Sive Morten
Special Consultant to the FPA
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Fundamentals
(Reuters) - The euro fell against the dollar on Friday after Catalan separatists won a regional election, prompting worries about the possible break-up of the euro zone's fourth-largest economy.
Spain's government had hoped that the Catalan election would strip pro-independence parties of their control of the regional parliament and end their campaign to force a split. But with 96 percent of ballots counted in a vote to elect Catalonia's regional parliament, separatist parties are seen winning 70 seats out of 135.
"The euro dipped on the (Catalan) headline but it is not obvious that the vote advances the issue one way or the other and the euro found good support on dips," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
The euro slid 0.3 percent to $1.1835. Europe's common currency though was still up nearly 13 percent so far this year, on track for its best yearly performance in 14 years. The dollar, meanwhile, was little moved by Friday's mixed batch of economic data.
Reports showed U.S. consumer spending accelerated in November and shipments of key capital goods orders increased for the 10th straight month. However, household savings dropped last month to their lowest in more than nine years. Low savings suggest the strong pace of consumer spending is unlikely to be
sustained unless there is a significant pickup in wage growth.
Analysts said trading volumes were thin ahead of the Christmas holiday, which could cause some volatility.
Friday's most eye-catching mover was once again bitcoin, although this time because of losses. It plunged as much as 25 percent on the day at one point to below $12,000, having lost a third of its value since Sunday.
The dollar index, which measures the U.S. currency against a basket of six major rivals, was up 0.2 percent at 93.400. For the year, however, the index was down 8.5 percent. One immediate threat to dollar bulls was removed on Thursday, as the U.S. Senate approved a bill to fund the federal government through Jan. 19 and avert agency shutdowns ahead of a Friday midnight deadline. The bill now goes to President Donald
Trump to sign into law.
Congress also approved the most significant U.S. tax code overhaul in three decades that is expected to give a short-term lift to already solid economic growth, also supporting the dollar.
The dollar was steady against the yen at 113.37. On Thursday, Bank of Japan Governor Haruhiko Kuroda
reinforced expectations that the BOJ was in no hurry to move away from its ultra-loose monetary policy.
Chart of the Week: Fathom’s ESIs Shrug off Euro Area Political Uncertainty
by Fathom Consulting
Fathom’s latest Economic Sentiment Indicator (ESI) for the euro area remained unchanged at 1.4% in November, with the country-level indices confirming that the upswing in economic sentiment remains elevated across the currency bloc.
France’s ESI saw the largest monthly increase, rising from 0.8% to 0.9%, predominantly driven by strength in both the manufacturing and services PMIs. The headline consumer confidence survey also jumped by two index points to 102.4 in November, indicating that rising optimism about the French economy is broad-based. Surprisingly, ongoing political uncertainty in both Germany and Spain is yet to have a meaningful impact on either country’s ESI, with both remaining elevated. Italy’s ESI continues to outperform hard economic data and is hovering around all-time highs, but elections must be held before the end of May next year and they have the potential to spark fresh waves of volatility, with a reversal in economic sentiment a strong possibility. That being said, the fragility of Italy’s recent upswing in economic sentiment has financial-market implications. We maintain our call that Italy’s weak fundamentals will continue to constrain its long-term growth potential and so stand by our recommendation to hold French and German equities relative to Italian equities.
COT Report
Today, guys, we will take a look at Aussie Dollar. Last time when we've talked on it, its net long positions were extremely high, and market was needed solid retracement down to normalize it. As a result it has dropped for 3 points, approximately from 0.78 to 0.75 area.
Now, we see massive closing of longs on recent report. Reasons could be different for that and it is not an exception that it also could be financial year end.
At the same time our long-term view on AUD - is inner, domestic growth sources. RBA follows flat policy, and mostly currency performance will depend on major income source - export (mostly to China).
Here is detailed Australian government report and it tells about good performance in 2017 . This mostly confirms our previous conclusion:
The only driving factor for AUD could be inner ones, as commodity export and it's prices. If overall commodities bullish trend will continue - then AUD will keep chances to proceed to higher levels, but in short-term perspective, within 1-2 months its upside potential looks limited and stands around 0.8150-0.82 area. At the same time, hardly we will get strong sell-off as well, as situation around AUD mostly looks positive by far."
Technical
Monthly
Actually, guys, I'm not occasionally has chosen AUD analysis today. In fact, we have major background for medium-term trading on monthly chart. This is not often happens. But when this happens - this give us real advantage, since we know long-term perspective in advance.
Construction here stands rather simple and I like when this happens. We will not take a look at some long-term tools here, such as far Fib resistance levels, big AB-CD, but will focus only on 2-3 month perspective.
After long-term drop market has reached Agreement at major all-time 5/8 Fib support of 0.7180 Fib level. Now market is forming a kind of flag action, and we're mostly interested in action inside flag. Here we have AB-CD pattern that has not quite reached OP target. Now, right at flag support line AUD is forming bullish grabber. Since there is just one week till December close, chances that it finally will be formed are significant, right?
This grabber totally agrees with idea of uncompleted AB-CD target. Thus, monthly chart lets us estimate major points of trading plan - invalidation point @ 0.75 and potential target @ 0.8160
Weekly
Monthly setup suggests that we should find some chance to take long position, somewhere inside grabber's candle.
Here trend is still bearish, but we already have some reversal signs. First is, in December price has passed through MPR1 and this could be early hint on new bull trend. Upside reversal is started by "222" Buy pattern, while right in reversal point we have bullish engulfing and tweezers bottom.
Meantime, market is coming to first major Fib resistance around 0.7740. Although AUD is not at overbought here, we have a kind of B&B "sell" setup. Market was dropping since summer's end and bearish momentum here is still strong. It means that as aussie will touch resistance - some deep retracement could happen. Very probable that it will happen right between Christmas and New Year's Day.
Still we should not fall in euphoria, because monthly grabber is not confirmed yet and surprises are still possible. Yes, we count on grabber, and chances are great, but this issue is not done yet. So, if we will get some surprise - I don't know, for example bearish grabber on weekly, - we should not upset and just keep mind open. May be opposite setup will be even more attractive.
Daily
On daily chart trend stands bullish, market is not at OB, but, we see that 0.7740 is not just a fib level but K-resistance area.
Also take a look that on a whole way up since 0.75 - there was no deep retracement yet. So, AUD has formed bullish reversal swing but no deep retracement. It means that it should follow...
The most recognizable pattern here is reverse H&S. It means that retracement should be somewhere to 0.7630 or even to 0.7585 Fib support:
4-hour
On intraday chart we do not have clear Fib extension that could point on 0.7740 level. But we have butterfly "Sell" on top with potential reversal point at 0.7730.
Also we have clear MACD divergence that should be formed right around daily K-resistance area.
So, scalp traders could watch for chances to sell around 0.7740, while we will be watching for retracement down, somewhere to 0.7585-0.7730 area to go long. May be a bit later we will get precise level, if AUD will start to form some AB-CD pattern, and we potentially could get "222" Buy pattern.
Conclusion:
AUD has positive mood. As speculative positions where off-loaded, due recent CFTC report - nothing prevents upside action from sentiment analysis point of view.
Fundamentally, Australia also shows good performance in 2017. RBA policy right now mostly stands flat and export income still stands as major driving factor.
Technically such positive background should support upside action. In shorter-term perspective, we expect action to 0.8160 area that should start somewhere from 0.76.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
(Reuters) - The euro fell against the dollar on Friday after Catalan separatists won a regional election, prompting worries about the possible break-up of the euro zone's fourth-largest economy.
Spain's government had hoped that the Catalan election would strip pro-independence parties of their control of the regional parliament and end their campaign to force a split. But with 96 percent of ballots counted in a vote to elect Catalonia's regional parliament, separatist parties are seen winning 70 seats out of 135.
"The euro dipped on the (Catalan) headline but it is not obvious that the vote advances the issue one way or the other and the euro found good support on dips," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
The euro slid 0.3 percent to $1.1835. Europe's common currency though was still up nearly 13 percent so far this year, on track for its best yearly performance in 14 years. The dollar, meanwhile, was little moved by Friday's mixed batch of economic data.
Reports showed U.S. consumer spending accelerated in November and shipments of key capital goods orders increased for the 10th straight month. However, household savings dropped last month to their lowest in more than nine years. Low savings suggest the strong pace of consumer spending is unlikely to be
sustained unless there is a significant pickup in wage growth.
Analysts said trading volumes were thin ahead of the Christmas holiday, which could cause some volatility.
Friday's most eye-catching mover was once again bitcoin, although this time because of losses. It plunged as much as 25 percent on the day at one point to below $12,000, having lost a third of its value since Sunday.
The dollar index, which measures the U.S. currency against a basket of six major rivals, was up 0.2 percent at 93.400. For the year, however, the index was down 8.5 percent. One immediate threat to dollar bulls was removed on Thursday, as the U.S. Senate approved a bill to fund the federal government through Jan. 19 and avert agency shutdowns ahead of a Friday midnight deadline. The bill now goes to President Donald
Trump to sign into law.
Congress also approved the most significant U.S. tax code overhaul in three decades that is expected to give a short-term lift to already solid economic growth, also supporting the dollar.
The dollar was steady against the yen at 113.37. On Thursday, Bank of Japan Governor Haruhiko Kuroda
reinforced expectations that the BOJ was in no hurry to move away from its ultra-loose monetary policy.
Chart of the Week: Fathom’s ESIs Shrug off Euro Area Political Uncertainty
by Fathom Consulting
Fathom’s latest Economic Sentiment Indicator (ESI) for the euro area remained unchanged at 1.4% in November, with the country-level indices confirming that the upswing in economic sentiment remains elevated across the currency bloc.
France’s ESI saw the largest monthly increase, rising from 0.8% to 0.9%, predominantly driven by strength in both the manufacturing and services PMIs. The headline consumer confidence survey also jumped by two index points to 102.4 in November, indicating that rising optimism about the French economy is broad-based. Surprisingly, ongoing political uncertainty in both Germany and Spain is yet to have a meaningful impact on either country’s ESI, with both remaining elevated. Italy’s ESI continues to outperform hard economic data and is hovering around all-time highs, but elections must be held before the end of May next year and they have the potential to spark fresh waves of volatility, with a reversal in economic sentiment a strong possibility. That being said, the fragility of Italy’s recent upswing in economic sentiment has financial-market implications. We maintain our call that Italy’s weak fundamentals will continue to constrain its long-term growth potential and so stand by our recommendation to hold French and German equities relative to Italian equities.
COT Report
Today, guys, we will take a look at Aussie Dollar. Last time when we've talked on it, its net long positions were extremely high, and market was needed solid retracement down to normalize it. As a result it has dropped for 3 points, approximately from 0.78 to 0.75 area.
Now, we see massive closing of longs on recent report. Reasons could be different for that and it is not an exception that it also could be financial year end.
At the same time our long-term view on AUD - is inner, domestic growth sources. RBA follows flat policy, and mostly currency performance will depend on major income source - export (mostly to China).
Here is detailed Australian government report and it tells about good performance in 2017 . This mostly confirms our previous conclusion:
The only driving factor for AUD could be inner ones, as commodity export and it's prices. If overall commodities bullish trend will continue - then AUD will keep chances to proceed to higher levels, but in short-term perspective, within 1-2 months its upside potential looks limited and stands around 0.8150-0.82 area. At the same time, hardly we will get strong sell-off as well, as situation around AUD mostly looks positive by far."
Technical
Monthly
Actually, guys, I'm not occasionally has chosen AUD analysis today. In fact, we have major background for medium-term trading on monthly chart. This is not often happens. But when this happens - this give us real advantage, since we know long-term perspective in advance.
Construction here stands rather simple and I like when this happens. We will not take a look at some long-term tools here, such as far Fib resistance levels, big AB-CD, but will focus only on 2-3 month perspective.
After long-term drop market has reached Agreement at major all-time 5/8 Fib support of 0.7180 Fib level. Now market is forming a kind of flag action, and we're mostly interested in action inside flag. Here we have AB-CD pattern that has not quite reached OP target. Now, right at flag support line AUD is forming bullish grabber. Since there is just one week till December close, chances that it finally will be formed are significant, right?
This grabber totally agrees with idea of uncompleted AB-CD target. Thus, monthly chart lets us estimate major points of trading plan - invalidation point @ 0.75 and potential target @ 0.8160
Weekly
Monthly setup suggests that we should find some chance to take long position, somewhere inside grabber's candle.
Here trend is still bearish, but we already have some reversal signs. First is, in December price has passed through MPR1 and this could be early hint on new bull trend. Upside reversal is started by "222" Buy pattern, while right in reversal point we have bullish engulfing and tweezers bottom.
Meantime, market is coming to first major Fib resistance around 0.7740. Although AUD is not at overbought here, we have a kind of B&B "sell" setup. Market was dropping since summer's end and bearish momentum here is still strong. It means that as aussie will touch resistance - some deep retracement could happen. Very probable that it will happen right between Christmas and New Year's Day.
Still we should not fall in euphoria, because monthly grabber is not confirmed yet and surprises are still possible. Yes, we count on grabber, and chances are great, but this issue is not done yet. So, if we will get some surprise - I don't know, for example bearish grabber on weekly, - we should not upset and just keep mind open. May be opposite setup will be even more attractive.
Daily
On daily chart trend stands bullish, market is not at OB, but, we see that 0.7740 is not just a fib level but K-resistance area.
Also take a look that on a whole way up since 0.75 - there was no deep retracement yet. So, AUD has formed bullish reversal swing but no deep retracement. It means that it should follow...
The most recognizable pattern here is reverse H&S. It means that retracement should be somewhere to 0.7630 or even to 0.7585 Fib support:
4-hour
On intraday chart we do not have clear Fib extension that could point on 0.7740 level. But we have butterfly "Sell" on top with potential reversal point at 0.7730.
Also we have clear MACD divergence that should be formed right around daily K-resistance area.
So, scalp traders could watch for chances to sell around 0.7740, while we will be watching for retracement down, somewhere to 0.7585-0.7730 area to go long. May be a bit later we will get precise level, if AUD will start to form some AB-CD pattern, and we potentially could get "222" Buy pattern.
Conclusion:
AUD has positive mood. As speculative positions where off-loaded, due recent CFTC report - nothing prevents upside action from sentiment analysis point of view.
Fundamentally, Australia also shows good performance in 2017. RBA policy right now mostly stands flat and export income still stands as major driving factor.
Technically such positive background should support upside action. In shorter-term perspective, we expect action to 0.8160 area that should start somewhere from 0.76.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
