Orbex Daily Forex Analysis for October 23rd 2014
Guest post by Jay Hawk at Orbex
Fundamental Currency Analysis
USD: The U.S. Dollar Index is currently up +0.0150 or +0.02% to 85.7560 after opening at 85.7600 in Asia earlier today. The Greenback is trading mixed against most majors, with the U.S. currency higher against Swissy, the Japanese Yen, the Canadian and New Zealand Dollars, steady against Sterling and lower against the Euro and the Australian Dollar. U.S. economic releases out later today include Weekly Initial Jobless Claims (269K) and Flash Manufacturing PMI (57.2).
EUR: The Euro is slightly lower against the U.S. Dollar today after French Flash Manufacturing PMI printed at 47.3 compared to an expected reading of 48.6, while French Flash Services PMI came out at 48.1 in line with expectations; nevertheless the previous reading was downwardly revised from 49.4 to 48.4. Also out was the Spanish Unemployment Rate, which declined to 23.7% from 24.5% with a consensus of 24.1%; German Flash Manufacturing PMI, which printed at 51.8 compared to an expected reading of 49.6 and German Flash Services PMI, at 54.8 versus 55.0 expected. Releases later today include Eurozone Flash Manufacturing PMI (50.0), Eurozone Flash Services PMI (52.0) and the first day of the EU Economic Summit.
GBP: Sterling is trading steady against the U.S. Dollar today ahead of UK Retail Sales (-0.1%), BBA Mortgage Approvals (41.5K) and CBI Industrial Order Expectations (-3). Also, MPC Member Broadbent will be giving a speech at the Society of Business Economists Annual Conference in London later today.
JPY: The Japanese Yen is off a fraction against the Greenback today after the release of Japanese Flash Manufacturing PMI, which showed a reading of 52.8 compared to an expected 52.1 print.
CHF: The Swiss Franc is trading slightly lower against the U.S. Dollar today with no significant Swiss economic expected.
AUD: The Aussie is trading higher against the Greenback today after the NAB Business Confidence Index printed at 6 showing no change from its previous reading. Also in a speech by RBA Governor Glenn Stevens addressing the Australian Payments Clearing Association, Stevens said, “our message to the industry is: stay the course. Continue the goodwill and prodigious effort that has brought you to this point. Deliver on the commitments you have collectively made. Let us together build a payments infrastructure that is efficient, open to competition and that will support innovation into the future.”
CAD: The Canadian Dollar is trading slightly lower against the U.S. Dollar today with no significant economic releases out of Canada today. Testimony to be given by BOC Governor Poloz before the Canadian Senate Standing Committee on Banking, Trade, and Commerce, in Ottawa, Canada was cancelled.
NZD: The Kiwi is off slightly against the U.S. Dollar today after dropping -1.1% yesterday in the wake of New Zealand CPI, which increased +0.3% q/q compared to an expected increase of +0.5%. The New Zealand Trade Balance (-620M) will be out later today.
AUD/USD: The AUD/USD currency pair shows the rate consolidating within a near term triangle pattern. Medium term, the rate broke up from its medium term down channel that resulted from a downside break of a long term trading range. In addition, the rate is trading below its mildly falling 200 day Moving Average, and its 14-day RSI has flattened out in central neutral territory. (See additional technical analysis in the section below)
Technical Analysis for the Majors
EUR/USD: The Euro fell slightly this morning after showing a significant drop yesterday. The rate has thus far sustained its downside break of its short term up trend that had contained its corrective rise from its recent 1.2500 low. Medium term declining trendline resistance is now drawn at the 1.2850 level. Resistance is seen at 1.2730 and 1.2840/1.2900, with support seen at 1.2624 and 1.2500. Its falling 200 day MA now lies at 1.3441, and its 14 day RSI has fallen within central neutral territory to read at the 42.37 level. Its outlook is bearish near term and medium term.
USD/JPY: USD/JPY has risen modestly for the past three days after breaking above the down channel that its recent downside correction from its 110.08 high created. Support appears at 106.66/80 and 107.05, with resistance noted at 107.37/52 and 108.00. The rate’s 14 day RSI has risen within central neutral territory to read at the 48.05 level, and the rate is trading above its rising 200 day MA currently at 103.45. Its outlook is mildly bullish near term and bullish medium term.
GBP/USD: Cable rose slightly this morning after falling for the previous two days, as it corrects lower off its recent high at 1.6183 that almost touched the upper resistance line of its medium term descending wedge pattern now drawn at 1.6181. The rate remains 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. Furthermore, the rate’s 200 day MA lies at 1.6676 with a falling slope, and its 14 day RSI has fallen within central neutral territory to read at the 43.79 level. Its outlook is mildly bearish near term and bearish medium term.
USD/CHF: The Swissy was up a bit this morning after rising more significantly for the previous two days, as the rate corrects higher off its recent 0.9360 low but remains below its more distant 0.9683 high. The rate has is re-testing the lower line of its recently broken near term up channel that is now drawn at 0.9541. In addition, the rate remains above its rising medium term trendline support line now drawn at 0.9246. Support is seen at 0.9467/68 and 0.9395/97, with resistance noted at 0.9561 and 0.9592/96. The rate’s 14 day RSI remains in central neutral territory and reads at the 56.38 level, and the rate is trading above its rising 200 day MA now situated at the 0.9044 level. Its outlook is bullish near term and medium term.
AUD/USD: The Aussie was unchanged this morning after falling somewhat yesterday, as it continues to consolidate above its recent 0.8641 low and below 0.8897 in a near term triangular pattern with a 256 pip initial width that will be used to compute its pattern target once a breakout occurs. Resistance is seen at 0.8811/59 and 0.8897, with support noted at 0.8743/46 and 0.8674/83. The rate remains below its mildly falling 200 day MA now at 0.9211, and its 14 day RSI reads in central neutral territory at the 44.94 level. Its outlook is neutral near term and bearish medium term. (See highlighted chart above.)
USD/CAD: USD/CAD is up today after also rising yesterday, as it consolidates below its recent five year high at the 1.1384 made last week with a mild downward bias. The rate also just bounced from its rising near term support trendline now drawn at 1.1195, and a medium term support line is drawn below that at the 1.1023 level. Its 14 day RSI has risen within central neutral territory to read at the 58.52 level, and the rate is trading above its mildly rising 200 day MA now at 1.0951. Its outlook is bullish near term and medium term.
NZD/USD: The Kiwi fell moderately today, after also declining yesterday, as it corrects lower off its recent high at the 0.8032 level. The rate has also been rising correctively from its recent similar lows of 0.7706 and 0.7712 within a near term channel pattern, and it is currently testing the lower support line now drawn at 0.7826. Support is noted at 0.7830 and 0.7793/0.7804, with resistance seen at 0.7915/27 and 0.7876. Also, its 14 day RSI has fallen within central neutral territory to read at the 42.94 level, and the rate remains below its falling 200 day MA now at 0.8454. Its outlook is bullish near term and bearish medium term.