FOREX: USD Weaker As Markets Await Trump Inauguration, Recent Ranges Holding
The USD is weaker across the board against all of G10 FX. The BBDXY index is around 0.25% softer, last near 1313. Recent lows in the index (1306.74) are still intact to the downside. We are seeing a slight outperformance trend from higher beta plays.
- Sentiment appears to be on the improve due to carry from Trump and Xi's phone call on Friday. The market grabbing onto any sense of better relations between the two countries. Trump also reportedly told his advisors that he would like to travel to China (per the WSJ over the weekend).
- Regional equity markets are mostly firmer, with Hong Kong the best performer, likely aided the FX risk mood. US equity futures are down but only slightly and this follows strong cash gains on Friday. There is no US cash Tsy trading today due to Martin L. King Day later in the US. Tsy futures are slightly softer.
- NZD/USD is up nearly 0.50%, last near the 0.5610/15 area. Recent highs at 0.5651 remain intact. For AUD/USD we are lagging slightly, up close to 0.35%, last near 0.6215 (likewise recent highs at 0.6246 haven't been breached. USD/CNH is sub 7.3300 and below its 20-day EMA support point.
- USD/JPY is back under 156.00, but Friday lows under 155.00 haven't been threatened at this stage. EUR/USD is up 0.30%, last near 1.0305. SEK has gained 0.40%, while GBP is back above 1.2200.
- Looking ahead, it is a relatively quiet start to the week data wise. We have the German ZEW, some ECB speak, along with UK Labor data. In Canada, the CPI prints.
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TRUDEAU SAYS `WE HAVE A LOT OF WORK TO DO'
- TRUDEAU SAYS `WE HAVE A LOT OF WORK TO DO'
- TRUDEAU WANTS GOVT TO PREPARE FOR NEW US ADMINISTRATION
- TRUDEAU DOESN'T ADDRESS QUESTIONS ABOUT HIS LEADERSHIP
USDCAD TECHS: A Pullback Would Be Considered Corrective
- RES 4: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 3: 1.4537 2.0% 10-dma envelope
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4356 @ 16:56 GMT Dec 20
- SUP 1: 1.4301 Low Dec 18
- SUP 2: 1.4174/4014 20- and 50-day EMA values
- SUP 3: 1.3928 Low Nov 25 and a key support
- SUP 4: 1.3822 Low Nov 6
USDCAD bulls remain in the driver’s seat. While price faded into the Thursday close, the recent breach of 1.4178, the Nov 26 high, confirmed a resumption of the uptrend and this maintains the price sequence of higher highs and higher lows. The latest rally opens 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4174, the 20-day EMA. A pullback would be considered corrective.
AUDUSD TECHS: Bearish Trend Structure
- RES 4: 0.6550 High Nov 25
- RES 3: 0.6501 50-day EMA
- RES 2: 0.6429 High Dec 12
- RES 1: 0.6337/6396 Low Dec 11 / 20-day EMA
- PRICE: 0.6263 @ 16:55 GMT Dec 20
- SUP 1: 0.6199 Low Dec 19
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
The trend needle in AUDUSD continues to point south and this week’s fresh cycle lows and Wednesday’s sell-off, reinforce a bear theme. The move down maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. The break lower opens 0.6158 next, a Fibonacci projection. Initial firm resistance to watch is 0.6396, the 20-day EMA.
