The Italian referendum was headline news and the resulting resignation of the Italian Prime Minister. The Austrians voted left which was a little bit of a surprise given the rights increasing support around the globe. Should be an interesting week!
Dean's Daily FX Update – 05 December 2016
In the Zone
- GBPUSD
- USDCAD
Noteworthy News
- The Italian Constitutional referendum was a resounding “NO” vote. As we head into some big elections next year, 2016 might be a precursor that people around the world have had enough. Although not as big as Brexit, this will have a negative effect on the Euro.
Recap
The big mover this morning was the EURUSD, as news filtered through that the “NO” vote was the resounding winner the EUR came under pressure. We had a nice Sunday gap in the pair – it closed on Friday at 1.0670 but opened at 1.0530. The pair bottomed out at 1.0500 but found support once PM Renzi announced his resignation, traditionally I would look to “trade the gap” but given the circumstances I would rather wait for London to enter the market.
Both the CHF and GBP got dragged into the EU mess and followed similar patterns to the EURUSD, cable was able to close its morning gap before retracing lower again. I believe that the GBP may open slightly higher this morning ahead of data and I will wait to see price levels between 1.2700 and 1.2733 where I will look for short trades.
Whenever we have scenarios like the referendum, the USDJPY is the pair that receives the flow as currency traders start looking for a “safe haven.” This was seen in the JPY this morning where the pair traded lower by close on 100 pips, like cable this pair has since closed the gap but I would not be surprised to see this pair trade lower this morning.
I will be looking to see how the market divulges the Italian referendum, there may be a similar move this morning such as what we saw on Sunday. If this is the case I will be looking keenly on the EURJPY and there may be an opportunity to short this pair today.
President Elect Donald Trump was very active on social media last night and was rather critical on China – this after a call with Taiwan had angered China. The bulk of Trumps “abuse” towards China was the Yuan devaluation, what did the Chinese do in response this morning – gave another “shut your mouth” Yuan devaluation! This is really trivial but I am going to keep my eye on this as it could affect both commodity and EM currencies going forward.
The USDCAD felt both the after effects of the referendum as well as slightly weaker Oil prices this morning. After such a steep move in Oil last week, it is bound to retrace somewhat and CAD will be dragged into that move. I would look for a slight recovery this morning but at 1.3280 – 1.3265 will be looking for a possible long entry.
Both the AUDUSD and USDZAR are little changed from Friday, in line with metal prices. I would not be surprised to see the ZAR strengthen a little bit more on the back of skirting a downgrade into junk status. I still sit this pair out as looking at past price action this year, the risk: reward ratio does not favour taking a short.
Weekly FX Ranges 05/12/2016 – 09/12/2016
Majors
EURUSD
Resistance 1.0692 – 1.0722
Support 1.0550 – 1.0515
GBPUSD
Resistance 1.2800 – 1.2875
Support 1.2506 – 1.2440
AUDUSD
Resistance 0.7500 – 0.7540
Support 0.7400 – 0.7360
NZDUSD
Resistance 0.7168 – 0.7199
Support 0.7042 – 0.7018
USDCAD
Resistance 1.3450 – 1.3500
Support 1.3285 – 1.3250
USDJPY
Resistance 114.40 – 114.84
Support 112.72 – 112.00
USDCHF
Resistance 1.0178 – 1.0200
Support 1.0075 – 1.0050
Rand
USDZAR
Resistance 14.1800 – 14.2800
Support 13.6900 – 13.4800
EURZAR
Resistance 15.0400 – 14.1000
Support 14.7000 – 14.4800
GBPZAR
Resistance 18.0000 – 18.1070
Support 17.2728 – 17.0800
Minors
AUDCAD
Resistance 1.0000 – 1.0020
Support 0.9883 – 0.9830
AUDJPY
Resistance 84.79 – 85.06
Support 83.80 – 83.00
EURCHF
Resistance 1.0790 – 1.0804
Support 1.0765 – 1.0742
EURGBP
Resistance 0.8513 – 0.8557
Support 0.8335 – 0.8300
EURJPY
Resistance 121.34 – 121.87
Support 120.30 – 119.70
GBPJPY
Resistance 144.92 – 146.28
Support 141.18 – 139.73
GBPCAD
Resistance 1.7000 – 1.7080
Support 1.6711 – 1.6647
GBPCHF
Resistance 1.2933 – 1.3000
Support 1.2650 – 1.2584
CADCHF
Resistance 0.7626 – 0.7700
Support 0.7503 – 0.7476
Indices
DE30
Resistance 10680 – 10730
Support 10490 – 10403
UK100
Resistance 6830 – 6877
Support 6670 – 6612
US500
Resistance 2190 – 2220
Support 2150 – 2120
US30
Resistance 19135 – 19300
Support 18900 – 18700
SA40
Resistance 44100 – 44355
Support 42765 – 42150
Commodities
BRENT
Resistance 54.39 – 55.20
Support 50.20 – 48.90
XAUUSD
Resistance 1195.00 – 1200.40
Support 1170.04 – 1163.00
XAGUSD
Resistance 16.86 – 17.00
Support 16.28 – 16.00
Important Economic Data out today
- 11:30 GBP Services PMI
- 17:00 USD ISM Non-Manufacturing PMI
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