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There was a little bit of a lull in trading on Friday as the market continued with its range bound trading nature into the weekend. There is no real explanation for this, this week we have US Thanksgiving on Thursday and so the market could be eerily quiet towards the back end of this week. I am also tempted to start looking at trading opportunities in the indices this week as liquidity dries up.
FOMC member Kaplan was his usual dovish self on Friday as he does not seem that optimistic on the likelihood of the tax reform stimulus, this I suppose could be in response to the falling of the bond yields last week as traders indicating their own pessimism about the US economy.
The US bonds and the USDJPY will be the two instruments to watch this week as they tend to move in strong correlation. The 10 year government bond is trading near both the 200 day MA at 2.305% and the 100 day MA at 2.27%, and the floor may move out beneath it should the pair trade lower. If this were to happen, the USDJPY would trade lower still. It is currently trading at 112.00 which in itself should be an attractive long set up but I am going to heed caution here.
The commodity currencies got hammered last week and as a result most of them are looking extended, I am going to keep an eye on the AUDUSD today, and there are a lot of factors that support my view. We have major support forming at 0.7530 which is a 78% fib, this is also a major support level stretching back to June of this year. We also have divergence on both the daily and 4H charts and so I will be dropping to the 1H chart and waiting for an EMA crossover as confirmation.
Market Insight Commentary – Forex
In the Zone
- AUDUSD
- NZDUSD
- USDCAD
- USDJPY
Market Insight Commentary – Indices
Important Economic Data out today
16:00 EUR ECB President Draghi Speaks
Consensus: None
Effect: More hawkish than expected is good for the EUR
Noteworthy News
- The White House Administration has not been able to get a single bill passed this year, the tax reform bill would seem to be the most likely to pass, oddly though the market is having some serious doubts and this is evident in the US government yields.
