Good morning,
A painfully quiet Asian session last night has given the market little if any direction for the European open. Not so much as even a glimmer of headlines or jawboning, quiet I tell you, very quiet.
So where does that leave us for today? In simple terms the market is a little bit edgy and outside of waiting for the NFP data on Friday (and the relevant positioning/book squaring that entails) we are sideways at best. As I mentioned at our internal morning meeting today, I remain a USD bull, albeit a little more cautiously this week than last, especially with the DXY running into that 80 zone and subsequent intermediate resistance. However I can equally not rule out a return of some risk appetite which was clearly absent all week last week in the wake of the Obama debacle, the WEF etc… and this is being evidenced most in the commodity currencies on the back of both gold and oil looking a bit healthier.
The AUDUSD has staged some return to form filling the gap that it left on the way down after the RBA decision, with 0.8930 now marking the next resistance region. I remain overall (medium term) bearish this cross but equally concede that in the short term there is definitely ground it needs to make up after recent heavy trading. Equally the USDCAD remains heavy although true to form is grinding and will likely continue to do so in the coming days with the Canadian NFP also due Friday. I remain short and now look for 1.0520/30 as the next intermediate target lower before we head to 1.0480/50.
The EURUSD today is going to take out the stops that have been building into 1.4020 and we should see a print above the 1.4030 level. The key here will be as I said yesterday whether we close above there or not. A higher close to me signals 1.4150 as a retracement target and one that for now I’m not ruling out. On the Cable, I am faced with a tale of two cities, in that overall I remain a bear, but am equally bullish in the very short term as today we head to test 1.6080 and a break here opens 1.6130/50 at which point I sell again.
The USDJPY remains a pain in the a**** for me for now and I prefer not to go near it for now.
On the data front today we look to the Euro zone retail sales and US non – manufacturing ISM data to guide price action.
Good luck out there today.
Best regards,
Ken Veksler.
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