Opportunity in Currencies
Bill Baruch of Blue Line Futures - InsideFutures.com - Wed Dec 06, 4:37PM CST

FX Rundown

Euro (December)

Session close:Finished right at 1.18 down about 23 ticks

Fundamentals:The Euro edged lower on the session despite ECB board member Mersch saying how the ECB should plan for the end of bond buying and that the economic recovery will make stimulus unnecessary. Furthermore, early this morning German Factory Orders were better than expected and in the U.S ADP Payrolls and Nonfarm Productivity were both light. All in all, one would have thought the Euro would gain on the heels of this news. However, the focus remains a grind higher in the U.S Dollar on tax-reform, ahead of Nonfarm and next weeks Fed rate hike meeting with a heavy does of technicals that we discussed last night.Tomorrowbrings German Industrial Production at1:00 am CT, Eurozone GDP at4:00and a speech from Draghi at10:00.

Technicals:We have been outspoken on our long term bullish thesis but made it clear that yesterdays move into support and below the rising trend line opened the door for the bears. Price action today has fought stronger fundamentals on the session and grinded lower because of this. We are eyeing 1.1728-1.1730 as a strong buy opportunity.

Bias:Bullish/Neutral

Resistance 1.18875-1.1903**, 1.1942**, 1.19975-1.2019***, 1.2154-1.2180****

Pivot - 1.1824-1.1837

Support 1.1728-1.1730***, 1.1672**, 1.15785*, 1.1481-1.15***

Yen (December)

Session close:Settled at about .8910 and gained a quarter of a penny

Fundamentals:The Yen has been working itself higher on the session in the face of weakness in equity markets. The S&P sold off into the close yesterday and Asian markets took it on the chin overnight. The Nikkei however has cut losses in half ahead of the U.S close. Treasuries are rising along with the Yen, but Gold is the lagging musketeer. Data on Foreign Bond Buying and Investment in Japanese stocks is outtonightat5:50 pm CT. There is a 30-year JGP auction istonight. It does not look like the U.S government will shut down due to the lack of a budget deal, but traders should continue to watch for this and the Yen being a potential beneficiary. Japanese GDP istomorrowevening.

Technicals:Price action traded into R2 today but retreated to settle just below R1 at .8913-.8917. The tape needs to get out above the 9-day moving average which aligns with R2 in order to spark a bullish intermediate term setup. However, strong resistance lies ahead, a move out above here and specifically major three-star resistance will spark a short-covering rally that should garner legs.

Bias:Bullish

Resistance -.8930-.8939**, .8960**, .8982-.8995**, .9018-.9045***, .9119**, .9321-.9359****

Pivot - .8913-.8917

Support - .8880-.8884**, .8845-.88475**, .8801**, .8730***

Aussie (December)

Session close:Lost about 40 ticks on the session to .7564

Fundamentals:Aussie GDP data missed expectations last night and took the wind from the currencys sails; 2.8% YoY vs 3%. A strengthening Dollar has added to pressures making it a difficult session on the heels of a wait and see approach from the RBA earlier in the week.Tonightwill be key as it begins to round out a thick week of data and Trade Balance is due at6:30 pm CT.

Technicals:Price action has bled clearly back below .7605-.7607 and faces major three-star support at .7530-.7550 which will be a critical battle through the rest of the week.

Bias:Neutral/Bullish

Resistance - .7605**, .7645-.7676***, .7726-.7755**, .7824**, .7891-.7893***

Support - .7530-.7550***, .7390****

Canadian (December)

Session close:Lost more than half a penny on the session to finish at about .7816

Fundamentals:The Bank of Canada left rates unchanged today which was not a surprise. The verbiage though essentially closed the door on a rate hike early next year. Labor Productivity missed the market this morning and this pushed the Canadian off of session highs ahead of the meeting. The announcement itself sparked a sizable drop and signals a failure against higher prices. Weakness in Crude Oil has also weighed on price action. Building Permits are due at7:30 am CTtomorrowand Ivey PMI is at9:00.

Technicals:Price action fell short of major three-star resistance early this week and on the heels of strong data last Friday. Due to this and the failure yesterday ahead of the Bank of Canada we were clear in the FX Rundown last night on our wait and see approach and Neutralized our stance on the Canadian. This is clear technical damage and the bears are now in the drivers seat.

Bias:Neutral/Bullish

Resistance .7858*, .7897-7902*, 7922**, .7950-.7960***, .8019-.8035**, .8293****

Support - .7803**, .7730-.7745***, .7671**, 7550***

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