USD Strength Resumes, OPEC Leaves Oil Flow Unchanged Nov. 28, 2014
OPEC Holds Production Levels, USD Strength Continues For Now
There are several theories that have been discussed as to why OPEC would see it in their interest to leave out put at the same levels but when it comes to commodities the strength of the USD always comes into play since they are all priced in USD. Having said that most all of the other arguments are valid even if a little less plausible. At this point all concerned are doing what they think is best for them self and the strength of the USD should continue due to the US being the cleanest dirty shirt in the mud pile today. This is likely to continue for the short to medium term until we start seeing impacts down the road in US data. We will have to wait and see since it will probably take until next year to see the shale producers start to fall in the US and other oil producers get hurt as well. We may just get another OPEC meeting sooner than many think since I did see I was wrong about break even prices for most producing countries yesterday. I was going by old figures and the more up to date data shows most producers need at least $80 -$100 a barrel oil to turn profit. As things progress and those countries have to reshuffle their books things could fall apart sooner rather than later and OPEC will cut production then.
EUR/USD Reverses For Intraday Push
The Reversal on the EUR/USD yesterday didnt quite make it to the best level for the turn but did push off and finished the push during Asia this morning. At this point its still best to keep an open mind on direction unless we get some conviction below the 1.2442 level during London later today. Any conviction during Asia has a higher probability of being a fake out so if that does happen I will be cautious and look for London to agree. Otherwise I will be open for the long at 1.2444 or Asian lows during the London session. If it does manage to push up and widen the Asian range I will look for a short set up at the Asian highs but any push above will likely test the 1.2500 level which is a risky place for a short even though its valid.
GBP/USD Hits Stops and Reverses
The GBP/USD reversal after taking stops to the highs of the first push up does add probability to the full three push reversal to the downside. Its already showing conviction below yesterdays lows but as with the EU is more than likely false. At this point I will be slightly bias for the short today but will be cautious as well. The best level to short will be the Asian highs as of now but would be better to see them hold price below yesterdays lows at 1.5715 and test there with a set up during the London session. I will be open for the long at the Asian lows but if they hold below 1.5715 then my bias for the short will hold.
EUR/JPY Undecided, Still Holding Range
With the EUR/JPY still holding the range again I will be looking at the highs of 147.39 for the short or the 146.41 for the long as the safer entries. If we do get some conviction above 147.39 then I will be bias for the long and look for a set up at either yesterdays highs or the backside of 147.39 if they push far enough away during a conviction move.
Forex News Today
News releases start early with German Retail Sales and UK Nationwide HPI at the Frankfurt open. The German data has the bar set high with a sizable improvement so the chance for a disappointment is better but if its close to expectations we may see some Euro strength. The UK housing data is expecting a small drop so should be close. If it disappoints big then GBP weakness should come in even if its only via the EUR/GBP. Later is the higher impact Euro Zone CPI release so baring large misses on previous data they will likely wait for this release. What to watch for is a disappointment that is close to or below zero. If that happens the Euro should drop as more QE comes in play. Otherwise if its close we wont see much movement on it.
Have a great weekend
MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!
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