S$ choppy following the FOMC Minutes. Focus turning to tomorrow’s US Jobs/NFP, China CPI.

The FOMC Minutes reiterated the statement released at the original meeting without divulging anything new. The reaction has been limited, although the dollar has given up a little of the strength seen earlier in the session. Look for more of the same today, with the market really looking to focus on tomorrow’s US Jobs/NFP data/China CPI. Before then, today sees the German Factory Orders, EU PPI, Retail Sales, US Jobless Claims, Consumer Credit Change. Australia gets Building Permits.

EUR/USD: 1.1849

The Euro fell to as low as 1.1800 in the hours ahead of the FOMC Minutes, before a mild bounce. The release of the minutes actually had minimal impact as they merely re-emphasized the message that the Fed had put out at the time of the meeting, although the Euro is squeezing a bit higher, to 1.1850, as I write.

The Fed retained their optimism on the US economy while at the same time being concerned about the international outlook, low wage growth and inflation and appear to remain cautious on the timing of the first rate hike

Earlier in the day the EU inflation data came in mixed, with the Core figure coming in slightly above expectations (0.8% ; exp 0.6%) while the CPI headed into the deflationary zone, coming in at -0.2%; exp -0.1%). The EU unemployment figure came in as expected at 11.5%.

Technically the Euro is looking heavy still in the medium term, although the shorter term charts do hint at the chance of a squeeze to the topside. A downside break of 1.1800 would suggest a run towards 1.1743, where the Euro was initially pegged to the dollar in January 1999. Beyond here, we are likely to head to the 2005 low at 1.1640.

The topside should see good selling interest now at 1.1875, above which could head back to 1.1900. The hourlies are trying to turn a bit higher from an oversold condition, so if we do see any sort of squeeze, look for a return, above 1.1900, to 1.1975 (23.6% of 1.2569/1.1800) and possibly to 1.2000, where there is still a gap that needs to be filled from the lower Monday opening price. If so, there is no change in the view that it would be a good sell opportunity.

Today sees a bit of secondary data but the market will begin to focus on tomorrows US jobs data/NFP, so a choppy days trade close to 1.1800 would not really surprise. Use 1.118/1.1900 as a guide.

Economic data highlights will include:

German Factory Orders, EU PPI, Retail Sales, US Jobless Claims, Consumer Credit Change.

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USD/JPY: 118.90

Having moved to a low of 118.04, the dollar has managed a recovery today, reaching the previous session high of 119.62 (high 119.64) ahead of the FOMC Minutes, turning a little lower in choppy trade and has just broken 119.00 at the time of writing.

The charts are somewhat mixed and I am not sure that I would be too involved at current levels although the longer term gameplan of looking to buy the dips remains unchanged.

Below 119.00, support should again be seen at around 118.70 (daily Kijun) and then at today’s session low at 118.38. Below here would retest the 118.00 level, although this currently looks unlikely to be seen, but below which should find strong bids at 117.80 (weekly Tenkan). Below this would see further strong support at the  11 Dec low at 117.43 and then at the next degree of Fibo support at 116.80 (23.6% of 100.75/121.84). If seen I would again consider it to be a decent medium term buying opportunity.

On the topside, above 119.65 (100 HMA) would revisit 119.85 (200 HMA) and then 120.00. If this can be overcome then look for further gains towards descending trend resistance at 120.50 and the minor triple top at around 120.75. At this stage I doubt we are heading towards 121.00, but if/when we do, further advances towards the trend high at 121.85, a break of which would see a run towards the 15 July 2007 high at 122.42. In the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time given the resistance levels sitting in between.

For the coming session look for a choppy range of 118.80/119.70, ahead of tomorrow’s main event, this being the NFP reading.

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AUD/USD: 0.8074

Having hugged 0.8070 through Europe, the Aud headed to Monday’s low, on the back of general US$ strength, in reaching 0.8033 where it again ran out of downside momentum. After some choppy trade following the release of the FOMC Minutes, the overall result has left the Aud pretty much unchanged, currently sitting at 0.8060. As I write, the Aud is heading a little higher, now at 0.8085.

More of the same choppy trade looks likely today, with the hourlies actually looking as though they want another try of the topside. where sellers would be seen ahead of the 100 HMA at 0.8100 and the 200 HMA at 0.8120. Above here could get interesting as it would break the descending trend resistance, which could take us back to the weeks high at 0.8156 and possibly to the next descending trend resistance, currently at 0.8180. A break would most likely trigger some stops which could then propel the Aud up towards 0.8200/15 (0.8211: 23.6% of 0.8795/0.8033). I don’t really see it happening today, although it would provide a decent sell opportunity if we were to get there, with a stop placed above the trend/Fibo resistance at around 0.8240.

As we said before, below 0.8030 would see a run towards 0.8000. If/when seen, this should initially act as solid support, although a break of 0.8000 would head towards the important Fibo level at 0.7936 (61.8% of 0.6006/1.1080) which should hold it at least that the first attempt. If wrong, then we are headed to the July 2009 low at 0.7700 and then possibly to the RBA’s stated target at 0.7500.

For today look for a range bound session of 0.8030/0.8100 with the local Building Permits the only real focus.

The overall focus of trading from the short side remain in place, but we could be in for another near term squeeze towards 0.8100/20, so leave room to sell into strength.

Economic data highlights will include:

Building Permits.

Meta Trader – AxiTrader    AUD/USD: 4 Hour