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Sentiment Up. AUD May Fall on Status Quo RBA

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Current Developments – Sentiment Recovers, USD Last Minute Recovery

Despite threats from China to call off trade deals with the US, sentiment rebounded on Monday as stocks rose. Investors appeared to have welcomed continued global economic growth prospects following the beat in last week’s US jobs report. However, most of the gains were realized via a gap higher as Wall Street came online. For the majority of the US session, the S&P 500 oscillated and finished the day 0.45% higher.

Amidst a recovery in risk appetite, the US Dollar performed poorly during the first half of Monday’s session. Traders may have continued unwinding their safety bets from last week. Despite the greenback’s decline, it finished the day only cautiously lower after a partial recovery towards the second half of the day. There, it rose with local government bond yields, signaling firming hawkish Fed rate hike bets.

Not surprisingly, the anti-risk Japanese Yen was amongst the worst performing currencies on Monday as Asian stocks rose earlier in the day. The sentiment-linked New Zealand on the other hand outperformed. Meanwhile the British Pound declined across the board. UK lawmakers are back this week from their recess as Prime Minister Theresa May has key decisions to make on Brexit. Perhaps traders were betting that they won’t go so well.

A Look Ahead – All Eyes on RBA for AUD/USD

The top tier event risk during Tuesday’s session is the RBA rate decision. Unlike the last few announcements, the Australian Dollar could be at risk of another status quo outcome. This is because yesterday, better-than-expected local retail sales and corporate profits sent local bond yields higher which suggested increasing RBA rate hike bets. AUD/USD simultaneously rose to its highest since March 23.

If the central bank reiterates its patient stance on raising rates, then some of those hawkish bets could be reversed. While still low, the probability of an RBA rate hike by the end of the year recently jumped to about 25% according to overnight index swaps from 19%. With that in mind, we shall see if a beat in today’s Caixin China PMI data adds more fuel to those expectations.

Join DailyFX Analyst Daivd Cottle who will be hosting the RBA rate decision webinar LIVE and covering the AUD/USD reaction

DailyFX Economic Calendar: Asia Pacific (all times in GMT)

Asia AM Digest: Sentiment Up. AUD May Fall on Status Quo RBA

DailyFX Webinar CalendarCLICK HERE to register (all times in GMT)

Asia AM Digest: Sentiment Up. AUD May Fall on Status Quo RBA

IG Client Sentiment Index Chart of the Day: AUD/USD

Asia AM Digest: Sentiment Up. AUD May Fall on Status Quo RBA

CLICK HERE to learn more about the IG Client Sentiment Index

Retail trader data shows 49.8% of AUD/USD traders are net-long with the ratio of traders short to long at 1.01 to 1. The percentage of traders net-long is now its lowest since Apr 12 when AUD/USD traded near 0.77563. The number of traders net-long is 19.5% lower than yesterday and 30.8% lower from last week, while the number of traders net-short is 34.5% higher than yesterday and 27.8% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUD/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUD/USD-bullish contrarian trading bias.

Five Things Traders are Reading:

  1. Australian Dollar Could Gain Despite RBA If GDP Comes In Solid by David Cottle, Analyst
  2. Counter Trend Patterns Working in USDJPY and EURUSD by Jeremy Wagner, CEWA-M, Head Forex Trading Instructor
  3. EUR/USD Rate Outlook Mired by Renewed Greek Fears by David Song, Currency Analyst
  4. AUD/USD Technical Outlook: Aussie Rebound Testing Key Resistance Hurdleby Michael Boutros, Currency Strategist
  5. US Dollar Drops to Support, AUD/USD Fresh Monthly Highs Ahead of RBA by James Stanley, Currency Strategist

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter



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Weekly Trade Levels for US Dollar, Euro, Sterling, Loonie, Gold & Oil

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New to Forex Trading? Get started with this Free Beginners Guide

DXY, Euro, Loonie Monthly Opening-Ranges Intact

The US Dollar Index is trading into the monthly opening-range highs into the start of the week and the focus is a reaction around the 98.05/10 resistance zone- note that the monthly ranges in Euro and Loonie also remain intact. In this webinar we review updated technical setups on DXY, EUR/USD, USD/CAD, GBP/USD, Crude Oil (WTI), Gold, USD/JPY, AUD/USD, EUR/AUD & SPX.

Why does the average trader lose? Avoid these Mistakes in your trading

Key Trade Levels in Focus

DXY – Immediate focus is on topside resistance at 98.05/10. Initial support at 97.87 with near-term bullish invalidation raised to 97.71.

EUR/USD – Euro is coiling into the monthly opening-range just above slope support. Immediate focus is on support at 1.1140. Initial resistance at 1.1187 with near-term bearish invalidation at monthly-open resistance at 1.1215– look for a bigger reaction there IF reached. A break lower would expose 1.1110.

GBP/USD – Sterling broke below multi-month slope support last week with price responding to near-term pitchfork support into the open. Initial resistance at 1.2798 with bearish invalidation at 1.2859. Downside support objectives at the August low-day close at 1.2697 and the 100% extension at 1.2662.

Gold – Risk for near-term recovery while above the yearly / monthly low-day close at 1270. Initial resistance at 1280 with near-term bearish invalidation with the monthly open a 1283.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Key Event Risk This Week

Economic Calendar- Key Data Realeses

Economic Calendar – latest economic developments and upcoming event risk

Active Trade Setups:

Learn how to Trade with Confidence in our Free Trading Guide

—Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex



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AUDUSD Soars on Shock Election, Apple Shares Slump, Risk of S&P 500 Drop

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MARKET DEVELOPMENT – AUD Soars on Shock Election, Apple Shares Slump, Risk to S&P 500

DailyFX Q2 2019 FX Trading Forecasts

AUD: The Aussie outperforms following a shock election outcome, in which Prime Minister Scott Morrison secured re-election (full story). In reaction, the Aussie gapped higher at the Asia open, reclaiming the 0.69 handle against the greenback. However, as equity markets have headed lower throughout the European morning, risks are for gains to be faded. Alongside this, key headwinds in the form of trade war tensions and a potential RBA June rate cut are likely to limit upside. Reminder, RBA Governor Lowe due to speak tonight after RBA meeting minutes (calendar)

Crude Oil: Oil prices surged at the Asia open as Saudi Arabia signalled that cuts could be extended throughout the remainder of 2019 at the JMMC meeting, while President Trump had also stepped up his critical rhetoric towards Iran. Although, with equity prices beginning to push lower, oil prices have pared the majority of its initial gains.

Equities: US equity futures have headed lower amid the continued crackdown by the US on China’s Huawei, which in turn has chipmakers come under pressure, while Google also stated that they are to restrict the company’s use on android services. Elsewhere, Apple’s price target had been cut by HSBC to $174 (median street price target = $220), citing concerns over China, while tariff led price increases on Apple products could also have dire consequences on demand. Apple shares currently lower by 2.4% in pre-market.

AUDUSD Soars on Shock Election, Apple Shares Slump, Risk of S&P 500 Drop - US Market Open

Source: DailyFX, Thomson Reuters

DailyFX Economic Calendar: – North American Releases

AUDUSD Soars on Shock Election, Apple Shares Slump, Risk of S&P 500 Drop - US Market Open

IG Client Sentiment

AUDUSD Soars on Shock Election, Apple Shares Slump, Risk of S&P 500 Drop - US Market Open

How to use IG Client Sentiment to Improve Your Trading

WHAT’S DRIVING MARKETS TODAY

  1. Gold Price Sell-Off Continues, Silver Price Hits a Six-Month Low” by Nick Cawley, Market Analyst
  2. COT Report: Japanese Yen and Euro Shorts Collapse, USD Longs Reduced” by Justin McQueen, Market Analyst
  3. Crude Oil Price May Be Carving Out a Top” by Paul Robinson, Currency Strategist
  4. Using FX To Effectively Trade Global Market Themes at IG” by Tyler Yell, CMT , Forex Trading Instructor

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX



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Gold Price Sell-Off Continues, Silver Price Hits a Six-Month Low

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Gold (XAU) and Silver (XAG) Price Analysis and Charts.

  • Gold (XAU) eyes a cluster of support.
  • Silver (XAG) makes afresh 2019 low as buyers disappear.

DailyFX Q2 Forecasts and Top 2019 Trading Opportunities.

Gold (XAU) Needs to Support to Hold

The sell-off on gold continues with the precious metal down around $30 in less than a week. Gold is under pressure from a resurgent US dollar, buoyed by last Friday’s Uni of Michigan data which smashed expectations and hit a multi-year high. The important 61.8% Fibonacci retracement level at $1,287/oz. failed to provide any support when broken last week, while the $1,287 – $1,281/oz. zone made up of old horizontal support is being tested now. A clear break and close below opens the way to the recent double bottom around $1,266/oz. which is currently being guarded by the 200-day moving average at $1,268.6/oz. Below here the 50% Fibonacci retracement level at $1,262/oz heaves into view.

How to Trade Gold: Top Gold Trading Strategies and Tips

Gold (XAU) Daily Price Chart (August 2018 – May 20, 2019)

Gold Price Sell-Off Continues, Silver Price Hits a Six-Month Low

Silver (XAG) Nears a Fresh Six-Month Low

Another precious metal under heavy selling pressure. Silver is now at levels last seen in early December last year and is over 11% lower since making its recent high of $16.21/oz. in late February. The downtrend since the late-February high continues to be respected and it is possible that silver completely retraces all the way back down to the November 14 low at $13.89/oz. Psychological support at $14.00/oz. may slow the decline, while the CCI indicator shows that the market is extremely oversold.

Silver (XAG) Daily Price Chart (August 2018 – May 20, 2019)

Gold Price Sell-Off Continues, Silver Price Hits a Six-Month Low

Trading the Gold-Silver Ratio: Strategies and Tips.

IG Client Sentiment data show that retail traders are 79.1% net-long gold, a bearish contrarian indicator. Recent daily and weekly sentiment shifts give us a stronger bearish contrarian bias.

— Written by Nick Cawley, Market Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1



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