The commodity currencies continued to trade a bit stronger yesterday and today may be the day we see a pull back. I am favouring the NZDUSD and USDZAR. More signs of divergence from these forex pairs and traders will be watching closely.
Dean's Daily FX Update – 20 October 2016
In the Zone
- NZDUSD
- USDCHF
- USDZAR
Noteworthy News
- US Presidential debates are now out of the way, roll on the election. Trump was a little better and dare I say he may have shaded the debate last night. The media polls report that Clinton will win this election by 10 points, if Trump can get voters to the station this election could be tighter than what the media think.
- Finance Minister Gordhan will not withdraw his application and be bullied by the Gupta family. This saga could drag into court.
Recap
We were braced yesterday for the bumper day for the CAD and boy did the BOC Governor deliver some fireworks. Rates, as expected, were left on hold. The statement was a lot more hawkish than the market expected and the USDCAD, like a bag of bricks dropped by 100 pips. In his press conference he stated that he “actively considered” cutting rates and this led the USDCAD to bounce by 140 pips. I am a little undecided today as to how to trade the pair, logic would suggest that the dust will settle and we will find some immediate resistance but I will wait for London to open.
The GBPUSD has been the ‘darling’ this week it was a little lacklustre yesterday, my views from yesterday still stand, GBP has not been able to take full advantage of a weak USD and this raises red flags for me. I am still on the side lines in this pair but I still believe that the market will look for shorts in this pair.
EURUSD is again in a little bit a sideways range, we have been testing those lower levels again this morning and I suspect that we could see a break today lower today.
There was a surprise draw in oil out of the US yesterday, a big draw at that and this allowed for a sharp rally in the commodity currencies. AUDUSD, NZDUSD and USDZAR were all able to break through major resistance levels. I see divergence building on these pairs and we could be due a rally against these pairs today.
Daily FX Ranges
EURUSD
Resistance 1.0991 – 1.1000
Support 1.0958 – 1.0900
GBPUSD
Resistance 1.2296 – 1.2320
Support 1.2236 – 1.2200
AUDUSD
Resistance 0.7700 – 0.7720
Support 0.7660 – 0.7630
NZDUSD
Resistance 0.7230 – 0.7250
Support 0.7190 – 0.7165
USDCAD
Resistance 1.3160 – 1.3200
Support 1.3079 – 1.3050
USDJPY
Resistance 103.84 – 104.00
Support 103.30 – 103.00
USDCHF
Resistance 0.9900 – 0.9915
Support 0.9873 – 0.9850
USDZAR
Resistance 13.9900 – 14.0400
Support 13.8400 – 13.7891
Important Economic Data out today
- 10:30 GBP Retail Sales
- 13:45 EUR Minimum Bid Rate
- 14:30 EUR ECB Press Conference
- 14:30 USD Philly Fed Manufacturing Index
- 14:30 USD Unemployment Claims
High Risk Investment Warning: Trading foreign exchange and/or contracts for difference on margin carries a high level of risk, and may not be suitable for all investors. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. Before deciding to trade the products offered by BlackStone Futures you should carefully consider your objectives, financial situation, needs and level of experience. You should be aware of all the risks associated with trading on margin. BlackStone Futures provides general advice that does not take into account your objectives, financial situation or needs. The content of this Website must not be construed as personal advice. BlackStone Futures recommends you seek advice from a separate financial advisor. Please take the time to read our Risk Disclosure Notice.
