Daily Forex Preview for September 19th 2014

The FX markets were relatively quiet post FOMC day with the Yen weakening across the board and taking most of the Yen crosses to new highs, especially the GBPJPY, EURJPY and USDJPY with the rally showing no signs of exhaustion. Despite soft US data, the Greenback was steady against most of its peers.

The British Pound rallied yesterday as the Scottish Vote was underway indicating that the markets are expecting to see a ‘No’ vote. Scottish independence vote results are expected to be announced later today which could see some more action in the GBP crosses.

The ECB completed its first round of TLTRO lending, totaling €82bn, as banks, already awash with cash, shied away from taking the loans, despite the throw away interest rates. This hints at the possibility that the ECB is looking at a larger ABS purchase program. The ECB also released a press note that the rotational voting system will come into effect in January 2015. Germany, the hawk in the ECB will be sitting out for two months and the markets will certainly keep an eye on the ECB’s press conferences during these two months.

Economic data for today is relatively soft with the exception of Canada which will be publishing the monthly CPI and wholesale sales.

Fundamentals Recap – September 18, 2014

• New Zealand quarterly GDP beats estimates rising 0.7% v/s 0.6% consensus
• BoJ Governor Kuroda speech
• Switzerland Libor rate unchanged. SNB pledges the EURCHF 1.2 peg
• UK Retail sales m/m rises 0.4% as expected
• ECB’s Targeted LTRO offering lends 82.6bn
• US Building permits decline to 1mn
• US weekly unemployment claims fall to 280k v/s 312k
• US housing starts decline 0.96mn
• Philly Fed manufacturing index drops to 22.5 v/s 22.8 estimates and below 28 from previous month

Fundamentals – September 19, 2014

• New Zealand visitor arrivals m/m declines -3%
• New Zealand Credit Card spending y/y rises 4.2%
• German PPI m/m expected to be unchanged at -0.1%
• Eurozone Current Account to widen to 14.3bn
• Canada Core CPI m/m to rise 0.2%
• Canada Wholesale sales m/m to rise 0.8%
• Canada monthly CPI to decline -0.1%

EURUSD Daily Pivots

EURUSD continues to consolidate and is currently trading within a bearish flag pattern after making a low at around 1.28333 during the FOMC minutes. The pair has managed to rally since then but the downside pressures still persist. A break of the bearish flag consolidation will likely put further downside targets for the Euro. The key risk comes from German PPI and partly the current account balance for the Eurozone.

USDJPY Daily Pivots

There is a bearish divergence being formed as indicated by the Stochastics oscillator, provided we see a crossover on the H1 charts as price makes a higher high. Indicative of a corrective move towards 108.483 which comes just a few pips below today’s daily pivot level. The stochastics however is well settled in the overbought region across the H4 and daily time frames indicating a continued momentum to the upside.

GBPUSD Daily Pivots

GBPUSD saw a positive day yesterday making a higher close with the bullish momentum seemingly continuing into today’s trading session. The pair is however susceptible to the results of the Scottish independence vote which would be announced today. Bookmarkers and general opinion has been putting the verdict to the ‘No’ side which if true could