Posted on: 26 November 2015, by: Pepperstone Support, category: Market Review
The late NY afternoon was quiet as we wind down into Holiday mode here in America. European trade and the ensuing momentum garnered from the ECB exclusive dominated what was left before London went home. The USD was bid and the spillover was widespread as a Reuters ECB exclusive caught the market off guard. Headlines suggested that the ECB is potentially considering a double dose of policy measures to cut the deposit rate further. Euro was sold sharply, dropping as low as 1.0565. The slide was contained by rumors of massive barrier option protection at 1.0550. Layered bids totaling several yards of orders were suggested into this area of support and we were able to recover above the 1.06 figure into the NY close with short term players squaring their books clean. This Reuters headline will have the market looking for a big play from Draghi in December.
Oil seems to be firming up at current levels, backed by a less bearish build in the DoE data. USDCAD was sharply unchanged from yesterday’s price action at the margin and we look for support into 1.3280/60 to attract buying into what’s going to be an action packed first week of December. Commodity FX remains a paradox. AUD and NZD both remain elevated against USD given the risk backdrop. Best to avoid at the moment until we get into next week where direction will be clearer.
USDJPY benefited from the USD positive environment, recovering into 123 but failing to breach and close above this key level for the second day in a row in spite of what was a good bit of positive US data. Durable goods increased 3.0% and personal income also rose, totaling 0.4%. Claims sit at 40 year lows and new home sales rose 10.7%. The only sour note was a miss in the Michigan sentiment indicator, dropping to 91.3 from the expected 93.1.
Cable has pushed back against stretched positioning on the back of the Autumn statement. It was fairly noiseless and the gains were steady – look for a sharper squeeze above 1.5160 if we breach it. The market is still short after the bearish commentary from Haldane and Carney earlier in the week.