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Forex Trading Strategies Thanksgiving holiday in the US may keep the market rangebound - though it didn't in 2004 or 2005...
Market seems indecisive until we see 1.1730 or 1.1900 taken out in EUR/USD.
MAJOR HEADLINES – PREVIOUS SESSION
• US Heating Oil stocks rose last week and pushed heating oil prices sharply lower in the US yesterday, despite expectations for colder weather this week.
• New Zealand PPI Inputs rose 2.9% in Q3 vs. 1.5% expected and PPI Outputs rose 1.8% vs. 1.0% expected.
• Japan Merchandise Trade Surplus was ¥822.1B in October vs. ¥879 expected, but on an adjusted basis was ¥719.7B vs. 564.9B expected
• Japan Supermarket Sales for October out at -4.6% on a Year-on-year basis vs. -1.9% in September
• Japan Nationwide Department Store Sales increased 0.1% vs. 0.8% in September.
The market was quiet overnight, with the JPY staying on the weak side of the range vs. USD and EUR.
THEMES TO WATCH – UPCOMING SESSION
Thanksgiving. WE would give thanks if we could get a good directional indicator on the USD here, as the market really seems to be at a crossroads and the bears and bulls seem to both be able to muster considerable force with everything the market throws at them. USD/JPY for example, was on the brink of a break lower yesterday, but once again refused to bite on the sell-off and pulled back to 119.00 area resistance overnight on the mixed data from Japan. EUR/USD survived a scary semi-reversal yesterday (we're beginning to lose count of these reversals), but doesn't look pretty until it works its way through 1.1900 and holds there.
We would expect a rather quiet, range bound market today and tomorrow as for most people in the US, this is an extended weekend - but the last two years have NOT seen quiet Thanksgivings - with last year see a sharp sell-off in the USD on Thanksgiving Day itself and the previous year showing a big USD sell-off on Friday. This isn't to say that we should expect a weak USD because it's Thanksgiving, but that we shouldn't necessarily expect a quiet market for these two days.
Traditionally, the Thanksgiving to the end of the year period is associated with strong optimism in the US, but one wonders if the optimism this year will be as great as in years past with Consumer Confidence still in the cellar and the stock market already having seen a spectacular run lately (seems very odd to see those two phenomena simultaneously, by the way.). Again, our premise is that the repatriation trade effect must fade soon as the front-runners of this flow take profits and the flow itself begins to dry up. Then we have to go back to worrying whether the foreign capital flows will continue to finance the huge monthly injection needed to keep the US Dollar afloat. If the US economy continues to show resilience and yields start picking up again, we may be forced reluctantly back into strong USD mode.
And, we reiterate that while we would very much like to see the USD weaker, we don't have the technical case for this development in place just yet - so an extra dose of caution may be in order until we do.
Note: the support/resistance levels used in the matrix’s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
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