Forex news for North American trading on December 12, 2016
- Dow closes at yet another record but S&P and Nasdaq end up down
- USDJPY down on the day but support holds on the first look
- WTI futures settle at $52.83, up $1.33 on the day
- US Monthly budget -136.7B vs -130.0B estimate
- Forex technical analysis: GBPJPY spring tightening
- Gold bounces back after making 10 month lows
- The 9 year 11 month auction goes off at 2.485%
- Forex technical analysis: EURUSD extends above MA resistance
- GBPUSD trades at new session highs as London/European traders exit
- UK, France and Germany break their winning streak
- Italy's Padoan to keep his post in new government
- US sells 24B 3-year notes at high yield of 1.452%
- UK's Hammond: It would be helpful to have a longer period to manage Brexit
- Stay in Britain, stay under EU law say EU Brexit negotiators - Telegraph
- German economic growth is sustainable says Schaeuble
- ECB QE count: Bought €16.320bn vs €14.516bn prior
- Forex technical analysis: USDCAD holds trend line support, but....
- US Capitol visitor centre on lock down for security threat
- Trump's running the economy by Twitter again
- The strongest and weakest currencies as NA traders enter for the day
In other markets:
- S&P index +13.34 points or 0.59%
- NASDAQ composite index +27.14 points or 0.5%
- Dow industrial average up 142.04 points or 0.72%
- 2 year notes 1.141%, +1 basis points
- 5 -year notes 1.8857%, Unchanged
- 10 year note 2.4712%, Unchanged
- 30 year bond 3.1537%, Unhchanged
- Spot gold $1162, +$3.00
- Crude oil futures of $52.44, +$0.94
- The GBP was the strongest. The USD was the weakest.
The FOMC is the big news for the week (Wednesday at 2 PM ET). With little in the way of economic news or events today, the market traded as if it was getting ready for that decision.
The dollar has been moving higher of late not only in anticipation of a Fed hike (there is no doubt) but also in reaction to a more upbeat economy on the back of the potential for NEW Trump initiatives. However, for today, the beat of the dollar higher drum, took more of a backseat today as the dollar retreated a bit - especially in the London and NY sessions.
Fundamentally, there was no major economic data out today. Sure the US deficit numbers were reported but they had zero impact. The U.S. Treasury auctioned off 3 and 10 year notes, but those auctions went without any surprises. The Non OPEC production cuts announced over the weekend had more of an impact in the earlier sessions (Crude oil traded as high as $54.51). In the NY session oil prices came back down - erasing much of the gains (they traded as low as $52.18). The Dow closed higher for the 15th time since the election, but the Nasdaq and S&P closed lower(no new records there) US debt yields moved higher earlier but ended the day unchanged across the curve.
So it seemed that the forex markets were based on lightening positions in front of the FOMC decision.
What does some of the favorite pairs look like into the new trading day?
EURUSD
The EURUSD traded as low as 1.05246 in the early hours of the Asia-Pacific session. That was mighty close to the 1.0517-20 level that was a triple bottom until last weeks post Italian referendum fall to 1.0503 (that was quickly rejected). The failure to move lower was the signal to start this pairs corrective rotation higher. Into London's exit, the pair extended to new session highs, and in the process the price moved above the 100 bar moving average on the 4-hour chart at the 1.0630 level. The high extended to 1.06517, just short of a cluster of resistance defined by the 38.2% retracement of the moved down from last week's high, and the 100 and 200 hour moving averages. That cluster of resistance comes in at the 1.0657 area. That will be a key resistance target area on the topside into the new trading day. Look for sellers on the first test, with stops on a break. Close support in the new day comes in at 1.0630. A move below that level SHOULD be more bearish with 1.0600 likely the next support target.
USDJPY
The USDJPY trader at the highest level since early February at 116.11. That high corresponded with swing lows going back to August 2015 and January 2016 at 116.09 and 115.96. The inability to take the price higher from there started a rotation back lower. The NY and day low did stall at support at 114.82-86 (see post here) but the correction higher stalled at intraday resistance at 115.15-19. So we enter the new day between support at 114.82-86 and resistance at 115.15-19. A break on the downside should wander down to 114.44-54 area where - among other technical levels - sits the 100 hour MA. ON the topside, should the 115.19 level give way, look for the 115.59 level to be tough to crack on the first look.
GBPUSD
The technical story today for the GBPUSD turned more bullish on the move above the converged 100 and 200 hour MAs at the 1.2618 area. Sellers turned to buyers and the price trended higher. The pair was able to extend above the 50% of the move down from the December high at the 1.26609 level. The correction off the high into the session close, could only get to 1.2665 (the high for the day reached 1.2699). So in the new day, buyers remain in control (above 1.26609) but 1.2700-04 (1.2704 was the high from Dec 8th) is an area that needs to be broken and remain broken. Other upside targets come in at 1.2743 and the 100 day MA at 1.2766. If that 100 day MA is tested, I would expect sellers to lean. ON the downside, on a break of 1.2661, the 200 hour MA is now at 1.2632 and the 100 day MA is at 1.26175. A move below those levels increases the bearishness. In the new day, UK CPI will be released with YoY expected to increase to 1.1% from 0.9% last month. Core CPI is expected to come in at 1.3% vs 1.2 last.
NZDUSD
The NZDUSD is up testing the 50 % at 0.7186 and the 100 day MA at 0.7200 into the new trading day. Key level for bullish or bearish bias in the new day. In trading today and on Thursday last week, the price moved above the 100 day MA but close back below the level after limited upside momentum (to 0.7221 adn 0.7206). If there is another break, the price needs to stay above that MA level.
AUDUSD
The AUDUSD has been trading up and down in a roughly 100 pip trading range since December 5th (from 0.7410 to 0.7507). The high price on Monday reached 0.7503 and remains close to that high in the new trading day. A move above the 0.7507 should solicit more buying on the break but can we trust it given the up and down action seen over the last few weeks? Of course sellers may continue to put a lid on the pair too. In which case, a rotation back to the 100 hour MA at 0.74644 currently, will be the first major support target.
Below are the % changes of the major currencies vs each other.
