GROWTHACES.COM Trading Positions
EUR/USD: short at 1.2480, target 1.2330, stop-loss 1.2550
GBP/USD: short at 1.5810, target 1.5650, stop-loss 1.5780
USD/JPY: long at 117.50, target 119.80, stop-loss 116.60
USD/CHF: long at 0.9600, target 0.9760, stop-loss 0.9580
EUR/CHF: long at 1.2025, target 1.2095, stop-loss 1.1995
EUR/GBP: short at 0.7990, target 0.7840, stop-loss 0.7980
EUR/USD: Getting Ready For The ECB Meeting Next Week
(stay short ahead of the ECB meeting next week)
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[li] HICP inflation in the Euro zone fell to 0.3% yoy in November from 0.4% yoy in the previous month. The drop was driven, as expected, by a fall in energy price inflation. The reading was in line with the forecast of GrowthAces.com.
[/li][li] Consumer inflation has not been at the ECB’s target level of close to 2% since the start of 2013 and has been falling since a 3% peak in late 2011. Euro zone inflation is likely to decline further due to dropping energy prices and will probably briefly fall below zero.
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[ul]
[li] The Euro zone unemployment rate held steady at 11.5% for the third month in a row.
[/li][li] Today’s Euro zone figures gave the ECB another reason to take additional measures tackle the threat of deflation. The ECB meeting is scheduled for next week. What will the ECB do?
[/li][li] It will certainly revise downwards its GDP and CPI projections. Moreover, the ECB President Mario Draghi is expected to drop a hint of additional measures (the most probable scenario). On the other hand, he is likely to say more time is needed to assess the effectiveness of the already announced measures (TLTRO). Draghi may also surprise the markets with an immediate decision to broaden the asset purchase program, but in our opinion it is a less probable scenario. In the next step of the ECB would likely target the non-financial corporate bond market. In the opinion of GrowthAces.com the likelihood of announcing the sovereign quantitative easing this week is very low.
[/li][li] The EUR/USD dropped yesterday to 1.2429 and we saw some profit taking on EUR-selling positions at that level. The EUR/USD recovered today and traded just below 1.2490. The reaction to the Euro zone inflation data was limited. We stay EUR/USD short with the target at 1.2330.
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Significant technical analysis’ levels:
Resistance: 1.2524 (high Nov 27), 1.2532 (highNov 26), 1.2539 (30-dma)
Support: 1.2402 (low Nov 25), 1.2358 (low Nov 7), 1.2342 (low Aug 21, 2012)
USD/JPY: Macroeconomic Figures Did Not Help The JPY
(we stay long)
[ul]
[li] Friday brought us a lot of Japan’s macroeconomic releases. Inflation data were in line with expectations, while the data from the real sphere were even better than expected, but they did not help the JPY.
[/li][li] Household spending fell 4.0% yoy to October vs. a 5.6% yoy decline in the previous month. Retail sales rose 1.4% yoy in October vs. the consensus of 1.2% yoy and growth of 2.3% yoy in September.
[/li][li] Japan’s industrial output unexpectedly rose 0.2% mom. A fall by 0.6% mom was expected. It followe a 2.9% mom rise in September. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 2.3% in November and increase 0.4% in December.
[/li][li] Japan’s jobless rate fell to 3.5% from 3.6% in September, while the jobs-to-applicants ratio rose to 1.10, the highest level since June 1992.
[/li][li] The core consumer price index, which excludes volatile fresh food but includes oil products, rose 2.9% yoy in October, in line with the median forecast, but lower than 3.0% in the previous month. Excluding the effects of April’s tax hike, inflation was estimated at 0.9% yoy.
[/li][li] Finance Minister Taro Aso said: “We won’t seek a sudden increase in prices but aim to achieve a 2% target” after the release of Japan’s inflation data for October. Aso also said that consumption-related data remained weak but consumption would pick up from now on the back of steady improvement in the job market. Japanese Economics Minister Akira Amari said that consumer prices are basically flat as a decline in oil prices has been slowing inflation.
[/li][li] The JPY depreciated tomorrow despite relatively good data. The USD/JPY broke above 118.00 and traded 118.08-118.34 today. We stay long with the target at 119.80. The divergence between monetary policies in Japan and the United States is still a key driver for the USD/JPY rate.
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Significant technical analysis’ levels:
Resistance: 118.34 (session high Nov 28), 118.59 (high Nov 25), 118.98 (high Nov 20)
Support: 117.74 (session low Now 28), 117.00 (psychological level), 116.81 (low Nov 19)
USD/CAD: The Loonie Hit By OPEC Decision
(short-term outlook is bullish, the target for the next week is 1.1450)
[ul]
[li] Canada’s current account deficit in the third quarter unexpectedly narrowed to CAD 8.40 bn. It was the best result since the third quarter of 2008 when a surplus of CAD 3.97 bn was recorded. A deficit of CAD 11.1 bn was expected. The Statistics Canada revised the second quarter deficit to CAD 9.91 bn from an initial CAD 11.87 bn.
[/li][li] The Organization of the Petroleum Exporting Countries and agreed to maintain their output at 30 million barrels per day, rejecting calls to lower production to bolster prices.
[/li][li] The CAD extended losses against the USD on Thursday after OPEC’s announcement. It is worth mentioning that a strong drop in the CAD was due to the lack of liquidity in the market because of the U.S. Thanksgiving Day holiday.
[/li][li] Canadian GDP data will be released today at 13:30 GMT. The forecast for September GDP is 0.4% vs. -0.1% in August and the third quarter annualized GDP growth number is expected at 2.1% yoy. The data are likely to give some support to the loonie.
[/li][li] Our bid at 1.1210 was set a bit too low and we missed the opportunity to get long on the USD/CAD at attractive levels. In our opinion the USD/CAD is likely to go near 1.1450 (high November 7) next week.
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Significant technical analysis’ levels:
Resistance: 1.1394 (high Nov 14), 1.1402 (high Nov 11), 1.1450 (high Nov 7)
Support: 1.1325 (session low Nov 28), 1.1300 (psychological level), 1.1235 (low Nov 27)
Thank you for reading.
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