The Antipodean currencies ended the London session very strong against the US dollar, and of the European currencies the Swiss and Norwegian Krona were the weakest pairs. The Australian dollar looks very likely to close the week at its weekly high and has broken out of the Jan-Feb consolidation range, leaving the upside targets of 0.81350 very much in play from here.
During the first couple of hours in the US session the major indices have had a mixed day so far, with the Nasdaq (UsaTec) struggling to make gains from the futures open as Microsoft fell 1.00% and Apple is more or less a non-mover but still trading below the January 2021 opening price. The UsaTec could end the week at its lows and if it does so, that would be a Weekly Bearish Engulfing pattern, suggesting further weakness to come. There is a rising trend line that could be a target but with stimulus talks coming to a head I am not sure if we see much lower. I will have to keep an eye on how we fare next week. 12735 is a key level for me, which if tested I would like to see a quick move higher off that should we be more bullish, otherwise that would be a sign of continued bearishness in my opinion.
US flash PMI data for the Services and Composite came in better than last month and slightly above the market expectations but the US Markit Manufacturing PMI Flash reading was 58.5 as expected and below the previous month.
Good news around the vaccines came from both Pfizer and BioNTech as Israeli studies of 9000 health workers show an efficacy of 85% after a single dose. We also learned in the last 24 hours that the Serum Institute in India, the biggest supplier of vaccines, should get the go-ahead from medicines and healthcare regulators (MHRA) to produce AstraZeneca’s vaccines and will be distributing worldwide and especially 3rd world countries.
Canadian Retail sales today came in weaker than expectations and the Canadian dollar went higher. This may have caught a lot of retail traders off guard as 89% of the traders in the sentiment indicator are bullish the USDCAD currently. The USDCAD is testing 2021 lows and if they fail to offer any support here, we will have to refer to 2multi year swing lows from April and February 2018. On the daily chart the Loonie is in a very controlled descending channel from the March 2020 highs when the US dollar was a safe haven. If we print a double bottom here, we will have to take out the January 2021 swing high before I start looking for bullish trade setups.
Oil has traded lower today and has come back in under the $60 level and could drop down to $57.50 quite rapidly as the price action from after the 12th of February shows an area of imbalance which could get filled in.