17 Jan: All eyes on UK PM May. Brexit statement due today.

By | January 17, 2017

 

 In the absence of a US market on Monday, out for the MLK public holiday, currencies have been thin and generally finished the session not too far removed from their weekend levels, except for Sterling which fell heavily on the weekend report that UK prime minister Theresa May will deliver a speech later today to lay out the plan of a “hard” Brexit, meaning that the UK is prepared to withdraw from a tariff-free trade relationship with EU in return for control of immigration. Elsewhere, the Euro and the Aud were heavy, under pressure from the move in Sterling, while the Yen was choppy, but is currently not too far removed from Friday’s close.  European stocks were a little heavy, the metals firm and oil, unchanged.

The main event on Tuesday is likely to be the UK PM, Theresa Mays’ statement on Brexit, and with word of a removal from the single EU market, the pressure seems likely to stay on the downside. Elsewhere from the UK, the December Inflation data is due. Otherwise, there is a bit of secondary data out today (ZEW/New York State Empire Mfg Index), but nothing likely to create too much volatility although the world Economic Forum does kick off in Davos so we should expect some soundbites to emerge from that. Janet Yellen is due to speak tomorrow. Ahead of JY, the Fed’s Dudley will be speaking later today

CURRENCIES
EURUSD: 1.0600
Res  1.0635  1.0675  1.0700
Sup  1.0575  1.0550  1.0500
USDJPY: 114.14
Res  114.50  114.85  115.00
Sup  113.80  113.60  113.00
GBPUSD: 1.2041
Res  1.2085  1.2120  1.2180
Sup  1.1985  1.1900  1.1820
USDCHF: 1.0114
Res  1.0135  1.0150  1.0180
Sup  1.0090  1.0055  1.0040
AUDUSD: 0.7473
Res  9111.4740  9507.2270  9875.3690
Sup  8697.3140  8329.1720  7915.0120
NZDUSD: 0.7096
Res  0.7145  0.7170  0.7200
Sup  0.7075  0.7050  0.7025
INDICES / COMMODITIES
S+P: 2266
Res  2274  2280  2290
Sup  2262  2256  2248
DJ30.fs: 19776
Res  19876  19920  19979
Sup  19720  19660  19509
SPI200.fs: 5687
Res  5720  5740  5760
Sup  5680  5665  5630
GOLD: 1203
Res  1208  1220  1234
Sup  1190  1178  1170
XAGUSD: 16.80
Res  17.00  17.15  17.30
Sup  16.55  16.40  16.25
OIL (WTI): 52.62
Res  53.50  54.35  55.20
Sup  52.00  51.45  50.65

 

Indices/commodities
S&P Futures 2266
With US markets closed there is no change to the outlook and the short-term momentum indicators are telling us nothing. The dailies look a little heavy, while the weeklies remain positive so a cautious stance is best as we head towards Donald Trump’s inauguration on Jan 20. Buying dips would seem to be the longer-term theme although I cannot bring myself to do so at these levels and the Trump factor could easily see stocks turn ugly – very quickly – especially if he ramps up the prospect of a trade war with China.
24 Hour: Neutral Medium Term: Look to buy dips – with tight SL
Resistance Support
2300 Minor 2262 13 Jan Low
2290 Minor 2248 12 Jan low
2280 Minor 2240 Minor
2277 All-time high/14 Dec high/6 Jan high 2230 Minor
2273 13 Jan high 2225 30 Dec low
DJ30.fs 19776
Ditto S+P.
24 Hour: Neutral Medium Term: Look to buy dips – with tight SL
Resistance Support
20000 Minor 19769 Session low
19964 All-time high/14 Dec high 19692 12 Jan low
19924/20 6 Jan high/9 Jan high 19660 30 Dec low
19903 11 Jan high 19600 Minor
19875 12 Jan high /13 Jan high 19500 10 Jan low
SPI200.fs 5687
The ASX managed to squeeze up to the 200 HMA at 5720 early on Monday, although it has traded in heavy fashion ever since while at the same time holding above support at 5680. The short-term momentum indicators are now pretty much neutral but the dailies still look increasingly toppish, so we could see a retest of the 13 Jan low at 5666, below which there is not a lot to hold the SPI up until 5615.Selling into strength is again preferred and on the topside sellers will be seen at the 5720, session high, at Friday’s high (5740) and again at 5760. A break of this would then allow a return to the 5790 area although this is beginning to look less likely. If wrong and we do head above 5790 at any stage, there really is not too much resistance ahead of the 29 May 2015 high at 5814, and beyond that, the 5 May 2015 high of 5889. Although the weeklies still point higher, the near-term risk appears to be to the downside and selling into strength, with a SL above 5760, or possibly above 5790 is preferred.
24 Hour:  Prefer to sell rallies Medium Term: Mildly bearish – Prefer to sell rallies
Resistance Support
5814 29 May 2015 high 5684 Session low
5789 9 Jan high 5666 13 Jan low
5761 12 Jan high 5650 Minor
5740 13 Jan high 5615 30 Dec low
5719 Session high/200 HMA 5605 23.6% of 5029/5789
GOLD 1203
Gold managed to reach 1208 on Monday as safe-haven buying helped it higher when Sterling gapped lower. As Cable steadied, Gold retreated back to 1200 where it currently sits, again hugging the 100 WMA. The short-term momentum indicators are flat, possibly slightly negative, and a similar session today would not surprise, although the Brexit statement could see some safe haven buying which would take Gold higher. With the dailies still looking positive, looking to buy at around 1180/90 may be a longer-term plan, with a SL placed tight under 1170. If we do head higher, above the session would then target 1215/20.
24 Hour: Neutral Medium Term: Prefer to buy dips.
Resistance Support
1235 Minor 1198 Session low
1219 38.2% of 1375/1122 1188 13 Jan Low
1215 23 Nov high 1186 (23.6% of 1122/1207)
1208 Session high 1175 (38.2% of 1122/1207)
1201 100 WMA 1165 (50% pivot of 1122/1207)
XAGUSD 16.80
Silver had a rangebound session (16.78/92), leaving the outlook unchanged.  Further choppy trade looks likely today, but the daily charts still look mildly positive so if we do break 17.00 we could then head to 17.30. I would be surprised to see it head above 17.00 today given that the short-term momentum indicators are now looking a little heavy. The downside should again see support at the 100 WMA (Weekly moving average) at 16.70, which could still act as a pivot, and then at the 10 Jan low at 16.53, which were the lows for both 10/11 Jan.
24 Hour: Neutral Medium Term:  Prefer to buy dips
Resistance Support
18.00 Minor 16.70 100 WMA
17.90 Minor 16.53 10 Jan low/11 Jan low
17.30 (50% of 18.98/15.63) 16.41 9 Jan low
17.21 7 Dec high 16.25 6 Jan low/200 HMA
16.98 12 Jan high 15.83 30 Dec low
OIL (WTI) 52.62
WTI is pretty close to its weekend levels following a 52.09/69 range, leaving the outlook unchanged.Look for a choppy range of 50.70/54.00 to cover it over the next few days, with a topside break of 54.00 likely to target the 55.21 January high. On the downside, immediate minor support lies at 52.00/10 and then again at the H/S neckline at 50.70, which should be strong. Back under 50.00 could then open the way to 49.00 and possibly towards the 200 DMA at 47.00. As before, keep SL on long positions either on a break below 50.70 or at around 49.20. As for today, 52.00/53.50 may cover it. Prefer to buy dips.
24 Hour: Prefer to buy dips Medium Term: Cautiously long – Tight SL sub 50.70
Resistance Support
54.29 6 Jan high 52.09 Session low/12 Jan low
53.80 9 Jan high 51.50 Minor
53.47 12 Jan high 51.00 Minor
53.15 13 Jan high 50.70 Rising trend support/ Reverse Head/Shoulders Neckline
52.69 Session high 50.00 Psychological

EURUSD: 1.0600
The Euro opened lower, on the back of the move in Cable, and although it did close the minor chart gap to 1.0635 it remained heavy through the session. In thin trade it has closed without too much damage, at 1.0600. The 4 hour charts remain heavy so another test of the 1.0580 low could be on the cards. UK PM Teresa May is expected to outline her Brexit policy later today, and with a “hard Brexit “on the cards, the Euro could well be dragged lower, in sympathy with Sterling which would be likely to remain under pressure, with good Euro support to be seen between 1.0450/1.0500, below which we could revisit the 3 Jan low of 1.0340. The daily charts still point higher though, so if we do break back above 1.0635, another test of last week’s 1.0684 high would not really surprise, above which could see a run towards 1.0700. A break of this level then sees little to stop the Euro heading to 1.0815, so I think stops on shorts should be left tight above 1.0700. As before, in the longer term I still prefer to sell into strength. Look for something like 1.0525/0625 to cover it again but cautiously keeping note of what the UK PM has to say.  The Davos jamboree starts today – watch from soundbites from there, although Trumps Twitter account is probably more important!
24 Hour: Mildly bearish Medium Term: Mildly bullish – but look to sell into strength.
Resistance Support
1.0750 Minor 1.0579 Session low
1.0702 (38.2% of 1.1299/1.0340) 1.0570 12 Jan low /200 HMA
1.0684 12 Jan high 1.0500 Minor
1.0675 55 DMA/ (61.8% of 1.0873/1.0340)/13 Jan high 1.0478 (50% pivot of 1.0340/1. 0624)
1.0635 Session high 1.0452 11 Jan low

Economic data highlights will include:

World Economic Forum – Davos, German/EU ZEW Economic Sentiment Survey, New York State Empire Mfg Index, Fed’s Dudley Speech

Meta Trader
EURUSD: 4 Hour


USDJPY: 114.14
 US$Jpy has traded a choppy 113.61/114.48 range on Monday but is closing the session at near 114.00, not far from its weekend closing levels. The momentum indicators are mixed with the short-term charts suggesting that the dollar will remain underpinned today, while the dailies still point lower, hinting that near-term rallies may provide a sell opportunity. While the coming session could once again be choppy near current levels, with the dailies still point lower a retest of the session low may be on the cards, below which could see a quick move towards 113.00. Below there the next major support is not seen until 112.00 although that is unlikely in the near term. On the topside, if we head back above 114.50, sellers will again be seen at 114.90/115.00 today, which might be a near term sell area, with a SL placed above 115.50.
24 Hour: Neutral Medium Term: Prefer to sell rallies
Resistance Support
116.00 Minor 113.80 Minor
115.50 12 Jan high 113.61 Session low
115.44 13 Jan high 113.11 8 Dec low
114.91 23.6% of 118.66/113.75 112.87 5 Dec low
114.46 Minor 112.00 38.2% of 101.18/118.66

Economic data highlights will include:

Industrial Production, Capacity Utilisation

Meta Trader
USDJPY: 4 Hour


GBPUSD: 1.2041
Cable opened the week lower after the weekend UK press report on the chances of a “hard” Brexit, and fell to 1.1980 in early trade before consolidating mostly above 1.2000 through the rest of the session. We now await the announcements from PM May later in the coming session, and there could be further downside to be seen in Sterling, depending how tough a stance the UK PM takes. It could be a volatile week for Cable, and indeed both the 4 our and the daily indicators are hinting at lower levels ahead. Technically, selling into strength again seems to the plan, and right now the chart gap at 1.2180 may provide the cap, with a SL placed above 1.2200. All up, it is probably best to remain square until we see what the UK PM has to say. The UK inflation data is due (December – exp 0.3%mm, 1.4%yy), but will fade in importance to TM’s statement
24 Hour: Neutral Medium Term: Cautiously prefer to sell rallies
Resistance Support
1.2232 13 Jan high 1.2000 Psychological
1.2200 Minor 1.1986 Session low
1.2180 Chart Gap 1.1950 Minor
1.2150 100 HMA 1.1900 Minor
1.2115 Minor 1.1821 7 Oct low

Economic data highlights will include:

UK PM, Theresa May, statement on Brexit, UK CPI, PPI, RPI

Meta Trader
GBPUSD: 4 Hour


USDCHF: 1.0114
US$Chf is higher today with the dollar generally supported by the move in Sterling, although in the bigger picture the outlook remains choppy as we continue to use 1.0100 as a pivot. The short-term momentum indicators are mixed on Tuesday but while the dailies continue to point lower, selling into strength still seems to be the plan, possibly looking for a test of parity and possibly lower in coming sessions. Above last Thursday’s 1.0149 high, we could then head towards 1.0200, with further resistance is seen at in the 1.0250/1.0250 area. In the short term, stops on shorts should probably be left tight above 1.0150.
24 Hour: Neutral Medium Term: Mildly bearish
Resistance Support
1.0275 (76.4% of 1.0335/1.0089) 1.0090 Session low
1.0240/47 (61.8% of 1.0335/1.0089)/11 Jan high 1.0042 13 Jan Low
1.0210 (50% pivot of 1.0335/1.0089) 1.0035 30 Dec low
1.0149 12 Jan high 1.0000 Psychological
1.0135/40 Session high /200 HMA 0.9935 23.6% of 0.9549/1.0343
Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7473
The Aud traded in heavy fashion on Monday, placed under some pressure by the move in Sterling and has finished the day at 0.7480, in the middle of the 0.7457/0.7505 range. There is little change in the outlook, although the 4 hour charts do look increasingly negative so any upside above 0.7500 may be somewhat limited today. The dailies still point higher though, so if wrong on the limited potential above 0.7500, we could yet see a move towards 0.7540 which should be strong resistance if we see it, but a break of which could then open the way to 0.7600. As before, looking to sell into strength seems to be the medium-term plan. Below the Monday low, support lies around 0.7450 and at 0.7430 ahead of the chance of a move back to 0.7400 although I don’t think we head down here today. We have some minor data today, but the Aud will be more affected, I suspect, by the moves in Sterling following on from UK PM Statement today, potentially heading lower in unison. Also, look out for the rhetoric of a possible trade war once DT is in the White House. Aud/Jpy, in particular, could come under pressure in the days ahead.
24 Hour: Mildly bearish Medium Term: Prefer to sell rallies
Resistance Support
0.7567 15 Nov high 0.7457 Session low
0.7540/4 61.8% of 0.7777/0.7160/Daily cloud top 0.7448 13 Jan Low
0.7524 14 Dec high 0.7429 12 Jan low
0.7517 12 Jan high 0.7390 Minor
0.7504/00 Session high – 200/100DMAs 0.7351 11 Jan low

Economic data highlights will include:

Home Loans, Investment Lending for Homes, New Motor Vehicle Sales (Dec)

Meta Trader
AUDUSD: 4 Hour


NZDUSD: 0.7096
The Kiwi had a choppy day (0.7075/0.7148), once again book-ended by the 100 DMA/200 DMA and finished at the 0.7100 pivot leaving the outlook unchanged. We could be in for a similar session ahead, and as with the Aud, while the 4 hour charts appear to be rolling over, the dailies still point higher so we could yet see a test of 0.7150/7200. If that happens, I still prefer to sell into that level, looking for a return towards 0.7000 at some stage although that is some way off, although if Sterling were to fall heavily later in the day, we could see the Kiwi dragged lower via the GbpNzd cross. For today, look for some choppy trade at close to current levels, with 0.7075/7150 looking likely to cover it, but with the chance of a downside break later in the day Look out for the Global Dairy Trade Index, due in European trade.
24 Hour: Neutral Medium Term: Prefer to sell rallies
Resistance Support
0.7275 76.4% of 0.6857/0.7143 0.7080/75/71 200 DMA/Session low / 23.6% of 0.6857/0.7143/13 Jan Low/
0.7238 14 Dec high 0.7045 12 Jan low
0.7195 61.8% of 0.6857/0.7143 0.7030 38.2% of 0.6857/0.7143
0.7170 Minor 0.7000 Psychological
0.7148 Session high /100 DMA 0.6980 Minor

Economic data highlights will include:

NZIER Business Confidence, Global Dairy Trade Index

Meta Trader
NZDUSD: 4 Hour