The forex markets shrugged off the Italian referendum and moved sharply higher after the initial sell off. Even the equity indices felt comfortable with the result and also traded higher for the day. Are we seeing the start if the Christmas rally? Only time will tell.
Dean's Daily FX Update – 06 December 2016
In the Zone
- GBPUSD
- EURUSD
- USDCAD
Recap
If anyone had any doubt on whether the market could absorb another attack on the status quo – the answer was delivered yesterday. Much like the US Election, a “bad” result in the Italian referendum was supposed to send the EUR spiralling lower. Whilst the initial reaction was for it to do so, much like the US Election the EUR dusted itself off and then marched on higher.
I am not sure what to read into this, we have many potential market moving political developments on the agenda in 2017, and I am wondering if the market is becoming more accepting of the global change which seems to be sweeping through?
Anyhow, the EURUSD was a wild ride yesterday and the range was close on 300 pips yesterday. The high on the day was close on 1.0800, we have both the 200 Hour MA and the 38.2% Fib at 1.0820 and so this could prove to be major resistance level this week. There will invariably be a pullback after such a big move, which is not by any means saying that the buyers have had their day in the sun, I think that 1.0700 will be the level to watch to see if buyers come back into the market.
Yesterday we defined a range that the USDJPY looked to be forming, we were looking for the pair to trade lower. Our concern was around 113.00, this is where the 200 Hour MA was and this is exactly where the market found support. It seems as though buyers will lean against this level for now and so this morning I would look for the buyers to drive this pair to a test closer to 114.40. The USDJPY has stalled at 114.85 since February and there is nothing to suggest that the sellers won’t enter the market again at this level.
As expected the RBA (Royal Bank of Australia) left rates on hold, this was the last meeting until February 2017. The market did not even flinch at this as there was nothing in the subsequent statement that suggests we should expect anything different going foward. Both the AUDUSD and NZDUSD look rather subdued and perhaps are starting to wind down for the summer holidays.
The USDZAR had again outperformed and continues to make inroads into the USD, the fact that South Africa was able to skirt a downgrade should help its cause. Perhaps as the country is able to distance itself further from potential downgrades and political instability so we will see greater inflow into the ZAR.
FX Ranges 06/12/2016
Majors
EURUSD
Resistance 1.0755 – 1.0790
Support 1.0657 – 1.0635
GBPUSD
Resistance 1.2740 – 1.2762
Support 1.2673 – 1.2650
AUDUSD
Resistance 0.7470 – 0.7480
Support 0.7424 – 0.7412
NZDUSD
Resistance 0.7147 – 0.7155
Support 0.7096 – 0.7090
USDCAD
Resistance 1.3320 – 1.3340
Support 1.3270 – 1.3250
USDJPY
Resistance 114.20 – 114.46
Support 113.50 – 113.15
USDCHF
Resistance 1.0114 – 1.0129
Support 1.0070 – 1.0060
Rand
USDZAR
Resistance 13.9040 – 14.0025
Support 13.7650 – 13.6915
EURZAR
Resistance 14.9061 – 14.9570
Support 14.6879 – 14.6501
GBPZAR
Resistance 17.6350 – 17.7257
Support 17.4278 – 17.3626
Minors
AUDCAD
Resistance 0.9928 – 0.9941
Support 0.9881 – 0.9860
AUDJPY
Resistance 85.16 – 85.33
Support 84.55 – 84.37
EURCHF
Resistance 1.0832 – 1.0850
Support 1.0776 – 1.0766
EURGBP
Resistance 0.8438 – 0.8450
Support 0.8373 – 0.8353
EURJPY
Resistance 122.56 – 122.79
Support 121.23 – 120.92
GBPJPY
Resistance 145.40 – 145.78
Support 144.34 – 143.89
GBPCAD
Resistance 1.6951 – 1.6970
Support 1.6850 – 1.6820
GBPCHF
Resistance 1.2870 – 1.2880
Support 1.2800 – 1.2770
CADCHF
Resistance 0.7605 – 0.7618
Support 0.7562 – 0.7550
Indices
DE30
Resistance 10726 – 10800
Support 10580 – 10520
UK100
Resistance 6762 – 6777
Support 6710 – 6690
US500
Resistance 2205 – 2210
Support 2190 – 2180
US30
Resistance 19200 – 19300
Support 19149 – 19100
SA40
Resistance 43461 – 43754
Support 42723 – 42640
Commodities
BRENT
Resistance 54.96 – 55.50
Support 53.80 – 53.24
XAUUSD
Resistance 1175.00 – 1177.20
Support 1165.74 – 1163.00
XAGUSD
Resistance 16.79 – 16.85
Support 16.54 – 16.48
Important Economic Data out today
- 15:30 CAD Trade Balance
- Tentative NZD GDT Price Index
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