- US Dollar: US Dollar Sticks to Range Despite Impressive Leading Indicators Report
- Euro Bides its Time After European Union Summit
- British Pound Bounces on Strong UK Retail Sales Figures
- Commodity Dollars Little Moved, Volatility Unlikely Until Next Week
US Dollar: US Dollar Sticks to Range Despite Impressive Leading Indicators Report
The US Dollar recovered sharply into late Friday trade, finishing the week almost squarely where it began amidst exceedingly choppy market conditions. The Greenback sold off through the overnight session as it pulled back from range highs against the Euro and other key counterparts. Yet markets showed little appetite for extended trend moves and pushed the currency to fresh multi-week peaks before the close.
Limited event risk on the day gave little impetus for major moves, and a similarly empty calendar promises listless moves in the days ahead. A Leading Indicators report was the only major event through the New York session and fell exactly in line with consensus forecasts. That said, 9 of 10 of the index’s components pointed to growth through the next three to six months—the broadest advance in seven years. The data perhaps only confirms a slow but steady improvement in forward-looking growth measures, and as such elicited little reaction out of the US Dollar and broader financial markets.
Traders should remain cautious in what promises to be a slow week of price action ahead, as liquidity will only worsen through holiday-shortened trade. Exceedingly low volatility expectations suggest very few traders expect anything in the way of trends. That does not necessarily rule out choppy intraday price moves—much as we saw through the past several days of trade. We think traders should limit leverage amidst what may prove to be a challenging week for forex trading.
Related:Top Forex Trading Ideas for 2011, Top Mistakes of 2010
Euro Bides its Time After European Union Summit
Yesterday we wrote that the highly-anticipated European Union summit produced few surprises and had effectively zero effect on Euro pairs. Yet some hours after we published said report the Euro traded considerably higher against the US Dollar and many traders attributed gains to announcements that the EU stood ready to provide bailout funds in a bid to preserve the monetary union. While plausible, it seems more likely that the EURUSD was simply bouncing off of range lows as traders showed little appetite in pushing major currencies to any significant highs or lows. Range-bound price action likewise goes a long way in explaining the Euro’s sharp correction into the US session.
A strong German IFO business confidence reported lifted fundamental forecasts for Europe’s largest economy—yet German economic growth has never been in doubt. Market focus remains on the Euro Zone periphery and it will be important to watch developments in ongoing fiscal crises going forward. We are unlikely to see any major moves in bond markets or otherwise in the week ahead, but the stage is set for an eventful January. Recent warnings on sovereign debt ratings suggest that the crisis is far from resolved, and we could see further turmoil when traders return to their screens in the New Year.
British Pound Bounces on Strong UK Retail Sales Figures
The British Pound was the second-worst performer against the Dollar today, after U.K. Nationwide Consumer Confidence unexpectedly declined to a 20-month low. The decline in confidence could be largely attributed to Prime Minister David Cameron’s drive to reign in the record budget deficit with deep spending cuts and tax hikes. The budget squeeze includes the elimination of 330,000 public-sector jobs and an increase in the country’s value-added tax from 17.5 percent to 20 percent. Overall, sterling was the worst performing currency of the week, dropping 1.7 percent against the greenback and hitting a three-month low of $1.5454 during today’s session. Looking ahead, traders are anticipating the U.K.’s final 3Q Gross Domestic Product reading on the 22nd, which will likely confirm that the country’s economy grew 2.8 percent in the past year.
Commodity Dollars Little Moved, Volatility Unlikely Until Next Week
The Australian, New Zealand, and Canadian Dollars traded lower against their U.S. counterpart today as Europe’s sovereign debt crisis dampened risk appetite and higher Treasury yields attracted investors to the greenback. The Canadian Dollar fell intraday to a two-week low against its American namesake, while the New Zealand Dollar ended the week near its two-month low. Looking ahead to next week, traders should keep an eye on coming event risk that may provide increased volatility for the commodity currencies. Canada will announce its Consumer Price Index inflation figures for November and the Reserve Bank of Australia will release its December minutes on the 21st, while New Zealand will release its 3Q Gross Domestic Product figures the next day. The commodity bloc, which has enjoyed high interest rates and a strong rebound from the financial crisis, will need strong economic data heading into the New Year to maintain its appeal.
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ECONOMIC DATA
Next 24 Hours
|
Currency |
GMT |
Release |
Survey |
Previous |
Comments |
|
NZD |
21:30 |
Performance Services Index (NOV) |
52.0 |
PSI declined in October. |
|
|
JPY |
5:00 |
Leading Index (OCT F) |
97.2 |
Japan’s leading index fell to 9-month low in October. |
|
|
JPY |
5:00 |
Coincident Index (OCT F) |
100.7 |
||
|
JPY |
5:30 |
Tokyo Department Store Sales (YoY) (NOV) |
2.7% |
Department store sales rose annually in October for first time since 2008. |
|
|
JPY |
5:30 |
Nationwide Department Store Sales (YoY) (NOV) |
0.6% |
||
|
JPY |
7:00 |
Convenience Store Sales (YoY) (NOV) |
-5.9% |
||
|
EUR |
7:00 |
German Producer Prices (MoM) (NOV) |
0.3% |
0.4% |
Producer prices increased in 7 of the past 8 months. |
|
EUR |
7:00 |
German Producer Prices (YoY) (NOV) |
4.5% |
4.3% |
|
|
EUR |
9:00 |
Euro-Zone Current Account s.a. (euros) (OCT) |
-13.1B |
Current account deficit narrowed in September. |
|
|
EUR |
9:00 |
Euro-Zone Current Account n.s.a. (euros) (OCT) |
-9.2B |
||
|
13:30 |
Wholesale Sales (MoM) (OCT) |
0.7% |
0.4% |
Rose in Sept. on autos. |
|
|
USD |
13:30 |
Chicago Fed National Activity Index (NOV) |
0.00 |
-0.28 |
Likely rose to 4-month high |
|
EUR |
15:00 |
Euro-Zone Consumer Confidence (DEC A) |
-9.0 |
-9.4 |
Likely rose to 3-year high. |
SUPPORT AND RESISTANCE LEVELS
CLASSIC SUPPORT AND RESISTANCE
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
|
Resist 2 |
1.3840 |
1.6420 |
89.00 |
1.0460 |
1.0922 |
1.0600 |
0.8230 |
127.60 |
146.05 |
|
Resist 1 |
1.3700 |
1.5910 |
86.00 |
1.0000 |
1.0750 |
1.0200 |
0.8000 |
120.00 |
140.00 |
|
Spot |
1.3242 |
1.5633 |
84.02 |
0.9647 |
1.0062 |
0.9901 |
0.7405 |
111.26 |
131.36 |
|
Support 1 |
1.3000 |
1.5500 |
80.00 |
0.9500 |
0.9950 |
0.9600 |
0.6850 |
103.80 |
125.00 |
|
Support 2 |
1.2925 |
1.5300 |
75.00 |
0.9000 |
0.9700 |
0.9375 |
0.6585 |
100.00 |
119.00 |
INTRA-DAY PIVOT POINTS
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
|
Resist. 2 |
1.3453 |
1.5742 |
84.49 |
0.9819 |
1.0216 |
0.9970 |
0.7457 |
112.58 |
132.09 |
|
Resist. 1 |
1.3320 |
1.5645 |
84.26 |
0.9756 |
1.0178 |
0.9928 |
0.7413 |
111.69 |
131.35 |
|
Pivot |
1.3227 |
1.5549 |
83.97 |
0.9658 |
1.0108 |
0.9884 |
0.7382 |
111.04 |
130.69 |
|
Support 1 |
1.3094 |
1.5452 |
83.74 |
0.9595 |
1.0070 |
0.9842 |
0.7338 |
110.15 |
129.95 |
|
Support 2 |
1.3001 |
1.5356 |
83.45 |
0.9497 |
1.0000 |
0.9798 |
0.7307 |
109.50 |
129.29 |
CLASSIC SUPPORT AND RESISTANCE –EMERGING MARKETSSCANDIES CURRENCIES
|
Currency |
USD/MXN |
USD/TRY |
USD/ZAR |
USD/HKD |
USD/SGD |
Currency |
USD/SEK |
USD/DKK |
USD/NOK |
|
Resist 2 |
14.4500 |
1.6755 |
8.7915 |
7.8165 |
1.4945 |
Resist 2 |
7.7500 |
5.7800 |
6.2750 |
|
Resist 1 |
13.8500 |
1.5931 |
8.3675 |
7.8075 |
1.4655 |
Resist 1 |
7.5800 |
5.6625 |
6.1150 |
|
Spot |
12.4087 |
1.5458 |
6.8789 |
7.7782 |
1.3135 |
Spot |
6.8430 |
5.6477 |
5.9857 |
|
Support 1 |
12.0500 |
1.4724 |
6.6950 |
7.7490 |
1.2750 |
Support 1 |
6.4500 |
5.2625 |
5.7030 |
|
Support 2 |
11.7200 |
1.3475 |
6.4300 |
7.7450 |
1.2500 |
Support 2 |
6.1250 |
5.1000 |
5.5200 |
INTRA-DAY PROBABILITY BANDS
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
|
Resist. 3 |
1.3384 |
1.5726 |
85.00 |
0.9821 |
1.0247 |
1.0024 |
0.7475 |
112.39 |
132.40 |
|
Resist. 2 |
1.3335 |
1.5681 |
84.76 |
0.9789 |
1.0220 |
0.9989 |
0.7449 |
111.99 |
131.95 |
|
Resist. 1 |
1.3286 |
1.5636 |
84.51 |
0.9758 |
1.0193 |
0.9954 |
0.7422 |
111.59 |
131.51 |
|
Spot |
1.3188 |
1.5547 |
84.02 |
0.9694 |
1.0139 |
0.9885 |
0.7369 |
110.79 |
130.62 |
|
Support 1 |
1.3090 |
1.5458 |
83.53 |
0.9630 |
1.0085 |
0.9816 |
0.7316 |
109.99 |
129.73 |
|
Support 2 |
1.3041 |
1.5413 |
83.28 |
0.9599 |
1.0058 |
0.9781 |
0.7289 |
109.59 |
129.29 |
|
Support 3 |
1.2992 |
1.5368 |
83.04 |
0.9567 |
1.0031 |
0.9746 |
0.7263 |
109.19 |
128.84 |
v
Written by: David Rodríguez, Quantitative Strategist for DailyFX.com
Tosubmit Questions or Comments about an article; email drodriguez@dailyfx.com
