Morning Forex Briefing
The USD is trading mixed to start New York this morning after a quiet two-way overnight session. Mostly unchanged against EURO and GBP but lower against the JPY, the Greenback is holding in previous ranges after a brief break lower on technical trade. Firming a bit against the GBP in European trade, Cable had some early strength erased on liquidation from cross-spreaders traders say. A large order from the sell side was due to be executed at the London Fix and may have pressured the market in thin holiday trade. With only a few days to the Christmas holiday and Hanukkah already in celebration traders feel that holiday conditions are in full swing and expect trading to be choppy and two-sided; most feel large swings in price are less likely even if fundamentals are surprising. For this morning the US Current Account Deficit is due. Not normally a closely watched indicator but lately with the CA running at record percents against GDP some traders are finding it a solid clue to near-term USD direction.
Tomorrow is PPI which is expected to be benign and in line with analysts forecasts. Both PPI and CPI are showing very little risk of inflation getting past the Fed target so a lower reading from PPI tomorrow might inspire a round of USD liquidation. Other indicators due out this week could inspire some choppy trade and due to the holiday conditions no matter the accuracy of economic indicators or the markets’ response to them I think it is wise to expect two-way trade and some volatility; the USD could continue to cover a lot of the same ground twice making for difficult trade on a longer time frame. In my view, the astute trader will consider standing aside for the most part until after the new year. Shorter term volatility traders might have lots of solid opportunity but thinner conditions might make the use of limit orders more risky due to volatility.
Watch for USD/JPY to have a few fireworks near-term; the BOJ has a rate announcement due on Tuesday. Although analysts are divided on the potential for a rate hike at this time no matter what is announced will create some volatility as conditions are a bit thin. Look for two-way trade today and for the whole week. Also, last broadcast for the year is this Wednesday; I’ll be back on Tuesday Jan. 2nd.
USD/JPY Daily
|
R3: 119.00
|
|
R2: 118.60
|
|
R1: 118.20
|
|
Current Price : 117.79
|
|
S1: 117.40/50
|
|
S2: 117.00
|
|
S3: 116.60
|
Pair showing signs of failure at the 118.20 area as long wick from Friday with a lower engulfing pattern next bar suggests topping. Stops likely under the 50 bar MA and under 100 bar MA; look for a rush of selling to also be bought due to holiday volatility. Close under 117.40 argues for a test of the 116.60 area near term. BOJ remains wildcard due to uncertainty.
GBP/USD Daily
|
R3: 1.9660
|
|
R2: 1.9600
|
|
R1: 1.9530/40
|
|
Current Price : 1.9503
|
|
S1: 1.9480/90
|
|
S2: 1.9450
|
|
S3: 1.9350
|
Rate continues to attract technical buyers around 1.9490 area and sellers above the 1.9680 area leaving a solid two-sided range; very tradeable but dangerous in terms of volatility. Stops likely under last weeks low but bids said to extend down to next fib defense area around 1.9350 area. Look for volume to remain lighter through the holidays.
Please see www. ProEdgeFX.com for details
Trading Futures, Options on Futures, and off-exchange Foreign Currency transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. The information contained on this email does not constitute a solicitation to buy or sell by Infinity Futures, Inc., and/or its affiliates, and is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law.