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Dollar continues to extend gains over the high-beta FX pairs, will it make for a calm holiday trading season?
MORNING BRIEF
Dollar continued to extend its gains yesterday against the other major currencies in the aftermath of Fed’s decision to taper its asset purchases program. However, the pace of Dollar’s rise has slowed down and indeed it seems like investors have already priced in the Fed’s move and are now enjoying their gains. The Euro lost the 1.3650 support level in the overnight session and is now trading around the 1.3630 area while the Pound continues to trade around the 1.6350 mark seeming unfazed by the Dollar’s strength. With a light day ahead of us regarding news releases we expect the calm trading conditions to continue for the last day of the week and possibly see some kind of retracement in the Euro. The Cable seems that it could go either way today and the Gross Domestic Product set for release early in the morning could spur a short term rally outside of the tight range the pair is trading in since the Fed’s decision. The next couple of weeks we expect volume to drop as the holiday season kicks in and given the fact that no major themes are featured in the news we believe that this year volatility will also retreat and make for a peaceful Christmas holiday. However, in the FX market conditions can change rapidly thus we’ll be here to discuss any developments with you.
UK and US Gross Domestic Product releases along with the EZ Consumer Confidence will close the week
The last day of trading for this week holds a couple of significant news releases that will draw our attention. Early in the morning the UK GDP will be released and this announcement could provide a short-term direction to the range-bound Pound for today. Later in the day the US GDP will also be released and although this is an important printing we expect market’s reaction to be limited as the Dollar has acquired a direction after the FOMC decision and seems to want to stick with it. Finally, early in the afternoon the Euro-zone’s Consumer Confidence report will add an important piece of information to our knowledge but the late time of the printing should not cause any friction to the market conditions as the week comes to an end.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
9.30 |
GBP |
Gross Domestic Product (YoY) |
Medium |
1.5% |
1.5% |
|
13.30 |
USD |
Gross Domestic Product (Annualized) |
Medium |
3.6% |
3.6% |
|
15.00 |
EUR |
Euro-zone Consumer Confidence |
Medium |
-15 |
-15.4 |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
The Euro continued to fall yesterday but at a significantly slower pace and is now trading around the 1.3630 mark. We believe that the currency is extremely oversold at this point and even though we feel that the Euro will fall lower towards the 1.3550 area we prefer to enter into a short trade after a retracement higher occurs. As we mentioned yesterday a pullback towards the 1.3700 area will provide us with the chance to enter short and at this point we hesitate to suggest a trade for you as the technical outlook appears extremely oversold.
GBP/USD
The Pound has settled into a tight range yesterday and the exit from this range will dictate what’s next for the strong UK currency versus the rising Dollar. As such we’d like to offer you our suggestions: we like a long trade just above the 1.6390 mark with targets at the 1.6420 and 1.6470 areas with a stop just below the 1.6335 low, however should the 1.6335 support be broken downwards then we’d like to enter into a short trade, target the 1.6300 and 1.6280 price tags and place our stops just above the 1.6388 peak.
FTSE 100
The FTSE 100 continued higher yesterday overcoming the 6,575 resistance level and it seems that it will climb higher. As such we’re looking for an opportunity to enter the current uptrend and any pullbacks will offer us exactly this opportunity. The UK index seems extremely overbought at this time and that’s why we’re not suggesting that you go right ahead and jump into a trade at this point, a retracement lower will cool off the index and offer us the chance to join the uptrend.
Gold
Gold fell yesterday as well and the $1,212 support has been breached. Gold seems to have pulled back a bit after reaching as low as $1,187 and is now trading around the $1,194 mark. We’d like to enter short on Gold if the $1,187 low is broken, place our targets at the $1,182 and $1,172 marks and a stop just above the $1,198 peak as the yellow metal seems bound to fall even lower with Dollar’s price on the rise.
The above charts have been created using FXCM’s Trading Station platform.
STOCK MARKET FOCUS
[Restricted Content] Ltd.
The Alpesh Patel Value/Growth filter has indicated [Restricted Content] Ltd. as our stock of the day.
Company Information: [Restricted Content]
Created using Sharescope Pro
[Restricted Content] Ltd. has been rated an 8 out 10 in our Value/Growth rating and gets an B Grade rating on our Bullish Momentum meter. The P/E ratio is relatively low suggesting that the stock might be underpriced, the ratio of the price earnings growth is also low and Turnover is up year on year supporting the growth potential. From a technical standpoint, the MACD indicator is pointing upwards in the weekly chart above suggesting further incline. The suggested holding period for a stock of this type is 6-12 months.
Important Information
The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.
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