Morning forex briefing
The USD had a two-sided session
overnight as expected, traders continue to consolidate the major
pairs within established ranges seen earlier this week. Volumes are on the
modest side which is typical ahead of a closely-watched US fundamental; in
this case the NFP report due tomorrow morning. Technical trade is evident
traders say and some desks suggest that market players are watching for
current support/resistance numbers to hold through the next 24 hours.
Analysts warn that stops are likely building on either side
of the market ahead of Friday’s data so the risk of intraday volatility is
maybe a bit higher today. Overnight the USD climbed against the majors aided
mostly by USD/JPY; the lift coming from comments made by BOJ governor Fukui
who reiterated his stance that the BOJ is in no hurry to raise interest rates.
Fukui told the press that rates will be raised “when appropriate†but again
gave no timetable for the next rate hike. Analysts are looking for a 25 BP
rate hike from the BOJ sometime after the first of the year; USD/JPY traded to
an overnight high at 117.38 before exporter selling was seen. Cable weakened
overnight early to an intraday low at 1.9032 before following the rest of the
complex higher back to the opening range; currently trading about unchanged
from yesterday’s New York close. Technical studies are approaching overbought
levels but near-term studies suggest room for more upside before a correction;
aggressive traders most likely will look for a short on another attempt to
reach 2006 highs so short-term traders have a selling opportunity in my view.
EURO is range bound near the highs overnight and traders
note that cross-spreaders again active in the non-USD pairs which may be
lending a bit of support to EURO this morning. Also lending a bit of support
was German employment data “leaked†to the press ahead of schedule; German
unemployment fell to 10.4% below expectations. As expected, the ECB held rates
firm at today’s General Council meeting; analysts still expect the ECB to hike
rates 25 BP at the December GC meeting. In my view, today is a typical
pre-report day for the USD. Traders will be closely watching the US NFP number
tomorrow for another clue to the health of the US economy. The bottom line is
a lower number will add to the “Fed will ease†argument while a higher number
supports the “wait and see before another hike†argument. In my view, I think
the market is getting a bit over-extended on USD strength and any news moving
forward is most likely factored-in to USD pricing.
GBP/USD Daily
R3: ?
R2: 1.9160/80
R1: 1.9120/30
Current Price : 1.9070
S1: 1.9030
S2: 1.8980
S3: 1.8900
Rate consolidating just under resistance area between 1.9080
and 1.9120; look for a solid pullback to the 1.8880 area or below on good
volume should US data firm the USD tomorrow. Fib support at 1.8900 likely to
offer at least one bounce but a correction of recent strength would be healthy
for an additional advance to new 2006 highs before the end of the year.
Aggressive traders can sell above 1.9100
USD/JPY Daily
R3: 118.20
R2: 117.80
R1: 117.30
Current Price : 116.93
S1: 116.50/60
S2: 116.00
S3: 115.80
Pair getting support from the 100 bar MA, long candle wicks
the past three days suggest that willing buyers are at the 116.60 area and a
rotation higher is likely. Look for a USD rally to cap around the 118.00 to
118.20 area near-term and that would be a strong selling opportunity in my
view. Look for a corrective rally off US data tomorrow and a lift in price to
be sold heavily on good volume.
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