MNI Europe Morning FX Analysis: Unwinding RBNZ Easing Bets Fuels Kiwi's Surge

FOREX: Unwinding RBNZ Easing Bets Fuels Kiwi Surge

The RBNZ's MPS & subsequent press conference put a strong bid into the kiwi. New Zealand's central bank left its OCR & asset-purchase scheme settings unchanged, while delivering on its promise to unveil the design of a Funding for Lending Programme (FLP), to be rolled out within weeks. RBNZ easing bets were pared as policymakers tipped hat to the relative resilience of domestic economy (with caveats, stressing downside risks and lingering uncertainty) and moved the trough of their "unconstrained OCR track" 90bp higher. In addition, RBNZ Gov Orr used his presser to call the inevitability of negative interest rates into question, noting that "it's too early to tell" if we will see a sub-zero OCR. Numerous sell-side desks backpedalled on their expectations of a negative OCR, while local money markets no longer price such a scenario during 2021.

• The kiwi easily topped the G10 pile and NZD/USD surged to a 19-month high, briefly showing above the $0.6900 mark. AUD/NZD dipped through its 200-DMA and tested key support from Oct 30 low, but rejected that level for now. A spill-over from NZD strength bolstered AUD against other G10 currencies.
• USD struggled, lagging behind all of its G10 peers save for sterling. GBP consolidated Tuesday's gains, nudging the recovery high to $1.3280($1.3278 Nov10), but seeing some profit take counter into Europe.
• Greenback sales allowed USD/CNH to grind lower still, as the rate hovers near cycle lows. USD/KRW printed worst levels since Jan 31, 2019, defying pressure from a bleak labour market report released out of South Korea. On the plus side, early South Korean trade figures pointed to a continued recovery in exports.
• Today's data-light calendar features a speech from ECB's Lagarde and Riksbank's Financial Stability Report. The U.S. observes the Veterans' Day holiday.

MNI FX TECHNICALS: 

EUR/USD: Bullish Focus

• RES 4: 1.2011 High Sep 1 and major resistance
• RES 3: 1.1981 2.0% 10-dma envelope
• RES 2: 1.1971 3.0% Upper Bollinger Band
• RES 1: 1.1920 High Nov 9
• PRICE: 1.1825 @ 05:50 GMT Nov 11
• SUP 1: 1.1773 20-day EMA
• SUP 2: 1.1752 50-day EMA
• SUP 3: 1.1711 Low Nov 5
• SUP 4: 1.1603 Low Nov 4 and the bear trigger

EURUSD retraced Monday and was broadly flat Tuesday. The recent move lower is considered a correction with the pair maintaining a bullish tone following last week's gains and breach of 1.1881, Oct 21 high. The break higher paves opens 1.2011, Sep 1 high. A break of 1.1920, Monday's high would resume the uptrend. On the downside, key support has been defined at 1.1603. A move below this support is required to reinstate a bearish threat.

GBP/USD: Bullish Price Structure

• RES 4: 1.3357 High Sep 3
• RES 3: 1.3319 High Sep 4
• RES 2: 1.3292 76.4% retracement of the Sep 1 - 23 sell-off
• RES 1: 1.3280 Intraday high
• PRICE: 1.3260 @ 05:53 GMT Nov 11
• SUP 1: 1.3157 Low Nov 10
• SUP 2: 1.3093 Low Nov 6
• SUP 3: 1.3051 20-day EMA
• SUP 4: 1.2911 Low Nov 3

GBPUSD started this week on a strong note following last week's gains and remains firm. Importantly, the pair has breached key resistance at 1.3177, Oct 21 and Nov 6 high. The break above this level signals scope for further strength with attention on 1.3292 next, 76.4% of the Sep 1 - 23 sell-off. Note that price has traded through the 61.8% retracement at 1.3174. Initial support lies at 1.3157 ahead of Friday's 1.3093 low.

EUR/GBP: Bearish Trend Sequence Extends

• RES 4: 0.9149 Oct 20 high
• RES 3: 0.9107 High Oct 23
• RES 2: 0.9064/69 Trendline drawn off the Sep 11 high / High Nov 5
• RES 1: 0.8982 High Nov 10
• PRICE: 0.8917 @ 06:00 GMT Nov 11
• SUP 1: 0.8884 Low Nov 10
• SUP 2: 0.8866 Low Sep 3 and a key support
• SUP 3: 0.8830 Low May 15
• SUP 4: 0.8748 61.8% Feb - March Rally

EURGBP traded sharply lower Tuesday clearing 0.8946, Nov 4 low, the bear trigger, as well as the 200-dma. The break lower negates a recent bullish candle pattern and confirms a resumption of the underlying downtrend that has been in place since Sep 11. Note too that trendline resistance drawn off the Sep 11 high remains intact, reinforcing the current bearish theme. Attention is on 0.8866, Sep 3 low. Initial resistance is at 0.8982, Nov 10 high.

USD/JPY: Bullish Engulfing Candle Still In Play

• RES 4: 106.55 High Sep 3
• RES 3: 106.11 High Oct 8
• RES 2: 105.88 100 dma
• RES 1: 105.65 High Nov 9 and the intraday bull trigger
• PRICE: 105.21 @ 06:04 GMT Nov 11
• SUP 1: 104.42 50.0% retracement of yesterday's range
• SUP 2: 103.18/09 Low Nov 6 / Low Mar 12 and key support
• SUP 3: 102.02 Low Mar 10
• SUP 4: 101.29 Bear channel base drawn off the Mar 24 high

USDJPY rallied sharply higher Monday defining a key short-term support at 103.18, Nov 6 low. The pair remains bullish. In candle terms, Monday's price pattern is a bullish engulfing line highlighting a potential reversal in sentiment. A break of 105.65, the Monday high would reinforce this set-up and signal scope for a climb towards the 100-dma at 105.88 and the early October highs of 106.11. Initial support is seen at 104.42, 50.0% of Monday's trading range.

EUR/JPY: Bullish Following Bear Channel Breakout

• RES 4: 127.08 High Sep 1 and primary resistance
• RES 3: 126.46 High Sep 10
• RES 2: 125.79 76.4% retracement of the Sep - Oct Sell-Off
• RES 1: 125.13 High Nov 9
• PRICE: 124.43 @ 06:11 GMT Nov 11
• SUP 1: 123.99 Low Nov 10
• SUP 2: 122.69 Low Nov 9
• SUP 3: 122.21 Low Nov 5
• SUP 4: 121.62 Low Oct 30 and key support

EURJPY traded sharply higher Monday and maintains a positive tone with recent gains signaling a reversal of the recent bearish theme. The cross has convincingly breached resistance highlighted by the 20- and 50-day EMA's. Furthermore, the cross has also cleared its bear channel resistance drawn off the Sep 1 high. This has opened 125.79, a Fibonacci retracement ahead of the early September highs of 126.46. Support is at 122.69.

AUD/USD: Consolidating But Remains Bullish

• RES 4: 0.7414 High Sep 1
• RES 3: 0.7376 3.0% 10-dma envelope
• RES 2: 0.7345 High Sep 16
• RES 1: 0.7340 High Nov 9
• PRICE: 0.7308 @ 06:15 GMT Nov 11
• SUP 1: 0.7239 Low Nov 6
• SUP 2: 0.7145 Low Nov 5
• SUP 3: 0.7094 Former trendline resistance drawn off the Sep 1 high
• SUP 4: 0.7049 Low Nov 4

AUDUSD is consolidating but maintains a bullish tone. The pair rallied sharply higher last week reinforcing the significance of the recent trendline break drawn off the Sep 1 high. Gains on Nov 5 also resulted in a break of 0.7243, Oct 9 high. With bullish conditions strengthened, scope is seen for a climb towards 0.7345 next, Sep 16 high. Initial firm support is seen at 0.7145. A break would undermine the current bullish outlook.

USD/CAD: Bearish Theme Dominates Following Recent Weakness

• RES 4: 1.3300 High Nov 4
• RES 3: 1.3208 50-day EMA
• RES 2: 1.3178 High Nov 5
• RES 1: 1.3081 Low Oct 21
• PRICE: 1.3032 @ 06:27 GMT Nov 11
• SUP 1: 1.2929/17 Low Nov 9 / Low Oct 16, 2018
• SUP 2: 1.2897 2.0% 10-dma envelope
• SUP 3: 1.2857 Low Oct 4, 2018
• SUP 4: 1.2783 Low Oct, 1 2018 and a key support

USDCAD traded lower Monday extending the most recent sell-off from 1.3390, Oct 29 high and remains bearish. More importantly, the pair has cleared the Dec 31 2019 lows, hitting the lowest level since mid-2018 in the process. Various levels of support, most notably 1.2952, the Dec 2019 low gave way Monday. This reinforces the bearish theme and opens 1.2917 and 1.2857, Oct 16 and Oct 4, 2018 lows respectively. 1.3081 is a firm resistance.

MNI KEY LEVELS: 

EUR/USD: MNI Key Levels

• $1.2011 YTD Sep01 high
• $1.1966/88/91 Aug18 high/Upper Boll Band (3%)/Upper 2.0% 10-dma env
• $1.1916/20/29 Upper Boll Band (2%)/Nov09 high/Sep02 high
• $1.1887 76.4% 1.1920-1.1780
• $1.1867/73 61.8% 1.1920-1.1780/Upper 1.0% 10-dma env
• $1.1850/60 100-mma, 50% 1.1920-1.1780/Nov05 high
• $1.1833/39/43 Intraday high, 38.2% 1.1920-1.1780/100-hma/Nov10 high
• $1.1823 ***CURRENT MARKET PRICE 05:11BST WEDNESDAY***
• $1.1812 Cloud top, Intraday low
• $1.1783/80 55-dma/Nov10 low
• $1.1773/72 50-dma/21-dma
• $1.1762/61/58 50% 1.1603-1.1920/Cloud base/200-hma
• $1.1724/11 61.8% 1.1603-1.1920/Nov05 low
• $1.1696/78 100-dma/76.4% 1.1603-1.1920
• $1.1638/30/03 Lower 1.0% 10-dma env/Lower Boll Band (2%)/Nov04 low

GBP/USD: MNI Key Levels

• $1.3477/82 Upper3.0% 10-dma env/YTD Sep01 high
• $1.3403 Sep02 high, Sep02 high
• $1.3376/88 1.618% swing 1.3177-1.2855/Upper Boll Band (3%)
• $1.3357 Sep03 high
• $1.3346 Upper 2.0% 10-dma envelope
• $1.3319 Sep04 high
• $1.3273/80/92 Upper Boll Band (2%)/Intraday high, Sep07 high/76.4% 1.3482-1.2676
• $1.3261 ***CURRENT MARKET PRICE 05:26BST WEDNESDAY***
• $1.3254 Intraday low
• $1.3215/08 Upper 1.0% 10-dma env/Nov09 high
• $1.3169 100-hma
• $1.3157 Nov10 low
• $1.3119 Nov09 low
• $1.3093 Nov06 low
• $1.3079 Cloud top

EUR/GBP: MNI Key Levels

• Gbp0.9060/69/74 55-dma/Nov05 high/50-dma
• Gbp0.9048/49/55 Nov09 high/100-dma/Nov06 high
• Gbp0.9026 21-dma
• Gbp0.9000 200-hma
• Gbp0.8982/83/91 Nov10 high/10-dma/100-hma
• Gbp0.8946 Nov04 low
• Gbp0.8917/26 Intraday high/200-dma
• Gbp0.8914 ***CURRENT MARKET PRICE 05:34BST WEDNESDAY***
• Gbp0.8912/02 Lower Boll Band (2%)/Intraday low
• Gbp0.8900/95 Sep04 low/Lower 1.0% 10-dma env
• Gbp0.8884 Nov10 low
• Gbp0.8866/64/55 Sep03 low/Jun09 low/Lower Boll Band (3%)
• Gbp0.8830/26/21 May15 low/May14 low/100-wma
• Gbp0.8815/08/05 200-wma/May13 low/Lower 2.0% 10-dma env
• Gbp0.8794 50-mma

USD/JPY: MNI Key Levels

• Y105.85 Oct12 high
• Y105.75 Oct20 high
• Y105.65 Nov09 high
• Y105.62 Upper 1.0% 10-dma envelope
• Y105.53 Cloud top
• Y105.49 Nov10 high
• Y105.25/31/32 50-dma/55-dma/Intraday high, Cloud base
• Y105.19 ***CURRENT MARKET PRICE 05:43BST WEDNESDAY***
• Y105.01 Intraday low
• Y104.82 Nov10 low
• Y104.78/71 21-dma/38.2% 103.18-105.65
• Y104.65 Cloud Kijun Sen
• Y104.54 Nov05 high
• Y104.44 200-hma
• Y104.42 Cloud Tenkan Sen, 50% 103.18-105.65

EUR/JPY: MNI Key Levels

• Y125.39 Upper 2.0% 10-dma envelope
• Y125.22 Upper Bollinger Band (2%)
• Y125.21 200-wma
• Y124.96 50-mma
• Y124.93 Fibo 38.2% 149.78-109.57
• Y124.73 Cloud top
• Y124.46 Intraday high
• Y124.41 ***CURRENT MARKET PRICE 05:48BST WEDNESDAY***
• Y124.17/16 Intraday low/Upper 1.0% 10-dma env
• Y124.14 Cloud base
• Y124.09 55-dma
• Y123.91 50-dma
• Y123.81 100-dma
• Y123.44 100-hma
• Y123.38 Cloud Kijun Sen, Cloud Tenkan Sen

AUD/USD: MNI Key Levels

• $0.7484 Jul09-2018 high, Jul10-2018 high
• $0.7453/64 Aug09-2018 high/Jul25-2018 high
• $0.7423 Upper Bollinger Band (3%)
• $0.7403/14 Upper3.0% 10-dma env/YTD Sep01 high
• $0.7382 Sep02 high
• $0.7331/40 Upper 2.0% 10-dma env/Sep03 high, Nov09 high
• $0.7318/29 Intraday high/Upper Boll Band (2%)
• $0.7305 ***CURRENT MARKET PRICE 05:53BST WEDNESDAY***
• $0.7276/74 Intraday low/100-hma
• $0.7259/53 Upper 1.0% 10-dma env/Nov10 low, 50-mma
• $0.7242/39 200-wma/Nov06 low
• $0.7210 Cloud top
• $0.7191/80/76 55-dma/200-hma/50-dma
• $0.7159/45 Cloud base/Nov05 low
• $0.7143/41 21-dma/100-dma

USD/CAD: MNI Key Levels

• C$1.3177/78/90 50-mma/Nov05 high/55-dma
• C$1.3158/59 21-dma/200-wma
• C$1.3135 200-hmaC$1.3097 Nov06 high
• C$1.3068 Nov09 high
• C$1.3051 Nov10 high
• C$1.3035/44 100-hma/Intraday high
• C$1.3033 ***CURRENT MARKET PRICE 05:56BST WEDNESDAY***
• C$1.3009/00 Intraday low/Lower 1.0% 10-dma env
• C$1.2985 Nov10 low
• C$1.2966 Lower Bollinger Band (2%)
• C$1.2929/17 YTD Nov09 low/Oct16-2018 low
• C$1.2891 Oct05-2018 low
• C$1.2869/68 Lower Boll Band (3%)/Lower 2.0% 10-dma env
• C$1.2857 Oct04-2018 low

OPTIONS: Expiries for Nov11 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1650-55(E1.1bln), $1.1770-80(E820mln),
  $1.1800-10(E982mln), $1.1830-35(E1.1bln)
• USD/JPY: Y104.00($550mln), Y105.25-37($668mln)
• GBP/USD: $1.3150(Gbp479mln-GBP calls), $1.3275(Gbp428mln-GBP calls)
• USD/CNY: Cny6.5877($500mln), Cny6.63($830mln), Cny6.65($965mln-USD puts), Cny6.70($625mln)

Larger Option Pipeline

• EUR/USD: Nov13 $1.1840-55(E1.1bln), $1.2000(E1.78bln-EUR calls); Nov16 $1.1500(E1.1bln);
  Nov17 $1.1850(E1.3bln-EUR calls), $1.1895-1.1905(E1.1bln)
• USD/JPY: Nov12 Y103.00($1.9bln-USD puts), Y105.40-50($1.5bln); Nov13 Y101.00($995mln-USD puts)
• EUR/JPY: Nov16 Y123.00(E1.25bln)
• EUR/AUD: Nov12 A$1.6520(E973mln)
• AUD/NZD: Nov16 N$1.0650(A$1.3bln)
• USD/CNY: Nov13 Cny6.60($1.1bln); Nov20 Cny6.60($1.0bln), Cny6.90($2.0bln)