AUDNZD Resistance Turned Support (Sep 13, 2017)
AUDNZD has sold off in the past couple of days but the uptrend remains intact. Price is moving inside an ascending channel formation on its 4-hour time frame and is currently testing support at the 1.1000 major psychological level.
This coincides with a former resistance level that might hold as a floor from here. It also lines up with the 100 SMA, which is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. Stochastic is indicating oversold conditions, which means that sellers are exhausted and ready to let buyers take over.
There have been no major reports out of New Zealand, leaving traders to react to polls leading up to next week’s elections. The Kiwi enjoyed a boost from a poll indicating that the Green Party might not have enough votes to be represented in Parliament. This could ease some political uncertainty as it would leave the National Party to secure majority of the seats and avert a coalition government.
Meanwhile, Australia has its jobs report due later on this week and might report a 17.5K gain in hiring. This would be lower than the earlier 27.9K increase but still enough to keep the unemployment rate steady at 5.6%. Stronger than expected data could support hopes that the RBA could switch to a more hawkish bias in their next policy announcements.
China is also set to print a number of top-tier reports on Thursday, namely industrial production, retail sales, and fixed asset investment. A rebound in the first two figures is eyed but fixed asset investment could lag from 8.3% to 8.2%.
By Kate Curtis from Trader’s Way
EURJPY Countertrend Play (Sep 14, 2017)
EURJPY is still moving in an uptrend but is currently bouncing off the top of its ascending channel resistance on the 4-hour time frame. Stochastic is also turning lower from the overbought zone to indicate a pickup in selling pressure.
If this keeps up, price could drop to the channel support at the 130.50 minor psychological level. This lines up with the moving averages dynamic inflection points. However, the 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is still to the upside.
Euro bulls could wait for an actual test of the channel support before going long and aiming for the channel resistance at the 132.50 minor psychological level or higher.
Data from the euro zone has been mostly stronger than expected so far this week. The German final CPI reading was unchanged at 0.1% as expected but the WPI was stronger than expected at 0.3% versus the projected 0.1% gain. The region’s employment change figure for Q2 was also better than expected at 0.4% versus 0.3% while the previous period’s reading enjoyed an upgrade.
As for the yen, data has also been upbeat as the BSI manufacturing index recovered from -2.9 to +9.4, much higher than the projected +4.8 reading. Annual PPI came in a notch lower than the projected 3.0% figure at 2.9% but still marked a decent improvement over the earlier 2.6% figure.
There are no major reports due from both the euro zone and Japan today, so price action could hinge mostly on market sentiment. Also note that the yen has sold off on dollar strength as expectations for an upbeat CPI release kicked in when the PPI beat consensus.
By Kate Curtis from Trader’s Way
NZDJPY Breakout and Pullback (Sep 15, 2017)
NZDJPY was previously consolidating inside a falling wedge formation before an upside breakout occurred. Price reached a high of 80.40 before pulling back, possibly making a retest of the broken wedge resistance. Stochastic is heading lower for now, so sellers have the upper hand until the oscillator hits oversold levels and turns higher.
Applying the Fib tool on the latest swing low and high on the 4-hour time frame shows that the 61.8% level is closest to the broken resistance and also lines up with an area of interest or former resistance. This is also close to the 100 SMA dynamic support, which is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.
Risk appetite has picked up for the most part of the week as geopolitical risks related to North Korea’s missile threats have been subdued. At the same time, dollar strength has translated to yen weakness, buoying most yen pairs higher in the past few days, although signs of profit-taking are materializing.
There have been no major reports out of New Zealand this week, with the election polls being the main source of volatility. Earlier on, a poll indicating that the Green Party would likely not get enough votes to secure seats in Parliament spurred speculations that the National Party won’t have trouble holding on to majority.
There are no major reports from both Japan and New Zealand until the end of the week, but risk sentiment could be in for a big shift once more if North Korea launches another test or makes more threats over the weekend. Also, the US retail sales release could influence yen-dollar dynamics once more.
By Kate Curtis from Trader’s Way
EURGBP Resistance Turned Support (Sep 18, 2017)
EURGBP sold off sharply from its previous rally to the .9300 region, pulling back to an area of interest around the .8700 to .8800 levels. This lines up with the 50% to 61.8% Fibs, which could hold as potential support. Stochastic is already indicating oversold conditions to show that sellers need to take a break, but the oscillator has to pull higher to signal that buyers are getting back in.
The 100 SMA is still above the longer-term 200 SMA on the daily time frame so the path of least resistance is still to the upside. Price is also trading around the 100 SMA dynamic support but a larger pullback to the 200 SMA dynamic inflection point closer to the lowest Fib is possible.
The pound got a strong boost from better than expected UK CPI, which then fueled hawkish expectations for the BOE decision. The central bank acknowledged that the economy has been improving and signaled a potential tightening move down the line, with MPC member Vlieghe reiterating those upbeat points on Friday.
Meanwhile, the euro was also previously supported by ECB tapering expectations but has been vulnerable to a selloff with some officials expressing concern about currency appreciation. Also, the region’s trade balance turned out weaker than expected on Friday at a surplus of 18.6 billion EUR versus the earlier 21.7 billion EUR and the estimated 20.1 billion EUR figure.
Euro zone final CPI readings are due today, along with the Italian trade balance. As for the UK, the freshly released Rightmove HPI showed a 1.2% decline in house prices, following the earlier 0.9% drop. UK retail sales is due later in the week and analysts are expecting to see a 0.2% uptick.
By Kate Curtis from Trader’s Way
USDCAD Downtrend Pullback (Sep 19, 2017)
USDCAD continues to trend lower but seems to be in a correction from its current selloff. Applying the Fibonacci retracement tool shows that the the 50% level lines up with the trend line resistance and the 1.2400 major psychological level that might keep gains in check.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the downtrend is more likely to continue than to reverse. The 100 SMA is already holding as dynamic resistance at the moment but both RSI and stochastic are still on the move up to signal that the correction is still in play.
The line in the sand is at the 61.8% Fib or the 1.2500 handle, which lines up with a previous support zone. A convincing break past this area could signal that buyers are getting stronger and are ready to sustain an uptrend.
The main event risk for this setup is the FOMC statement as the central bank will also release its updated growth forecasts, which might contain revisions on account of the recent hurricanes. In this meeting, a press conference is also scheduled so traders are likely to pay close attention to Yellen’s responses to get clues on whether December tightening is still possible or not.
Canada’s top-tier events aren’t scheduled to take place until Friday, during which the CPI and retail sales figures will be printed. Stronger than expected results could continue to fuel expectations for another BOC interest rate hike before the end of the year.
Both the BOC and the FOMC have hiked interest rates twice this year but the former has been more of a surprise compared to the latter. In fact, rate hike expectations for the Fed have considerably fallen in the past few months on downbeat inflation and slowing employment.
By Kate Curtis from Trader’s Way
EURCAD Triangle Resistance (Sep 20, 2017)
EURCAD is forming a descending triangle on its 4-hour chart and could be due for a test of the top. This lines up with the 61.8% Fibonacci retracement level near the 1.4850 minor psychological mark and a former support zone.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that the resistance is more likely to hold than to break. Price is currently testing the 100 SMA dynamic resistance but may still have some momentum left to test the 200 SMA dynamic inflection point.
Stochastic is already indicating overbought conditions and is starting to turn lower to show a return in selling pressure. If any of the Fibs are able to keep gains in check, price could fall back to support around the 1.4500 handle.
The main event risks for this trade are the Canadian retail sales and CPI releases on Friday. Analysts are expecting to see a 0.2% increase in headline retail sales, faster than the earlier 0.1% uptick, and a 0.4% gain in the core version of the report. Headline CPI is projected to come in at 0.2% after staying flat in the previous month.
As for the euro, volatility could also kick higher towards the end of the week with a couple of speeches by Draghi and the PMI readings from its top economies. ECB officials have been trying to talk down the shared currency, wary of spurring more gains on speculations of ECB tapering.
If Draghi emphasizes the challenges posed by a stronger euro, the shared currency could give up more of its recent gains. On the other hand, focusing on the improvements in the region and giving more clues on what their next policy moves might be could keep it supported.
By Kate Curtis from Trader’s Way
GBPNZD Ascending Trend Line (Sep 21, 2017)
GBPNZD has been trending higher and is moving above an ascending trend line connecting the latest lows of price action since August 22. Price has surged past the area of interest around 1.8200 and has found resistance at 1.8700 before pulling back.
Applying the Fib tool on its latest swing low and high shows that the 61.8% level lines up with the area of interest and trend line. It also coincides with the 100 SMA, which is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.
The gap between the moving averages is getting wider to indicate that bullish momentum is getting stronger. At the same time, stochastic is indicating oversold conditions and might turn higher to also reflect a return in buying pressure. If that happens, a test of the swing high could be underway.
Economic reports from the UK have been mostly stronger than expected, with CPI, claimant count, and retail sales all surpassing estimates. This supports the BOE’s hawkish stance, even as Carney recently admitted that the rise in global rates was partly the reason for their tightening bias.
As for the Kiwi, data has also been mostly upbeat this week. The GDT auction yielded a stronger 0.9% gain in prices compared to the previous 0.3% uptick while the current account balance reflected a smaller deficit. The Q2 GDP is due next and a 0.8% growth figure is eyed, stronger than the earlier 0.5% expansion.
However, the upcoming RBNZ decision could be preventing the Kiwi from advancing any further as jawboning remarks are expected. The parliamentary elections also poses uncertainty even as surveys hinted a National Party victory.
By Kate Curtis from Trader’s Way
AUDJPY Uptrend Setup (Sep 22, 2017)
AUDJPY continues to trend higher and is moving inside an ascending channel pattern on its 4-hour chart. Price just bounced off the resistance at 90.30 and is making a pullback to support at the 89.00 area.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the 61.8% level lines up with the channel support, adding to its strength as a floor. However, price already seems to be bouncing off the 50% Fib and could be poised for another test of resistance from here.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This means that the uptrend is more likely to continue than to reverse. Stochastic is still pointing down to indicate that there may be a bit of selling pressure left before Aussie bulls get back in the game.
The BOJ kept interest rates on hold as expected and didn’t trigger too much of a reaction from the Japanese currency. The central bank also maintained its pace of JGB purchases while keeping a relatively upbeat outlook on the economy.
However, the Aussie was on the decline due to weaker commodity prices, particularly metals like iron ore. The latest FOMC statement, which turned out more hawkish than expected, was being blamed for the selloff as a tightening bias would weigh on global demand down the line.
There are no other reports lined up from Japan or Australia for the rest of the week as traders look to market sentiment for clues. There are still some concerns about an attack from North Korea, which would drastically weigh on the higher-yielding Aussie and might lead to a gap over the weekend if the tension escalates.
By Kate Curtis from Trader’s Way
AUDNZD Channel Breakdown (Sep 25, 2017)
AUDNZD recently broke below the ascending channel support on its 4-hour time frame to signal that a reversal is underway. Before that happens though, price could still make a pullback to the broken support. However, the 100 SMA is still above the longer-term 200 SMA to indicate that the path of least resistance is to the upside or that there’s a chance the uptrend might resume.
Applying the Fibonacci retracement tool on the latest swing high and low shows that the broken support lines up with the 61.8% level around the 1.1000 major psychological level. Stochastic is pointing up to show that buyers are in control for now until the oscillator hits overbought levels and turns back down.
The New Zealand elections held over the weekend resulted to a victory for the National Party but not enough for them to take majority. This means that politics will be in limbo for a bit longer as the country waits for a coalition to be formed.
Another potential event risk for the Kiwi is the upcoming RBNZ decision. Even though no actual interest rate changes are expected, traders appear to be pricing in a less upbeat statement from the central bank since jobs growth recently disappointed. Kiwi strength could also be one of the issues pointed out and more jawboning could keep a cap on the currency’s gains.
There are no major catalysts lined up for the Aussie, which indicates that it might simply act as a counter currency in the next few days or be more sensitive to price action of gold and iron ore. Market sentiment could also push these higher-yielding currencies around.
By Kate Curtis from Trader’s Way
GBPUSD Countertrend and Correction Setups (Sep 26, 2017)
GBPUSD is still trending higher on its longer-term charts and is testing the top of its ascending channel visible on the daily time frame. This could mean an opportunity for a countertrend play back to the support at 1.3100 or a correction setup there.
The 61.8% Fibonacci retracement level lines up with the bottom of the channel and a former resistance level. It’s also close to the 100 SMA dynamic support, which is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside.
However, stochastic is indicating overbought conditions and could be ready to head south anytime soon, which means GBPUSD might follow suit. If any of the Fib levels keep losses in check, price could head back up to the swing high at the 1.3650 minor psychological resistance again.
Risk aversion seems to be peeking back in the markets early this week as North Korea announced that the US has declared war on the hermit nation. This could mean more jitters in the days ahead and heightened tensions between the two nations that might limit risk-taking.
In the UK, Prime Minister May’s Brexit speech failed to revive bullish sentiment for the economy and its negotiating stance. More updates on this issue are set to hit the headlines with meetings between the top officials scheduled in the next few days.
As for the dollar, the Fed’s hawkish sentiment gave the currency strong support last week and it remains to be seen whether this could last or not, given the developments from North Korea. FOMC officials have several testimonies scheduled throughout so their policy stance could also push the Greenback around.
By Kate Curtis from Trader’s Way
EURJPY Rising Trend Line (Sep 27, 2017)
EURJPY has been trending higher recently, with a rising trend line connecting the lows on the 4-hour time frame. Price is moving close to testing this support area, which lines up with the 61.8% Fibonacci retracement level and the 131.00 major psychological level.
This trend line also coincides with the 100 SMA, which is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. The gap between the moving averages is widening, reflecting stronger bullish momentum.
Stochastic is also indicating oversold conditions, so sellers might take a break and let buyers regain control from here. In that case, EURJPY could make its way back up to the swing high at 134.50 and beyond.
The outcome of the German elections seems to be weighing on the shared currency at the moment due to the rising popularity of AfD and the fact that Merkel’s political party still needs to negotiate with rivals for a coalition government. But once this uncertainty is resolved, the focus could return to improving euro zone fundamentals and ECB tapering expectations.
As for the yen, the Japanese snap elections could also bring in some uncertainty and stronger support for PM Abe would mean a continuation of Abenomics, which has typically been bearish for the currency. Another factor that could impact yen price action is the shift in market sentiment stemming from North Korea tensions.
Japan is set to print its core inflation readings, along with the latest household spending, retail sales, and industrial production figures, on Friday. Upbeat reports could keep the currency supported while downbeat data could reinforce the idea of prolonged BOJ easing.
By Kate Curtis from Trader’s Way
NZDJPY Triangle Pattern (Sep 28, 2017)
NZDJPY seems to be forming a triangle consolidation pattern visible on its daily time frame as it bounced off the 82.00 handle and is heading back to support around 79.00 to 79.50. Stochastic has turned lower from the overbought region to reflect a pickup in bearish pressure.
The 100 SMA has crossed above the longer-term 200 SMA to suggest that the path of least resistance is to the upside or that nearby support areas could hold. However, the moving averages are also oscillating to reflect a continuation of sideways price action.
As expected, the Reserve Bank of New Zealand kept interest rates unchanged at 1.75% and barely made any changes to their official announcement. While they acknowledged that the TWI has eased since their previous statement, they still emphasized that a lower Kiwi would be beneficial for tradeables inflation and balanced growth.
The central bank also acknowledged that growth has been in line with expectations for the June quarter, rebounding off the weak performance in previous quarters. Policymakers noted that inflation has also picked up then but could retreat again in the coming months.
As for the yen, the currency seems to be reacting to currency-specific factors and is also being dragged lower by dollar strength. The next batch of catalysts include the core CPI readings, household spending, retail sales, and preliminary industrial production numbers due on Friday’s Asian session.
By Kate Curtis from Trader’s Way
EURUSD Support Turned Resistance (Sep 29, 2017)
EURUSD recently broke below support around the 1.1850 minor psychological level then dropped close to the 1.1700 mark. Price appears to be making a correction from here and applying the Fibonacci retracement tool shows that the 50% level lines up with the broken support.
The 100 SMA is still above the longer-term 200 SMA on the 4-hour time frame so the path of least resistance might still be to the upside. The 200 SMA dynamic inflection point is slightly above the area of interest, adding to its strength as a ceiling. The 100 SMA is slightly above the 61.8% Fib, which might be the line in the sand for a correction.
Stochastic is heading north so EURUSD could follow suit. Once the oscillator hits overbought levels and turns lower, selling pressure could return and bring the pair back down to the swing low or lower.
Euro zone economic data turned out weaker than expected yesterday, with the German GfK consumer climate index dipping from 10.9 to 10.8 instead of improving to the consensus at 11. Meanwhile, German preliminary CPI printed another meager 0.1% uptick.
As for the dollar, the focus on tax reform has allowed equities and the currency to regain a lot of ground. To top it off, renewed Fed December hike expectations are also keeping the currency supported, along with upgraded growth forecasts and the start of the balance sheet runoff next month.
However, Fed head Yellen sounded less hawkish in her latest speech, casting doubt on tightening expectations. Traders are likely to keep close tabs on next week’s NFP report since Yellen admitted they may have overestimated the strength of the labor market and its impact on inflation.
By Kate Curtis from Trader’s Way
AUDUSD Resistance Turned Support (Oct 02, 2017)
AUDUSD previously broke past the resistance around the .7750 minor psychological level then zoomed up to the .8100 area. From there, price retreated from the rally and is showing signs of a correction to the broken resistance.
Applying the Fibonacci retracement tool on the latest swing low and high on the daily time frame reveals that the 50% level lines up with the area of interest. This also lines up with the 100 SMA, which is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside. The 200 SMA coincides with the 61.8% Fibonacci retracement level, which might be the last line of defense for the uptrend.
Stochastic is already indicating oversold conditions, so sellers are exhausted and ready to let buyers take over. If so, AUDUSD could resume its climb up to the swing high or higher. On the other hand, a move below the Fibs could pave the way for a drop to the swing low.
There are several event risks lined up for the Australian dollar this week, including the RBA interest rate statement and the release of the retail sales and trade balance figures. No actual policy changes are expected from the RBA but any shift in their bias could determine where the Aussie is headed in the longer run.
Meanwhile, the US has its NFP due on Friday and this could generate a lot of attention since Fed head Yellen previously talked about how the Fed might have overestimated the strength of the labor market. Analysts are expecting to see a mere 88K gain in hiring, which might still douse December hike expectations especially if underlying components reflect more weaknesses.
By Kate Curtis from Trader’s Way
GBPUSD Long-Term Correction (Oct 03, 2017)
Cable has been selling off recently but could be due for a bounce as it tests the support zones visible on its long-term chart. Price is moving inside an ascending channel on its 1-hour time frame and is currently approaching the 50% Fibonacci retracement level at the mid-channel area of interest.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, which means that the uptrend is likely to carry on. The 100 SMA lines up with the channel support at 1.3000, which is also near the 61.8% Fib level.
Stochastic is still heading south on this time frame, so there’s enough bearish pressure left for a deeper correction. If any of the support areas keep losses in check, GBPUSD could climb back to the swing high near the 1.3650 minor psychological resistance.
UK economic data turned out weaker than expected as the manufacturing PMI slipped from 56.7 to 55.9, lower than the projected dip to 56.3. At the same time, Brexit-related issues remain and Prime Minister May’s speeches seem to be doing very little to shore up confidence in the government’s bargaining position.
As for the dollar, the strong ISM manufacturing PMI, which rose from 58.8 to 60.8 versus the consensus at 57.9, led to a boost in NFP expectations. The employment and prices components ticked higher, putting upside pressure on overall employment and inflation. The Markit version of the report saw an upgrade from the initial estimate at 53.0 to 53.1 as well.
Looking ahead, the UK services PMI could be the next big catalyst for the pound, although more headlines pertaining to Brexit could continue to limit its gains. The ISM non-manufacturing PMI and ADP non-farm employment figures could also push the dollar around ahead of the actual NFP release.
By Kate Curtis from Trader’s Way
EURUSD Major Correction (Oct 04, 2017)
EURUSD previously broke past the range resistance at the 1.1450 minor psychological level to indicate that bullish momentum has won over. Price stalled in its rally near the 1.2100 major psychological level and showed signs of a correction to the broken ceiling.
Applying the Fibonacci retracement tool on the latest swing high and low on the daily time frame shows that the 38.2% level lines up with the area of interest at which several buyers might be waiting. However, the 100 SMA is still below the longer-term 200 SMA on this chart so the path of least resistance is to the downside.
Stochastic is also just starting to turn down from the overbought zone to reflect a pickup in selling pressure. This could lead to a deeper pullback to the lower Fib levels, namely the 50% level at 1.1200 and the 61.8% level at 1.0500 near the 100 SMA dynamic support.
Euro zone economic reports have been mixed, with the latest flash CPI readings dampening hopes of ECB tapering this month. Leading indicators such as industry PMIs have printed upbeat results, though, while Spain’s unemployment change figure released yesterday fell short.
Another factor weighing on the shared currency is the political uncertainty stemming from the Catalan elections. The push for independence could set a precedent for other cities seeking their own government and might put the stability of the union at risk.
As for the dollar, traders are keeping close tabs on leading indicators for employment as this could contain clues on how the official NFP report might turn out. Strong data could bolster Fed rate hike expectations for December and push the dollar higher, along with the increased focus on tax reform.
By Kate Curtis from Trader’s Way
EURGBP Area of Interest (Oct 05, 2017)
EURGBP is currently testing a former resistance level around the .8800 major psychological mark, which appears to be holding as support. This lines up with the 50% Fibonacci retracement level on the swing high and low on the daily time frame. Stochastic is also pointing up to reflect the presence of buying pressure.
The 100 SMA is above the longer-term 200 SMA on this chart so the path of least resistance is to the upside, which suggests that the uptrend is more likely to resume than to reverse. The gap between the moving averages is also widening to reflect strengthening bullish momentum that might take price up to the swing high around .9300.
Economic data from the UK didn’t turn out so bad yesterday as the services PMI ticked up from 53.2 to 53.6, reflecting a stronger pace of industry expansion versus the consensus of no change. This is also in contrary with the results of other industry PMIs in the manufacturing and construction sectors. There are no major reports due from the UK economy today, so Brexit-related updates might push the pound around.
Meanwhile, data from the euro zone was mixed as final services PMI readings mostly came in line with expectations while Italy’s reading surprised to the downside and Spain’s figure was better than expected.
The ECB minutes are due next and traders are hopeful to get more clues on tapering plans. Draghi said that they have already started initial discussions and could reach a decision this month, probably agreeing to start tapering by December. However, any signs of strong dissent within the committee could douse expectations for the year.
By Kate Curtis from Trader’s Way
NZDUSD Head and Shoulders (Oct 06, 2017)
NZDUSD could be in for more losses as price formed a head and shoulders pattern on its daily time frame. Price is also testing the neckline around the .7100 major psychological mark and a breakdown could send it lower by 450 pips or the same height as the chart formation.
However, the 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This means that there’s still a chance for the long-term uptrend to resume. Stochastic is also dipping into the oversold region, which reflects exhaustion among sellers and a potential return in buying pressure.
Earlier this week, New Zealand’s GDT auction yielded a 2.4% slump in dairy prices, erasing the gains chalked up in earlier weeks. The NZIER business confidence index has also taken a hit and fallen from 18 to 5 to reflect much lower optimism among firms.
On the other hand, the dollar has gained strong support from better than expected leading indicators for the NFP. The ISM manufacturing and non-manufacturing PMIs both beat expectations and showed gains in the employment component while the ADP report and Challenger job cuts also reflected positive hiring momentum.
The main catalyst for today is the NFP release, which is expected to show a gain of 88K versus the earlier 156K figure. A higher than expected read could boost December hike expectations, especially since the latest batch of Fed officials to give speeches sounded more upbeat. On the other hand, a huge miss could lead to losses for the dollar if traders think it’s bad enough to keep the US central bank on hold for the rest of the year.
By Kate Curtis from Trader’s Way
USDCAD Steady Channel (Oct 09, 2017)
USDCAD continues to head north and is trading inside an ascending channel on its 1-hour time frame. This channel has held since the start of September and another test of support is underway.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the 50% level lines up with support around the 1.2500 major psychological level. This lines up with the 100 SMA dynamic support and a former resistance level.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, which means that the uptrend is more likely to continue than to reverse. The 200 SMA is also slightly below the channel support, adding an extra layer of defense to the downside. Stochastic is in the oversold region, which suggests that selling pressure is exhausted and that buyers could take over soon.
Jobs data from both the US and Canada turned out weaker than expected on Friday, with the former shedding 33K jobs and the latter gaining 10K versus the estimated 13.9K increase. However, the US dollar was able to benefit from a stronger than expected 0.5% increase in average earnings and expectations of a positive revision in the September figure later on.
Also in Canada, the Ivey PMI rose from 56.3 to 59.3 to reflect a faster pace of industry growth compared to the estimated drop to 56.0. US and Canadian banks are closed in observance of Columbus Day today so liquidity could be lower than usual.
There’s not much in the way of top-tier data from Canada this week while the US has plenty of catalysts on deck. This includes the release of the FOMC minutes, retail sales, PPI, and CPI readings. The oil-related Loonie might simply take its cues from the commodity this week.
By Kate Curtis from Trader’s Way
USDJPY Range Resistance (Oct 10, 2017)
USDJPY has been trading sideways on its long-term charts, bouncing off support at the 108.50 minor psychological mark and heading towards the resistance around 114.00 to 114.50. Price is consolidating at the moment, though, and technical indicators are hinting that a selloff could be due.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the ceiling is more likely to hold than to break. Stochastic is also turning lower to indicate the presence of selling pressure that might be enough to take USDJPY back down to support.
US economic data turned out weaker than expected on Friday as the economy shed 33K jobs instead of gaining 88K as expected. However, the previous reading enjoyed an upgrade while average hourly earnings showed stronger than expected wage growth that could fuel inflation down the line.
There were no major reports out of the US economy yesterday as banks were closed in observance of Columbus Day. Japanese banks were also closed then, which explains the consolidation for the pair. Today, the Japanese current account balance is lined up and a smaller surplus of 1.98 trillion JPY is eyed from the previous 2.03 trillion JPY figure.
In the US, FOMC member Kashkari is set to give a speech but traders have already heard his dovish remarks in the past. The next major catalyst for the dollar might be Wednesday’s FOMC minutes release or the CPI and retail sales reports due on Friday. Japan has core machinery orders, preliminary machine tool orders, and PPI data due throughout the week.
By Kate Curtis from Trader’s Way
