There appears to slowing momentum in the dollar. Forex traders have been riding the USD wave as they price in a hike in rates in December. Yellen speaks tonight and we will see if it will be buy the rumour and sell the fact. Lots of opportunities seem to be presenting.
Dean's Daily FX Update – 17 November 2016
In the Zone
- EURUSD
- AUDUSD
- USDJPY
- USDCHF
Noteworthy News
- Hillary Clinton (remember her?) made her first appearance last night. She never referred to Trump once and urged her followers to never give up. In a country that is already divided, I find these words to be somewhat irresponsible. The Democrats are going to have to accept defeat quickly if they want to add value.
Recap
For over a week now, the USD has been on a march, we have had a lot of FOMC members weighing in with comments suggesting a rate hike is imminent – this should be no surprise. The market seems to have stalled this morning and you get the impression that everyone is waiting for Fed Chair Yellen to testify, with the Fed Funds showing a 94% probability that we will get a December hike, I am not certain if we will get any shocks.
My opinion is that the greenback has spent the last week pricing in probability of the rate hike, it also looks to me as though the market is now slowing momentum. This does suggest that we may see a relief rally in the offering today as traders take profit leading into tonight’s event risk, I am also mindful that considering that any shock in the market will only be if Yellen is dovish, I will lean against that when looking at entries.
I see the highest probability opportunities in the safe haven currencies – EUR, JPY and CHF – as well as the AUD which has displayed some resilience after weak data this morning. The morning video covers this in more detail.
The GBPUSD was a choppy session yesterday, we are still stuck in the channel that formed post the flash crash in October. The top side of that range comes in at 1.2673, we have minor support at 1.2350 and this means that cable is trading in the middle of this pair. I am not trading this pair and would only get mildly interested if we had a weekly close above 1.2750 – which seems a long way away.
The Kiwi was also somewhat range bound, but it does look as though we have some buyers back in the market, but the NZDUSD is very much trading at indecisive levels. 0.7020 has been the low for this year and this is precisely where the 200 day MA is currently sitting. You may find that buyers will have that in the back of their minds as they look for entries – I would expect strong support if price got down there.
The USDCAD is a tricky one to trade, it has been buoyed by the work of certain countries desperately trying to manoeuvre a production cut in oil. Early in the week we had headlines out of OPEC countries about the need to work together, yesterday it was the chance of Russia to put their weight behind the production cut. This is creating choppy sessions in the CAD and I am also aware that it takes only one headline out of Iran stating they are not going to freeze production to undo all the hard work. We had a “home run” on Tuesday and so I am going to sit on the side lines for now.
Daily FX Ranges
EURUSD
Resistance 1.0730– 1.0760
Support 1.0690 – 1.0665
GBPUSD
Resistance 1.2491 – 1.2525
Support 1.2408 – 1.2382
AUDUSD
Resistance 0.7525 – 0.7545
Support 0.7474 – 0.7460
NZDUSD
Resistance 0.7098 – 0.7115
Support 0.7072 – 0.7060
USDCAD
Resistance 1.3475 – 1.3500
Support 1.3415 – 1.3390
USDJPY
Resistance 109.49 – 109.70
Support 108.60 – 108.40
USDCHF
Resistance 1.0037 – 1.0057
Support 0.9998 – 0.9970
USDZAR
Resistance 14.3550 – 14.4600
Support 14.1400 – 14.0500
Important Economic Data out today
- 11:30 GBP Retail Sales
- 15:30 USD Building Permits
- 15:30 USD CPI
- 15:30 USD Core CPI
- 15:30 USD Philly Fed Manufacturing Index
- 15:30 USD Unemployment Claims
- 17:00 USD Fed Chair Yellen Testifies
- Tentative USD PPI
- Tentative USD Retail Sales
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