USD Trading Outlook
AUD/USD The below f/c China PMI wasn't enough to inspire bears to seriously test the 2014 low. A bounce off the 0.8565 area ensued in Europe as the USD began seriously slipping after USD/JPY couldn't break 119.00. AUD/USD climbed and sat near 0.8615 as NY got going. With US CPI above f/c and jobless claims better than f/c AUD/USD dipped in early NY. Buyers emerged in the 0.8590 area and a steady ascent took hold as the USD couldn't mount any meaningful bounce in NY. AUD/USD hit a 0.8641 high in NY but saw only a small pullback as it sat just above 0.8630 late in the day. The pair may squeeze higher in Asia as there is little data and the market may focus on the technical picture. A bullish hammer candle formed today and RSI turns from near oversold territory. If today's USD slide persists overnight we might see AUD/USD test the 0.8720 area as recent shorts might cover.
AUD/USD Bear pressure remained on AUD for Europe & NY. Rotations out of EUR shorts and into longs vs. AUD, NZD, CAD & JPY combined with another heavy day for iron ore to keep AUD/USD weighed down. Europe pushed the pair below 0.8430 as NY got going. NY saw an early lift as housing data was on the soft side. The pair lifted towards 0.8655 but ran out of gas. Persistent USD strength and a rebound in US bond yields saw the pair near 0.8610 before action settled near 0.8625 into the Fed minutes. The market's initial reaction the minutes was deemed dovish as the USD got hit hard. AUD/USD spiked up to 0.8658 but the move quickly reversed. All the gains were given back and a new low was set as the pair begins working through bids in the 0.8605/0.8590 region. The Nov 11 low is the last bit of support before the 2014 low comes into play. Stops are noted below 0.8590 and may get run as day/week RSIs are biased down and spreads narrow. A break of the 2014 low opens the door to the May 2010 low near 0.8066.
AUD/USD Europe erased all of Asia's gains after the RBA's Steven's warned AUD investors they underestimate the risks of an AUD decline. A quick spike lower halted at the 200-HMA which sat 0.8682 at the time. A quick rebound saw the pair back near 0.8710 after the USD softened in early NY. The pair then saw a steady ascent. The lift got an added boost from a spike up in AUD/NZD after a weak Fonterra milk auction. The lift eventually hit a NY high of 0.8735 and the pair sat just below that level late in the day. Westpac Oct Leading index and the BoJ are the main risks overnight but traders might looks to commodities for cues. Iron ore and rebar have hit new trend lows are could have AUD bulls on edge. An acceleration to the downside for those commodities is likely to keep any future AUD/USD enthusiasm tempered.
AUD/USD All of Asia's gains were erased in Europe as the USD regained its footings. AUD/USD slipped form the o/n high and sat just above 0.8730 as NY got going. The pair had been consolidating into NY's open and early action saw that theme persists. The bear won out though as the USD firmed a bit further and US bond yields recovered off their lows. The pair slipped through Europe's low and quickly hit a 0.8695 low. Some intra-day profit taking saw a bounce into Europe's close. The remainder of NY was relatively subdued and the pair sat just above 0.8710 late in the day. The RBA's minutes and RBA governor Stevens' speech are the key risks later on. The minutes are likely to be status quo and harp on AUD strength and neutral rates. Traders will keep a close ear on Stevens though. Last week RBA's Asst. Gov. Kent noted that intervention hasn't been ruled out. Should Stevens utter intervention as well traders will take notice. AUD/USD might get hit. A test of the 10-DMA and TL support near 0.8670 as well as the Nov 14 low is then likely. A break below them could indicate the recent squeeze is done & a test of the 2014 low might be due.
AUD/USD Europe attempted a break of s-t resistance near 0.8720/30 but failed as they could only reach 0.8717. A drift lower had the pair near 0.8690 as NY got going. Early NY saw the pair dive lower after the solid US retail sales data. The 200-HMA was pierced and a 0.8648 low hit. A bounce ensued as the USD weakened across the board and the pair lifted back above the 200-HMA. The above f/c U. of Mich. data weighed a bit on the pair but not enough and shorts covered in earnest as a wave of USD sales flooded the market. AUD/USD spiked higher and ran stops above 0.8730. The follow through continued into NY's afternoon and the 61.8 Fib of 0.8912-0.8540 and the Nov 3 high were pierced. A high of 0.8774 was hit. A slight pullback had the pair just below 0.8760 late in the day. the 0.8765/70 zone was pierced but the rally couldn't hold above it. However, more gains may be due as the pair holds above the 10 & 21-DMAs and a long lower wick is formed on today's candle. A test of October's high cannot be ruled out before the longer term bear trend resumes.
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