Currencies continued moving with high volatility yesterday, as dollar started the day recovering against most rivals, even breaking trough key supp/resist. zone, to end the day losing after signs from the Federal Reserve that a rate cut is not - despite previous speeches indicating otherwise - out of the question. Only Japanese yen was unable to recover the lost ground in early Asian and European session, closing the day down against greenback. The rally against greenback was triggered by the publication of the Beige Book that reported the U.S. housing sector remains "quite depressed" with a turnaround not foreseen until late 2008, while, inflation remains under wraps, making more plausible a third rate cut. Anyway, today we expected another interesting day full of macroeconomic data, starting with:
02:00 GBP Nationwide Houses Prices, for November, MoM (Expected 0.1% Previous 1.1%) and YoY (Expected 8.3% Previous 9.7%)
04:30 GBP M4 Money Supply for October MoM (Previous 0.1%) and YoY (Previous 11.8%)
04:30 GBP Mortgage Approvals (Expected 95K Previous 102K)
08:30 US GDP-Prel. Q3 (Expected 4.9% Previous 3.9%) Chain Deflator-Prel Q3 (Expected 0.8% Previous 0.8%): The Gross Domestic Product is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output; the broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Included on GDP, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure.
08:30 US Initial Claims 11/24 (Expected 330K Previous 330K): This weekly report, measure the number of filings for state jobless benefits; but the important number here is the 4 weeks average, that can show us the underlying trend. It usually provokes small reactions in the market.
10:00 US New Home Sales Oct (Expected 750K Previous 770K): This report measures the annualized number of new residential buildings that were sold during the previous month. The most damage sector of the American economy will be closely watched tomorrow.
EUR/USD is right now at 1.4827 slightly bearish in 4 hours charts, as the pair seems to be forming a descendant channel in that time frame. A continuation above 1.4845, will find is next resistance around 1.4867, a descendant trend line that if broken could send the pair to the zone around 1.4890, followed by 1.4910, and finally 1.4935. Under 1.4809, the pair will find its first important support at the zone around 1.4780, followed by 1.4750, and finally 1.4711, yesterday’s minimum.
USD/JPY is quoting at 110.17 bullish after breaking the daily descendant trend line that guided the pair these last days. Correcting from yesterday’s high, the pair will find its first support at 110.04, followed by 109.85, then 109.56, 109.20 and finally the zone around 108.90. Resistances in case of a continuation will be at 110.47, followed by the zone around 110.60, 110.90 and finally 111.08.
GBP/USD is right now at 2.0765, correcting yesterday’s run but still bullish in bigger charts. Above 2.0796, the pair could easily continue to 2.0830, followed by the zone around 2.0860, 2.0905 and finally 2.09945. Supports today will be at 2.0731, followed by the zone around 2.0695, 2.0660, 2.0635 and finally 2.0606, a 4 hours ascendant trend line.
Have a great trading day!