Daily Forex Preview for 6th November 2014
Daily Forex Preview for 6th November 2014
The US dollar gained since the start of yesterday’s European trading session as investors across the Atlantic digested news of the mid-term elections which saw the Republicans gain seats, taking a majority in both the House and the Senate. Commodity risk currencies fell to new yearly lows. ADP non-farm payrolls beat expectations showing 230k new jobs added while the previous month’s reading was revised higher to 225k, from 213k previously. Services PMI was soft at 57.1 while ISM non-manufacturing fell below expectations at 57.1
The Euro was mixed as services PMI from Spain was softly lower at 55.9 and Italian service PMI ticked higher to 50.8. Germany’s PMI services dropped to 54.4. The Eurozone final services PMI was soft at 52.3. Monthly retail sales for the currency bloc declined by -1.3%.
The UK’s services PMI declined to 56.2, the lowest reading since July 2013. The Pound which already weakened during the start of the London trading session continued to lose ground to the stronger Greenback, making a very sharp pin bar from the daily charts to close the day lower at 1.5975
Today’s economic data is packed with high profile events from the Eurozone and the UK’s Central bank monthly monetary policy
Fundamentals Recap – November 05, 2014
- China HSBC services PMI 52.9, down from 53.5 previously
- Switzerland CPI m/m 0%
- Spain services PMI 55.9 v/s 56.2 consensus
- Italy services PMI 50.8 v/s 49.6 consensus
- UK services PMI 56.2 v/s 58.5 consensus
- Eurozone retail sales m/m declines -1.3% v/s -0.6% consensus
- US ADP non-farm employment change rises 230k v/s 214k consensus
- US ISM non-manufacturing PMI softer than expected at 57.1
Fundamentals – November 06, 2014
- Australia employment change 24.1k v/s 20.3k; unemployment rate unchanged at 6.2%
- German factory orders m/m to rise 2.2%
- UK, Halifax HPI m/m to be soft at 0.5%
- UK manufacturing production m/m to rise 0.3%; Industrial production to rise 0.5%
- BoE monetary policy, expected to keep interest rates unchanged at 0.5%
- Canada building permits m/m to rise 5.2%
- ECB minimum bid rate expected to remain unchanged at 0.05% followed by ECB press conference
- Canada Ivey PMI to rise 59.2
EURUSD Daily Pivots
R3 | 1.2657 |
R2 | 1.2611 |
R1 | 1.2548 |
Pivot | 1.2502 |
S1 | 1.2438 |
S2 | 1.2392 |
S3 | 1.2328 |
EURUSD broke down from the bearish continuation flag chart pattern and at the time of writing looks to be testing the break out level which shows strong confluence near a major support/resistance zone of 1.255 and 1.252. A successful test of this resistance level could see a steeper decline towards the region of 1.227, provided the first technical support at 1.2466 gives way. Key risks to the EURUSD will be today’s ECB press conference.
USDJPY Daily Pivots
R3 | 116.616 |
R2 | 115.731 |
R1 | 115.186 |
Pivot | 114.176 |
S1 | 113.756 |
S2 | 112.871 |
S3 | 112.326 |
The bullish flag consolidation which broke out previously saw the USDJPY rally to make a high towards 115.516. Current declines are likely to be capped near the support level established at 114.176 and the daily pivot level. A successful test of this support could see the USDJPY rally towards the objective of 118. Alternatively, a break of the support at 115.516 could see the USDJPY dip lower to test 113.56 region which is the initial break out from the flag.
GBPUSD Daily Pivots
R3 | 1.6195 |
R2 | 1.6108 |
R1 | 1.6042 |
Pivot | 1.5955 |
S1 | 1.5889 |
S2 | 1.5802 |
S3 | 1.5736 |
GBPUSD broke out from the consolidation price zone between 1.60 – 1.595 to make a new low near an established support level of 1.587 but soon rallied back to the zone. A break out to either side is imminent with the upside rally likely to be capped near 1.617, while any declines could find support near 1.581 region.