Market Analysis: 14 November 2016
by Christala Parmaxi
The US Dollar extended its gains against most of the majors on Friday, closing the day higher against the New Zealand Dollar by 1.35% and against Australia Dollar by 0.88%. The greenback closed the day almost unchanged against the Japanese Yen and lower only against the British Pound among the seven major currencies. The Dollar keeps on extending its gains during the new week while it is digesting Donald Trump’s win. We doubt if any event within the week will be able to break this trend, the most notable event of the week will be Janet Yellen’s speech on Thursday.
There are three speeches scheduled for today, ECB President Mario Draghi, ECB Executive Board member Peter Praet and Dallas Fed President Robert Kaplan. As for Tuesday, we are looking for The Reserve Bank of Australia meeting minutes at 02:30 server time, UK CPI at 11:30 which is expected to be higher than the previous month and US Core Retail Sales which are expected steady at around 0.5%. On Wednesday, there would be the releases of UK Average Earnings Index, UK Claimant Count Change and US Producer Price Index. During Thursday’s early Asia Session the Employment Change rate of Australia is expected at 20K against last month’s negative rate while Great Britain’s Retail Sales are expected higher than the last release. On Thursday there are also releases from Europe since October’s CPI is going to be releases while from the US the Core CPI, Building Permits and Philadelphia Fed Manufacturing Index are going to be published. The highlight of the day though, is Chair Yellen’s speech before the Joint Economic Committee of Congress. Last but not least, on Friday we get Canada’s CPI for the month of October.
The commodity currencies are facing the biggest losses against the US Dollar due to uncertainty and fear of markets to Donald Trump. AUDUSD and NZDUSD were both running a long term uptrend which is now threatened to be broken. As of USDCAD, it is currently running on 9-month high levels.
On the daily timeframe, the Kiwi is about to reach the lowest level since October 2016 since it penetrated the psychological level of 0.71 to the downside. The next valid resistance and support levels are 0.71 and 0.704 respectively. MACD is still above its equilibrium level which indicates that the trend has not end yet but it is slopping downwards below its trigger line. The Average Directional Index indicates strong negative direction while RSI is slopping downwards. A cross of Bollinger lower band below 0.704 would indicate a trend reversal.
On the hourly chart, the pair is moving within a trading range of 40 pips. Even that the overall sentiment is bearish, we would wait for a confirmation of a sell signal upon penetration of 0.707 to the downside.
Upon downwards penetration of 0.75, we would change our long term view from bullish to bearish from the Aussie. Both RSI and MACD are slopping downwards while ADX indicates no clear direction of the trend. The major resistances are near 0.76 and 0.77 while the supports lie at around 0.75 and 0.744.
On the hourly chart, the pair is ranging between 0.752 and 0.757. The indicators reflect the indication of the pair since they are near neutral levels.
The pair is running on new highs while it is moving between Bollinger’s upper and middle bands. The indicators are on bullish levels while the price is trading above the triple SMA. The next valid resistance to be reached is the psychological level of 1.36 and then 1.37. The risks are near the supports of 1.3475 and 1.3425.
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