Digest Dec 2015 No12 : Poor data might have a bit of an impact but we may need to wait for the New Year
EUR/USD a last minute bid capped here for 2015?
- Despite the fuzzy Spanish elections and Fed hike, EUR/USD was a last minute bid overnight, meeting the 200 SMA at 1.0927 with a high scored at 1.0938. Moves can be a little exaggerated in the thinner markets and one must feel for the stops triggered and SMS notifications ruining your Xmas party.
- Look out for the last minute option expiries as well, such as 3.1B in euro expirations today at 1.09, and the final positioning and settlements and then await real leverage/flows that will return in the New Year on more level playing field as desks come back and with perhaps some New Year's resolutions, such as not to run your losses too much while we hope for a more directional theme next year - yeah right!
- There is a bit of last minute data in the US GDP Q3 final revisions to go, PCE and US durable goods. Meanwhile, looking ahead to 2016, last Friday, FXStreet hosted a special event about what 2016 might hold for the Forex traders. The panelists were Ashraf Laidi, Boris Schlossberg, Adam Button and Valeria Bednarik. Today, we want to share with you the recording of the whole show and look out for commentary around the Fed and ECB and the possible headwinds from China in the currency wars.
EUR/USD levels
- Technically, EUR/USD downside is to play for below 1.1000 and the current lows represents not just the May low, but the July low, the 7th December low and the 20 day ma at 1.0822. Karen Jones, chief analyst at Commerzbank said this is a pivotal point and a break down through there is likely to trigger another leg lower to the 1.0523 recent low (favoured). "Currently we suspect that the 20 day ma will hold the initial test – but only temporarily," she warned.
US manufacturing still struggling
- The November IP report confirmed that manufacturing continues to underperform the overall economy. Total manufacturing output was flat in November and non-auto output increased 0.1% samr. This leaves total manufacturing up only 0.8% saar so far in 4Q15 and non-auto manufacturing up 1.1%. These anemic quarterly growth rates are close to the trend in output growth over the first 11 months of the year, 1.1% saar for all manufacturing and 0.6% for non-auto manufacturing.
- Moreover, December manufacturing surveys to date point to continued weakness through the end of the year. The PMI had been holding up better than other surveys, but the flash PMI for December dropped to 51.3, its lowest reading since October 2012. The key new orders component dropped to 50.5, its lowest reading since September 2009. Results from the first regional Fed surveys for December were also generally downbeat, in line with the tone of the PMI.
USD/JPY flow - mostly book tidying
- Volumes heavy, inspiration lacking in to holiday's, as ranges hold
- Flow light - O/n 121.50 sold 9.0 NY cut Asia, 1week 122.00 at 5.5 Tok cut
- 30 Dec 120.50 Tok cut 6.75, 6 Jan 121 vs 4week 122 Tok 6.0 vs 6.5
- 15 Jan 119.75 Tok 7.45, 27 Jan 122.50 at 6.4 Tok, 3month 7.9 (7.8 in London)
USD/JPY awaits US GDP Q3 final revision
- USD/JPY was offered in a tight, but volatile ranges in thin holiday markets early on overnight.
- The euro was one catalyst on the board in the US shift, but the Yen was unable to capitalise on the offer in the greenback below lows of 120.83 even while US stocks declined, although the 121 handle remains a solid platform again for the week by the looks of it. However, US data will start to flow in, the last for the year with GDP Q3 final revisions.
- Poor data might have a bit of an impact but we may need to wait for the New Year on a level playing field to see the full market reactions. "We expect Q3 GDP to be revised down by 0.4pp in the second estimate to 1.7% (Consensus: 1.9%), from 2.1%," explained analysts at Nomura today. Then we get the BoJ minutes later before we bring out the turkey!
- USD/JPY 2016 was a topic discussed last Friday. FXStreet hosted a special event about what 2016 might hold for the Forex traders. The panelists were Ashraf Laidi, Boris Schlossberg, Adam Button and Valeria Bednarik. Today, we want to share with you the recording of the whole show and look out for BoJ, Yen, currency wars and Fed commentary.
- USD/JPY levels
- Earlier, Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, however, the bearish trend is clearer, as the price has extended further below its moving averages, whilst the technical indicators maintain their bearish slopes within negative territory. Renewed selling interest below 120.70 can see the pair extending its decline down to 120.35, a strong static support level where buying interest is expected to surge.
EUR/USD ignores German data, nears 1.09 handle
- The better-than-expected German data had no impact on the EUR/USDpair, which is slowly heading towards 1.09 levels.
- Focus on stocks ahead of US data
- The pair is at the mercy of the sentiment in the major European equities. At the time of writing, the major European equity futures were pointing to a positive opening, which means the EUR may have a trouble sustaining above 1.09 ahead of the US data.
- Later in the day, the third quarter US GDP could turn out to be a non-event unless the figure is revised significantly higher/lower.
- EUR/USD Technical Levels
- At 1.0903, the immediate resistance is seen at 1.0922 (hourly 200-MA), above which the pair could test 1.1006 (50% of 1.1495-1.0517). On the other hand, a break below 1.0894 (50-DMA)-1.0890 (38.2% of 1.1495-1.0517) could open doors for a drop to 1.0803 (Dec 17 low).
NZD/USD: looking to 2016 and the RBNZ
- NZD/USD has been oscillating in a tight range in holiday season and is set up in a minor recovery from below the 0.65 handle having made highs that cleared the 0.68 handle earlier in the month.
- The Fed was the next main theme after the RBNZ was digested and with the Fed lifting off, the question now is whether the Fed can or will continue to increase rates next year. How will the commodities sector play out and can NZ crawl out from a disinflationary situation where the RBNZ will not need to cut interest rates again?
- As it stands, analysts at Westpac feel that the economy is losing momentum. "Over the past year, we've actually seen quite a sharp deceleration in growth - down from a rate of 3.7% in 2014"..."We expect that by mid-2016, the lingering softness in inflation and slowdown in growth will be apparent, and will prompt the RBNZ to cut rates again".
- Last Friday, FXStreet hosted a special event about what 2016 might hold for the Forex traders. The panelists were Ashraf Laidi, Boris Schlossberg, Adam Button and Valeria Bednarik. Today, we want to share with you the recording of the whole show and look out for commentary around the Fed and the possible headwinds from China in the currency wars.
- NZD/USD levels
- Technically, on the wide, the price targets the 0.6869 mark where the 200 DMA is located and to the downside, the 100 DMA at 0.6555 through the cluster of MA's guards the Nov lows at 0.6489.
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