21 March 2014 The Big Picture The U.S. dollar continued to benefit from Fed Chair Janet Yellen’s statement and has strengthened against eight of its 10 developed-nation counterparts this week, with only the Australian and New Zealand dollars climbing. The focus today will be on comments from three Fed speakers. U.S data released yesterday added to dollar’s gains. The Philadelphia Fed Survey rose to 9.0 in March from -6.3 the previous month. Employment data released on Thursday showed weekly jobless claims for the week ended on March 15 rose by 5k to a seasonally adjusted 320k. Analysts had expected jobless claims to rise by 10k. Yesterday, the euro reached a two-week low. There was more pressure on the common currency after the statement of European Central Bank Executive Board Member Sabine Lautenschlaeger about interest rates. She stated that rates will remain low for an extended period or even go lower. The Australian dollar advanced after Citigroup Inc.’s Economic Surprise Index indicated that economic reports have been exceeding economist estimates. This index measures the gap between data reports and analyst estimates. Crude oil prices fell in Asia on Friday as U.S. oil inventories rose for a ninth week. Gold advanced on speculation that the Federal Reserve statement about interest rates would boost physical demand for the precious metal. On Friday, Eurozone’s preliminary consumer confidence for March is forecast to rise to -12.3 from -12.7 in February. In Canada, retail sales are estimated to have risen 0.7% mom in January after falling 1.8% mom in December, while Canada’s CPI is forecast to have slowed to +1.0% yoy in February from +1.5% yoy in January. Three Fed speakers are scheduled on Friday. St. Louis Fed President James Bullard speaks on the topic Debt and Incomplete Financial Markets: A Case for Nominal GDP, Dallas Fed President Richard Fisher will deliver a speech titled “Forward Guidance: Fad or the Future of Monetary Policy, while Minneapolis Fed President Narayana Kocherlakota speaks on Transitional and longer-term challenges for monetary policy. EUR/USD · EUR/USD continued declining and fell below the 1.3810 barrier and the lower boundary of the downward sloping channel. The rate met support at the 1.3770 (S1) level near the 200-period moving average. A clear break below that support zone, may trigger extensions towards the next hurdle at 1.3715 (S2). Nonetheless, the RSI found support at its 30 bar and moved higher, thus I would expect the upward corrective wave to continue, maybe to challenge the 1.3810 (R1) resistance. · Support: 1.3770 (S1), 1.3715 (S2), 1.3650 (S3). · Resistance: 1.3810 (R1), 1.3850 (R2), 1.3893 (R3). USD/JPY · USD/JPY moved higher on Wednesday, breaking above the 101.85 barrier and reaching the resistance of 102.70 (R1). A clear break above the 102.70 (R1) hurdle, may target the next one at 103.40 (R2). Nonetheless, since the pair is not in a clear trending phase, I consider the overall outlook to remain neutral. On the daily chart, both the daily MACD and the daily RSI lie near their neutral levels, confirming the sideways path of the currency pair. · Support: 101.85 (S1), 101.25 (S2), 100.75 (S3) · Resistance: 102.70 (R1), 103.40 (R2), 103.75 (R3). EUR/GBP · EUR/GBP moved lower after finding resistance at 0.8400 (R1). The decline was halted by the support of 0.8340 (S1). The negative divergence between our momentum studies and the price action is still in effect, thus further decline cannot be ruled out. A dip below 0.8340 (S1) may target the next support at 0.8300 (S2), near the 38.2% retracement level of the 17th Feb. – 18th Mar. advance. On the other hand, a rebound near the support of 0.8340 (S1) may challenge once again the 0.8400 (R1) key resistance. · Support: 0.8340 (S1), 0.8300 (S2), 0.8260 (S3). · Resistance: 0.8400 (R1), 0.8460 (R2), 0.8535 (R3). Gold · Gold moved in a consolidative mode, remaining supported by the 200-period moving average. As mentioned in previous comments, a break below that support zone may signal a short-term reversal and have larger bearish implications. The RSI moved higher after exiting its oversold territory, while the MACD seems ready to cross above its trigger line, thus I would expect the forthcoming wave to be to the upside, maybe to test the resistance of 1354 (R1) · Support: 1330 (S1), 1310 (S2), 1290 (S3). · Resistance: 1354 (R1), 1392 (R2), 1415 (R3) Oil · WTI moved lower after finding resistance at the 100.75 (R1). Intraday bias is neutral for now since the possibility for a higher low still exist but only a break above the 100.75 (R1) would trigger further advances. On the downside, a break below the 98.00 (S1) support, may flip the outlook back negative. Both the RSI and the MACD remain above their blue support lines, for now. · Support: 98.00 (S1), 96.50 (S2), 95.00 (S3) · Resistance: 100.75 (R1), 103.00 (R2), 105.00 (R3). Have a good day.
Posted on: Fri, 21 Mar 2014 09:20:46 +0000
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