Euro (December)
Session close: Finished down more than half a penny.
Fundamentals: The Euro gapped lower on the open last night as German Chancellor Angela Merkel was unable to form a coalition government. The failure to form a coalition would lead to a new vote and Merkel followed with comments today that she would prefer such rather than conceding in negotiations. Right now, with the possibility of a re-vote, we have backed away from our immediate and long term bullish thesis until we get more clarity. The Eurozone as a whole has shown strong growth prospects and outside of this issue, we expect the Euro to strengthen. However, we also believe that today’s weakness is also due to factors other than Germany; with the Dollar up, Gold and treasuries got clobbered. ECB President Mario Draghi commented today on lagging inflation and ultimately his comments coupled with Merkel’s renewed selling pressure. ECB member Coeure speaks tomorrow at 9:00 am CT. Fed Chair Yellen, who gave here letter of resignation to leave the board once Powell is sworn in, speaks tomorrow night at 5:00 pm CT.
Technicals: Today’s price action is weak. The market gapped lower on the open last night and traded higher to cover the gap in the early hours of this morning, however, the failure to hold the recovery and then trade back to session lows opens the door for lower price action through tomorrow. Major three-star support comes in at 1.1714-1.1730 and this aligns the 50% retracement with the trend line in which price action broke out above (now coming in below at support). A close below here will spark further selling. We are now Neutral as we are looking for more clarity. Overhead resistance aligns with the 100-day moving average and today’s swing high.
Bias: Neutral
Resistance – 1.1804-1.1826**, 1.1866-1.18815**, 1.1921-1.1934***, 1.1991*, 1.2019**
Support – 1.1714-1.1730***, 1.1694**, 1.1650**, 1.15785*, 1.1481-1.15***
Yen (December)
Session close: Lost nearly half a penny on the session.
Fundamentals: The risk-on trade today put pressure on all safe haven assets with Gold taking the biggest hit. Today was a disappointing session for Yen bulls as Friday’s session showed strong prospects of a breakout coming on the heels of hawkish comments from a BoJ council member. Overall, it is surprising to see these safe haven assets take such a hit on the heels of the political news out of Germany which leads to us crediting Dollar strength for shaping up the session. All Industries Activity data is due out at 10:30 pm CT tonight.
Technicals: We remain Bullish, but our approach has been neutralized slightly in the near term after a session like today. Friday’s high of .8944 and close of .8928 was very constructive but did fall short of major three-star resistance at .8971-.8980. Today’s high edged this out at .8948 and pins a .382 retracement at .8865, a level that we will watch closely on a closing basis in order for this short-lived uptrend to stay intact.
Bias: Bullish/Neutral
Resistance – .8828**, .8971-.8980***, .9021-.9045***
Support – .8865**, .8800-.8828***, .8755-.8764**, .8639**, .8427***
Aussie (December)
Session close: Lost about 20 ticks on the session
Fundamentals: Today was an inside trading day for the Aussie, though it lost ground due to U.S Dollar strength. Traders stand by for the release of the RBA Minutes at 6:30 pm CT. RBA Governor Lowe speaks at 3:05 am CT tomorrow morning.
Technicals: Relative Strength is almost in oversold territory a 30. Price action has clung to the .7550 level in a quiet session today ahead of the RBA Minutes.
Bias: Neutral
Resistance – .7622**, .7678***, .7717-.7725***, .7780**, .7872-7902**, .7964**, .8096-.8115***
Support – .7550**, .7390****
Canadian (December)
Session close: Settled down more than a quarter of a penny on the session.
Fundamentals: The Canadian lost ground today on Crude Oil weakness but also as the U.S Dollar strengthened. NAFTA remains a headwind and talks continue today with Mexico and Canada confronting U.S auto demands. Wholesale Inventories are due out of Canada tomorrow at 7:30 am CT. We are eyeing Retail Sales on Thursday as a key number.
Technicals: Price action bled a little lower into the electronic session close and we now have first key support coming in at .7790-.7803. Major three-star support now aligns with the 200-day moving average and recent swing lows at .7727-.7745; a close below here will signal a complete failure and open the door to further selling. We remain very upbeat on the Canadian and its slow grind lower has been a constructive correction. The bulls want to achieve a close back above .7851.7856 in order to neutralize weakness and encourage the buyers to step back in.
Bias: Bullish
Resistance – .7851-.7856**, .7954***, .8019-.8035**, .8293****
Support – .7790-.7803***, .7727-.7745**, .7671**, 7550***
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