AUD/USD: 0.9085EUR/USD: 1.3795It was a mixed picture at the end of the week, with the market continuing to trade defensively, keeping one eye on what the next move will be in the Ukraine but also paying increasing attention to any comments with regards to a possible change in monetary policy from the Fed following last week’s FOMC meeting. Today looks likely to be more of the same, with the flash global PMI's data to be the focus, China being the first cab off the rank.
The dollar was generally a little bit easier on Friday as markets steadied after a volatile latter half of the week, driven by speculation over shifts in U.S. monetary policy. The main mover on the day was Oil which rose on fear of supply disruptions over Crimea and this is likely to remain a key driver of markets in the next few days as sanctions, imposed by the West, and Russia's retaliatory actions, begin to bite.
Today will see the release of the flash global PMI's and over the course of the week there is plenty of secondary data but it looks like one of being dominated by political headlines and quotes, in what looks to be a choppy but probably rather directionless few days ahead.
In a tight day's trade on Friday, the Euro continued to recover from Thursday's selloff to 1.3747, following the FOMC, and made it back to a high of 1.3810, having earlier seen a low of 1.3765.
There is not a lot of change in the technical outlook and the immediate support lies at Friday's 1.3765 low, ahead of Thursday 1.3747 base. Below here, would most likely extend to 1.3720 (weekly tenkan /50% pivot of 1.3475/1.3966), ahead of 1.3700 and then possibly to the top of the daily cloud at 1.3680. The 61.8% Fibo support is at 1.3660, which in turn lies ahead of rising trend support at 1.3630.
Given that the dollar strength was unable to follow through on Friday, the short term charts are now looking to turn higher from an oversold position although at this stage the dailies still point lower, thus giving us a rather mixed picture and I don't think we should get too married to being either long or short, looking for a directional move.
On the topside, if 1.3810 can be taken out, then we could head back to 1.3830. The 100 and 200 HMA's lie at 1.3860/75 respectively and are heading a bit lower, so these could well act as a cap on Monday. If wrong, look for further gains back to 1.3900 and possibly towards 1.3966, although it seems pretty unlikely that the Euro can head up here in the next day or two, and I suspect we could be in for some choppy 1.3750/1.3860 trade.
Keep and eye on the release of the HSBC China manufacturing PMI due later in Asia. It is expected to remain in negative territory (48.7) and anything worse than that could see traders run for the exit with regards to placing risk trades and could put the Euro under some pressure as the market runs to the safe haven of the dollar and the yen.
Later on the EU flash PMI's and the US, Markit flash manufacturing PMI will be the day's highlights, with little else of consequence, aside from some probable Russia bashing from assorted politicians.
Economic data highlights will include:
M: EU Mfg, Services, Composite PMI’s, US Markit Mfg PMI.
T: German IFO. US Consumer Confidence, New Home Sales, Case Schiller House Price Index, Richmond Fed Mfg Activity
W: German Consumer Confidence, US Durable Goods, Services PMI, US Banks Stress Test Info.
T: US GDP, Jobless Claims, Pending Home Sales
F: German Retail Sales, US Personal Consumption Expenditure, Personal Spending, Rts/Michigan Consumer Sentiment Index
Jim LanglandsFX Charts www.fxcharts.com.au
