now be found at 1.2566 (02/03/2015 high) and 1.2664. An hourly support lies at 1.2449 (27/02/2015 low).

In the longer term, the technical structure looks like a rounding bottom whose maximum upside potential is given by the strong resistance at 1.3065 (09/03/2009 high). The recent weakness is seen as a medium-term corrective phase. Key supports stand at 1.2314 (22/01/2015 low) and 1.2047 (intraday low)”.

Buy limit 2 units at 1.2363, Obj: Close unit 1 at 1.2646, remaining at 1.2950, Stop: 1.2290

Source: SwissQuote

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RBA still on its way to cut rates

 

SwissQuote report that “given the potential headwinds on the Australian economy, we suspect that the RBA will downgrade its inflation outlook and remove its neutral rate bias during its February meeting. Such revisions would strongly hint for a rate cut in March in order to protect the economic recovery and further weigh on the Australian dollar. However, the RBA could be less patient as mentioned by a close RBA watcher, which had some reliable
sources from RBA’s senior staff in the past. Even if the RBA has to respect a media “black-out” in the week before policy meeting, AUD/USD made new lows on the news”.

(Source: SwissQuote)

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Australian dollar against Japanese yen set for gains in the near term

 

Capital Trust Markets reports “the Aussie dollar has shown a lot of resiliency against most major currencies recently, raising the case of more upside in pairs like AUDUSD and AUDJPY.

Technical Analysis

There are a couple of important trend line formed on the 4 hour chart of the AUDJPY pair, which are likely to act as a support for the pair moving ahead. The pair recently climbed towards 102.80 area where it found sellers, and is currently trading lower. There is a chance that the pair might spike lower towards the first bullish trend line, which is also sitting around the 23.6% Fibonacci retracement level of the last leg from the 98.05 low to 102.83 high. Moreover, there is one more bullish trend line, connecting lows sitting just below the first trend line. So, there is a lot of support around the 101.80-60 area where buyers are likely to take a stand. If the pair continues to trade higher from the current or lower levels, then initial hurdle is around the last swing high of 102.83, followed by the all-important 103.00 area.

AUDJPY 11.24.2014

On the other hand, if the AUDJPY pair breaks the highlighted support zone, then it is likely to head towards the 100 simple moving average (SMA) – 4H, which is around the 50% fib retracement level.

Moving Ahead

There is no major release in Australia in the coming sessions, but in Japan the BOJ monetary policy meeting minutes will be released during the next Asian session. We need to see how the Yen pairs react after the release. Overall, buying dips is a good idea in AUDJPY moving ahead”.

(Source: Capital Trust Markets)

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Reduction in NZD short positioning

 

SwissQuote report “net short positions in New-Zealand dollar have been reduced from elevated levels. Even if NZD/USD is more sensitive to the upside given the large net short NZD positions, the technical structure remains negative as long as prices remain below the key resistance at 0.8052 (04/02/2014 low)”.

swissquote nzd nov14

(Source: SwissQuote)

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Canadian inflation data set for release on Friday morning

 

As the markets open in the US on Friday morning, we will get the latest Canadian inflation data reported out of the nation.

Capital Trust Markets reports “the Canadian dollar gained strength during today’s session on the back of better-than-expected wholesale sales data, and markets will be looking for strong inflation figures to reinforce the data and compound the bullish momentum. With this in mind, what’s expected and how can we set up to profit from a release either side of the consensus forecast? Here is what you need to know.

First, what did the wholesale sales data tell us about the Canadian economy? The data – reported at 1.8% growth versus a forecast of 0.7% – comes amid a spate of strong releases this month. Manufacturing sales beat expectations of 2.1% at the end of last week, while unemployment throughout October dipped to 6.5% with employment rising 43.1 K, and building permits reported at the beginning of the month expanding by 12.7% month over month during September. This being said, there are some concerns about deceleration in the house price growth over the last few months, and this is likely to force the bank of Canada to hold interest rates at their current lows so as to avoid jeopardizing any sustainable growth over the coming quarters. With this in mind, what of levels to keep an eye on in the USDCAD? Take a look at the chart below.

USDCAD

As the chart shows, we have seen a certain amount of consolidation in the pair over the past few weeks. However, we could see this consolidation come to an end and the US dollar resume its upside momentum versus its Canadian counterpart, as we approach a combination of key level and 200 SMA support. 1.1266 and 1.1464 are the levels to keep an eye on. Consensus forecasts the upcoming core CPI data (MoM) – the likely headliner – at 0.2% for October. With this in mind, look for anything below to reinforce aforementioned support and validate 1.1464 medium-term to the upside”.

(Source: Capital Trust Markets)

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AUDUSD broke important support – heavy downside expected

 

Capital Trust Markets reports “recent market sentiment suggests that the AUDUSD pair might head lower in the near term as the US dollar might gain traction moving ahead.

Technical Analysis

There was a monster trend line on the 4 hour chart of the AUDUSD pair, which was breached earlier during the Asian session. The most important point to note from the charts is the fact that the pair is now trading below all three key simple moving averages (100, 200 and 50). This might add pressure on the Aussie dollar buyers. Currently, the pair is trading around the 50% Fibonacci retracement level of the last leg from the 0.8540 low to 0.8795 high. So, there is a chance of a correction in the near term towards the broken support area which might act as a resistance now. Immediate resistance is around the 50 SMA, followed by the 100 SMA. The 4H RSI is well below the 50 level, which could encourage the Aussie sellers to take the pair lower moving ahead.

AUDUSD 11.19.2014

On the downside, initial support can be seen around the 0.8600 area. A break and close below the mentioned area might call for a move towards the 0.8550 level”.

(Source: Capital Trust Markets)

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Australian monetary policy meeting minutes set for release Monday evening

 

Shortly after the markets close in the US on Monday evening, the latest monetary policy meeting minutes will be reported out of Australia.

Capital Trust Markets reports “the meetings come at a time when markets are looking at the Australian property sector very closely in order to gain insight into whether the house prices and construction activity will continue to expand into 2015, or whether the current deceleration of those aforementioned will lead to a halting and eventual decline. This scrutiny surrounding the Australian economy means that any bias inferred by the monetary policy meeting minutes as far as possible interest rate policy is concerned could impact the value of the Australian dollar versus its major counterparts during the Asian session. With this in mind, what of the minutes likely to show and what are the levels to keep an eye on as we head into the release? Let’s take a look.

First, let’s look at the minutes. The likely outcome of the release will be that Australia’s monetary policy committee will hold interest rates low for the foreseeable future. The property market is expanding, but inflation remains low and wages – and in turn – retail activity are showing very little movement month on month. Through keeping interest rates at lows as we head into the end of the year and throughout the beginning of 2015, the reserve bank of Australia (RBA) hopes it will be able to stimulate Australian households into engaging in consumer activity. So what are the levels to keep an eye on as we head into the release? Take a look at the chart below.

2014-11-17_10-07-58

Action earlier today saw the AUD USD into the open of the Asian session, but at the open of the European morning session the pair dipped back below its 200 SMA (H4) to validate 0.8595 and 0.8761 as in term support and resistance respectively. These are the levels to keep an eye on. If we get a hawkish tone to the meeting minutes – unlikely – we could see a break back above the 200 SMA and the turning of the overall trend to the upside. Such a situation would validate 0.8910 longer-term. However, if we get a dovish tone the bearish momentum is likely to continue – a situation in which 0.8595 would serve as an initial downside target”.

(Source: Capital Trust Markets)

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BNP Paribas forex trade – Go short EURAUD

 

BNP Paribas recommend to client to take a short EURAUD trade. They report “we see opportunity to short EUR vs high yielders amid a positive risk-taking environment. AUD is resilient to falling commodity prices and our positioning
indicator suggests further scope for EURAUD shorts.

We initiate a short EURAUD trade recommendation at 1.4260 targeting 1.3805 with a stop loss at 1.4490.

We expect EURAUD to trade lower during periods of improving risk appetite. While the Fed’s QE3 progamme has now officially come to a close, we expect increasingly aggressive easing programmes from the ECB and BoJ to provide
offsetting support for markets. Combined monetary base growth for the major central banks is likely to continue through 2015. We continue to favour long positions in risk-sensitive currencies funded in EUR and JPY and are now initiating a short EURAUD trade recommendation at 1.4260 targeting 1.3805 with a stop loss at 1.4490″.

bnp paribas euraud nov14

(Source: BNP Paribas)

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Dovish Bank of England a negative for GBP

 

ANZ report “the BoE was unambiguously more dovish in its November Quarterly Inflation Report. There was a notable downgrade in the bank’s inflation forecast and softening in the outlook for GDP growth.

• Wages are responding to the employment gains of the past year or so as spare capacity shrinks. In part due to its weaker inflation outlook, the BoE looks for real annual earnings growth of around 2% by the end of 2015.

• In such a subdued environment for inflation, it is difficult for the BoE to justify a normalisation in policy rates in the near term. Prospects for a H1 2015 rise in the bank rate have been reduced. This is negative for sterling near term and will act as a constraint on GBP vs USD, AUD and NZD”.

(Source: ANZ)

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A technical take on precious metals – SwissQuote

 

 

Long-term technical structures call for further weakness on precious metals reports SwissQuote.

Looking at long-term price configurations of precious metals, three (gold, silver, platinum) out of four have validated multi-months distributive patterns since September. The duration of these bearish patterns and the implied downside risks suggest that a bottom in this commodity segment has likely not been made yet. Palladium has also declined sharply since September but the long-term succession of higher lows remains intact, as can be seen by the rising trendline. However, a break of the resistance at $811 is needed to alleviate concerns of an upcoming second leg lower.

Gold likely to decline towards $1045
The bearish breakout at $1181 in gold has validated a 16-month declining triangle formation, calling for a decline towards the key support area between $1045 (05/02/2010 low) and $1027 (29/10/2009 low). In the shorter term, the recent rebound has thus far been unimpressive. As a result, the resistance at $1194 (given by the 50% retracement from the October high at $1255) is likely to curb any prices appreciation.

Monitor the short-term price action of Platinum
The short-term technical configuration of Platinum is worth monitoring as prices are challenging the key support at $1190 (06/10/2014 low). A decisive break lower would confirm the downside risk at $1072 implied by the recent validation of its multi-months distributive pattern. It would also not bode well for the short-term performance of gold and silver.

swissquote gold nov14

(Source: SwissQuote)

 

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EUR/CHF attractive for a “no” in Swiss Gold Referendum

 

SwissQuote report “the tensions in Switzerland have been mounting over the past weeks due to unexpectedly balanced election polls on the Gold Referendum. However we believe that the rational will finally win over the Swiss gold debate. In our opinion, the markets have gone well beyond themselves. EUR/CHF edges the oversold conditions (RSI at 30%), the 1-month implied volatility advanced to 4.45%, highest levels over more than a year. The 1-month (25-delta) EUR/CHF risk reversals became quite negative as demand for put options increased overly. The rational calls for action. Given our biased view in favor of a “no” outcome, we believe that there is opportunity in the topside OTM calls. On the spot markets, EUR/CHF is seen at optimal entry levels for long EUR/CHF positions”.

(Source: SwissQuote)

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Hong Kong employment data set for release Monday morning

 

Shortly before the markets open in the US on Monday, midway through the Asian session, the Census and statistics department will report the latest unemployment data out of Hong Kong.

Capital Trust Markets reports “we’ve had some better-than-expected data out of Hong Kong recently, but concerns that the Chinese slowdown will have a collateral damage effect on the nation has markets on edge – and any key releases such as the upcoming employment figure can have a considerable impact on the value of the Hong Kong dollar versus its major counterparts. With this in mind, what are the levels to keep an eye on as we head into the release and what does consensus forecasts the figure to be? Here is what you need to know.

First, let’s take a quick look at what is happening in Hong Kong at the moment. The recent protests – pro democratic – effectively brought Hong Kong to a standstill last month, and this has had a hampering effect on the nation’s growth. The Hong Kong government suggests that growth during 2014 will come out at 2.2%, falling at the lower end of the 2 to 3% target issued by the Hong Kong government earlier this year. Business sentiment is relatively weak as a result of the aforementioned protests, and both exports and industrial production are down on a quarter over quarter basis. However, the nation’s financial sector remains strong and – unlike numerous other countries across the globe – expansion is effectively a certainty for this year and the next. So, what are the levels to keep an eye on as we head into the upcoming employment release? Take a look at the chart below.

HKD

As the chart shows, we’ve seen a large amount of volatility in the USDHKD over the past couple of weeks. After a large and sharp decline early on Friday morning, 7.7530 and 7.7560 are the levels to keep an eye on – serving as in term support and resistance respectively. Consensus forecasts the upcoming employment release at 3.3% – unchanged on the previous figure. With this in mind, look for anything above 3.3% to weaken the Hong Kong dollar and test in term resistance in the USDHKD. Conversely, strong data (i.e. anything below 3.3%) would likely catalyze a break below in term support and validate 7.7515 longer-term”.

(Source: Capital Trust Markets)

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EUR/JPY heading to 145.66

 

Capital Trust Markets reports “EUR/JPY bulls look to 145.66 as a possible target following a strong break above 143.50 resistance level.

Technical Analysis

EURJPY13thNovember

EUR/JPY has been trading around a key pivot level for the past two weeks, first rejecting off 143.50-144.20 without a bearish continuation, only to cross above this level on Tuesday 11th November. Spot is currently around 144.44 half-way through the 13th/11 U.S. trading session, with a strong bullish bias after a successful re-test and bounce of 143.50, this time performed from above.

Stochastic remains at extreme overbought levels on Daily, indicating a temporary top and a deeper correct are both long overdue. That being said, swing configuration maintains a higher highs and higher lows structure, pointing to future gains in the next trading sessions. Depending how EUR/JPY reacts at 145.66, coupled with reactions post-GDP reports on Friday, we could see the start of a correction soon, since the most recent bullish swing is showing a considerable slow-down in the uptrend.

Based on the current technical landscape, if EUR/JPY fails to rally higher and turns around, a break below 143.33 will invalidate the Higher Lows structure. This should trigger a stop hunt from long positions accumulated below this area, pushing EUR/JPY back to 141.00″.

(Source: Capital Trust Markets)

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USDCAD finally stops recored breaking winning run

 

Capital Trust Markets reports “the US Dollar (USD) extended downside movement against the Canadian Dollar (CAD) on Wednesday, dragging the price of USDCAD to less than 1.1350 following the emergence of a bearish pin bar on the weekly timeframe. The long term bias however remains bullish due to Higher High on the daily chart.

Technical Analysis

As of this writing, USDCAD is being traded around 1.1345. A hurdle can be seen near 1.1465, the swing high of the bearish pin bar as demonstrated in the following daily chart. A break and daily closing above the 1.1461 resistance area could incite renewed buying interest, validating a fresh rally above the 1.1500 handle.

On the downside, the pair is expected to find a support around 1.1310, the 23.6% fib level ahead of 1.1215, the 38.2% fib level and then 1.1138, the 50% fib level as demonstrated in the above chart. The bias will remain bullish as long as the 1.1300 support area is intact.

Dollar Plunges

The US Dollar came under a renewed selling pressure yesterday as many of the oversold currencies and commodities pulled back, halting the record breaking winning streak by the US Dollar. The correction phase might continue in the coming days since many pairs are currently being pulled back from the key levels.

Trade Idea

Keeping in view the overall technical and fundamental outlook, selling the USDCAD pair around the current levels appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing above the 1.1465 resistance area”.

(Source: Capital Trust Markets)

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CAD/JPY buyers eye 104.50 as Yen heads lower

 

Capital Trust Markets reports “CAD/JPY stayed bullish even through a major downswing from 99.81 down to 92.89, respecting a higher high – higher low swing configuration. This allowed the pair to bounce back and we are now seeing traders eye a fresh multi-year Higher High.

Technical Analysis

CADJPY12thNovember

Apparently there is nothing that can stop CAD/JPY from rallying even higher. Last week price closed above 101.04, where many were expecting some kind of temporary correction off 2013’s high. A bounce failed to materialize and buying momentum simply ate through all the sell orders placed in this area. On Tuesday the Japanese Yen tripped even lower on disappointing data, allowing a strong rally +120 pip rally. This helped the pair consolidate above resistance, paving the way for future gains as the pair enters uncharted territory since 2008.

Stochastic is showing overbought conditions on all timeframes from 4H all the way up to Monthly. This suggests a major correction is around the corner, however with price action heavily skewered towards fresh gains, we will stick to long positions until a bearish signal appears.

Towards the downside, albeit already at a decent distance, 101.04 is the primary support level to be watched. A return below this level should warn traders of deeper correction potential, while a bounce will suggest uptrend continuation”.

(Source: Capital Trust Markets)