EUR/USD: QE Still Likely After TLTRO. Eyes On US Retail Sales.

Article by http://growthaces.com

GROWTHACES.COM Trading Positions

USD/CAD: long at 1.1420, target 1.1600, stop-loss 1.1440

EUR/GBP: short at 0.7930, target 0.7800, stop-loss 0.7990

EUR/CHF: long at 1.2025, target 1.2040, stop-loss 1.1995

GROWTHACES.COM Pending Orders

EUR/USD: sell at 1.2560, if filled target 1.2370, stop-loss 1.2630

USD/CHF: buy at 0.9570, if filled target 0.9715, stop-loss 0.9520

USD/JPY: buy at 117.00, if filled target 119.10, stop-loss 116.40

GBP/JPY: buy at 183.50, if filled target 186.80, stop-loss 182.80

NZD/USD: sell at 0.7920, if filled target 0.7760, stop-loss 0.7980

AUD/USD: sell at 0.8390, if filled target 0.8230, stop-loss 0.8450

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EUR/USD: QE Still Likely After TLTRO. Eyes On US Retail Sales.

(sell at 1.2560)

• Banks borrowed EUR 129.84 bn of four-year loans from the ECB in its latest TLTRO round, which is in line with expectations. The total take-up amounted to EUR 212.4 bn, far short of the EUR 400 bn upper limit identified for the end of the year. Let us remind that banks are repaying earlier emergency loans given by the ECB at the height of the crisis, which means that the net impact of the fresh round of credit may be small.
• The low interest from banks now means the ECB will likely have to launch quantitative easing if it is to keep a key pledge underpinning markets, namely that it will expand its balance sheet of assets such as bonds or credit to banks by 1 trillion EUR.
• European Central Bank Executive Board member Benoit Coeure said that TLTRO uptake was within the central bank’s estimates and market expectations. He added that together with the ECB’s other measures, they created conditions that stimulate credit growth to the real economy and reduce financial fragmentation. ECB Governing Council member Erkki Liikanen said the ECB will assess the economic situation in January and assess which potential measures are most appropriate. He added that an ability to act came ahead of unanimity at the ECB in future decisions.
• French core inflation turned negative in November (-0.2% yoy), with the first drop in the indicator since records started in 1990 pointing to a growing risk of deflation in the euro zone’s economy.
• The EUR/USD traders were focused on today’s allotment of TLTRO by the ECB. The result of the auction actually met expectations. Although the number is too low to stop quantitative easing but too high to generate the EUR selling.
• Investors are also waiting for today’s U.S. retail sales reading (13:30 GMT) that could determine the direction for today. Our EUR/USD short reached the stop-loss level at 1.2450. We placed our sell order at 1.2560 now.

Significant technical analysis’ levels:

Resistance: 1.2496 (hourly high Dec 11), 1.2507 (high Dec 1), 1.2524 (high Nov 27)

Support: 1.2389 (10-dma), 1.2362 (low Dec 10), 1.2292 (low Dec 9)

USD/CAD: The Loonie Still Under Pressure Of Oil Prices

(stay long)

• Bank of Canada Governor Stephen Poloz said: “The recent weakness in oil and other commodity prices raises important risks to the economic outlook. This shock is especially complex: it is likely to boost global growth but to moderate growth and inflation in Canada, even though the effects should be tempered by exchange rate depreciation and stronger non-energy exports.”
• The Organization of the Petroleum Exporting Countries said in a monthly report that it expects demand for its oil to be 280k barrels per day lower in 2015 that it had forecast previously. The CAD retreated against USD on Wednesday, as crude prices tumbled after an OPEC forecast of sinking demand next year and data showed a spike in U.S. inventories.
• We stay USD/CAD long and our target is 1.1600. We raised the stop-loss of our position to 1.1440.

Significant technical analysis’ levels:

Resistance: 1.1503 (high Dec 10), 1.1531 (high Jul 14, 2009), 1.1600 (psychological level)

Support: 1.1448 (session low Dec 11), 1.1436 (low Dec 10), 1.1398 (low Dec 9)

NZD/USD: RBNZ Much More Hawkish Than Expected

(sell at 0.7920)

• New Zealand’s central bank held its benchmark rate steady. The Reserve Bank of New Zealand said that while inflation was low, the economy was growing strongly and expected to do so for the next two years. RBNZ Governor Graeme Wheeler said: “Some further increase in the official cash rate is expected to be required at a later stage. (…) Further policy adjustments will depend on data emerging over the assessment period.”
• The statement of the central bank was much more hawkish than expected. There were expectations the RBNZ would shift to a clear neutral stance, because of relatively strong NZD, falling prices of dairy exports (the biggest earner of New Zealand) and lower external demand. However, the central bank said the economy had been growing above trend, boosted by strong construction activity, high immigration and low rates.
• We got short on the NZD/USD ahead of the RBNZ decision at 0.7710, but after hawkish statement the rate rose to 0.7872 and our position reached the stop-loss at 0.7735. Despite hawkish rhetoric of the central bank the market does not expect interest rates hike until December 2015 at earliest. That is why the medium-term outlook for the NZD/USD remains bearish. We are looking to get short at 0.7920.

Significant technical analysis’ levels:

Resistance: 0.7837 (55-dma), 0.7872 (hourly high Dec 11), 0.7890 (high Dec 2)

Support: 0.7771 (10-dma), 0.7662 (low Dec 10), 0.7609 (low Dec 9)

AUD/USD: Short-Lived Reaction To Jobs Data

(sell at 0.8390)

• Employment rose 42.7k in November, above the median forecast of a 15.0k increase. However, all but 1,800 of those positions were for part-time work.
• The jobless rate rose to 6.3%, the highest since late 2002, from 6.2% in the previous month.
• A survey by Australia and New Zealand Banking Group showed total job advertisements rose 0.7% mom to 138,053 per week on average in November. That was the highest average since January last year.

• The reaction of the AUD/USD after the release of labor market data was short-lived. The AUD/USD jumped as far as 0.8378 but fell again below 0.8300 in the European session.
• Recent sharp falls in commodities prices, combined with a global slowdown in inflation, have revived the risk of monetary easing in Australia. Futures show around a 25% probability of a cut at the RBA’s next policy meeting in early February and are almost fully priced for a move to 2.25% by April.
• Our trading strategy for the AUD/USD is to sell at 0.8370.

Significant technical analysis’ levels:

Resistance: 0.8378 (high Dec 11), 0.8398 (high Dec 5), 0.8442 (38.2% of 0.8796-0.8223)

Support: 0.8223 (low Dec 9), 0.8195 (low Jun 9, 2010), 0.8082 (low Jun 7, 2010)

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