Contributed By: DailyFx
EUR/CHF:Despite the latest setbacks, we retain a constructive outlook with the market in the process of carving out a major base. There is some very solid internal range support in the 1.3200’s and we would expect to see any additional declines very well supported ahead of 1.3200 on a close basis. Ultimately, only a close back below 1.3200 would give reason for concern. Look for a break back above 1.3500 to reaffirm outlook and open the next major upside extension beyond 1.3835.
Contributed By: DailyFx
AUD/USD:Clear signs of another short-term top emerging with the market stalling out by fresh post-float record highs at 1.0185 several days back, and then reversing course to end a sequence of consecutive daily higher lows. The latest break back below the 20-Day SMA further encourages bearish outlook from here, and we will look for a 2-day close below the 50-Day SMA (0.9750) for additional bearish confirmation. From here the risks are for declines towards critical support by 0.9650, below which will really accelerate. Any intraday rallies should be very well capped ahead of 1.0000.
Contributed By: DailyFx
North American Commodity Update
Commodities - Energy
Where Risk Trends Pull out of its Dive, Crude Maintains its Tumble
Crude Oil (LS Nymex) - $80.44 // -$1.90 // -2.31%
Though broader risk appetite trends were able to level off through US trading hours Wednesday, US oil maintained its tumble. This decline marked the fourth consecutive decline (fifth if Thursday’s unchanged performance is counted) and is thereby matches the worst performance the commodity has suffered since the series of declines through August 24th. The extension of this bearish phase is a combination of both fundamental and sentiment-based factors; but technical traders have no doubt taken note of the session’s low. Looking back at historical price action, the $80 figure besides representing an easily identifiable, even level is also a well-worn support/technical level and represents the mid-point of the September to December advance. So, while the technical trend channel of this period has indeed been breached, there is still meaningful support and the market has already retraced half of the previous two months’ advance.
For fundamental guidance on the day, we saw a shift away from risk appetite trends to the more tangible macroeconomic drivers. Looking at investor sentiment in fact, we see that the S&P 500 (a good, basic barometer for the level of optimism) was little moved through Wednesday’s session just a day after marking a critical shift in trend. This change in the backdrop reflect a market that is reluctant to unwind otherwise profitable positions and are therefore waiting to see the level of contagion financial problems in the US, China and especially Europe will have. In the meantime, the demand/supply balance behind oil’s fundamental value was tipped by a few big ticket developments. In Asia, China’s Premier followed up on his vow to fight inflation with a more refined effort to put temporary price controls on “important daily necessities.” This is a more elegant solution than simply vowing to put in inflation measures; but the effect on growth will likely be the same. What’s more, energy commodities can be grouped under necessities. Another indicator to note from China was the quarterly consumer confidence survey which dropped for the first time in six quarters. Moving forward to the US session, the lowest reading on core inflation on record warns of a slowing economy though does support stimulus efforts. Something to take note of for future concerns, October housing starts plunged 11.7 percent to its second lowest levelon record. Depressed activity, growing foreclosures and overleveraged real-estate derivatives could prove a new crisis.
From macro concerns to energy market-specific issues, we see that there was a big miss on the Department of Energy crude figures. Instead of the no change expected by economists, the API figures (which showed the biggest plunge since September 2008) were more reasonable forecasters with a 2 percent drop in inventories equivalent to 7.286 million barrels. On the futures market, the December contract is soon to expire; and we have seen activity roll out to the January contract – which reported a 52 percent jump in volume to its own record 341,921 contracts.
Crude Futures Chart (Daily)
Commodities - Metals
Gold Little Moved After Critical Break as Investors Wait for the Next Shoe to Drop
Spot Gold - $1,336.00 // -$3.70 // -0.28%
Though it would put in for a fourth consecutive loss, gold was still looking at a far more reserved decline through Wednesday’s close. This tempered pace fits both a fundamental pause from the speculative ranks and a meaningful technical backdrop. For guidance on the supply and demand course, the ‘alternative asset’ value for the metal was little changed as other gauges for sentiment trends were similarly little changed for the day. From price action, the break of the three-and-a-half month rising trend channel yesterday doesn’t mean the market is in free fall. The past month, the metal has developed a frequented level of support around 1,320 and there is still a range of short-term term rising trendlines to fall back on.
Yet, despite the technical levels that exist, fundamental and sentiment concerns can easily drive this market to resume its plunge or otherwise completely reverse the losses of the past week. There are many general financial and economic concerns that quickly puts the metal’s safe haven appeal and alternative asset value back to work. European developments are still at the forefront. However, with Ireland’s decision to not ask for financial aid at the monthly EU meeting, the region is floating in limbo. Nevertheless, EU, IMF and ECB members are scheduled to travel to Ireland and comb the nation’s finances to see if its banking system can stand up by itself. A passing or failing grade will be delivered soon. In the meantime, clearing housings for investors that are trading Ireland’s debt are boosting margin and there is concern that support for Greece’s bailout program is disintegrating. State-side, the US saw inflation trends cool to the lowest level on records going back half a century. This curbs the appeal of gold as an inflation hedge on the one hand but confirms the devaluing effects of Fed stimulus on the other hand. And, in Asia, investors are waiting to see what measures China will take towards cooling rampant inflation. This could curb speculative turnover globally and lower the risk of financial crisis from this particular region.
In addition to the big, intangible themes, we can see there is still a supply and demand influence on price. The World Gold Council released its 3Q market outlook with projections for demand growing through jewelry use, institutions, central banks and industrial. At the same time, the supply trend is also seen rising in the months ahead. One highlight for demand however shows India’s imports have through the first three quarters already overtook the total consumption of 2009 at 624 tons. Meanwhile, total ETF demand was little changed for the day.
Spot Silver - $26.17 // $0.53 // 2.07%
Wednesday’s performance for silver was essentially a mirror of the previous day. There was little progress made as volume on the active December contract dropped to its lowest level since November 2nd. Momentum has slowed on this metal’s decline for a number of days; yet it is still early to say whether this is simply a reduction in speculative interests after the increase in margin by the CME or a shift back towards optimism.
Spot Gold Chart (Daily)
Contributed By: DailyFx
Commodities – Energy
Crude Oil Wipes Out November Rally Despite Plunge in Inventories
Crude Oil (WTI) - $80.91 // $0.47 // 0.58%
Commentary: Crude oil fell for a fourth day in a row despite a steep drop in U.S. crude oil inventories. The move in crude was interesting considering that U.S. equity markets were virtually flat the entire day. Crude was down between $0.50 and $1.00 before the inventory report, proceeded to rally up to unchanged after the numbers, and then sold off for the rest of the day to end down $1.90, or 2.31%, to $80.44. Crude has virtually wiped out this month’s entire run.
We can only speculate as to why crude underperformed to such a degree on Wednesday. OPEC could be keeping a lid on prices by raising production, or the impact from the diesel-related spike in demand from China could be abating as imports make their way to the region. We have seen crude oil imports into the U.S. plunge in recent weeks, with distillate imports in particular virtually disappearing, which could be an indication that supply has simply been shifted from North America to Asia.
As we said in our latest report on petroleum inventories: “Imports remain extremely depressed and fell further last week to the lowest since 1997. Such a low level of imports is likely a function of weak demand rather than tight supply. U.S. inventories were and still remain extremely elevated—especially on the product side. Thus, we have seen refineries cut production to bring stocks to more normal levels. Imports fell as refineries demanded less crude. Furthermore, a spike in diesel demand in China has led to premium pricing in that part of the globe, which is another factor that has led to reduced volumes coming into the U.S. Indeed, we have seen U.S. distillate imports completely evaporate, but even so, stocks remain more than ample.”
Technical Outlook: Prices have continued to tumble, with the bears just a hair away from challenging the horizontal barrier at $79.49. A break below this boundary exposes a rising trend line set from May’s spike low, now at $77.04. Near-term resistance remains at $83.27.
Commodities – Metals
Gold Falls for a Fourth Day but Rebounds Overnight
Gold - $1348.20 // $12.20 // 0.91%
Commentary: It’s been awhile since gold fell four days in a row, but that was the case on Wednesday as the metal shed another $3.70, or 0.28%, to settle at $1336. It was a day of pause for the rally in the U.S. dollar as the currency fell just slightly versus most of its rivals. Tomorrow we will publish our weekly Gold – Forex Correlations report and all indications are that the numbers will show that this week was another in which gold and the dollar held true to their inverse relationship.
Now that gold prices are $90 below last week’s all-time highs, some may be anxious to dip their toes into the water. We would be extremely cautious here, however, for the potential downside remains significant. Consider that it was less than two months ago that gold first surpassed $1300. Meanwhile, gold ETF holdings have risen only slight over the last five months.
Technical Outlook: Prices have stalled above support at $1322.39, the 38.2% Fibonacci retracement for the 7/28-11/9 advance. Near-term resistance stands at a previously broken rising trend line set from late July, now at $1358.96. Alternatively, renewed selling pressure that takes prices through current support will target the 50% Fib at $1290.81.
Silver - $26.18 // $0.54 // 2.11%
Commentary: Silver again bucked the trend in gold prices to advance $0.16, or 0.62%, to settle at $25.63. From peak-to-trough silver had fallen from $29.36 to $24.99, or 15% in a little over one week. A bounce is to be expected, but given how frothy silver remains, it will likely be some time before prices make another significant run higher.
The gold/silver ratio fell to 51.5, but remains higher than levels earlier this month near 50. (The gold/silver ratio measures the relative performance of the two precious metals. A higher ratio indicates gold outperformance while a lower ratio indicates silver outperformance).
Technical Outlook: Prices are testing higher through resistance at 26.10, the 50% Fibonacci retracement of the 10/22-11/09 upswing. A daily close above this juncture exposes the 38.2% Fib at $26.87. Near-term support stands at $25.33, the 61.8% level, with a reversal lower through this boundary exposing the 76.4% Fib at $24.37.
Contributed By: DailyFx
* Dollar Rally Cools Post Breakout as Investors Mull Financial Cracks, US Inflation
* Euro Buys Time with Irish Bailout Rebuke but Region-Wide Troubles will Force the Issue
* British Pound Traders Find Little Confidence in Employment Figures, What about Deficit Progress?
* Canadian Dollar Prepares for Capital Flows, Growth Forecast and BoC Quarterly Review
* New Zealand Dollar Boosted by Accelerated Inflation and Improved Consumer Confidence
Dollar Rally Cools Post Breakout as Investors Mull Financial Cracks, US Inflation
Most experienced traders are familiar with the concept that a significant breakout is often followed by a short-term correction whereby the market makes it ultimate decision to catalyze the new-found trend or reverse the move to draw price back into a comfortable trading range. Both the dollar and risk appetite trends are currently in this transition period. Looking for the logic behind this pause during a period that many would think is a clear signal to plow into a new trend, there is both a technical and fundamental motivation. From the technical side of things, former support is often treated as new resistance (and vice versa) as the initial breakout flashes through momentum by clearing nearby entry and stop orders. As this accelerant is burnt off, the many speculators used to the old trend will attempt to jump back in on what they think is a ‘cheap’ price. Yet, as it becomes evident that the market is struggling to overtake that former floor, reality begins to set in and the eager traders capitulate. That said, a false breakout is the scenario where there is enough participation to push beyond the technical boundary and put the market back on its original path. We can see that most market benchmarks are in the process of determining which scenario will prevail. The Dollar Index, is pulling back towards the five-month trend and 50-day moving average that it just recently overtook. Reflecting on a broader theme, the S&P 500 marked a very tentative and modest bounce after posting its biggest drop in months to break a preternaturally consistent, two-month bull trend.
The fundamental aspect of this trading phenomenon is unique to our current situation. There are still very serious reasons to doubt the outlook for economic activity, financial stability and the prospect for returns; but it is difficult for market participants to throw in the towel on the impressive trend of the past few months. Since the beginning of September, considerable leverage was dedicated to taking part of the steady climb ahead of the Fed’s second stimulus program. Eventually, investors in equities, corporate debt and other risky assets will submit to the troublesome forecast; but there is currently a lull that is allowing traders to ignore reality. The most prominent threat, European financial stability, has recently found a temporary period of calm after Ireland refused stimulus at Tuesday’s EU meeting. However, this doesn’t improve the situation in the country’s banking system. In fact, it merely postpones a solution while financing costs across the region continue to balloon and the lines of support start to breakdown. Another building threat to risk appetite trends exists in China’s threats to curb inflation. This may seem a prudent economic policy; but the side effect is curbed speculation in one of the market’s favorite trading destinations.
The US is providing its own contribution to the global risk scheme. Adding credence to the Fed’s decision to add a second round of stimulus this month, the core measure of annualized CPI growth slowed to its weakest pace on record at 0.6 percent. This doesn’t really diminish the dollar any further because the expansionary policy has been largely priced in at this point; but it does remind us that there are lasting economic and market troubles related to deflation or stubborn disinflation. The data that we should pay more attention to is the housing starts data. Construction on new developments plunged 11.1 percent to its second lowest level on record owing largely to multi-home dwellings. Yet, this data should be put into context of the larger US housing sector problems. Not only is construction activity anemic; the wealth in home prices is further curbing confidence, a backlog of reposed properties is threatening to keep this sector from contributing to a recovery and ongoing issues with foreclosures threaten to trigger the financial mess tied up in real estate-based mortgages. US housing may pose a second wave crisis.
Related:Discuss the Dollar in the DailyFX Forum, John’s Analyst Picks: AUDUSD and AUDCHF offer Short-Term Setups in Eerily Quit Markets
Euro Buys Time with Irish Bailout Rebuke but Region-Wide Troubles will Force the Issue
Have conditions improved in Europe? It would seem so with the euro slowly retracing its steps after its significant decline of the past week. However, this tentative recovery is more accurately attributed to a pause in more pervasive financial concerns. Ireland is still the most immediate threat to the future of the shared currency. Finance Minister Lenihan’s decision to snub financial support from the EU at the group’s monthly meeting late Tuesday has not improved the situation. In fact, the uncertainty increases the risk for instability for the broader region. However, as the market awaits the EU, ECB and IMF’s assessment of the country’s ability to stabilize its own banking sector, there is time for reflection.
Yet, the market may not simply wait for policymakers to give them the official assessment of the market’s health. It was reported Wednesday that LCH.Clearnet – one of the largest clearing houses for European fixed income – raised its margin on Irish government debt by 15 percent for the second time in a week. The steps to smother confidence are progressive in this way. In the meantime, Ireland isn’t our only concern. Following up on its threat to withhold its next tranche of support to bailout Greece, Austrian officials said the EU was pushing back its December payment to January. Elsewhere, Portugal struggled in its recent bond auction; and it was rumored that the ECB had to buy Portuguese and Greek bonds.
British Pound Traders Find Little Confidence in Employment Figures, What about Deficit Progress?
Even though risk appetite took a slow turn north, the British pound was still struggling to gain traction. This was particularly surprising given a surprise decline in jobless claims through October; though the noncommittal BoE minutes help offset that fundamental marker. Perhaps speculation of a future stimulus program will carry more weight as we look ahead to public borrowing figures.
Canadian Dollar Prepares for Capital Flows, Growth Forecast and BoC Quarterly Review
The Canadian dollar has merely been following risk appetite and US dollar-based trends the past few days; but perhaps the currency’s own fundamental backdrop will carry more weight over the coming 24 hours. On the docket for Thursday are the Leading Indicators index and capital flows figures. For actual market influence though, the BoC’s quarterly review will likely carry the most weight for policy and growth forecasts.
New Zealand Dollar Boosted by Accelerated Inflation and Improved Consumer Confidence
It certainly helps that risk appetite trends were bullish; but the New Zealand dollar found an extra push through its own fundamental docket early Thursday morning. For interest rate hawks, the 1.2 percent reading on the 3Q producer price index output doesn’t necessarily promise future hikes; but it sets up the CPI numbers for the occasion. Also, consumer confidence would show relief in a bounce from a year low.
Contributed By: DailyFx
The dollar index suffered its first daily loss in the last five sessions on Wednesday as stabilizing equities lifted risk appetite and fears began to ease regarding Ireland’s obstinacy to accepting an aid package. The index started the day brightly enough as concerns regarding Ireland’s ability to manage its financing needs alone put the euro under pressure and lifted the buck. However, risk appetite was given a boost early in the North American session from solid consumer prices data and rising equities putting the greenback under the cosh. The index managed to pare its loss a tad into the NY close as US stocks gave back their gains as financials slipped dragging down the broader sentiment. But the dollar got a further knock late in the day as expectations started to rise that Ireland would in fact accept aid from the EU and IMF, lifting the euro once again. The easing of sovereign debt fears early in Asia helped Chinese and Japanese stocks to consolidate after the previous sessions weakness, keeping the pressure on the buck.
Looking ahead, as we approach the European open the index is under mild pressure, but at present this looks little more than consolidation after solid gains over the past couple days. We will only begin to be concerned about the door being opened to further losses in the index if we breach the 78.00 level, which is still some ways off. We therefore maintain our bullish slant in the index and favour this up-move to continue up above the psychologically important 80.00 level and encounter some resistance around 81.00.
Contributed By: DailyFx
The arrival of EU and IMF teams in Dublin to discuss the possibility for a bailout for Ireland, has undoubtedly helped to prop the Euro a bit, as market sentiment improves on the expectation for a resolution. However, we would suggest that the main reason for the latest rebound in the Euro, and currencies across the board has been more a function of the US economy.
The latest batch of data released on Wednesday has taken on more meaning in light of the Fed’s ultra-accommodative monetary policy, which has resulted in large injections of liquidity into the markets over the past several months. With the Fed already implementing a second round of quantitative easing, there are many who now fear that the central bank will need to be extremely careful going forward as there are serious risks of long-term inflation should this accommodation continue to be so aggressive.
The Fed is well aware of this danger, and as such, has made it very clear in its language that while they are more than comfortable with their quantitative easing approach, at this point, they would like to wait to see how economic data comes out before making additional decisions. Clearly, softer than expected CPI and weaker housing starts do not help the case for a reversal in monetary policy, and given the disappointing batch of data, this has only helped to reinforce the need for current quantitative easing measures.
We have therefore seen a sell-off in the US Dollar since the release of this data, as QE bulls have found comfort in the idea that the Fed is less likely to alter its policy. The US Dollar had benefited in recent days from better economic data and comments out from various Fed officials that had suggested the need to soon rein in current monetary policy. However, data like we saw yesterday threatens the USD recovery, and only helps to justify additional selling in the Greenback.
We are not comfortable with this reaction, and instead remain in the camp that believes the US economy is on a path to recovery and the Fed needs to start thinking about reversing its QE policy and worrying more about longer-term inflationary threats. Nevertheless, we can not ignore the will of the markets, and in light of these latest developments, we would expect to see more USD selling over the coming sessions. We will be on the lookout for opportunities to buy the buck into dips.
Looking ahead, the Swiss trade balance is due at 7:15GMT, followed by Eurozone current account at 9:00GMT. UK public finances and public sector net borrowings are then out at 9:30GMT, along with UK retail sales. Swiss ZEW is then out at 10:00GMT, along with the Eurozone OECD economic outlook. UK CBI trend total orders then caps things off for the European calendar at 11:00GMT. The improved risk appetite has helped to fuel a decent recovery in US equity futures and commodity prices.
Contributed By: DailyFx
Europe Session Key Developments
- Ireland's Hold Out Will Lead to Significant Volatility
- British Officials Said They Would Back Support for Ireland to Prevent Bank Woes from Reaching the U.K. Market
European Equities rose modestly on Wednesday as investors hoped that European Union officials would devise a more definitive plan to cope with the region’s debt crisis though all they got was a pledge of support from Britain’s Finance Minister. Concerns that Ireland will not be able to pay the cost of rescuing its banks – in trouble largely because of the real estate boom collapse – has worsened Europe’s government debt crisis. Markets have pushed up borrowing costs for other troubled nations like Portugal and Spain, threatening to destabilize the common Euro currency. Officials from the International Monetary Fund and the European Central Bank will meet in Dublin on Thursday to further analyze the situation with Ireland’s troubled banking sector.
FTSE100 / 5692.56 / +10.66 / +0.19%
U.K. jobless claims unexpectedly fell in October, suggesting that the labor market is recovering momentum as the prospect of a record budget squeeze looms. U.K. Stocks rose slightly led by Experian PLC, the world’s biggest credit-checking company, which jumped 6.3% to 748 pence after reporting that first-half net income rose to $260 million up from $249 million a year earlier. (its biggest gain since April 2009). GlaxoSmithKline PLC (Glaxo) rose 2.4% to 1,243 pence after winning backing from an advisory panel of the U.S. Food and Drug Administration for the company’s Benlysta lupus drug. ICAP PLC, the world’s biggest interdealer broker, rose 1.3% to 472 pence after reporting that first-half pretax profit rose 2% to $292 million as revenue increased by 9%.
CAC 40 / 3792.35 / +29.88 / +0.79%
French stocks also reported gains after the CAC’s biggest drop in 3 months. Soitec SA surged 6.5% to 8.68 Euros after the supplier to the chip industry reported a smaller first-half net loss than expected citing sustained demand from the semiconductor industry. Zodiac Aerospace SA rose 2.2% to 52.78 Euros as the biggest maker of airplane seats in Europe may be taken over by a hostile bid by Safran SA (Safran’s shares slid 1.4% to 21.53 Euros).
DAX / 6700.07 / +36.83 / +0.55%
German stocks advanced on the general sentiment across Europe as the EU started work on a possible aid package for Ireland. Infinenon, Europe’s 2nd biggest chipmaker, rose 1.4% to 6.31 Euros as RBS raised its recommendation on the stock to “buy” from “hold” continuing Infineon’s gains made yesterday on positive profit reports. MAN SE, Europe’s 3rd largest truckmaker, jumped 2.5% to 88.31 Euros while Lufthansa Airlines rose 2.3% to 15.98 Euros. There is still uncertainty in the market with a risk of sideways trading between 6,650 and 6,750 in the DAX index.
IBEX 35/ 10189.30 / +93.90 / +0.93%
Spain’s IBEX 35 index rose 0.9% to trim losses of 2.5% yesterday. Cie Automotive added 2.1% to 4.19 Euros after the Spanish car-parts maker agreed to sell its Mexican steel wheels business to Brazil’s Iochpe-Maxion SA for $3.2 million. Fersa Energias Renovables SA gained for the first time in 4 days gaining 2.3% to 1.11 Euros after Goldman Sachs changed the stock’s status from “neutral” to “sell.”
S&P/MIB / 20639.08 / +76.01 / +0.37%
Pininfarina SpA surged 22% to 3.51 Euros as the designer of sports cars gauges interest for an acquisition by other firms like Magna International Inc. Tenaris SA rose 4.1% to 16.17 Euros paring yesterday’s 5.4% decline as European basic-resource shares climbed 0.8% today, the 5th best performance among 19 Industry groups in the Stoxx Europe 600 Index.
Contributed By: DailyFx
The euro spiked higher as Ireland’s central bank Governor said that he expects Ireland to ask for assistance from the EU and IMF. He said that the figure could run into the tens of billions of euros and he acknowledges that banks must hold additional capital. Speculation has been rife that Ireland will ask for aid since early in the Asia session and the confirmation has seen the euro spike to fresh highs as concerns over Ireland’s ability to handle its debt alone are finally put to rest.
In recent days the euro has been under significant pressure with Irish obstinacy to requesting funds said to have made ECB President Trichet “mad” (Irish Times).Irish officials had said that funding is available through 2011 and it is fully capable of handling higher borrowing costs. In an abrupt U-turn a deal now seems to be in the offing, Ireland’s central bank Governor stressed that getting the terms and getting conditions of any assistance right is essential. Adding that if an agreement is reached it will be a loan and not a bailout, noting that he is confident a package will be agreed upon as officials would not have arrived in Dublin if there was no hope for consensus. The government initially wanted a clear distinction between an emergency bank aid and financial help for the State, there is now a reluctant acceptance that the former will have to be drawn by the government on behalf of the institutions.
Contributed By: DailyFx
The list keeps getting longer. I am seeing so many opportunities out there; and the greater the number of potentials, the harder it is to remain patient. However, patience is key to ensuring that good trades are taken and good entry levels are found. Simply jumping in now while ignoring the natural ebb and flow of the market can get me stopped out or drawn into bad trades that could ultimately be highly correlated (meaning I lose on an entire theme - which would deliver a far bigger loss than expected). We are one day after a critical break in risk appetite trends (as seen on the S&P 500); and the market seems to be far more quiet and making the effort to slowly correct the move. This is very common after a major breakout. A retest of former support as new resistance and vice versa is one of the foundations of trading. Yet, this time around there is a very heavy fundamental slant. We are simply waiting for many different things to fall apart. There is already more than enough there to force the swell in sentiment these past months to collapse; but it looks like we have too many hold outs that want to remain blissfully ignorant to reality.
For live position, I am still in the reduced and long-term long USDJPY position. Today's modest dollar pullback really doesn't alter the bearing on this setup because it is based heavily in fundamentals which means it will take a while to play out. Besides I'm happy to sit still while it is already well enough in the money. New to the game this morning are short AUDUSD and AUDCHF positions. AUDUSD bounced back up to test a short-term descending trendline from the past few weeks and offered me entry on a reduced short at 0.9825. I'll set the stop up 45 points and the first target at 100 (note the skew as I am comfortable with a little more risk here given my larger technical and fundamental outlook). As for AUDCHF, a very consistent falling trend of highs gives me easy entry on a reduced short from 0.9720 and allow me to put up a 50 point stop and 70 point first target.
The pendign column is still huge. It is very tempting to just jump in on a EURUSD and GBPUSD short; but I am waiting for either trend confirmation breaks or retracement to better levels on both cases. For the former I'd like to see 1.3625 and latter 1.5950. A long USDCHF trade above 1.00 is something that I would take even if I have long dollar exposure elsewhere given its fundamental winds. NZDUSD is very similar to AUDUSD; but I still want to highlight its descending trend channel these past two weeks and ptoential break of 0.7650. AUDCAD is still one of my favorite trade possiblities should it break 0.99 and confirm reversal. Then there is GBPCAD with wedge breakout potential, GBPJPY on a pull back to its channel and EURJPY and EURCHF who are staring down their respective range supports.