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FX Daily Hotline 
29 January 2016     By C Dichio, Analyst

Chart of the day: Sterling recovery v Yen gathers speed...

 

Currencies had already started to recover against the Japanese Yen, often the declines had become oversold, such as for the British Pound shown on the right.  Note the very low level of the RSI indicator this month to this effect.  The Bank of Japan's decision to introduce a negative interest rate (-0.1% for the benchmark rate), for the first time, has quickened the short-term rally this morning, where Sterling was trading at Y173.525 a short time ago.  The rate is heading for potential resistance at the 50-day Moving Average.  That line currently stands around Y175.90.

 

Daily Comment:

 

The Australian Dollar appears on the 'Gainers' list versus the US Dollar with +0.8%.  The Aussie has extended its recovery from oversold within the prior medium-term trading band.  The failed break under that range has also raised hopes for a further 'bear trap' rally, possibly towards the upper boundary near US$0.74.  One observes that the 200-day Moving Average is close to that barrier, and may also offer resistance when/if it is approached.

The Greenback has extended its correction from overbought against the Canadian Dollar.  The rate probes potential support in the C$1.40-1.38 area; near the 50-day MA.  We will consider buying the US unit if support is established hereabouts (see also hotlines for 25 and 27 January), especially should that occur on a dynamic up move.

Recording a 2.3% loss, the US currency has continued to unwind from the overbought all-time high against the Russian Ruble.  That peak was plotted at RR85.9573 on 21st of the month.  The pullback approaches potential support at the shorter-term MA line, which is currently drawn near RR73.2000.

The US$ similarly reacts from the overbought all-time high versus the Mexican Peso.  That pinnacle was also drawn on 21 January, at MP18.8024.  The move through MP18.4000 on Thursday has generated a bearish P&F Breakout signal on the automated scanner.  While some further correction is possible over the short term, on a longer-term basis, one would point out that uptrend support has been offered by the 100-day MA since August 2014.

This morning, one notes that the Euro is experiencing an off day (The main exception is against Japan's Yen.)  The example is against the British Pound, where the single European unit was trading at �0.7573 a little while ago.  The Euro is potentially reasserting the correction from the overbought high at �0.7756.

 

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
GBPJPYGBP/Japanese Yen170.648+1.0%
AUDJPYAustralian Dollar/Japanese Yen84.174+0.9%
GBPUSDBritish Pound/US Dollar1.4362+0.9%
AUDAustralian Dollar/US Dollar0.7084+0.8%
GBPCHFGBP/Swiss Franc1.456+0.8%
Top 5 Losses.
SymbolStockClose% Change
RUBRussian Ruble per 1 US Dollar76.3-2.3%
ZARUS$/South African Rand16.1978-1.5%
TRYNew Turkish Lira per 1 US Dollar2.9692-1.1%
EURZAREuro/South African Rand17.7132-1.1%
MYRUS$/Malaysian Ringgit4.2055-1.1%
    
The FX Model Portfolio
Date Stock Code Type Open Price Current Price % P&L Target Stop
11 Jan 2016 South Korean Won per 1 US Dollar KRW Long 1208.72 1208.55 -0.01% 1160
18 Jan 2016 US$/Norwegian Krone NOK Long 8.9011 8.6135 -3.23% 8.4
  • We watch to buy US$ v C$.

 

Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
DXYUS Dollar IndexS-t gradual ranging advance slows on the approach to stiff resistance at the early-December high.98.614-0.4% 96.466/97.19100.51
EUREuro/US DollarRanging beneath resistance near the 'Peak' KDR of 15 Dec following the early-Dec upward dynamic.1.094+0.4% 1.0524/1.07111.1495/1.106
GBPUSDBritish Pound/US DollarRenews the small recovery from oversold.1.4362+0.9% 1.3503/1.4081.5242/1.4969
CADUS$/Canadian DollarCorrection from overbought probes potential support starting near 1.4.1.4029-0.5% 1.2832/1.38021.4948/1.469
JPYUS$/Japanese YenReasserts the recovery from prior support at the late-Nov 2014 low (115.57).118.82+0.1% 105.23/115.57123.76/118.38
ZARUS$/South African RandDrifting beneath the overbought all-time high.16.1978-1.5% 14.8084/16.356917.9169
KRWSouth Korean Won per 1 US DollarReasserts the uptrend after correcting from overbought.1208.55+0.5% 1162.4/1192.021277.85/1242.53/1216.23
CHFUS$/Swiss FrancHolds the ranging s-t advance from the Dec low towards the late-Nov high.1.0138-0.1% 0.9476/0.97861.0328/1.0125
EURGBPEuro/Pounds SterlingPossibly reasserting the advance after the correction from overbought.0.7618-0.5% 0.7305/0.75260.7875/0.7756
EURJPYEuro/Japanese YenRecovery from the April 2015 floor (126.1) probes potential resistance near 130.129.99+0.5% 118.73/126.1134.6/130?
EURCHFEuro/Swiss FrancExtends the overbought rally from the m-t range.1.1092+0.3% 1.0531/1.07131.2097
GBPJPYGBP/Japanese YenRecovers from oversold having found support near the Feb 2014 low (163.889).170.648+1.0% 163.889/163.986188.813
GBPCHFGBP/Swiss FrancReasserts the counter rally from oversold. Probes supply starting near the sideways area around 1.46.1.456+0.8% 1.3817/1.41211.4944/1.4646?
CHFJPYSfr/Japanese YenOversold decline from the Dec ceiling finds support at 115.353.117.208+0.3% 114.085/115.353?124.048/118.939
AUDJPYAustralian Dollar/Japanese YenRecovery from oversold probes potential resistance at the 50-day MA.84.174+0.9% 74.482/79.21790.728/83.529?
AUDAustralian Dollar/US Dollar'Bear trap' recovery from oversold. Points towards resistance near the 200-day MA.0.7084+0.8% 0.6771/0.68270.744/0.049


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