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Fundamental Currency Analysis
USD: The U.S. Dollar Index is currently down -0.0170 or -0.02% to 84.9380 after opening at 84.9260 in Asia earlier today. The Greenback is trading mixed against the major currencies today after the United States reported better than expected economic numbers yesterday. Weekly Initial Jobless Claims dropped to 264K from 287K and versus an expected 286K, Industrial Production increased +1.0% m/m compared to +0.4% expected, the Philly Fed Manufacturing Index printed at 20.7 versus an anticipated reading of 19.9, Capacity Utilization increased to 79.3% versus 79.0% expected, the NAHB Housing Market Index printed at 54 compared to a consensus of 59, Crude Oil Inventories rose to +8.9M versus +2.3M expected. In a speech today, FOMC member Charles Plosser said that, “I would prefer that we start to raise rates sooner rather than later,” he continued saying, “this may allow us to increase rates more gradually as the data improve rather than face the prospect of a more abrupt increase in rates to catch up with market forces, which could be the outcome of a prolonged delay in our willingness to act”.
EUR: The Euro is trading fractionally higher against the U.S. Dollar today after consolidating at a slightly lower level yesterday. Data released yesterday included Eurozone Final CPI, which came out in line with expectations increasing +0.3% y/y, and a Spanish 10-year Bond Auction, which had a yield of 2.20% and a bid to cover ratio of 1.6, compared to a previous auction result of 2.08% over 1.5. Later today, Bundesbank President Weidmann will give a speech entitled “Reforms for Recovery and Resilience” at the Economic Conference 2014, in Riga, Latvia.
GBP: Sterling is higher against the U.S. Dollar today after a +0.44% increase yesterday. Cable gained in the absence of any significant economic numbers released yesterday. No significant economic data is expected today.
JPY: The Japanese Yen is fractionally higher against the Greenback today, with no significant economic numbers expected from Japan until next week.
CHF: The Swiss Franc is trading steady against the U.S. Dollar today after consolidating at a slightly higher level yesterday. The Swiss State Secretariat for Economics (SECO) cut its growth forecasts for Switzerland to +1.8 percent from +2.0 percent for 2014 and to +2.4 percent from +2.6 percent for 2015.
AUD: The Aussie is fractionally lower against the Greenback today after declining -0.7% yesterday. In a speech at the Thompson Reuters FX Benchmark event in Sydney, RBA Assistant Governor Debelle said that “Financial markets have been quiet, maybe too quiet, for much of this year”, Comparing the present with 1994 before the bond crash in Australia he said that, “The sell-off, particularly in fixed income, could be relatively violent when it comes”.
CAD: The Canadian Dollar is steady today after consolidating at a slightly higher level yesterday. Canadian economic data yesterday had Manufacturing Sales decline -3.3% m/m versus an expected decline of -1.6%, and Foreign Securities Purchases, which increased to +10.28B versus +4.31B expected. Releases later today include Core CPI (+0.1%) and CPI (0.0%).
NZD: The Kiwi is fractionally higher against the U.S. Dollar today after declining -0.46% yesterday. No significant economic data is expected out of New Zealand until next week.
Highlighted Chart of the Day: USD/CHF
[See Above Chart]
A daily candlestick chart of the USD/CHF currency pair appears above showing the rate recent moving lower to break its near term up channel drawn in orange, although its remains within its medium term up channel drawn in orange. In addition, the rate is trading above its rising 200 day Moving Average shown in green, and its 14 day RSI drawn in blue in the indicator box is leveling out within central neutral territory. (See additional technical analysis in the section below.)
Technical Analysis for the Majors
EUR/USD: The Euro rose slightly this morning after falling yesterday, as it rises correctively from its recent 1.2500 low. Nearby declining trendline resistance is now drawn at the 1.2907 level. Resistance is seen at 1.2859/86 and 1.2900, with support seen at 1.2791 and 1.2767. Its falling 200 day MA now lies at 1.3467, and its 14 day RSI remains in central neutral territory at the 53.22 level. Its outlook is neutral near term but bearish medium term.
USD/JPY: USD/JPY rose modestly yesterday, and is down slightly this morning, as it consolidates within its downside correction from its recent 110.08 high that now creates a down channel pattern. Resistance appears at 106.66/80 and 107.05, with support noted at 105.70, 105.43 and 105.19. The rate’s 14 day RSI is still in lower neutral territory and reads at the 36.18 level, and the rate is trading above its rising 200 day MA currently at 103.32. Its outlook is mildly bearish near term and bullish medium term.
GBP/USD: Cable rose for the third straight day this morning after making a new recent low at 1.5874 two days ago, as it bounces off the support line of its medium term descending wedge pattern. The rate has now recovered above its 50.0% Fibonacci retracement level of its long term rally from 1.4812 to 1.7190 at 1.6001, with its 38.2% Fibo level providing theoretical resistance at 1.6282. Falling trendline resistance also appears at 1.6251. Furthermore, the rate’s 200 day MA lies at 1.6691 with a falling slope, and its 14 day RSI has risen to read in central neutral territory at the 45.26 level. Its outlook is mildly bullish near term and bearish medium term.
USD/CHF: The Swissy was trading unchanged this morning, after rising somewhat yesterday, as the rate consolidates while correcting lower from its recent 0.9683 high. The rate has now broken its near term up channel support line now drawn at 0.9505, with its medium term trendline support now drawn at 0.9226. Support is seen at 0.9395 and 0.9360, with resistance noted at 0.9432 and 0.9467/68. The rate’s 14 day RSI now reads in central neutral territory at the 45.39 level, and the rate is trading above its rising 200 day MA now situated at the 0.9027 level. Its outlook is bearish near term and bullish medium term. (See highlighted chart above.)
AUD/USD: The Aussie fell yesterday and this morning, as it consolidates above its recent 0.8641 low and below 0.8897 in what appears to be a triangular pattern in its fourth wave. Resistance is seen at 0.8811/59 and 0.8897, with support noted at 0.8674/83 and 0.8641. The rate remains below its mildly falling 200 day MA now at 0.9216, and its 14 day RSI reads in central neutral territory at the 43.16 level. Its outlook is neutral near term and bearish medium term.
USD/CAD: USD/CAD is mildly lower this morning after falling a bit yesterday, as it consolidates below its recent five year high at the 1.1384 made three days ago. The rate is reacting lower off its rising medium term resistance trendline now drawn at 1.1397, and it has a rising short term support line drawn at the 1.1148 level, with a medium term support line below that at the 1.0999 level. Its 14 day RSI remains in upper neutral territory at the 60.96. level, and the rate is trading above its mildly rising 200 day MA now at 1.0947. Its outlook is bullish near term and medium term.
NZD/USD: The Kiwi rose slightly today after falling yesterday, as consolidates after rising correctively from its recent similar lows of 0.7706 and 0.7712. The rate is trading a bit below the falling upper line of its medium term descending wedge pattern now drawn at 0.7996, with its declining lower line currently situated at 0.7852 as its apex approaches. Support is noted at 0.7915/27 and 0.7876, with resistance seen at 0.7972/95 and 0.8040. Also, its 14 day RSI reads in central neutral territory at the 49.55 level, and the rate remains below its falling 200 day MA now at 0.8465. Its outlook is bullish near term and bearish medium term.
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