EUR/USD off-lows, but remains capped below 5-DMA
EUR/USD found support near NY lows and now makes another attempt to regain 5-DMA as the US dollar extends its corrective slide versus its main competitors in early Europe.Currently, EUR/USD trades +0.21% higher at 1.0575, flirting with daily tops posted previously at 1.0578. The main currency pair is seen consolidating the Asian recovery, with the bulls finding respite from a broad based retreat in the US dollar, in response to stalled buying in the treasury yields.On Thursday, the EUR/USD pair staged a solid rebound from the lowest levels since March 2015 reached just ahead of 1.05 handle, and rallied as high as 1.0587 levels, before giving up half the gains to settle the day almost unchanged at 1.0554.Looking ahead, light trading is expected to extend on Friday as most US traders still continue to enjoy Thanksgiving celebrations, with the US bond markets open half-day. Meanwhile, the major awaits the US economic data due later in the NA session for fresh incentives.In terms of technicals, the pair finds the immediate resistance 1.0589 (daily pivot/ 5-DMA). A break beyond the last, doors will open for a test of 1.0629 (daily R2) and from there to 1.0647 (Nov 23 high). On the flip side, the immediate support is placed at 1.0518 (multi-month low) below which 1.0500 (zero figure) and 1.0456 (March 2015 low) could be tested.
GBP/USD sidelined around 1.2450, UK GDP on sight
The British Pound is trading almost unchanged vs. the buck at the end of the week, prompting GBP/USD to prolong its consolidative stance around the mid-1.2400s. Nothing relevant around the pair so far this week, sidelining above the 1.2400 handle although with gains limited around the lows-1.2500s.Absent news from the UK side, the dollar-dynamics remained an exclusive driver behind the pair’s price action in these past sessions, with market participants closely watching the potential Fed move by end of 2016 and the US political scenario.Later in the session, advanced GDP figures are expected to show the UK economy has expanded 0.5% QoQ during the October-December period and 2.5% on a yearly basis.Across the pond, Markit’s Services PMI is due along with Goods Trade Balance results for the month of October. As of writing the pair is gaining 0.05% at 1.2454 facing the next hurdle at 1.2514 (high Nov.21) followed by 1.2570 (55-day sma) and then 1.2675 (high Nov.11). On the other hand, a breakdown of 1.2308 (low Nov.21) would open the door to 1.2297 (low Nov.18) and finally 1.2081 (low Oct.25).
NZD/USD extends recovery beyond 0.70 mark, tests 200-DMA
The NZD/USD pair extended Thursday's rebound from 4-month lows and is now building on to its recovery back above 0.70 psychological mark. Currently trading at a fresh session peak, hovering around the very important 200-day SMA near 0.704 region, a broad based US Dollar retracement is helping the pair to register a goodish recovery on Friday. Moreover, the prevalent risk-on mood is further benefitting riskier assets/higher-yielding currencies - like the Kiwi. In absence of any fresh development, the current pull-back could also be attributed to short-covering after the pair showed a strong resilience to defend 0.70 psychological mark on daily closing basis. Next in focus would be second-tier US economic releases that include - goods trade balance, prelim wholesale inventories and flash services PMI.From technical perspective, the pair remains closer to multi-month lows and has been flirting with 200-day SMA. Moreover, the recent recovery moves were also sold into, suggesting that the near-term depreciating move could get extended further even from current levels. From current levels, up-move beyond 0.7060 horizontal resistance could get extended towards weekly high resistance near 0.7080-85 region above which the pair seems all set to surpass 0.7100 handle and head towards testing 0.7115-20 resistance area. On the downside, renewed selling pressure below 0.7030, leading to a subsequent break below 0.70 round figure mark, would confirm near-term bearish trend and is likely to drag the pair immediately towards 0.6950 horizontal support before darting towards 0.6900 round figure mark.
USD/CAD drops to lows near 1.3450 on USD selling
The greenback has now accelerated its selling bias, dragging USD/CAD to test daily lows in the mid-1.3400s for the time being.Spot is printing 2-day lows in the vicinity of 1.3450 on Friday as a bout of selling pressure continues to punish the buck early in the European session.The US Dollar Index (DXY) is now retreating for the second session in a row after hitting fresh 13-year tops beyond the key 102.00 barrier on. Wednesday, bringing in some respite for the risk-associated assets.In the meantime, the softer tone in crude oil prices has dragged the barrel of West Texas Intermediate back below the $48.00 mark, limiting the downside in CAD somewhat.Later in the NA session US October’s Trade Balance figures are due followed by the Services PMI tracked by Markit and the weekly report on US drilling activity by Baker Hughes. As of writing the pair is losing 0.17% at 1.3468 and a break below 1.3374 (low Nov.22) would aim for 1.3311 (38.2% Fibo of the 2016 drop) and finally 1.3260 (low Nov.9). On the other hand, the next up barrier aligns at 1.3566 (high Nov.18) ahead of 1.3575 (50% Fibo of the 2016 drop) and finally 1.3590 (high Nov.14).
USD/CHF once again fails to conquer 1.0200 mark and retreats
The USD/CHF pair once again faced rejection just below 1.0200 handle and has now drifted in to negative territory to currently trade at a fresh session low around 1.0150 region. After its recent up-surge, following Donald Trump's surprise victory in the US presidential election, the overall US Dollar Index seems to have entered a near-term consolidation phase and has failed to provide fresh impetus to assist the pair to move past 1.0200 mark for the second consecutive session.Meanwhile, minutes from the Federal Reserve's latest monetary policy meeting (released on Wednesday) reaffirmed market expectations that the central bank would certainly raise interest rates at its meeting in December and has also fueled speculation of faster monetary tightening during 2017, which might continue to underpin the greenback and limit and sharp downslide for the major.Looking ahead, today's US economic calendar, featuring the release of trade balance, prelim wholesale inventories and Markit flash services PMI, would be looked upon for some impetus during NA session. A follow through selling pressure below 1.0145 (yesterday's low) is likely to extend the pull-back further towards 1.0120 support area below which a fresh leg of corrective slide could seems to drag the pair towards 1.0050 support area. Meanwhile on the upside, 1.0185-90 area now seems to have emerged as immediate strong resistance, which if cleared decisively should now lift the pair immediately towards 1.0230 intermediate resistance, en-route yearly high resistance near 1.0255 region.
AUD/USD extends bullish run beyond 0.7450
The Aussie is building onto yesterday’s gains and takes-out Wednesday’s high, as sentiment turns favorable towards emerging market currencies amid a retreat in the US treasury yields.Currently, the AUD/USD pair jumps +0.78% to hit fresh six-day highs of 0.7466, bouncing-off lows reached at 0.7400. The AUD/USD pair stands resilient to slightly risk-averse market condition, which weighs down on the US treasury yields, dragging the US dollar index as well. Moreover, a solid recovery staged by gold prices, also lends support to the renewed upside in the resource-linked AUD.Calendar-wise, the AUD/USD pair will take cues from the upcoming US economic data due to be reported in the NA session, as attention now turns an action-packed calendar scheduled for release next week. We have the highly-influential US NFP data and Australian private capex numbers.The pair finds the immediate resistance at 0.7505 (Nov 17 high) above which gains could be extended to the next hurdle located 0.7527 (20-DMA) and 0.7583 (50-DMA). On the flip side, the immediate support located 0.7414/06 (10 & 5-DMA). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.7371 (daily S1) and below that at 0.7325 (Nov 18 low).
USD/JPY trims soft Japanese CPI-led gains to fresh multi-month highs
The USD/JPY pair reversed majority of its weak Japanese consumer prices-led gains to 8-1/2 month highs and has now moved into neutral territory amid broad based greenback retracement.Currently trading around mid-113.00s, the pair caught fresh bids during early Asian session on Friday after Japanese consumer price data - National Core CPI, remained in negative territory for eighth consecutive month in November. Meanwhile, Tokyo Core CPI also came-in to show deflationary pressure for the eleventh straight month. Today's softer Japanese CPI prints provided additional boost to the prevalent bullish sentiment surrounding the major. Bulls, however, took a breather at higher level amid near-term overbought conditions. Moreover, with no major market-moving releases scheduled from the US, traders seemed inclined to take some profits off the table and could be the only factor triggering the pair's retracement from multi-month highs. However, given that market already seems to be pricing-in a certain Fed rate-hike action in December, any corrective slide might now be utilized to initiate fresh long positions and hence, are likely to be short-lived.Immediate downside support is pegged at 113.20 (session low) below which the pair is likely to drift below 113.00 handle towards 112.50-45 support area. On the upside, 113.90 (session peak), closely followed by 114.00 round figure mark, seems to act as immediate resistance, which if cleared should open room for continuation of the pair's upward trajectory further towards March monthly highs resistance near 114.50 region.
Oil: Iran and Iraq remain sticking points for OPEC - HSBC
Iran does not appear to have shifted its previous OPEC stance that it will not freeze production until output has reached 4mbd notes, Research Team at HSBC. “According to Bloomberg data, the country last produced near that level in 2008. Iranian production recovered sharply in the first half of 2016 after US and EU nuclear-related sanctions were lifted in January, but monthly gains have been marginal over the past 5-6 months. This suggests that Iran’s output is close to capacity, and investments in new capacity will likely be required to reach the 4mbd target. Third party estimates suggest the country is now producing 3.7mbd above the 3.6mbd cap level Saudi Arabia called for in its last stated position.” “In addition to contesting the validity of OPEC’s production statistics, Iraq has also argued it should be exempt from freezing output because it is fighting IS militants (Reuters, 23 October 2016). However, the Iraqi oil minister issued a statement during this week’s technical meeting in Vienna pledging to offer new proposals to help OPEC reach an accord. Depending on whether the group’s GCC members are happy to bear a larger share of the output reduction, a possible compromise could be that Iraq pledges to freeze production rather than participate in outright cuts.” “On 22 November, Bloomberg reported that OPEC’s technical committee did not resolve the issues surrounding Iran and Iraq’s participation, and that the decision had been deferred to the official OPEC meeting on 30 November. Whilst it is not too surprising that the most contentious issue has been left to the ministerial meeting, the failure to reach agreement after a series of technical committee consultations and informal meetings highlights the difficulty OPEC delegates will face in reaching consensus next week.”
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