A great day for us on the USDCAD yesterday as it dropped 100+ pips. We felt the oil price was ready to rally and there is a strong correlation between oil and this forex pair. We got a push higher in oil and the USDCAD traded lower. A “homerun” as Dean likes to call it!
Dean's Daily FX Update – 16 November 2016
In the Zone
- EURUSD
- AUDUSD
- NZDUSD
Noteworthy News
- The pressure on President Zuma will not go away, the opposition have filed criminal charges against Zuma yesterday. One gets the distinct feeling that the pressure is only going to intensify and I would not be surprised if he eventually vacates his position. The political situation is becoming a little bit of a farce and I think that we are lucky that the limelight is on Donald Trump – for now anyways.
Recap
The greenback continued its march against anything that was not the CAD yesterday. There has been a clear rebalancing of portfolios this last week as investors have migrated to industrial shares which has propped equity markets on the back of market friendly policies from Trump. It looks as though all the side deals for an OPEC induced oil production freeze are in place and this is underpinning the equity markets, throw in a 94% probability of a rate hike in December and we will have massive demand for the greenback.
On these markets, it seemed as though the big move is nearing the end of its primary cycle and were in a corrective mood yesterday. The equity markets are stalling at yearly highs, the bond yields started coming off the highs, gold was up by $6 and oil was up almost 6% on the back of a potential production freeze. There may be some further opportunity brewing in the indices where I am stalking a potential corrective move.
The biggest winner yesterday was USDCAD, it started the week testing major yearly Fibonacci levels at around 1.3590 on Monday, fast forward 24 hours later and it is trading below the 200 hour MA at 1.3430. This 160 pip swing proves that the market waits for nobody, there are multiple reasons for support buyers to come into the market today and hence the reason I exited the trade (there is further explanation of our trade management techniques in today’s video). Much will depend on the oil rally today as to where this pair goes, but after gaining over 100 pips I have decided to take my profit and watch the proceedings.
Amongst others, the USDJPY is an example of why I decided to stay out of the safe haven currencies. We covered the EUR in this morning’s video, but the EURUSD is the pair that is showing a little bit of fight, the JPY is very much in retreat mode though. Price has traded above 109.00, there are some indications that this could go higher in the coming days, but I would not be surprised to if traders take some profits off the table which will slow momentum. Look for a candle that closes below 109.00, this could lead to profit taking all the way down to 108.50 where support buyers will come back into the market.
The GBPUSD was a bit of a tug and war yesterday, it spent most of the day tracing lower. A headline stating that Brexit could take 2 years to unfold was the catalyst for a look back up to 1.2500 before finding resistance. The pair looks to be forming a channel which we define in the video and I continue to sit on the side lines in this pair.
Daily FX Ranges
EURUSD
Resistance 1.0794 – 1.0819
Support 1.0714 – 1.0690
GBPUSD
Resistance 1.2507 – 1.2525
Support 1.2422 – 1.2405
AUDUSD
Resistance 0.7575 – 0.7589
Support 0.7527 – 0.7519
NZDUSD
Resistance 0.7122 – 0.7139
Support 0.7072 – 0.7060
USDCAD
Resistance 1.3500 – 1.3528
Support 1.3430 – 1.3409
USDJPY
Resistance 109.10 – 109.50
Support 107.90 – 107.50
USDCHF
Resistance 0.9989 – 1.0000
Support 0.9943 – 0.9929
USDZAR
Resistance 14.3550 – 14.4600
Support 14.0900 – 14.0300
Important Economic Data out today
- 11:30 GBP Average Earnings
- 11:30 GBP Claimant Count Change
- 17:30 USD Crude Oil Inventories
- Tentative NZD PPI
- Tentative NZD Retail Sales
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