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Daily Outlook - Trader Talk

Currency Trading Summary Tuesday 20-Feb-2018

Written by Russell Sandiford / Dealer

What Happened on Monday > Top 3?

• USDJPY is above 106.50, contributed from upbeat Japanese Trade Balance

• American public holiday leads to an understandably muted Monday for Forex

• Bitcoin enters a higher price section, opening spaces up to $12,690 level


• (GBP) Sub -1.4000, GBPUSD is trading on bullish bias, higher lows at 1.3955

• (USD) Greenback holds its gains from Wednesday, expecting volumes coming in after the holiday

Data & Event Risk Today?

• (AUD) Monetary Policy Meeting – 11:30 am Sydney Time

• (EUR) German ZEW Economic Sentiment – 08:00 pm Sydney Time

USDX: 88.95

The greenback gets a slight lift, reaching around 89.35 level in holiday trade as forex today was a holiday in the US session due to President’s day and following China’s celebrations of Chinese New Year. Lack of directional drivers as there are no fundamental news today from the dollar side. Long term trend still favours the bearish markets, however breaking above 90.00 level would indicate a strong reversal sign.

USD JPY: 106.60

The pair climbing back up after the Yen gained aggressively lately, testing the last Thursday’s high as the dollar is regaining its strength for a second day in a row. BOJ’s comments regarding the intention to intervene if the Yen continues to appreciate and they are watching the FX markets closely. Regarding Risk aversion, it is still seemingly in play for equities and bond markets. Crossing down below the level 106.00 would reject the short reversal sign.

EUR USD: 1.2405

The pair held onto Friday’s losses as dollar gains through the day, in a follow follow-through of Friday’s price action, however lack of directional strength at the moment with the President’s day in US and Chinese New Year celebrations. Only some minor macroeconomic figures released by the EU however did not show any meaningful effects to the market. Settling below the 1.2400 level in the following days would give bearish sentiment.

GBP USD: 1.4030

GBPUSD broke down below the 1.40 level as the greenback benefited by the softer tone of equities with the European indexes and US futures traded lower by London’s close. Major macroeconomic events from the UK on Wednesday this week regarding employment report and inflation report hearings. Breaking above 1.4150 level would resume the bullish momentum.

AUD USD: 0.7915

Aussie dollar lack of momentum direction as trading in thin markets, with China and the US both on holidays, but holding the last week gains against USD maintaining above 0.79 level. AUD showed recovery, however remains exposed to US dollar strengthening in the opening week. RBA still hold the projections of rate increase, following mixed data for Australia and middling economic growth.

NZD USD: 0.7360

Dairy market is the key fundamental news to watch, albeit a quiet Monday, we see NZDUSD refusing to give up 0.7380, and encounters heavy resistance level at 0.7435. With China and U.S. both on holiday, Asian volatility has been well subdued in terms of trading volume.

USD CAD: 1.2560

Overall trading range was narrow on Monday as both markets, the US and Canada were shut for the day, however the CAD still under some pressure mainly due to the Dovish stance by BOC last week. The CAD however it was helped along in part by the recent surging oil price. USD on the other hand boosted by the concern of Japanese Government in stronger Yen and strong US economic data which is putting the loonie under stress.

VIX: 19.46

The US Holiday session has stalled volatility across markets on monday, leaving a modest 1.73% gain from 19.13 in the VIX. SPI and our fear index moves in correlation which signals the resurgence of the U.S. equity, and the same goes to DJIA.

GOLD: $1,345

Technically, we are leaning to the short position in XAU, notwithstanding, the U.S. public holiday halts the yellow metal at $1,348. As the moment, we expect gold price would demonstrate its unique correlation with dollar index, producing promising opportunities.

OIL (WTI): $62.40

Oil has just broken its pivotal long term short level, if we see a retracement back to 61.88 and RSI right above the equilibrium, then price could rise rapidly to the upside in four-hour chart. The seesawing in commodity price when in holiday period and thin trading is rather common, though with the strong uptrend intact, it is realistic to assume oil could well continue to add gains in the near term.

BITCOIN (BTC): $11,129

Bitcoin survives the first week of its $10,000 hallmark, heading toward heavy resistance of $11,000. A sharp recovery comes no surprise, and its valid indications had been made with the golden cross of 8 and 30 simple moving averaging. Tremendous amount of volume and positions established throughout the ascending course, however, it is prudent and savvy to practice a certainly level of risk management when the sentiment occupies the stage. Immediate support to look at is $10,000 and $9,200.

Macro Themes in Play

• With U.S. and China both on holidays, we assume interest in the last few trading days.

• Bitcoin is heading to its higher high at $12,110, and found immediate support at $10,100

Russell Sandiford / Dealer
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