Today is Christmas Eve and we do not get any significant data releases. Most of the major stock markets will be closed, or will have an early close. The German DAX and the Euro Stoxx 50 indices will be closed, together with the Scandinavian and Italian markets. UK and the US will have an early close, as they will allow traders to capture a few last trades before Christmas.
Yesterday, the main loser among the 8 major currencies was the British pound, which helped the FTSE 100 to be one of the main performers among the top global indices. The New Zealand and the Australian dollars were the ones that managed to get the upper hand. This was partially due to commodities like gold and silver, which managed to make their ways to the upside.
In terms of yesterday’s economic data releases, we received the core and the headline durable goods orders from the US. The core figure missed the forecast by only one tenth of a percent, sliding from +0.1% to 0.0%. Unlike the core figure, the headline number was a bigger disappointment, coming out at -2.0%, when the expectation was for a positive 1.5%.
After that we received the Canadian MoM GDP figure, which also showed up slightly lower, at -0.1%, when it was believed to be the same as previous, +0.1%. US new home sales were also below the initial forecast of 734k, coming out at 719k. All this negativity from the two largest North American countries had put pressure on their currencies and that’s why they were among the main losers yesterday.
For today, the economic calendar only shows a few data sets coming out from the US, like the Redbook MoM and YoY figures, Richmond Manufacturing and Service indices, API weekly crude oil stock and durables excluding defence. No forecasts are currently available for these economic indicators. Only goods orders non defence ex air on MoM basis are believed to have declined sharply going from +1.2% to -0.3%.
GBP/CHF – Technical Outlook
After hitting the area near the 1.3310 hurdle, which also became the highest point of December, GBP/CHF retraced back down, wiping off all of the gains made in the first half of the month. It seemed that the pair could have continued with the slide, but it got held at its medium-term upside support line drawn from the lowest point of August. As long as that line remains intact, we will stay positive with the overall near-term outlook. But given the rate’s proximity to that line, we will take a cautious approach from the very short-term perspective and wait for a confirmation break through one of our key levels.
If the aforementioned upside line continues to hold and we see GBP/CHF pushing back above the 1.2833 barrier, which is Friday’s high, this may attract a few extra buyers to join in. Such a move may help the pair to travel to the 1.2877 obstacle, a break of which could clear the way to the psychological 1.3000 hurdle, marked near the high of December 11th. The rate might get a hold-up around there, or even correct back down a bit. But if GBP/CHF stays above the 1.2833 zone, this could interest the bulls again and they might push the pair to the 1.3000 mark, a break of which may set the stage for a test of the 1.3080 level, marked by the inside swing low of December 13th.
If that upside line breaks and the rate slides below the 1.2673 support zone, this may spook the bulls from the field temporarily and allow more bears to join in. This is when we will aim for the 1.2615 obstacle, a break of which might open the door for a further move lower, where the next potential support area could be seen around the 1.2464 level, marked by the low of October 14th.
USD/CAD – Technical Outlook
Last week, USD/CAD managed to break above its short-term downside resistance line taken from the high of December 3rd. But as we can see now, the pair is struggling to move above the 1.3176 barrier. Although our oscillators, the RSI and the MACD, are somewhat in support of the upside idea, we will first wait for a confirmation break above 1.3176 barrier first and only then aim further north, hence why we will take a cautiously-bullish approach for now.
As mentioned above, a break above the 1.3176 zone may attract more buyers into the game and the rate might get lifted to the 200 EMA on the 4-hour chart, or to the 1.3205 zone, which is the high of December 13th. Initially, the pair might stall around there, but if the buying continues, a break of that zone may lead USD/CAD to the 1.3223 level, marked by the low of December 9th.
Alternatively, for us to get comfortable with the downside, we will take a slightly more conservative approach and wait for a rate-drop below the 1.3102 area, which is the current lowest point of December. Only then we will start aiming for the 1.3075 obstacle, a break of which could set the stage for a test of the 1.3042 level, marked by the lowest point of October.
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with the Company. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure.
Copyright 2019 JFD Group Ltd.