Australian Dollar Talking Points
AUD/USD retraces the decline from late last week even as the G7 Summit does little to ward off the threat for a global trade war, and the pair may continue to catch a bid over the next 24-hours of trade as the recent pickup in market sentiment appears to be gathering pace.
AUD/USD Outlook Mired by Failed Attempt to Break Trendline Resistance
Following the reaction to the Australia’s 1Q Gross Domestic Product (GDP) report, recent developments in AUD/USD raises the scope for a more meaningful recovery as the pair breaks out of a near-term range.
Even though the Reserve Bank of Australia (RBA) remains in no rush to lift the cash rate off of the record-low, indications of stronger-than-expected growth may push the central bank to gradually change its tune in the second-half of the year, with the improvement in risk appetite likely to keep AUD/USD afloat ahead of the meeting minutes due out on June 18 as the rebound from the May-low (0.7412) continues to unfold.
Keep in mind, a marked slowdown in Australia Home Loans may rattle the aussie-dollar exchange rate as Governor Philip Lowe and Co. warns that ‘the level of household debt remains high,’ but the RBA Minutes may heighten the appeal of the Australia dollar as ‘members agreed that it was more likely that the next move in the cash rate would be up, rather than down.’ With that said, AUD/USD may make another attempt to threaten the downward trend from earlier this year as bullish momentum appears to be gathering pace, with a break of trendline resistance raising the risk for a more meaningful recovery in the exchange rate.
AUD/USD Daily Chart
- String of lower-highs may produce a larger pullback in AUD/USD as the near-term rebound appears to be stalling ahead of trendline resistance, with a break/close below 0.7590 (100% expansion) bringing the downside targets back on the radar.
- However, the 0.7650 (38.2% retracement) remains on the radar as the Relative Strength Index (RSI) extends the bullish formation carried over from the previous month, with a close back above the stated region raising the risk for a run at the Fibonacci overlap around 0.7720 (23.6% retracement) to 0.7770 (61.8% expansion).
- Next region of interest comes in around 0.7850 23.6% retracement) to 0.7860 (61.8% expansion) followed by the overlap around 0.7930 (50% retracement) to 0.7940 (61.8% retracement), which sits just above the March-high (0.7916).
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— Written by David Song, Currency Analyst
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Bitcoin Net-Longs Slide Into 1-Month Lows
Bitcoin Net-Shorts 5.2% Higher Since Last Week
Bitcoin: Retail trader data shows 76.8% of traders are net-long with the ratio of traders long to short at 3.3 to 1. The number of traders net-long is 1.1% lower than yesterday and 8.0% lower from last week, while the number of traders net-short is 0.5% lower than yesterday and 5.2% higher from last week.
Be sure to check out our Bitcoin Trading Guide if you’re new to cryptocurrencies!
Bitcoin Net-Long Dip Indicate Bullish Bias
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Bitcoin price trend may soon reverse higher despite the fact traders remain net-long.
— Written by Yayati Tanwar, DailyFX Research
Canadian Dollar (CAD) Eyes Latest Inflation Report
Canadian Dollar Price, News and Analysis
- Inflation expected unchanged, but any uptick could seal another rate hike in October.
- Canadian economy continues to grow strongly.
Canadian Dollar May Receive a Boost on Latest Inflation Report
The Canadian dollar is currently treading water ahead of the July CPI report with the market expecting a 0.1% month-on-month rise and a 2.5% annualized reading, both unchanged from last month’s strong report. Canadian CPI grew at its fastest rate in over six years in June, due to higher energy prices, and another strong reading today will increase pressure on the Bank of Canada to hike rates again, probably at the October meeting. The central bank has already hiked rates by 0.25% twice this year and by a total of four times in the last 12 months. Last week data showed Canadian unemployment falling to 5.8% from a prior 6% while employment grew by 54.1k against expectations of 17K and a prior month’s 31.8k.
USDCAD has remained in a 1.2950 – 1.3200 range over the last month, despite the strength of the US dollar and fears over the NAFTA negotiations. The pair currently trade at 1.3130, just above 23.6% Fibonacci support at 1.3118 and below the July 24 high at 1.3192. An inline or slightly stronger-than-expected reading would seal another 0.25% rate hike and see USDCAD break lower with the 38.2% Fibonacci retracement at 1.2952 the short-term target. A weaker-than-expected reading today would see the July 24 high under pressure.
We have recently released our Q3 Trading Forecasts for a wide range of Currencies and Commodities, including the Canadian Dollar.
USDCAD Daily Price Chart (January – August 17, 2018)
— Written by Nick Cawley, Analyst
To contact Nick, email him at email@example.com
Follow Nick on Twitter @nickcawley1
USD/CNH & Gold Price Action Point to Reversals Gaining Traction
Gold, USD/CNH Technical Highlights
- Gold price reversal and sentiment supportive of a low
- Correlation between Gold & CNH extremely high
- USD/CNH reversing hard from near Dec ’16 peak
For an in-depth intermediate-term technical and fundamental outlook, check out the Q3 Gold Forecast.
Gold price reversal and sentiment supportive of a low
On Wednesday, we were discussing the oversold, overly bearish backdrop in gold, but that first we needed to see some type of swift flush and reverse or something of that nature before looking for a low. We didn’t have to wait long, as the past few sessions qualified as flush-and-reverse price behavior, with silver, unsurprisingly and in silver-like fashion, displaying even more capitulation-like behavior, shedding 3 of its 4% in an hour on Wednesday.
As long as gold & silver can hold onto yesterday’s lows on a closing basis, we’re looking for at least a rebound back to the point of origination of the most recent leg lower (~1210 & 15.30). If another leg lower develops we’ll have to reassess.
Check out the IG Client Sentiment to see how other traders are positioned and why it can be used as a contrarian indicator.
Gold Daily Chart (Flush & Reverse)
Correlation between Gold & CNH extremely high
If gold is reversing then so is CNH and vice versa. Gold and CNH have a 3-month correlation of 97%. They are effectively the same market at this juncture. How one plays it is up to the instrument of choice, but be mindful of total risk if trading both.
Gold/CNH Daily Chart (97% 3-mo Correlation)
USD/CNH reversing hard from near Dec ’16 peak
USD/CNH is in the process of carving out a weekly key-reversal bar just shy of the December 2016 high, assuming it doesn’t post a big rally from here. Trade a little higher today or lower and the reversal currently in place will stand as confirmed.
The candle development along with a break in the upward channel on the daily time-frame should usher in more selling, and perhaps in swift fashion. Looking lower, there are minor levels along the way that were carved out as the channel matured, but the broader target is the bottom of the upward grind since last month, right around the 6.60 mark.
USD/CNH Weekly Chart (Key-reversal nearly complete)
USD/CNH Daily Chart (Channel break to send it lower)
Resources for Forex & CFD Traders
Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
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