USDJPY - Let Battle Commence!

There's an battle going on between the bulls and the bears on this currency as we are reading completely different stories depending on which time frame you're looking at.

The ST & MT charts paint a pretty bullish picture which still has a valid target of 109.00 yet to be reached, formed from a breakout of a symmetrical chart pattern on the daily candle sticks close to the apex (See more from previous blog post on 10/12/13).  However if take a step back and look further out on the LT chart, we have a (potential) downtrend line being tested from the peaks in 1998 and 2007.  We have already satisfied the 38.2% retracement on this chart, which now brings the 50% level into play at 111.20.

AUDUSD - Broken below the 2013 low already

China's underperformance persists and with economic analysts starting to revise their growth forecast down to levels only seen back in 2005, it doesn't look like this outlook will turn around anytime soon.   Lagging Australian economic results also continue to disappoint weighing further on this currency and with calls that further RBA cuts are required to simulate this heavily commodity driven currency, it might be a case of 'things are going to get worse before it gets better' so to speak.

GBPUSD - Coming under first real sign of pressure

The GBPUSD is testing the trend support line from the July13 rally.  We shall see whether there is further impetus in the next couple of days and drive the currency through this support line.  Disappointing economic data in the new year is making investors wary of whether the markets can sustain their recent record highs in the short term, and seeking comfort in 'safe haven' currencies as of late.

Brent - Still trading in a sideways range

Brent 2014 forecasts range from around $98 - $110, with the main variance of forecasts being derived from the supply risk associated with Opec production. Some analysts think that the supply disruptions that we've seen over the past couple of year should persist whereas others are more optimistic around the supply side leading to lower estimates. The deteriorating political situation in Venezuela and the Libyan militants blocking some of the main ports disrupting exports are causing the most concern at the moment.  We should however continue to see strong demand coming from the emerging markets and Non-opec production driven from US and Canadian shale.

USDJPY - Keep a eye on the long term chart

The BoJ's ultra loose monetary policy continues to weaken the Yen and risk appetite across the board is increasing off the back of positive global economic sentiment economic as well as improving job market data, reducing the demand for 'safe haven' currencies.  

The positive job data will also inevitably bring us back to the FED tapering debate and when the market expects this to happen but most analysts aren't forecasting this to happen till March time though some are erring on the earlier side, potentially even in Jan or Feb.  This should lead to strength coming back into the USD, though we also have to bear in mind that the Republicans & Democrats still have to thrash out a Debt ceiling deal in February which is always a bit of a pantomime so might see some volatility around these upcoming months.

AUDUSD - Chinese data is not helping the bulls

We had some interesting Chinese data overnight with YoY exports gaining 12.7%, smashing the 7.1% forecast which was mainly driven by stronger shipments to the US and EU.  Imports however were only up 5.3%, failing to reach the estimate of 7.6%, which could put the AUD under further pressure. Weaker global commodities prices are also continuing to wane on this currency and more work might be required from the RBA in order to turn the local economy around as well.

AUDUSD - Bounced off strong support

The AUDUSD had a good attempt on the 0.9300 level but it proved too strong to break moving our focus back on the upside resistances which are at 0.9425, 0.9525 and 0.9700 currently.

I'm still in a bearish mindset on this and see as these levels as opportunities to short the currency however.  Looking at the fundamentals, there is growing concern over tightening financial conditions in China, Australia's largest exporter, as the chinese repo rate hit 5.45% on 15th Nov, fuelling some speculation that the worlds second largest economy's growth could be cooling.

GBPUSD - Broken neckline, but waiting for BoE inflation data

Following on from my last post on the 23Oct, we have seen a confirmed rejection of the 1.6250 level, making a 2 month low yesterday, breaking the neckline of the double top chart formation.  I would expect this weakness to persist on the short term and for the pairing to trade back down towards the 1.5700/1.5750 support area, from a technical point of view.

The quarterly BoE inflation is due later today so the market will be very much subdued before this publication at 10.30am GMT.

EURGBP - Bear channel still intact

Given that I haven't yet commented on the EURGBP I'll start off with the long term charts and increase granularity as I go along.

On the LT charts we can see that we are in a corrective wave pattern from the aggressive price action from the end of 2007-2008.  The Fibo levels have proven to be good support levels along the way at 38.2% (0.8537), 50% (0.8159) and at 61.8% (0.7781) which have all now been met.

AUDUSD - Gann Fan proving too much for the bulls

The currency pairing has had a very good recovery since its August low and managed to reach the 50% Fibo retracement of the April-August down move.  Bearish comments from RBA members and tightening Chinese financial conditions are putting a downer on the recent strength.  We are also starting to see some USD strength back as well as the US job data is improving once again and the expectations of the FED tapering are starting to build.  The next RBA meeting is on the 19th November which may suggest what is in store for the AUD.