It is Thanksgiving in the US today and so the afternoon and evening are likely to be a bit quiet. Reduced sessions and US FX traders feeding their faces with turkey could mean the dollar takes a breather. We have the commodity currencies in focus today.
Dean's Daily FX Update – 24 November 2016
In the Zone
- AUDUSD
- NZDUSD
- USDCAD
Noteworthy News
- The talk out of the SNB (Swiss National Bank) is that the Swissy is overvalued. This could mean that this pair is not the one to look for a short trades just yet.
Recap
It seemed as though we were going to be in for a lacklustre day yesterday, currencies for the most part were flat – until the New York traders arrived to their desks. This is a shortened week and my initial thoughts were that traders would take profit, the exact opposite happened as traders used what felt like any arbitrary excuse to buy the USD.
It already looked over extended but the dollar is bursting at the seams right now, I get the impression that everything must be priced in now and so I wait patiently for an opportunity.
The EURUSD spent much of the day at around 1.0625, once the USD started building up a head of steam it triggered stop losses all the way down to 1.0526. It has subsequently found support and trading around 1.0540, it does look as though it wants to attempt another push to that 1.0600 level. It is tempting for me, but the message I got from President Draghi is that there may further bond buying in December which means I will sit this pair out for now.
True to recent form, cable is not taking any of the bullying from the USD and seems amped for the fight. It was caught in the headwinds trading from 1.2440 down 100 pips to 1.2340, the difference being that the GBPUSD bottomed out and fought back – it closed last night at 1.2437. The GBP is the only currency that is stronger against the USD since the election, which is even more impressive if you consider the carnage elsewhere.
The USDJPY was the most effected pair yesterday, it was trading at 111.00 most of the day, it had seemed as though 111.37 was a strong resistance level. Once the USD bulls came into the market it traded non-stop to 112.97, it is trading only slightly lower this morning. This pair seems stretched to me, the recent trend is so steep that it lacks validity, and the inevitable pull back could be a deep one. The only issue with this trade is timing, it has traded way beyond my weekly range and so I will sit out this pair for now.
The commodity currencies were a little less affected yesterday and there does seem to be a little support trying to build. Considering the gold price, I would have expected to see more downside but was encouraged that it was largely contained. I cover these currencies in more detail in the video.
I remind you that today is Thanksgiving in the US, trade may be muted this afternoon and any major moves will be off reduced liquidity.
Daily FX Ranges
EURUSD
Resistance 1.0600 – 1.0620
Support 1.0530 – 1.0515
GBPUSD
Resistance 1.2460 – 1.2495
Support 1.2389 – 1.2367
AUDUSD
Resistance 0.7427 – 0.7440
Support 0.7370 – 0.7355
NZDUSD
Resistance 0.7050 – 0.7070
Support 0.6990 – 0.6970
USDCAD
Resistance 1.3515 – 1.3540
Support 1.3435 – 1.3410
USDJPY
Resistance 112.70 – 113.00
Support 111.22 – 110.78
USDCHF
Resistance 1.0170 – 1.0190
Support 1.0110 – 1.0100
USDZAR
Resistance 14.2300 – 14.3000
Support 14.0000 – 13.9500
Important Economic Data out today
- 11:00 EUR German Business Climate
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