Fundamental Currency Analysis – Orbex
USD: The U.S. Dollar Index is currently off -0.2080 or -0.24% to 84.9390 after opening at 84.9090 in Asia earlier today. The Greenback declined sharply against most major currencies after the United States reported dismal economic numbers yesterday. Core Retail Sales declined -0.2% versus an expected increase of +0.2%, PPI declined -0.1% compared to an expected rise of +0.1%, Retail Sales dropped -0.3% versus -0.1% expected, Core PPI came out at 0.0% compared to an expected increase of +0.1%, the Empire State Manufacturing Index printed at 6.2, significantly lower than the 20.3 reading that was anticipated, and Business Inventories, the only number that beat expectations printed at +0.6% versus +0.4% expected. Also, the Fed’s Beige Book showed that economic activity in all twelve Federal districts was experiencing modest to moderate growth. Today’s numbers include Weekly Initial Jobless Claims (286K), Industrial Production (+0.4%), the Philly Fed Manufacturing Index (19.9), Capacity Utilization (79.0%), the NAHB Housing Market Index (59), Crude Oil Inventories (+2.3M) and speeches by FOMC members Plosser and Kocherlakota.
EUR: The Euro is trading steady against the U.S. Dollar today after gaining +1.2% yesterday. In a speech yesterday, “Towards the banking union – Opportunities and challenges for statistics , ECB President Mario Draghi said that, “The ECB has every interest to facilitate and promote integration and standardization also on the “input side, in the internal systems of the banks, for only this will ensure coherent information.” Elsewhere, the EU began a two week probe of Eurozone area governments’ draft budgets after yields surged on 10-year securities from Italy, Greece, Portugal and Ireland. Today’s data includes Eurozone Final CPI (+0.3%), a Spanish 10-year Bond Auction (2.08/1.5 last) and a speech by German Buba President Weidmann.
GBP: Sterling is trading fractionally lower against the U.S. Dollar today after a +0.6% increase yesterday. Cable gained after the UK reported mixed economic numbers, the Average Earnings Index increased +0.7% 3m/y, while the Claimant Count Change showed a decline of only -18.6K compared to an expected drop of -34.2K, while the UK Unemployment Rate dropped to 6.0% from 6.2%. No significant economic numbers are expected from the UK today.
JPY: The Japanese Yen is fractionally lower against the Greenback today after yesterday’s 1.0% increase. No important Japanese economic numbers are expected until next week.
CHF: The Swiss Franc is trading steady against the U.S. Dollar today after increasing +1.2% yesterday. The rate gained despite Swiss ZEW Economic Expectations, which printed at -30.7 compared to a previous reading of -7.7 last). Today’s Swiss data is limited to the SECO Economic Forecasts.
AUD: The Aussie is off against the Greenback today after gaining +1.0% yesterday. The rate is lower today after MI Inflation Expectations printed at +3.4% compared to a previous reading of +3.5%. Later today, RBA Assistant Governor Debelle is scheduled to speak at the Thompson Reuters FX Benchmark event in Sydney.
CAD: The Canadian Dollar is down a fraction today after gaining +0.2% yesterday. The Loonie made a 5-year low against the U.S. Dollar before gaining after lower than expected U.S. data. Later today, Canada will release Core CPI (+0.1%) and CPI (0.0%).
NZD: The Kiwi is fractionally higher against the U.S. Dollar today after increasing an impressive +1.7% yesterday. The rate increased in the wake of the release of the Global Dairy Trade Price Index, which gained +1.4% versus a previous reading of -7.3%. Also out yesterday was the Business NZ Manufacturing Index, which printed at 58.1 compared to a previous print of 56.5.
In focus: GBP/USD
A daily candlestick of the GBP/USD currency pair shows the rate moving lower within a medium term descending wedge pattern. A set of Fibonacci retracement levels 50% level has just been penetrated. In addition, the rate is trading below its falling 200 day Moving Average, and its 14-day RSI is falling gently within lower neutral territory. (See additional technical analysis in the section below.)
Technical Analysis for the Majors
EUR/USD: The Euro rose modestly this morning after rallying to 1.2886 yesterday, as it rises correctively from its recent 1.2500 low. Nearby declining trendline resistance is now drawn at the 1.2917 level. Resistance is seen at 1.2859/86 and 1.2900, with support seen at 1.2791 and 1.2767. Its falling 200 day MA now lies at 1.3471, and its 14 day RSI is now in central neutral territory at the 54.26 level. Its outlook is bullish near term but bearish medium term.
USD/JPY: USD/JPY fell to 105.19 yesterday, but rose slightly this morning, as its downside correction off of its recent 110.08 high now creates a down channel pattern. Resistance appears at 106.66/80 and 107.05, with support noted at 105.70, 105.43 and 105.19. The rate’s 14 day RSI has risen to lower neutral territory to read at the 35.95 level, and the rate is trading above its rising 200 day MA currently at 103.30. Its outlook is mildly bearish near term and bullish medium term.
GBP/USD: Cable fell to a new recent low at 1.5874 yesterday, but then recovered most of its losses and is showing only a modest drop this morning, as it declines within a medium term descending wedge pattern. The rate is now trading just below its 50.0% Fibonacci retracement level of its long term rally from 1.4812 to 1.7190 at 1.6001, with its 61.8% Fibo level providing theoretical support at 1.5720. Falling trendline resistance also appears at 1.6251. Furthermore, the rate’s 200 day MA lies at 1.6693 with a falling slope, and its 14 day RSI has risen within lower neutral territory to read at the 37.65 level. Its outlook is bearish near term and medium term. (See highlighted chart above.)
USD/CHF: The Swissy fell sharply to 0.9360 yesterday, and is slightly lower this morning, as the rate corrects lower from its recent 0.9683 high. The rate has not broken its near term up channel, with medium term trendline support now drawn at 0.9222. Support is seen at 0.9395 and 0.9360, with resistance noted at 0.9432 and 0.9467/68. The rate’s 14 day RSI now reads in central neutral territory at the 44.38 level, and the rate is trading above its rising 200 day MA now situated at the 0.9025 level. Its outlook is bearish near term and bullish medium term.
AUD/USD: The Aussie rose to 0.8859 yesterday, but then fell modestly this morning, as it consolidates above its recent 0.8641 low and below 0.8897. Resistance is seen at 0.8811/59 and 0.8897, with support noted at 0.8747 and 0.8683. The rate remains below its mildly falling 200 day MA now at 0.9217, and its 14 day RSI now reads in central neutral territory at the 45.99 level. Its outlook is neutral near term and bearish medium term.
USD/CAD: USD/CAD is mildly higher this morning after rising to a new five year high at the 1.1384 level yesterday, but then closing lower on the day. The rate just touched its rising resistance trendline now re-drawn at 1.1384, with a rising support line drawn at the 1.0994 level. Its 14 day RSI now reads in upper neutral territory at the 62.53 level, and the rate is trading above its mildly rising 200 day MA now at 1.0946. Its outlook is bullish near term and medium term.
NZD/USD: The Kiwi rose sharply to 0.7994 yesterday, and then just bested that level this morning by rising to 0.7995, as it rallies correctively from its recent similar lows of