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Forex Trading StrategiesUSD/JPY survives an overnight dip as USD eases stronger again despite falling US yields. USD/CAD at resistance - failure to hold could mean 1.1700.
NZD bludgeoned on S&P downgrade threat. Australian growth disappoints.
MAJOR HEADLINES PREVIOUS SESSION
US Pending Home Sales for October out at -3.2% vs. -1.2% expected
Canada Ivey PMI out at 65.8 vs. 61.0 expected
US ABC Weekly Consumer Confiendence rises another notch to -14 from -15 last week
RBA Leaves Cash Target unchanged at 5.50% as expected
Japan's Official Reserve Assets grew $1.5B in November to $843.3B total.
UK Nationwide Consumer Confidence rose to 101 in November from 92 in October, according to the Nationwide Building Society
UK NIESR GDP estimate for November out at 0.4%
Australia's GDP for Q3 out at 0.2% QoQ vs. 0.5% expected
Japan Leading Economic Index for Oct out at 80.0% as expected and Coincident Index out at 88.9% as expected
AUD and especially NZD were hit for large losses, as USD/JPY dipped to support and then rallied a bit again.
THEMES TO WATCH UPCOMING SESSION
The NZD decline overnight was triggered by the S&P warning that it's widening current account deficit could threaten the country's investment rating - which is currently at AA+, the second highest possible rating. The reaction in the market shows two things: that the whole NZD rally is getting out of proportion and is a crowded trade, and the dangers of investing in such a thin market. The action could heat up even further in all NZD crosses with the RBNZ rate meeting tonight. Don't forget that the country's own finance minister has been talking down the currency. 0.7100 will be an important support area for NZD/USD and AUD/NZD looks like it has reversed its attempt at new 30-year lows. The risks certainly look skewed to the downside for NZD at the moment.
Looking ahead at today's calendar, there's very little to consider save for the US weekly energy inventories. With temperatures plunging across the US, it would seem that energy could head higher - though some are saying that higher energy prices can ironically lend support to the USD short term as the currency of choice for purchasing crude is the USD, and non-US countries must purchase the USD before they purchase the crude.
Meanwhile, the mind-numbing rally in USD/JPY continues - and found support yet again overnight as every sell-off attempt there seems to be averted posthaste. The eqully mind-numbing range in EUR/USD also continues to hold - will it continue to do so all the way to next Tuesday's FOMC? We wait for 1.1730 and 1.1830 to fall as short term trigger levels and 1.1640 and 1.1900 as the bigger trigger levels.
The other interesting pair to watch will be EUR/GBP, as we've scratched our heads at the strengthening GBP of late. Still, we need 0.6820+ again there to get interested in the technical view higher. The BOE is meeting today and tomorrow, although they only announces their rate decision and make no statements at the actual announcement, so we have to wait for the BOE minutes to get any insight into their thinking - and these won't be released until the 21st. Speculation of rate cuts ahead may begin to creep back into the picture again.
Note: the support/resistance levels used in the matrixs 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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