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The markets staged a turn-around late into the US session yesterday with the Greenback weakening across the board. USDJPY declined to make an intraday low to 117.944 while the EURUSD rallied as much as 1.2446 highs before easing off for the day. The bullish momentum looks set to continue through to today’s trading session. There was no particular reason as to the sudden declines in the Greenback as the few fundamentals from the US were relatively better than expected. It must however be noted that the US Dollar Index was trading near a major multi-year resistance level, which could be one of the reasons for the sudden decline.
The Euro single currency was bullish through the start of yesterday, proving the support level near 1.225 levels to be quite strong. The British Sterling was weaker on account of disappointing industrial and manufacturing data. But the Cable managed to rally later in the day due to the broad weakness in the Greenback.
Today’s economic calendar is quiet for most of the European and US trading sessions with the RBNZ overnight cash rate statement being the only sole market moving event for today.
Fundamentals Recap – December 9, 2014
- UK BRC Retail sales monitor y/y 0.9%
- NAB Business confidence 1 vs. 5 previously
- Japan prelim machinery tools orders m/m 36.6%
- German trade balance 20.6bn vs. 18.1bn; French trade balance -4.6bn vs. -4.5bn
- UK manufacturing production m/m -0.7% vs. 0.2%; industrial production m/m -0.1% vs. 0.3% estimates
- US NFIB small business index beats estimates rising to 98.1
- NIESR GDP estimates, UK at 0.7%
- ECB officials speeches
- US JOLTS job openings 4.83Mn vs. 4.81Mn
- IBD/TIPP Economic optimism 48.4 vs. 47.2
- US Wholesale inventories m/m 0.4% vs. 0.1%
Fundamentals – December 10, 2014
- Australia Westpac consumer sentiment -5.7%
- Japan BSI manufacturing index 8.1 vs. 13.1
- Japan PPI y/y 2.7% vs. 2.7% estimates
- Australia home loans m/m 0.3% vs. 0.1% estimates
- China CPI y/y 1.4% vs. 1.6%; PPI y/y -2.7% vs. -2.3%
- Japan consumer confidence 37.7 vs. 39.6
- RBNZ Official cash rate 3.5%
- RBNZ rate statement
EURUSD Daily Pivots
As noted in our yesterday’s analysis, EURUSD did indeed rally to 1.244 levels but saw a sharp reversal near this major resistance level. However, the fact that the declines were contained to the minor support, now the daily pivot is indicative of further upside push in EURUSD. A break above the resistance at 1.242 could see EURUSD target the next resistance at 1.25 levels. Alternatively, if the resistance at 1.244 holds, we could expect to see gradual declines back to the major support at 1.227
USDJPY Daily Pivots
USDJPY’s decline was predictable to the untested support region of 118.975 levels. With price making a large downward spike through to 118.332, USDJPY could possibly look towards a potential choppy price action today with little movement. A break of the down sloping trend line could however put USDJPY back to its bullish rally. To the downside, the next major support level comes in at 117.572.
GBPUSD Daily Pivots
Yesterday’s price action put the GBPUSD back into the range zone seen for the past 3 and half weeks. The resistance level of 1.5723 must be clearly broken followed by a break of the trend line in order to ascertain any bullish price action in the Cable. Alternatively, the lower end of the range at 1.561 and a potential test of the same level for resistance need to be tested to confirm further downside moves.
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