USD/JPY: still a case for a higher USD – Danske Bank Analysts from Danske Bank still see a case for a higher USD/JPY in the medium term and they have a target at 115 in 6M and 116 in 12M.
Key Quotes:
“USD/JPY initially broke above 114 as exit polls began to signal a clear Abe win on the election evening (CET). The relief rally faded quite quickly though, and USD/JPY dropped back below 114 again. USD/JPY remains highly correlated with yields on 10Y US government bonds and risk appetite. Further escalation in the tensions between the US and North Korea could initially lead to JPY appreciation via the risk channel.”
“Fundamentally, we still see a case for a higher USD/JPY in the medium term, driven by Fed-BoJ divergence, higher global yields (eventually) supported by global growth recovery and portfolio outflow out of Japan. We target USD/JPY at 115 in 6M and 116 in 12M.”Read More →

UK Q3 GDP: Growth remains sluggish – Wells Fargo According to analysts from Wells Fargo, sluggish GDP growth, tepid wage growth, and above-target inflation put the Bank of England in a tight quandary. They still expect the next rate hike in February and not next week.
Key Quotes:
“Data released this morning showed GDP in the U.K. expanding 0.4 percent (not annualized) in Q3. The print was 0.1 percentage points higher than consensus expectations. On a year-over-year basis, real economic growth held steady at 1.5 percent. Although a breakdown of GDP into its underlying demand components is not available at this time, examining growth data by sector reveals mixed results.”
“Output in the service sector moved in-line with total output, rising 0.4 percent over the quarter and 1.5 percent over the year. The finance and distribution, hotels & restaurants sectors were the top performers in the quarter. On the production side of the economy, output rose a solid 1.0 percent, the fastest pa..Read More →

He is playing too big a role in the tax reformIt is being reported that one of the 5 short listed candidates is now off the list for Fed chair.
Gary Cohn is reported to be off the consideration list. According to sources, Cohn is too involved with tax reform. Of course, Cohn has not always seen eye to eye with Trump on things he does and says (especially the Charlottesville white supremacist conflict).
That leaves:Jerome Powell (on current Fed board)Kevin Warsh (young but from a wealthy family who is a big Republican donor)John Taylor (considered a hawk), and current Fed Chair Yellen (liberal Democrat who has ties to Obama and likes banking regulation).And as always, the decision will come very, very, very, very, very, very soon.Read More →

Better GDP in the UK helped that currency. Lower CPI and a more dovish BOC has hurt the AUD and CAD.The GBPAUD and GBPCAD are leading the table for the largest % movers for the day. The GBPCAD is up 1.93%. The GBPAUD is up 1.95%. Pretty good moves for each.

What do the big moves do for the technicals for each of the pairs?

Looking at the daily chart of the GBPAUD, it would have been nice to have bought the pair last week when the price tested both the 100 and 200 day MAs at 1.6679. The low last week reached 1.66826. The price is now up to 1.7221. That was a nice level to get in as risk was defined and risk was limited and that was a very nice level.
But what now?
You have to continue to give the control to the buyers. The pair moved above the 1.71258-72 area today. That area has defined a bullish above and bearish below “line in the sand”. With the price above, that is the risk level for longs now, or a level to lean against on a dip (with a stop below).
How about the GBPCAD?
Looki..Read More →