Fundamental Currency Analysis – September 8 2014

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USD: The U.S. Dollar Index gapped higher this morning in Asia, ending up +0.2090 or +0.25%. The Greenback recovered after Friday afternoon’s losses in the wake of a lower than expected U.S. Non-Farm Payrolls number, which showed the addition of only 142K jobs in August versus an expected 226K that was down from July’s reading of 212K. The number was the lowest reading for NFP since June of 2012. Nevertheless, the U.S. Unemployment Rate dropped to 6.1% from 6.2%. Today’s only significant fundamental news for the Greenback will be a speech by Treasury Secretary Jack Lew at the Tax Policy Center in Washington D.C.

EUR: The Euro is trading lower against the Greenback in Asia this morning despite the German Trade Balance showing an expanding surplus of +22.8B from a previous reading of +16.4B and versus a consensus of a +17.3B surplus.

GBP: Sterling sold off sharply against the Greenback and across the board this morning after gapping lower over the weekend on new opinion polls showing a yes vote for Scottish independence in the lead. This morning’s UK economic data was limited to the Halifax HPI, which increased +0.1% m/m versus +0.2% expected with the previous number downwardly revised from +1.4% to +1.2%.

CHF: The Swiss Franc is trading mildly lower against the U.S. Dollar this morning after Swiss CPI came out with reading of 0.0% m/m versus an expected decline of -0.1%. Also, Swiss Retail Sales declined -0.6% y/y, which was significantly lower than the anticipated increase of +3.7%.

JPY: The Japanese Yen came off against the Greenback this morning after reporting a contracting Current Account of +0.10T versus a previous reading of +0.13T and the expected surplus of +0.18T. Also out today was Japanese Final GDP, which declined by -1.8% q/q, as was widely anticipated.

AUD: The Aussie is trading mildly lower against the U.S. Dollar this morning after the release of ANZ Job Advertisements, which increased +1.5% m/m versus a previous reading of +0.3% that was revised up to +0.5%.

CAD: The Loonie was slightly lower against the U.S. Dollar this morning after Friday’s release of Canadian Employment Change showed a decline of -11.0K, which was significantly lower than the increase of +10.3K expected. Also, Ivey PMI printed at 50.9 versus an expected reading of 55.7.  Building Permits (-4.2%) is the only significant Canadian release scheduled later today.

NZD: The Kiwi is up fractionally against the Greenback this morning despite New Zealand Manufacturing Sales declining -1.9% q/q versus a previous reading of 0.0%, which was revised down from +0.6%.

Highlighted Chart of the Day: GBP/USD

GBPUSD Technical analysis September 8 2014 Scotland referendum impact

A daily bar chart of the GBP/USD currency pair appears above illustrating the accelerating recent decline and weekend gap yesterday that took it below the 38.2% Fibonacci retracement level of its preceding long term rise shown in orange. The rate fell to a new recent low today below the lower line of its notable medium term down channel drawn in red. The rate also extended its divergence below its falling 200 day Moving Average shown in green. The rate’s considerably oversold 14 day RSI appears in blue in the indicator box and confirmed the decline with a new low. (See additional technical analysis in the section below.)

Technical Analysis for the Majors

EUR/USD: The Euro continued consolidating above its recent low at the 1.2919 level touched several days ago and below its psychological 1.3000 level. The rate is still trading below its falling 200 day MA now at 1.3615. Furthermore, its 14 day RSI remains quite oversold at the 19.04 level after confirming the recent low. Resistance is seen at 1.2987 and in the 1.3109/51 region, while support shows at 1.2919. Outlook is bearish in the near and medium terms.

USD/JPY: USD/JPY persisted in consolidating below it new recent high at the 105.70 level made several days ago and above the 104.68 reaction low. Support is seen at 104.68/77 and below that at 104.26. The rate’s former descending triangle pattern break of August 19th projects an upside target of 107.51 for this rise. The rate’s 14 day RSI remains just within overbought territory at 71.78 but failed to confirm the recent high. The rate remains above its gently rising 200 day MA currently situated at 102.37. Outlook is near and medium term bullish.

GBP/USD:  Cable gapped sharply lower over the weekend yesterday and fell again this morning to a new recent low at 1.6144. The gap top is situated at the 1.6280 level and has not yet been filled. The rate’s 200 day MA is now gently declining at 1.6751, while its 14 day RSI remains firmly in oversold territory at the 15.19 level and confirmed the recent low. Resistance shows at 1.6232 and 1.6439, with support seen at 1.6144 and 1.5936. Outlook is bearish in the near and medium terms. (See highlighted chart above.)

USD/CHF:  The Swissy remained below its recent high of 0.9334 thus far today, with support noted at 0.9285. The rate’s 14 day RSI is still in overbought territory, and it reads at the 75.04 level and has supported the rate’s recent rally. The rate remains well above its increasingly rising 200 day MA now situated at the 0.8943 level. Outlook remains bullish in the near and medium terms.

AUD/USD:  The Aussie continues fluctuating inside a 0.9201 to 0.9538 medium term trading range within which it is presently in an upswing.  Its 14 day RSI lies in central neutral territory at the 55.6 level, and the rate still remains above its rising 200 day MA now at the 0.9223 level. Support is seen in the 0.9322/32 and 0.9284/91 regions, with resistance noted in the 0.9362/73 region and at 0.9401. Outlook is neutral near term and bullish turning neutral in the medium term.

USD/CAD:  The Loonie has been consolidating within a near term triangle pattern since peaking at 1.0996 on August 26th, and the rate is currently in an upswing.  Resistance is noted at 1.0901 and in the 1.0985/96 region, with support seen at 1.0859 and 1.0820. Its 14 day RSI had begun moving lower within central neutral territory and now reads at the 57.88 level. Also, the rate remains below its now falling 200 day MA currently situated at 1.0936. Outlook is neutral in the near term and mildly bearish medium term.

NZD/USD: The Kiwi consolidated today above its fresh recent low of 0.8268 made several days ago. The rate remains between the falling upper trendline of its medium term down channel now drawn at the 0.8341 level and its parallel lower support line drawn at 0.8109.  Its 14 day RSI has recovered to read in lower territory at the 37.01 level, and the Kiwi remains below its flat 200 day MA now at 0.8515.  Support is noted at 0.8268, in the 0.8285/89 region and at 0.8309, with resistance seen at 0.8349 and 0.8389. Outlook is now neutral in the near term but bearish medium term.

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About Author

Jay Hawk of Orbex enjoyed a twelve year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Jay Hawk personally leased seats and traded as a specialist market-maker with a broker/dealer license on major U.S. trading floors. He also ran stock and options broking desks with hundreds of retail and professional accounts, and I actively managed trading portfolios for private clients as large as $30 million both on and off the trading floors. In addition, Jay started a professional options stock exchange brokerage to provide brokerage services on to floor market-makers and upstairs traders located in New York and Chicago. Jay also gave option seminars as both a consultant and educator and helped start the exchange traded currency options market.

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