Thursday, data lineup promised a bit of volatility and it did not disappoint. The BOE started thing of by increasing its Asset Purchase program by 50 billion pounds. The People's Bank of China not to be outdone lowered its own interest rates only seconds later. Then to keep things rolling, the ECB announced a 25 bp cut and lowered the deposit rate to 0%. All of these move point to a slowing global economy and make the NFP report even more important on Friday. A positive report, as suggested by ADP on Thursday, could send risk higher. A disappointing report could confirm everyone's worst fears of a global slowdown. Asian and European trading could be quite on Friday ahead of NFP. We may see a bit of profit taking in the EURUD And GBPUSD. If you fell you must trade the NZDUSD may present scalping opportunities between .80 and .8060. Data flow is also light in Asia and Europe. As always remember to keep your trades KEANE and play it smart.
EURUSD DROPPED AFTER EXPECTED CHANGES
It appeared to many traders that the 25 BP rate reduction was already priced into the EURUSD heading into Thursday’s announcement by the ECB. Yet the pair still fell aggressively after the news was released. The sharp fall could have been triggered by many factors. Ranging from the reduction of the deposit rate to 0%, BOE additional QE, or the Peoples Bank of China interest rate reduction. Most likely the combination of all of the data points lead to a level of uncertainty that pushed some player into the safe haven of the dollar.
Friday should be another interesting day of trading. NFP is due at 8:30 ET. A strong number similar to the ADP report released Thursday would further diminish the expectations of further QE. Heading into Asian and European trading the EURUSD is sitting below key support at 1.2405. This level should act as a pivot prior to NFP. If the cross remains below this level we could drift lower during the evening. If the pair can move back above 1.2505 we could see a bit of profit taking before the release. Focusing on a larger time frame support begins at 1.2285 and resistance is strong at past support at 1.2520.
Sup 1.2285
Res 1.1.2520 Pivot 1.2405
GBPUSD NO WHERE MAN WITH NO WHERE PLANS
The GBPUSD had an uninspired trading day on Monday. The cross moved a bit over there before slowly crawling over here. No real direction. The pair did test 1.57 but could not rally above. In the mean time support is at 1.5720 and resistance is on the ascending trend line at 1.5670. if that level gives way daily support at 1.5650 could be in play.
Sup 1.5670 1.5650
Res 1.5720
Plan: Waiting for a test of either the ascending trend line or daily price resistance at 1.570.
AUDUSD Slowly Gliding Higher
The AUDUSD continued to consolidate in a tight range on Thursday. The pair has moved in a 100 pip range so far this week. It is interesting to note that the cross did not fall on Thursday with overall risk. In the short-term support can be found at 1.0220 and resistance is at Thursday’s high around 1.0330. The pair has continued to make higher highs and lower lows throughout the week. If after the release of NFP the cross break either resistance at 1.0350 or support at 1.0220 we could see a test of either support at the .618 fib at 1.0140 or strong daily price resistance at 1.0460.
Sup 1.0220 1.0140
Res 1.0350 1.0460
NZDUSD IN A ZONE
There is not much to do or say with this pair at the moment. throughout the week the cross has traded in a narrow trading range. The support is .80 and resistance is at .8060. The pair briefly broke above resistance today but could not maintain its gains. If the NZDUSD break above resistance we could see a move higher towards .8235. A break below range support exposes past resistance at the .618 fib level .7940.
Sup .80 .7940
Res .8060 .8235
USDCAD IT IS A FIB GAME AT THE MOMENT
The USDCAD has found strong support at the 50 FIB level at 1.01232. The cross has briefly broken this level over the last three days but could never establish traction below. This price, combined with daily price support at 1.010 creates a support zone between 1.0023/00. If this level breaks we could quickly see a test of the .618 fib at 1.0047. Resistance can be found at the .382 fib at 1.0199.
Fib Levels .382 1.02 Sup 1.0123/00
.50 1.0123 Res 1.02
.618 1.0047
USDJPY IN A TEENAGE WASTELAND
The cross is drifting one way or the another. Never really making its mind up where it wants to go. The pair has ranged in a narrow zone over the last week or so and may continue to do so. Sup is at 79.20 and resistance begins at 80. Until the pair breaks out of this range the only thing to do is play the inside.
Sup 79.20
Res 80
