- US Dollar Likely to Remain in Ranges Despite Fresh Multi-Year Highs in S&P 500
- Euro hits Fresh Record-Low Against Swiss Franc
- British Pound Falls for Fourth Consecutive Day Despite Stronger-than-Expected 3Q GDP
- Australian Dollar, Canadian Dollar Gain While Kiwi Falls against Greenback
US Dollar Likely to Remain in Ranges Despite Fresh Multi-Year Highs in S&P 500
Disappointments in US Gross Domestic Product growth revisions and an Existing Home Sales report had little effect on the US Dollar or the S&P 500 on a fairly quiet day of trade. The Greenback initially dipped against the Euro through overnight trade, but markets needed little reason to pull the EURUSD back near multi-month lows and almost squarely where it closed just yesterday. An ostensibly busy economic calendar could spark some event-driven volatility through tomorrow’s trade. Yet the lack of market reaction to today’s disappointments suggests it will take significantly above or below-forecast outcomes to force major market moves.
Final revisions to US Q3 GDP figures showed that the economy grew less than forecast on lower-than-expected expansion in Personal Consumption and a smaller rise in business inventories. The fact that markets showed relatively little reaction to said data release suggests that few place great importance on the stale economic data. Yet slower consumption growth and rising inventories point to a concerning trend and continued downside risk to broader growth forecasts.
Tomorrow’s Durable Goods Orders, Personal Income and Spending, PCE Deflator, and Initial Jobless Claims releases could potentially force sharp short term moves across currency markets on any surprises. Lofty expectations leave risks to the downside for the high-flying S&P 500. But in truth we believe that we may need to wait until the New Year for substantial moves across US Dollar pairs. Suffice it to say, it should be an interesting January across forex markets.
Related:Top Forex Trading Ideas for 2011, Top Mistakes of 2010
Euro hits Fresh Record-Low Against Swiss Franc
The Euro finished essentially unchanged against the US Dollar on another choppy day of trading, but fresh Swiss Franc strength left the EURCHF at its lowest levels on record. The Swiss currency is increasingly becoming the safe-haven trade of choice as the US Dollar loses some of its luster as the world’s foremost reserve currency. Many have subsequently blamed an unwind in Euro/Swiss Franc carry trades as a primary driver of EURCHF weakness. Given continued concerns over the future Euro Zone unity and ongoing fiscal crises, we see little reason for a major trend shift through the medium term—much less through the end of the year. With very little event risk on the ledger, the Euro is likely to remain at best range-bound against the Swiss Franc and US Dollar until the return of full market participation in the New Year.
British Pound Falls for Fourth Consecutive Day Despite Stronger-than-Expected 3Q GDP
The British Pound continued its depreciation against the U.S. Dollar, falling for the fourth day in a row. The Pound fell by 0.53 percent against its American counterpart, to $1.5388. Revised 3Q GDP expanded by 0.7 percent from the 2Q, while growing by 2.7 percent from the same period in the previous year. The decline against the Dollar came somewhat as a surprise on the economic front, considering Total Business Investment is up 8.9 percent year-over-year. However, after yesterday’s poor deficit numbers, news outlets reported that divisions were forming in Dave Cameron’s coalition government, leading to early speculation of potential separations occurring in the future. On a similar note, Bank of England policy makers appeared split for a third straight month as opinions about Britain’s inflation continue to diverge. While Adam Posen continued to pursue further quantitative easing steps, Andrew Sentance voted to raise interest rates, as noted by the December 9 minutes released today. As for tomorrow and Friday, data is light coming from Britain, so any further event risk to the Pound will likely be borne out of the United States.
Australian Dollar, Canadian Dollar Gain While Kiwi Falls against Greenback
The Australian and New Zealand dollars posted mixed results against their American counterpart on Wednesday as U.S. 3Q GDP data indicated a revision upward in growth. The Aussie gained 0.24 percent, up to parity with the Greenback, at $1.00, while the Kiwi lost 0.28 percent, down to $0.7420, as investors braced for 3Q GDP data later in the session, which, while anticipated to show growth, was expected to expand at a slower pace than in the 2Q. The Canadian dollar was the biggest gained among the three commodity currencies on the day, appreciating 0.34 percent to $1.0139, as Crude Oil pushed through the $90.00 per barrel level and petroleum inventories dropped in the United States, signaling increased demand and potential for oil to see further gains in the coming weeks. Looking ahead, Canadian GDP data for October will be released tomorrow and is forecasted to show 0.3 percent growth month-over-month, while New Zealand M3 Money Supply data for November is expected on Friday.
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ECONOMIC DATA
Next 24 Hours
|
Currency |
GMT |
Release |
Survey |
Previous |
Comments |
|
EUR |
7:45 |
French Consumer Spending (MoM) (NOV) |
0.9% |
-0.7% |
Spending declined in 2 of last 3 months. |
|
EUR |
7:45 |
French Consumer Spending (YoY) (NOV) |
-0.4% |
-0.3% |
|
|
GBP |
9:30 |
Index of Services (MoM) (OCT) |
0.4% |
0.6% |
Likely rose for a third month in October. |
|
GBP |
9:30 |
Index of Services (3Mo3M) (OCT) |
0.8% |
0.6% |
|
|
GBP |
9:30 |
BBA Loans for House Purchase (NOV) |
30250 |
30766 |
Fell to 19-month low. |
|
13:30 |
Gross Domestic Product (MoM) (OCT) |
0.3% |
-0.1% |
Sept. decline was first since August. |
|
|
USD |
13:30 |
Durable Goods Orders (NOV) |
-0.5% |
-3.4% |
Declined in four of the past six months. |
|
USD |
13:30 |
Durables Ex Transportation (NOV) |
1.8% |
-2.7% |
|
|
USD |
13:30 |
Capital Goods Orders Non-Defense ex Aircrafts (NOV) |
3.1% |
-4.5% |
Capital goods orders for defense fell 21.3% in October. |
|
USD |
13:30 |
Capital Goods Shipments Non-Defense ex Aircrafts (NOV) |
-1.5% |
||
|
USD |
13:30 |
Personal Income (NOV) |
0.2% |
0.5% |
Slowdown in earnings reflected net effect of declines in construction, real estate, and government. |
|
USD |
13:30 |
Personal Spending (NOV) |
0.5% |
0.4% |
|
|
USD |
13:30 |
Personal Consumption Expenditure Deflator (YoY) (NOV) |
1.1% |
1.3% |
|
|
USD |
13:30 |
Personal Consumption Expenditure Core (MoM) (NOV) |
0.1% |
0.0% |
|
|
USD |
13:30 |
Personal Consumption Expenditure Core (YoY) (NOV) |
0.9% |
0.9% |
|
|
USD |
13:30 |
Initial Jobless Claims (DEC 18) |
420K |
420K |
Initial claims fell to a 3-week low. |
|
USD |
13:30 |
Continuing Claims (DEC 11) |
4100K |
4135K |
|
|
USD |
14:55 |
U. of Michigan Confidence (DEC F) |
74.5 |
74.2 |
At a six-month high. |
|
USD |
15:00 |
New Home Sales (NOV) |
300K |
283K |
Sales unexpectedly declined in October. |
|
USD |
15:00 |
New Home Sales (MoM) (NOV) |
6.0% |
-8.1% |
SUPPORT AND RESISTANCE LEVELS
CLASSIC SUPPORT AND RESISTANCE
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
|
Resist 2 |
1.3221 |
1.5550 |
84.06 |
0.9627 |
1.0210 |
1.0046 |
0.7468 |
110.50 |
130.25 |
|
Resist 1 |
1.3159 |
1.5467 |
83.82 |
0.9574 |
1.0174 |
1.0022 |
0.7441 |
109.98 |
129.41 |
|
Spot |
1.3119 |
1.5412 |
83.62 |
0.9538 |
1.0143 |
0.9986 |
0.7425 |
109.60 |
128.88 |
|
Support 1 |
1.3057 |
1.5329 |
83.38 |
0.9485 |
1.0107 |
0.9962 |
0.7398 |
109.08 |
128.04 |
|
Support 2 |
1.3017 |
1.5274 |
83.18 |
0.9449 |
1.0076 |
0.9926 |
0.7382 |
108.70 |
127.51 |
INTRA-DAY PIVOT POINTS
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
|
Resist. 2 |
1.3840 |
1.6420 |
89.00 |
1.0460 |
1.0922 |
1.0600 |
0.8230 |
127.60 |
146.05 |
|
Resist. 1 |
1.3700 |
1.5910 |
86.00 |
1.0000 |
1.0750 |
1.0200 |
0.8000 |
120.00 |
140.00 |
|
Pivot |
1.3097 |
1.5385 |
83.58 |
0.9521 |
1.0138 |
0.9997 |
0.7415 |
109.47 |
128.58 |
|
Support 1 |
1.3000 |
1.5312 |
80.00 |
0.9500 |
0.9950 |
0.9600 |
0.6850 |
103.80 |
125.00 |
|
Support 2 |
1.2925 |
1.5186 |
75.00 |
0.9000 |
0.9700 |
0.9375 |
0.6585 |
100.00 |
119.00 |
CLASSIC SUPPORT AND RESISTANCE –EMERGING MARKETSSCANDIES CURRENCIES
|
Currency |
USD/MXN |
USD/TRY |
USD/ZAR |
USD/HKD |
USD/SGD |
Currency |
USD/SEK |
USD/DKK |
USD/NOK |
|
Resist 2 |
14.4500 |
1.6755 |
8.7915 |
7.8165 |
1.4945 |
Resist 2 |
7.7500 |
5.7800 |
6.2750 |
|
Resist 1 |
13.8500 |
1.5931 |
8.3675 |
7.8075 |
1.4655 |
Resist 1 |
7.5800 |
5.6625 |
6.1150 |
|
Spot |
12.3049 |
1.5508 |
6.8077 |
7.7782 |
1.3068 |
Spot |
6.8656 |
5.6903 |
5.9933 |
|
Support 1 |
12.0500 |
1.4724 |
6.6950 |
7.7490 |
1.2750 |
Support 1 |
6.4500 |
5.2625 |
5.7030 |
|
Support 2 |
11.7200 |
1.3475 |
6.4300 |
7.7450 |
1.2500 |
Support 2 |
6.1250 |
5.1000 |
5.5200 |
INTRA-DAY PROBABILITY BANDS
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
|
Resist. 3 |
1.3290 |
1.5555 |
84.55 |
0.9642 |
1.0248 |
1.0138 |
0.7522 |
111.08 |
130.36 |
|
Resist. 2 |
1.3242 |
1.5513 |
84.31 |
0.9612 |
1.0220 |
1.0102 |
0.7495 |
110.67 |
129.92 |
|
Resist. 1 |
1.3193 |
1.5470 |
84.06 |
0.9581 |
1.0193 |
1.0067 |
0.7468 |
110.27 |
129.47 |
|
Spot |
1.3097 |
1.5385 |
83.58 |
0.9521 |
1.0138 |
0.9997 |
0.7415 |
109.47 |
128.58 |
|
Support 1 |
1.3001 |
1.5300 |
83.10 |
0.9461 |
1.0083 |
0.9927 |
0.7362 |
108.67 |
127.69 |
|
Support 2 |
1.2952 |
1.5257 |
82.85 |
0.9430 |
1.0056 |
0.9892 |
0.7335 |
108.27 |
127.24 |
|
Support 3 |
1.2904 |
1.5215 |
82.61 |
0.9400 |
1.0028 |
0.9856 |
0.7308 |
107.86 |
126.80 |
v
Written by: David Rodríguez, Quantitative Strategist for DailyFX.com
To submit Questions or Comments about an article; email drodriguez@dailyfx.com
