Eurozone’s November preliminary HICP rates eyed

The USD tended to weaken against its counterparts yesterday and during today’s Asian session, and we expect that the Thanksgiving Holiday in the US provides an opportunity for a long weekend for traders, hence we may see thin trading conditions continuing to apply given also the low number of US releases in today’s American session, In the FX market, JPY continued to strengthen as market expectations for the BoJ to hike rates in the December meeting seem to be enhanced. North of the US border, we note the release of Canada’s GDP rate for Q3 today and a possible slowdown as expected, could weigh on the Loonie as it may add more pressure on BoC to maintain a dovish stance. On a deeper fundamental level, we note that the path of oil prices could also influence the Loonie’s direction, given Canada’s status as a major oil producing economy. For the time being the path of oil prices seems indifferent yet should rumours about OPEC extending its oil production cuts enhancing, we may see oil prices rising and thus also providing some support for the Loonie.   

On a technical level we note that USD/CAD edged lower yesterday and during today’s Asian session, aiming for the 1.3960 (S1) support line. We tend to maintain a bias for a sideways motion for the pair between the 1.4110 (R1) resistance line and the 1.3960 (S1) support base. Should the bears take over, we may see the pair’s price action breaking the 1.3960 (S1) support line taking aim of the 1.3820 (S2) support hurdle. Should the bulls be in charge of the pairs’ direction we may see USD/CAD breaking the 1.4110 (R1) resistance line, clearly, thus opening the gates for the 1.4270 (R2) resistance barrier.     

In Europe on a fundamental level, we note the political uncertainty arising in France and should it be enhanced we may see it weighing on the EUR. On a monetary level, we note that ECB’s policymaker and head of France’s central bank Villeroy de Galhau, stated that the bank may have to move beyond neutral levels, to stimulate Eurozone’s economy. The statement was in stark contrast with ECB Board Member Schnabel’s comments earlier this week, highlighting the dovish side of the bank. Should we see additional dovish comments by ECB Vice President De Guindos today, we may see them weighing on the EUR. We note though that Germany’s preliminary HICP rate for November remained flat despite predictions for a possible acceleration. We highlight today the release of Euro Zone’s preliminary HICP rate for the same month and should the rate fail to accelerate, taking the markets by surprise we may see the release weighing on the EUR as calls for a more dovish stance on behalf of the ECB could be enhanced. 

EUR/USD continued edged lower yesterday yet in today’s Asian session rose using the 1.0530 (S1) support line as a platform. We tend to maintain our bias for the sideways motion to continue given also that the RSI indicator has risen further, nearing the reading of 50, implying further easing of the bearish sentiment of the market yet failing to break above 50, which could signal a slow build up of a bullish sentiment. Should the bears take over, we may see the pair breaking the 1.0530 (S1) support line, taking aim of the 1.0450 (S2) support level. Should the buying interest be extended and turn to a bullish outlook, we may see the pair aiming if not breaking the 1.0670 (R1) resistance base.    

Other highlights for the day:

Today in the European session, we note the release of Sweden’s and France’s final GDP rate for Q3, France’s preliminary HICP rate for November, Switzerland’s GDP rate for Q3 and KOF indicator for November. Tomorrow, Saturday we note the release of China’s NBS PMI figures for November, while SNB Chairman Schlegel speaks. In Monday’s Asian session, we get Australia’s building approvals and retail sales, both for October and China’s Caixin manufacturing PMI figure for November while RBA’s Jacobs is scheduled to make statements. 

USD/CAD Daily Chart

• Support: 1.3690 (S1), 1.3820 (S2), 1.3600 (S3)
• Resistance: 1.4110 (R1), 1.4270 (R2), 1.4480 (R3)

EUR/USD Daily Chart

• Support: 1.0530 (S1), 1.0450 (S2), 1.0330 (S3)
• Resistance: 1.0670 (R1), 1.0775 (R2), 1.0935 (R3)

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