Greg’s Weekly Analysis W/C 30th October 2017

AUDUSD:
Fundamentals: The USD has renewed strength for various of factors and the most important ones are the Tax plan to which the senate and the administration seems to closer after this weeks end, a tax plan that would reduce billions for mega companies is seen as positive as companies would repatriate their earnings back to the US in USD driving the dollar higher. The 2nd reason is a new FED Chair appointed by President Trump to replace Fed Chair Yellen at the end of her term in February and the 3rd is the possible fed rate hike going in year end in December. From the aussie side q/q retail sales and gdp declined and with latest comments from RBA stating that the next action could be either a cut or a hike, investors seem to favour the dollar and for good reason.

Technicals: The aussie dollar fell further as expected down to the support of the 50 daily ema and broke below the 7220 price level which could’ve acted as support. Next week since sellers took control of the pair retraces from the lows should be considered as selling opportunities once price confirms. Only a move back above 7800 would result in a bullish reversal.

EURUSD:
Fundamentals: The long awaited ECB meeting has concluded however despite the ECB President delivering on some aspects of the bond buying scheme, instead of ending QE he stated that the ECB will reduce its bond buying purchase but it will run for a longer period of time noting risk to the economy and sounding overall dovish, this was enough for market participants to sell the euro as prospect for new highs based on balance sheet reduction or rate hike wasn’t on the horizon.

Technicals: After ranging throughout much of the week the euro finally gave in and the 1.1850 price point held up as resistance from where price decelerated to weekly and monthly lows. Planning new sell positions or scaling in will be feasible from the breakout zone as well as retraces to value coupled with price confirmation.

GBPUSD:
Fundamentals: The pound remains in a tough spot with the Brexit negotiations developing in the background while a uncertain BoE called the Nov meeting as live for a rate hike, despite Gov Carney stating that he sees inflation to peak at 3% and now many argue that even if the bank hikes rates it will be to offset the previous cut that it did back when the pound fell due to Brexit. The pound remains attractive with huge potential to the upside but until certainty doesn’t take over fundamentally, the big players are bound to find opportunities elsewhere. If the pound does indeed become strong trading it against the USD will still not be a good idea as we would have a case of strong vs strong pairing, in this case pairing the pound with a weaker counter part will yield the highest reward to risk.

Technicals: After making some new highs at the start of the week on the intra-day the pound seemed like it had enough bullish power to accelerate ahead, however it as met with quick sell offs after that resulting in price closing the week almost from where it opened. Price action is neutral on the pair, a break below the 1.3000 would tilt the probability to the downside, while a close above the 1.3300 could confirm bull take over.

USDCAD:
Fundamentals: The BoC kept rates on hold and indicated more of wait and see mode rather than an aggressive path of rate hikes based on which investor would’ve bought back up the CAD further. With no rate hikes imminent the currency weakened especially in comparison to its stronger half the USD. Going ahead the pair is shifting towards a sustained clear bullish trend.

Technicals: The Canadian pair accelerated to extend on new highs and failed to provide value pullbacks, traders who want to take advantage of trend formation should wait for a pullback from the extended prices before committing capital to long positions.

NZDUSD:
Fundamentals: The NZD has a new government which spooked market participants and made them sell the currency as the agenda of the gov favours protectionism and less investment from the outside of NZ, however there’s no evidence and no bill has been put through yet to change the new Zealand faith as of yet which is why many have called the sell off based on fear and when the new Labour gov will not be as tough as the world sees it, the NZD could strengthen, not against the USD per se but a weaker counter-part such as the yen or even Canadian dollar.

Technicals: The NZD went into full bearishness however price is reacting to the 6850 level which is daily and weekly support. For now it’s too early to make a case for a bullish reversal as probability stands with the sellers, however in order to sell from value price needs to retrace from the lows and day traders could take advantage of that possible bullish run until rejection is met.

USDJPY:
Fundamentals: With sustained strength on the USD its hard to see this pair not rally and form new highs and trend higher, geopolitical events could rattle the developing trend as well as temporary hawkish BoJ statements but overall the medium and long term outlook is for USD and FED hawkishness with rate hikes versus a cautious QQE from the BoJ with record low inflation.

Technicals: The expectation for new highs have been fulfilled and the pair offered entries for intra-day traders, however the buy backs have been systematically rejected from the levels above the 114.00 which questions whether a larger pullback could be on the table before price is closing above the 114.00 level. Buy should be considered on pullbacks in case they are accompanied by price or candle patterns as a means of confirmation to the upspide.

FTSE:
The FTSE rallied ahead to the record highs of the 7500 and stalled from that level from the last half of the week until close. Prices did break out but quickly retraced making them no good for confirmation.

DAX:
With the correlation from the euro weakness having in flows to the DAX, the index accelerated to the highs above the 132000, with this in mind and the uptrend continuing buys could be in order on intra-day retracements as no sign of bearish rejection is present.

DOW:
Similarly the DOW gained further and although the sessions had intra-day declines there was no sustainability or desire to form lower lows. In this case going with the trend based on intra-day or waiting for lower high and lower lows on intra-day will be feasible for buys and sell on the index.

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