Daily Pivots: (S1) 95.19; (P) 96.17; (R1) 96.68

USD/JPY’s break of the intraday trend line support with 4 hours MACD dragged down signal line argues that fall from 100.54 might be resuming. Intraday bias is now mildly on the downside and near term focus is turned to 94.47 minor support. Break will confirm this scenario and bring deeper fall to retest 90.92 low first. On the other hand, above 97.13 minor resistance will revive the case that rebound from 90.92 is still in progress for 100.54 or above before completion.

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Daily Pivots: (S1) 1.2555; (P) 1.2628; (R1) 1.2689

EUR/USD’s strong rally in early US session suggests that rebound from 1.2389 is resuming. At this point, intraday bias is mildly on the upside as long as 1.2585 minor support holds. Further rise is in favor to 1.3290 high and 100% projection of 1.2329 to 1.3290 from 1.2389 at 1.3350 to complete the consolidation from 1.2329. Nevertheless, upside is expected be limited below 1.3768 cluster resistance and bring down trend resumption. On the downside, below 1.2585 will flip intraday bias back to the downside and break of 1.2389 will be an important indication that consolidation from 1.2329 has completed and recent down trend has resumed for next target of 50% retracement of 0.8223 to 1.6038 at 1.2131

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Mid-Day Report: Dollar Weakens as Consolidation Continues, FOMC Minutes Next
Dollar is sharply lower against European majors in early US session as consolidation continues. Technically speaking, as discussed in our technical outlook reports, more upside is still expected in EUR/USD and GBP/USD. Meanwhile, USD/CHF retreats sharply after edging higher to 1.2082 earlier today. Dollar index’s dip below 4 hours 55 EMA argues that some more pull back should be seen before resuming recent rally. Elsewhere, Crude oil, rides on dollar’s retreat and rebounds strongly from intraday low of 53.66 to above 55.6. Focus will now turn to FOMC minutes for inspirations on further volatility. Though, ,markets are pricing in 90% chance of another 50bps cut from Fed on Dec 16 and the minutes will likely have little impact to this view based on current economic and inflation outlook. Read the rest of this entry »

Oil reached our first target of 53.69 (100% projection of 147.27 to 90.51 from 110.45) and continued to trade lower Wednesday. Although oversold condition and loss of momentum might lead to a brief rebound, bearish outlook in short and medium has not changed.
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Daily Pivots: (S1) 1.1983; (P) 1.2014; (R1) 1.2062

USD/CHF’s rally is still in progress and climbs further to 1.2061 today so far. Intraday bias remains on the upside as long as 1.1965minor support holds. Current rise from 1.1208 is still expected to extend to next target of 100% projection of 1.0693 to 1.1746 from 1.1208 at 1.2261. On the downside, below 1.1965 will indicate that an intraday top is in place and bring retreat to 4 hours 55 EMA (now at 1.1875). Also, considering bearish divergence condition in 4 hours MACD, this will be an early alert that a short term top is formed and focus will then turn to 1.1549 support.

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Daily Report: A Busy Day Featuring BoE and FOMC Minutes

The forex markets are still bounded in tight range in generally as markets are still searching for a theme and direction. Meanwhile, as mentioned before, Swiss Franc remains the weaker one as driven by its pull back in EUR/CHF and GBP/CHF crosses. USD/CHF continues to climb higher. GBP/USD, on the other hand, loses momentum after hitting 1.5080 minor resistance. Dollar index continues to be bounded inside a triangle like consolidation pattern below 87.98. A number important events are scheduled today, including the release of FOMC and BoE minutes as well as US housing and inflation data, which could trigger some volatility in the markets.

BoE MPC minutes are expected to reveal a 9-0 vote for the surprised 150bps cut earlier this month. With core CPI having the steepest drop in at least 11 years and a clear sign of turnaround in inflation trend, markets expect that BoE is now free to have further steep rate cuts from BoE to avoid a prolonged recession in the UK economy. Indeed, markets are pricing in another 100bps cut over the next 12 months. The minutes are expected to affirm this view. But the impact on Sterling might be minimal.

FOMC minutes, on the other hand, is expected to elaborate on the perceived dovish bias of Fed and provide details of the discussions between board members, including those in the intermeeting cut before Oct 29. Markets are pricing in 90% chance of another 50bps cut from Fed on Dec 16 and the minutes will likely have little impact to this view based on current economic and inflation outlook.

Consumer inflation in US has peaked at 5.5% in Jul and is expected to continue the down trend in Oct. Headline CPI in US is expected to moderate drop sharply by -0.8% mom in Oct, with year-over-year rate steeply down from 4.9% to 4.0%. Core CPI is expected to rose 0.2% with year-over-year rate down to 2.4%, after plateau at 2.5% for three consecutive months from Jul to Sep.

NAHB builder confidence surprised the markets yesterday by plummeting sharply from then record low of 14 in Oct to new record low of 9 in Nov. Such pessimism is expected to be reflected in today’s new residential construction data too. Housing starts is expected to continue the down trend and drop from 0.82m to 0.78m annualized rate. Building permits is also expected to drop from 0.81m to 0.78m annualized rate.

Gold continues to stay in established range without any direction. Consolidation from 684.60 is still in progress and is probably in form of a contracting triangle. Having said that, further upside cannot be ruled out as long as 698.2 minor support holds but we’d still expect such consolidation to be limited below 824.5 support turned resistance and bring down trend resumption. On the downside, below 698.2 will be an early alert that such consolidation has completed. It will flip intraday bias back to the downside for retesting 684.6 low first. Break will confirm recent down trend has resumed.

In the bigger picture, correction from 1033.9 is still in force and should be targeting next key support zone of 100% projection of 1033.9 to 739.8 from 936.3 at 642.2 and 61.8% retracement of 371.3 to 1033.9 at 624.41. On the upside, while some rebound might be seen, break of 936.3 is needed to confirm that fall from 1033.9 has completed. Otherwise, medium term outlook will remain bearish.

Comex Gold Continuous Contract 4 Hours Chart

Comex Gold Continuous Contract Daily Chart

BY OilNGold

The forex markets continue to stay in tight range today despite some big surprises from inflation data from US and UK. US PPI dropped sharply by 2.8% mom in Oct, biggest fall since the series began in 1947. Year over year rate was down from 8.7% to 5.2% versus consensus of 6.2%. Core PPI, though, rose 4.4% with yoy rate up to 4.4%. TIC capital flow rose to 66.2B in Sep. Focus will turn to testimony of Bernanke and Paulson.
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Equity markets in Asia and Europe tumbled as investors were unsettled by worries on global recession. Financial stocks faced extreme pressures after Citigroup announced another round of staff cut which signaled more trouble for the sector will be seen in 2009. Commodity prices followed the selloffs. Oil price fell below previous low at 54.67 to 54.13, one more step closer to our targets of 53.69 and 50.
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Daily Pivots: (S1) 1.4609; (P) 1.4781; (R1) 1.4907

GBP/USD’s recovery from 1.4557 extends further today and with 4 hours MACD staying well above signal line, an intraday low should be in place. Some more consolidation is in favor. Above 1.4557 will encourage stronger recovery towards 4 hours 55 EMA (now at 1.5327). But upside should be limited below 1.5600 support turned resistance and bring fall resumption. On the downside, below 1.4557 will target mentioned 100% projection of 1.7630 to 1.5269 from 1.6671 at 1.4310.

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