9 minutes ago | October 23rd, 2014 12:54:30 GMT

Forex Technical Trading: EURUSD rebounds on better Manufacturing data

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The EURUSD rebounded in trading today after better than expected Markit PMI data (Composite at 52.2 vs estimate of 51.5 and 52.0 last month). The levels remain low (the low for the last 12 months is at 51.7, the high is 54.0) but at least the change was to the upside.  From a technical analysis perspective, the price based against the lows reached last week and extended to the underside of the broken trend line (we broke and held below the level yesterday). That level comes in at 1.2676 and will be a risk defining level for sellers now.

The EURUSD found support against the lows from last week (and Oct 10). The high found sellers against the underside of the trend line.

The EURUSD found support against the lows from last week (and Oct 10). The high found sellers against the underside of the trend line.

The close from yesterday and the 50% of the days trading range come in at  1.2648 and 1.26444 respectively (see 5 minute chart below). A move below those levels will help the sellers cause.  The 100 and 200 bar MA on the 5 minute chart come in at 1.2651 and 1.2646 respectively. So there is a bunch of intraday support in the 1.2644-51 area to get below.

EURUSD has some intraday support to get below.  Could be a challenge.

EURUSD has some intraday support to get below. Could be a challenge.

Despite the run up today, and the short term bias more bullish above the cluster of support, and the pair finding buyers near the  recent lows(see hourly), I gotta be more bearish on the pair overall.  I like the idea the underside of the trend line held – staying below will keep traders focused on the downside. However, if there is a move above the broken trend line at the 1.2676 level,  the sellers from yesterday, and from earlier in the week (when  the 100 hour MA was being pierced on Tuesday), may look to cover/take profit and look for a higher level to sell.  Right now all is ok with the hope for a break below the 1.2644 support low.

 

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33 minutes ago | October 23rd, 2014 12:30:05 GMT

US initial jobless claims 283k vs 282k exp

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  • Prior 264k. Revised to 266k
  • Continued claims 2.351m vs 2.380m exp. Prior 2.389m
  • 4 week average 281k vs 283.5k. Revised to 284k

You just can’t find bad news in this weekly report.

USD/JPY is taking off again to resistance at 107.70/75 and we’ve got a very positive dollar environment with decent stock earnings being reflected in bond yields rising and stock futures pointing to a good cash opening.

US initial jobless claims 23 10 2014

US initial jobless claims 23 10 2014

 

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36 minutes ago | October 23rd, 2014 12:26:41 GMT

Brent crude jumps on Saudi oil cuts in September

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Brent has jumped over a buck and a half after news came out that the Saudi’s cut their September oil supply by 328kbpd to 9.36mbpd. However, production increased to 9.70mbpd from 9.597m. The Saudi’s cut supply to the market and added to storage inventories.

There’s often differences between production and what comes to market, and in and out of storage but this highlights the markets expectations for cuts in actual production. Given the recent rhetoric from Saudi Arabia they’re not really interested in cutting production to bolster prices.

This is probably good news to fade but we’ve missed the top and the market is getting edgy for production cut news.

 

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46 minutes ago | October 23rd, 2014 12:17:38 GMT

Forex: The Strongest and Weakest Currencies for October 23, 2014

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The strongest is the CAD and the AUD. Most of the gains in the AUD are against it’s neighbors in NZD and Japan.

The weakest is the. NZD. Weaker inflation data sent the NZD lower. The JPY is also lower today and filled a small gap at the 107.61 area (the high reached 107.625).

The Strongest and weakest currencies in trading today

The Strongest and weakest currencies in trading today

That must mean the AUDNZD is racing ahead.  The AUDNZD has been trading in an up and down range – using the 100 day MA as the support and the 1.1292 as a ceiling. The pair is down near 15% from the high reached in July 2012 (see chart below). The buyers are in the control keeping the price above the 100 day MA)

AUDNZD has been in a range but above the 100 day MA (blue line)

AUDNZD has been in a range but above the 100 day MA (blue line)

Retail Sales in the UK were disappointing as well and has pressured the GBP

Today Initial Claims are expected to rise back up to 281K from the surprise low of 264K last week.  Also due out today in the US is the Markit Manufacturing PMI (est 57.0) and the Leading Index (est. +0.7%).   Chicago Fed National Activity Index is expected to come in at +0.15 vs -0.21 last month.

The US Initial Claims are expected to move back higher today (at 8:30 AM ET)

The US Initial Claims are expected to move back higher today (at 8:30 AM ET)

Stocks and Bonds

The US pre-market stock market is rising today. Caterpillar and GM have reported better earnings and that is lifting the Dow. In Europe, the continents shares are up but the FTSE is down after the weaker Retail Sales.

Bond yields are steady (slightly higher)  vs. yesterday. The US 10 year is at 2.24% while the German Bund is trading at 0.89%.

A snapshot of the Stock and Bond Market

A snapshot of the Stock and Bond Market

 

 

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54 minutes ago | October 23rd, 2014 12:09:11 GMT

Bank of Japan sees greater risk of inflation falling below 1% – WSJ

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Due to falling oil prices the BOJ now sees a bigger chance of CPI falling under 1%, say  people familiar with central bank thinking.

One sees the prospect as “now possible” and another says it’s 50/50. They also say that a move below 1% could last but one said that sustained falls after October were unlikely.

This could ultimately be what’s driven the yen this morning as the market may feel that we’re in a for another dose of stimulus from the BOJ.

In one aspect is that the inflation number falling on oil prices isn’t bad news for Japan as they are heavy oil importers, so the fall in price should be good for the economy. However, the market has the BOJ’s 2% target constantly at the back of its mind so any events that derail or push that back will be met with expectancy of further BOJ pumping.

Full story from WSJ here

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1 hour ago | October 23rd, 2014 11:42:22 GMT

US earnings watch: GM sees profits nearly double

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  • EPS $0.97 vs $0.95 exp
  • Revenue $39.3bn vs $39.02bn exp
  • Net profit $1.38bn vs $698m a year ago
  • North America and China earnings outweighed weakness in Europe and South America
  • 1st quarter in 2014 not to be affected by recalls

GM has taken some big hits on recalls this year so the good news would have been even better had they not had that to deal with. It’s another strong earnings report out of the States.

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1 hour ago | October 23rd, 2014 11:39:11 GMT

Caterpillar reports Q3 revenue of USD +13.55 bln vs +13.19 bln exp

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  • EPS adjusted $1.72 vs $1.34 exp
  • expects 2014 sales and revenues to be c.$55bln vs prev forecast of $54-56bln
  • EPS expectations for 2014 continue to improve

Better than expected Q3 numbers from the US machinery giant pushing share price up 5% in pre market and along with GM giving a boost to US equity markets

Caterpillar outlook:

  • from an economic perspective they believe there is a reasonable likelihood that world economic growth could improve on 2015

Sounds like that’s based on hope rather than scientific fact

  • despite cautious optimism for improved global economic growth, significant risks and uncertaintities remain that could temper growth in 2015

As I was saying but, hang on, they also say

We believe the likelihood of significant decline from current levels is limited

  • preliminary outlook for 2015 expects sales and revenues to be flat to slightly up from 2014

Add:

Chinese govt push for structural reform is slowing growth

Timing of US fiscal and monetary policy actions may temper business confidence

Caterpillar website here 

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