The USD maintained a sideways motion against the JPY and other currencies, as the Thanksgiving holidays passed with ease. Also, there were little if any news from the US-Sino front, hence the market sentiment did not experience a threat or a boost to move the JPY. It should be noted though that analysts are sticking to their smartphones for any new developments on the issue, as the Chinese side has vowed to impose “firm countermeasures” the US Hong Kong bill passing into law. Should the counter measures be limited to a Chinese no entry list for some US lawmakers which drafted the Hong Kong bill, the US would be off the hook quite easily, strengthening the prospects of a phase 1 deal. Should there be a harsh response from the Chinese, or generally negative headlines about the US-Sino relationships, we could see the current tranquillity abruptly ending, in the midst of a prolonged weekend pause of the markets. On the flip side, a slight euphoria for the recent positive US financial data, seems to be maintained in the market for the USD. USD/JPY maintained a very tight range bound movement, even for USD/JPY standards, between the 109.70 (R1) resistance line and the 109.00 (S1) support line. It should be noted that the pair’s price action, is currently threatening the upward trendline incepted since the 22nd of the month. Should the pair actually break the prementioned trendline, we would switch our bullish outlook for the pair in favour of a sideways motion. Should the pair’s long positions be favoured by the market, we could see it breaking the 109.70 (R1) resistance line and aim for higher grounds. If the pair comes under the selling interest of the market, we could see USD/JPY breaking the 109.00 (S1) support line and aim for the 108.35 (S2) support barrier.
…as the Looney prepares for crucial GDP release…
The Looney remained rather steady against the greenback, as it prepares for the release of the GDP growth rates. The financial data are expected to play a crucial role in BoC’s interest rate decision next week, hence CAD traders are increasingly zooming in. Should the rates slowdown as expected, we could see the Looney losing some ground as worries about a dovish stance by the BoC could rise. Also, CAD traders are expected to have one eye turned towards oil prices, which are also influenced by the US-Sino relationships. Should there be a drop in oil prices due to renewed tensions in the US-Sino relationships we could see the Looney weakening. USD/CAD also maintained a sideways movement yesterday, being comfortably between the 1.3335 (R1) resistance line and the 1.3230 (S1) support line. We maintain our bias for a sideways movement, yet the GDP release could provide some volatility for the Looney. Should the bulls dictate the pair’s direction, we could see it breaking the 1.3335 (R1) resistance line and aim for the 1.3430 (R2) resistance hurdle. If the bears take over, we could see USD/CAD breaking the 1.3230 (S1) support line and aim for the 1.3125 (S2) support level.
Other economic highlights today and early tomorrow
Today during the European session, we get Germany’s retail sales growth rate for October, France’s final GDP rate for Q3, France’s preliminary CPI (EU Normalised) rate for November, Germany’s unemployment data for November, Eurozone’s preliminary HICP rate for November and Eurozone’s unemployment rate for October. In the American session we get Canada’s GDP growth rate for September and Q3. During Saturday’s Asian morning we get China’s NBS manufacturing PMI for November. During Monday’s Asian session we get the Japan’s Jibun final manufacturing PMI for November, Australia’s building approval growth rate for October and finally China’s Caixin Manufacturing PMI for November.
USD/JPY 4 Hour
Support: 109.00 (S1), 108.35 (S2), 107.75 (S3)
Resistance: 109.70 (R1), 110.50 (R2), 111.30 (R3)
USD/CAD 4 Hour
Support: 1.3230 (S1), 1.3125 (S2), 1.3025 (S3)
Resistance: 1.3335 (R1), 1.3430 (R2), 1.3545 (R3)
