There was a distinct focus yesterday, for forex traders, on buying the USD – something that we were expecting after an interview where Donald Trump lamented the strong dollar put it under a little bit of pressure on Tuesday. It did attempt through the course of the day to strengthen but the catalyst for the greenback was the speech delivered by Fed Chair Yellen. There is no denying that she was a little more confident of an interest rate hike in 2017, but my interpretation was that of a dovish tone and I certainly didn’t get the impression that we can expect 3 rate hikes in 2017 as the market is pricing in.
Dean's Daily FX Update – 19 January 2017
In the Zone
- AUDUSD
- NZDUSD
- USDCAD
Noteworthy News
- A simple headline from Fed Chair Yellen, “next rate hike depends on the economy in the coming months” caught my eye. Despite the market reaction, this hardly instils the belief of 3 rate hikes this year, I wonder as the market digests her speech the USD comes off slightly this morning.
Recap
The USD closed the session in New York on the highs, I just wonder however, once the dust has settled if there may be some opportunity to fade the dollar move.
The EURUSD traded in a very tight range yesterday but it was forced to break that range on Yellens speech. This week the EUR has stalled at 1.0710 on more than one occasion and this seems to be the cap on the pair for now, for the EUR to continue its recent move this is the level that the market will have to close above. With the pair trading at around 1.0630 you may say the tide has shifted somewhat, but we are trading near major support levels at 1.0617 and 1.0600, and the sellers will only completely wrestle back the initiative if we are able to trade lower.
The USDJPY also attempted to make a run for it after the speech this evening, we have confluence in the form of the 200 hour MA and 38.2% fib in place and the pair will have to close above 114.50 if the pair is to challenge the next hurdle at 115.50 – my feeling though is that the resistance at 114.65 will be too strong to break.
The USDCAD got hit hard in a bout of volatility as Gov. Poloz left the possibility of a rate cut open, it is also clear that Canada is a little bit nervous around the inauguration of President Trump – I am sure that the NAFTA treaty will be one of the first things on the agenda. The combination of all these factors sent the CAD sharply weaker, despite the USDCAD trading through various major MA and resistance levels I am of the view that the speech was not that dovish. I believe there is a real opportunity in the CAD to fade the USD move and make some solid profit. 1.3200 could prove to be the first target, but I would not be surprised to see this pair trade a lot lower today.
Daily Ranges 19/01/2017
Majors
EURUSD
Resistance 1.0700 – 1.0714
Support 1.0625 – 1.0605
GBPUSD
Resistance 1.2375 – 1.2400
Support 1.2207 – 1.2178
AUDUSD
Resistance 0.7560 – 0.7580
Support 0.7490 – 0.7476
NZDUSD
Resistance 0.7200 – 0.7210
Support 0.7120 – 0.7110
USDCAD
Resistance 1.3260 – 1.3285
Support 1.3140 – 1.3120
USDJPY
Resistance 114.50 – 114.70
Support 113.00 – 112.80
USDCHF
Resistance 1.0080 – 1.0100
Support 1.0020 – 1.0000
Rand
USDZAR
Resistance 13.6350 – 13.6919
Support 13.4560 – 13.4095
EURZAR
Resistance 14.5000 – 14.5530
Support 14.3890 – 14.3550
GBPZAR
Resistance 16.7250 – 16.7620
Support 16.5080 – 16.4594
Minors
AUDCAD
Resistance 0.9968 – 0.9980
Support 0.9872 – 0.9845
AUDJPY
Resistance 86.11 – 86.26
Support 85.34 – 85.22
EURCHF
Resistance 1.0730 – 1.0740
Support 1.0710 – 1.0700
EURGBP
Resistance 0.8725 – 0.8740
Support 0.8640 – 0.8620
EURJPY
Resistance 121.80 – 121.93
Support 120.80 – 120.59
GBPJPY
Resistance 140.50 – 140.80
Support 138.78 – 138.40
GBPCAD
Resistance 1.6260 – 1.6307
Support 1.6023 – 1.6000
GBPCHF
Resistance 1.2398 – 1.2437
Support 1.2256 – 1.2240
Indices
DE30
Resistance 11620 – 11660
Support 11500 – 11470
UK100
Resistance 7270 – 7290
Support 7220 – 7200
US500
Resistance 2270 – 2300
Support 2260 – 2220
US30
Resistance 19900 – 19950
Support 19800 – 19600
SA40
Resistance 46800 – 47000
Support 46000 – 45800
Commodities
BRENT
Resistance 55.60 – 55.80
Support 54.17 – 53.80
XAUUSD
Resistance 1212.09 – 1220.00
Support 1195.00 – 1190.20
XAGUSD
Resistance 17.15 – 17.30
Support 16.90 – 16.80
Important Economic Data out today
- 14:45 EUR Minimum Bid Rate
- 15:30 CAD Manufacturing Sales
- 15:30 EUR ECB Press Conference
- 15:30 USD Building Permits
- 15:30 USD Philly Fed Manufacturing Index
- 15:30 USD Unemployment Claims
- 18:00 USD Crude Oil Inventories
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