The past week has been very interesting due to number of publications and macroeconomic developments that have taken place. What will certainly remain in memory of investors is Wednesday OPEC agreement on cutting daily production by 1.2 million barrels to 32.5 mbd (million barrels per day) from January 2017 year. This is first such decision since 2008! Check how for this information reacted Brent and how looks current technical situation from the point of view of the individual time frames in the series “From the investor to scalper.”
Another extremely important reading were obviously popular payrolls, which proved to be extremely neutral and, after initial weakening USD situation quickly returned to normal.
One of the less important for global markets but more for our domestic currency were Friday’s news that Standard & Poor’s decided to leave the Polish rating unchanged at the current level of BBB plus, and raised the outlook to “stable”.
Let’s get to the charts …
AUDUSD
Since the beginning of the week market fluctuated around major resistance of 0.7493 what resulted in that- from Monday to Wednesday was formed a triple top formation, which results in the observed dynamic slide, which on Wednesday pierced the bottom of the growth channel. Since the emergence of a strong reaction of demand in the area of local support 0.7370 from Thursday we observed growth, which now reached the lower limit of the previous channel re-testing it from the bottom.
The rejection of this zone could pave the way for further declines what if we look at the daily chart would follow the currently prevailing downward trend. We should, however, take into account possible earlier gains, which would test the growth trend line from the bottom (as resistance) defeated in November (daily chart).
EURUSD
This week Eurodollar finished in positive territory. Taking into account the technical aspects can be seen a forming wedge formation (ascending) with relatively small dynamics of growth which does not indicate in upcoming future larger growth.
Slightly more optimistic, however, the situation looks on the week chart where we see the rejection of the very important support zone. From a technical point of view, potential growth could reach up to around the level of 1.0868 although in case of the pairs with EUR worth considering is Italian referendum, which will take place on Sunday 4 December 2016 year and can cause excessive volatility.
This day may enrol as a turning point not only for Italy but for the whole euro zone and the European Union and it is all due to vote on the proposals for changes to the Constitution concerning the reconstruction of the Senate and as a result of the elimination of the equivalent of bicameralism, introduced in 1948. This law not only introduce changes to reduce the seats in the upper house from 315 to 95 but also abolition of lifetime Senators mandates, awarded by the President of the country for former heads of state and prominent personalities and as a result of reducing the political responsibility of the Senate the second person in the country would be chairman of the Chamber of Deputies and not, as now, the head of the Senate.
GBPUSD
As we see on the daily chart, the market is almost perfectly fulfilling my pro-growth assumption about which you can read more in the series “From the investor to scalper,” as a result of the rejection of the lower limit ongoing for nearly two months growth channel for the vast majority of the week moved to north. This dynamic growth gives real hope for the continuation of growth and test in the near future neighborhood level 1.2870 coinciding with the upper limit of the channel.
What initiated the gains in the pound could be the emergence on Tuesday of minor but extremely optimistic data on money supply and loans from the UK though, as we read in Wednesday’s article, the news agency Reuters, may be due to the intervention of major investment and pension funds.
What certainly had an impact on the strengthening of the British Pound is Friday readings PMI for the construction sector, which, contrary to forecasts slightly worse at 52.2 compared to the previous reading of 52.6 in November amounted to 52.8.
USDCAD
From the very beginning of the week we saw declines, as a result of which the market on Thursday evening broke simultaneously the bottom of two channels (upward and downward), which can be a powerful signal to declines in the near future. Today, however, price oscillates around a very significant support zone, which defeated could change the attitude of the market in the long term.
The strengthening of the Canadian dollar on this week was supported by Wednesdays readings of GDP that on a monthly basis, despite the pessimistic forecasts of 0.1% compared to the previous reading of 0.2%, in September amounted to 0.3% in annual terms of 0.9% which is also a good result compared to the previous reading of -0.3%.
On Friday we met also published by Statistics Canada (Canada’s statistical office) very optimistic report on the situation on the labor market in Canada, according to which the change in employment in November positively surprised. The report pointed to employment growth in jobs 10,7K the forecasts of -20K.
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USDJPY
Despite the declines from earlier in the week, as a result of Tuesday’s and Wednesday’s dynamic growth market reached last week level of 114.70, about which I have already written many times before. According to my assumptions around this level, there was a noticeable reaction of the supply side. Whether it will be enough to change the attitude of the market and stop for longer dynamic of growth its a question , only in November US dollar strengthened against the Japanese yen of 11.16%.
From a technical point of view , potential support, to which the market could move in the next turn is around the level 111.40.
Argument in favour after bearish trend scenario can also be current situation on the graph H1, where on Thursday was formed a double top formation as a result of which declines have set new, lower lows.
What may look less optimistic is the fact that declines lacks dynamics and the current situation in the other currency pairs with JPY indicates a strong weakening of the Japanese currency as a result of which currency pairs CHFJPY and CADJPY without any problem overcome all resistance levels, which are in their way . Detailed analysis of these instruments can be found here..
What awaits us in the coming week?
Below the most important macroeconomic publications, which, in particular, we need to pay attention to in the coming week. Undeniably the most important information will be the results of the constitutional referendum in Italy, about which I wrote above.
Weekend review of markets is almost a tradition in portal Comparic.pl and comparic.com but as you probably noticed it is somewhat altered edition with quite extensive summary of the most important macroeconomic events of the past week added. Since this is the first such issue very important to me is your opinion and if you have a moment, please leave your comment below with brief information which form you prefer: purely technical or present, taking into account the most important events and macroeconomic publications. Good luck and many pips in upcoming week wishes Team Comparic.com 😉
