EUR/USD bounces-off 1.0600, back to square one
The shared currency found fresh bids just ahead of 1.06 handle, now lifting the EUR/USD pair back towards the familiar ranges near 1.0630 region. Currently, EUR/USD trades modestly flat at 1.0632, revering a downward spike to session lows struck at 1.0604 in the last hour. The main currency pair jumped back into bids as the greenback faded a spike to daily highs against its major peers after the treasury yields stalled recovery and fell further into losses. Meanwhile, the US dollar index deflated from 101.16 highs to now trade around 100.86, down -08% on the day. The EUR/USD pair reverted to the levels seen in early Europe, although the recovery appears to lack momentum as positive European equities dampen the demand for euro as a funding currency.The major continues to get influenced by the USD dynamics, as the bulls await fresh impetus from the upcoming Eurozone consumer confidence data and US existing home sales report for further momentum. In terms of technicals, the pair finds the immediate resistance 1.0650 (psychological levels/ daily high). A break beyond the last, doors will open for a test of 1.0685 (10-DMA) and from there to 1.0700 (round figure). On the flip side, the immediate support is placed at 1.0600 (round number) below which 1.0567 (multi-month low) and 1.0556 (Nov 2015 low) could be tested.
GBP/USD turns mildly lower as USD regains traction
The GBP/USD pair failed to build on Monday's recovery momentum and has now slipped farther below 1.2500 psychological mark.Currently trading with mild weakness around 1.2480, off few pips from session low level of 1.2465, spot ran through fresh offers and confirmed rejection near 1.2500 handle as the greenback regained traction ahead of relatively thin UK economic calendar featuring the release of UK public sector borrowing. After yesterday's corrective slide from over 13-year highs, the overall US Dollar Index reversed Tuesday's early corrective slide and has now turned mildly into positive territory. Later during NA session, US existing home sales for October and Richmond manufacturing index for November might provide some short-term trading opportunities. However, Wednesday's FOMC meeting minutes will remain centre of attraction and would be looked upon for fresh insights over the Fed's next monetary policy action. Fed expectations has been a key driver of the US Dollar's recent up-surge following Donald Trump's victory in the US presidential election. Having faced rejection just above 1.2500 handle, a subsequent weakness below 1.2455-50 immediate support might now turn the pair vulnerable to break through 1.2400 handle towards testing 20-day SMA support near 1.2385-80 region. On the upside, sustained move above 1.2500 handle might lift the pair immediately towards 50-day SMA resistance near 1.2550 region.
USD/JPY: Numerous reasons to unwind long USD positions over - Nomura
Yunosuke Ikeda, Research Analyst at Nomura, notes that the USD/JPY has rallied from 101 to 111 since President-elect Trump’s victory and USD/JPY’s performance in 2017 will clearly depend on his chosen policy. “In the short run, however, we feel relatively bearish towards year-end for a number of reasons:1) This rally has been mostly driven by short-term investors unwinding USD/JPY shorts and building long positions. But will they be comfortable to bring those USD bullish positions into the new year without knowing what Trump’s policy priorities are?2) Fed funds futures have now priced in a December FOMC rate hike and 70-80% that there will be additional tightening in H1 2017. A further rise in US rates may require clearer information about US economic policies. We see the December FOMC as a "sell the fact" event.3) President-elect Trump will announce his choice for Treasury Secretary soon. He/she will highly likely be asked to comment on the latest USD trends. Verbal intervention in our opinion will be much easier if done by a Treasury Secretary "prospect" not bound by the G7 rules. 4) The Italian referendum on 4 December may trigger concerns about European politics and financial stability. This may provide a good reason and/or opportunity to take profit on bank stock positions. 5) The importance placed on the Abe-Putin summit in Japan scheduled on 15-16 December seems to be losing some momentum. President Putin seems less in need of economic support from Japan as it seems he may benefit from a friendlier US foreign policy. President Abe is giving up his desire to hold a snap election in January as his approval ratings are somewhat disappointing. Without a near-term election schedule he loses some of the political incentive to achieve a laudable agreement soon.6) The BOJ looks comfortable not taking action any time soon as Japan’s economic performance has improved.” “All in all, looking into year-end, we believe USD/JPY will face a heavy ceiling around 112. Identifying the downside is tricky but we would expect to see buy-on-dip demand from Japanese lifers/pensions to underpin a 108 level. However, if this is not the case, we believe we could see it falling to 106.”
AUD/USD extends Monday’s strong recovery, taps 0.7400 handle
The AUD/USD pair's recovery momentum from Monday's nearly five-month low level of 0.7310 gained further traction on Tuesday, lifting the pair back to 0.7400 handle. On Monday, the pair snapped a three-day losing streak and staged a goodish recovery as the overall US Dollar Index halted its post-US presidential election up-surge to 13-year highs. Additional greenback retracement during early Asian session on Tuesday helped the pair to extend overnight recovery gains. Moreover, the prevalent risk-on mood, as depicted by positive sentiment surrounding equity markets, and upbeat commodity prices further offered some fundamental support to riskier/higher-yielding currencies - like Aussie. Next in focus would be the release of US existing home sales data, later during NA session, and would be looked upon for short-term trading opportunities. However, the broader trend would be dependent on Wednesday's release of US durable goods orders and FOMC meeting minutes ahead of next week's NFP data. Immediate upside resistance is pegged at 0.7418 (Friday's high) above which the pair seems more likely to extend the recovery trend further towards its next major resistance near 0.7445-50 region. On the downside, 0.7380 level now becomes immediate support, which if broken has the potential to drag the pair towards 0.7335 intermediate support en-route 0.7310 (yesterday's low) support.
USD/CAD weaker, breaks below 1.3400 ahead of data
The greenback remains on the defensive during the first half of the week, with USD/CAD slipping below the key support at 1.3400 the figure.The pair is retreating for the second session in a row today to sub-1.3400 levels, or 2-week lows, following a persistent selling pressure surrounding the US dollar and a renewed optimism in crude oil prices.In fact, the barrel of West Texas Intermediate is extending the upside today, up more than 1% to the vicinity of the $49.00 mark ahead of the API report on US stockpiles due later in the NA session.In the data space, Canadian Retail Sales are expected to have expanded at a monthly 0.6% during September, while US Existing Home Sales are seen a tad lower in October.Despite the ongoing rebound, CAD remains under pressure from the positioning side, as speculative net shorts remained in multi-week highs during the week ended on November 30, as per the latest CFTC report.As of writing the pair is retreating 0.25% at 1.3385 and a break below 1.3311 (38.2% Fibo of the 2016 drop) would expose 1.3270 (55-day sma) and finally 1.3260 (low Nov.9). On the flip side, the immediate hurdle lines up at 1.3566 (high Nov.18) followed by 1.3575 (50% Fibo of the 2016 drop) and finally 1.3590 (high Nov.14).
EUR/JPY struggling to conquer 118.00 barrier, bullish bias remains
The EUR/JPY cross seesawed between tepid gains and minor losses within a broader trading range below 118.00 handle.Currently trading in neutral territory, around 117.80 region, the cross struggled for a firm direction and was seen consolidating its recent up-surge to 4-month highs. The cross initially dropped to 117.40 region on news of an earthquake in Tokyo and subsequent tsunami warnings for much of the nation's northern Pacific coast. The dip, however, was bought into after the Japan Meteorological Agency took back tsunami warnings and amid prevalent risk-on sentiment, which tends to dent the Japanese Yen's safe-haven appeal. Today's price-action further reaffirmed the pair's near-term well-established bullish trend, which could get an additonal boost once the cross decisively moves beyond 118.00 handle. In absence of any major economic releases from the Euro-zone and Japanese holiday on Wednesday, broader market risk sentiment would be a key driver ahead of the Euro-zone flash PMI readings during European session on Wednesday. On a sustained break through 118.00 handle, the cross seems all set to extend its near-term upward trajectory towards the very important 200-day SMA resistance near 118.70 region. On the downside, 117.35-30 area seems to have emerged as immediate support, which if broken is likely to drag the cross below 117.00 handle towards an important horizontal support near 116.60-50 region.
Gold retreats from 3-day high, stronger USD caps recovery
Having touched a three-day high level of $1221, Gold retreated from session peak amid renewed greenback buying interest.Currently trading around $1216-15 area, the precious metal was seen building on previous day's rebound momentum from Friday's 9-month low as the US Dollar paused its post-US presidential election relentless rally to the highest level since April 2003. However, renewed greenback buying interest, on continued expectations for Fed rate-hike action in December and prospect of aggressive fiscal stimulus by Trump administration, the yellow metal lost its recovery momentum and trimmed some of its gains, albeit traded in positive territory for the second straight session. With a high degree of negative correlation, stronger greenback tends to weigh on dollar-denominated commodities - like gold. Moreover, the prevalent positive sentiment around equity markets is further denting the metal's safe-haven demand and has failed to extend support to the metal's up-move on Tuesday. With a relatively thin US economic docket, featuring the release of US existing home sales data, investors will remain focused on Wednesday's release of US monthly durable goods order and FOMC meeting minutes ahead of next week's NFP data, which would help to determine near-term trajectory for gold prices. Weakness below session low support near $1213 level is likely to get extended towards $1208 horizontal support, which if broken might now drag the commodity further towards $1200 psychological mark support. On the upside, strength above $1220-21 resistance (session peak) has the potential to lift the metal further towards recent recovery highs resistance near $1229-30 region.
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