After the FOMC meeting last month, this week’s US GDP data took a leading role in trying to plot where the next big move was going to come. As the market spent most of the week jockeying for position it seemed that the Dollar was pricing in an impressive number as it forged stronger against its peers – especially the Commodity currencies.
At first glance the GDP did look a good number, but if you delved further into the fine print it was plain to see there is still weak investment and consumer spending. This may put a little dampener on proceedings, I have put it on the record a couple of times but I am not treating the December hike as a guaranteed move just yet.
The truth be told however, the GDP lost a little gloss on breaking news that the FBI would be re-opening the investigation against Hillary Clinton – so close to the election, scandalous! There was a small OPEC meeting in Austria that seems to be discussing an output freeze in oil, I will be monitoring this over the weekend as this could put a bid under Oil prices next week.
We spent most of the week watching the 1.0900 handle in EURUSD hoping for some support. For once this pair didn’t retreat and fought resiliently to hold its ground, it even managed to find some late week momentum and crashed through major resistance at 1.0950. We may come back lower to test that level on Monday and I hoping that this level changes polarity (when resistance becomes support) and that we have another kick higher.
At the end of the day GBPUSD was not a great performer, there is news that Fund Managers are starting to find value in cable and there is even some early signs that the pair may be finding a bottom at 1.2100. My concern is that the buyers have not been able to find a strong foothold and every rally is met with massive sellers. I will wait for someone to pick the bottom, I may miss out on some of the big move but that’s trading – I am happy to be more conservative because the downside here definitely outweighs the upside.
The USDJPY seemed to be on a one way road this week, all fundamental news this week favoured the JPY getting battered as investors flocked into the USD. On Thursday we traded at 105.60 which were multi month highs, it continued to test those levels, the FBI story put a halt to that as the market decided to go “risk off” and fled to the safety of JPY assets. The USDJPY traded lower by over 100 pips on that headline, it will be worth monitoring that situation over the weekend as it will have a profound effect on the JPY.
The AUDUSD and the NZDUSD did a round trip this week and all indications are that some nice range bound zones are forming, if that is the case I will definitely try and take advantage of it. The ZAR for me was the standout performer this week – despite all the political turmoil we found ourselves in, the USDZAR traded steadily stronger. We have some event risk this week in the form of Pravin Gordhan court appearances, one gets the impression that the US political circus may overshadow our own and perhaps we may get a “get out of jail free” card.
As was the case most of this week, USDCAD is the pair that I am eagerly watching, the Loonie did steadily lose ground to the USD but at slowing momentum – meaning that there is beautiful divergence forming on this pair. The OPEC meetings this weekend are key to this, there seems to be some disagreement between Iraq and Iran, but I am hoping some sort of sanity will prevail. If this is the case then the CAD is going to be playing some catch up next week and I want to be part of that ride.
Enjoy the weekend – next week promises to be a big one!
Weekly FX Ranges 31/10/2016 – 04/11/2016
Majors
EURUSD
Resistance 1.1030 – 1.1080
Support 1.0870 – 1.0825
GBPUSD
Resistance 1.2317 – 1.2362
Support 1.2166 – 1.2070
AUDUSD
Resistance 0.7679 – 0.7720
Support 0.7586 – 0.7530
NZDUSD
Resistance 0.7200 – 0.7265
Support 0.7106 – 0.7070
USDCAD
Resistance 1.3400 – 1.3450
Support 1.3200 – 1.3167
USDJPY
Resistance 104.80 – 105.40
Support 103.45 – 103.00
USDCHF
Resistance 0.9950 – 0.9990
Support 0.9860 – 0.9820
Selected FX Pairs
USDZAR
Resistance 14.0000 – 14.1241
Support 13.7070 – 13.6216
AUDCAD
Resistance 1.0215 – 1.0245
Support 1.0122 – 1.0088
EURCHF
Resistance 1.0855 – 1.0880
Support 1.0809 – 1.0790
EURGBP
Resistance 0.9000 – 0.9040
Support 0.8885 – 0.8856
EURJPY
Resistance 115.04 – 115.60
Support 113.50 – 113.00
GBPJPY
Resistance 128.18 – 129.00
Support 126.40 – 125.70
Commodity and Indices
XAUUSD
Resistance 1280.00 – 1290.00
Support 1255.00 – 1240.00
XAGUSD
Resistance 17.93 – 18.15
Support 17.35 – 17.15
DE30
Resistance 10772 – 10830
Support 10580 – 10516
UK100
Resistance 7040 – 7065
Support 6921 – 6900
US500
Resistance 2148 – 2166
Support 2124 – 2104
BRENT
Resistance 51.40 – 51.90
Support 49.20 – 48.74
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