Analys från DailyFX
Buy the Rumor: AUD, NZD Lead on US Debt Hope; USD Eyes Rebound
Talking Points:
– Day fifteen of the US government shutdown but a debt deal that would cover costs into the 1Q’14 is now likely.
– US debt limit hit on October 17 (2 days).
– ‘Buy the rumor, sell the news’ in risk, or is this the beginning of something bigger?
To receive this report in your inbox every morning, sign up for Christopher’s distribution list.
INTRADAY PERFORMANCE UPDATE: 09:40 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.06% (+0.56%prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
The shift in the risk profile towards a more optimistic view comes on the heels of reports that Democratic and Republican Senators are finalizing plans to open the government with funding through January and to raise the debt limit through February. This is a far better outcome than what was previously envisioned, only a six-week debt limit extension and no continuing resolution to reopen the government.
As has been typical the past few weeks, the Australian and New Zealand Dollars have benefited from the increasingly positive US fiscal headlines. Investors have been front-running any resolution since Thursday, and by Friday there were veritable signs of an improving global risk profile in equities and FX alike. Considering the shift in risk tolerance comes alongside subsiding US credit risk, the US Dollar may strengthen over the coming days.
The US Dollar is showing signs of basing against its major counterparts after several days of Hammers forming on the Dow Jones FXCM Dollar Index daily chart. With short-term topping patterns in play against the British Pound and the Euro, it looks like subsiding fears over a US default – inherently USD-negative – are helping the world’s reserve currency retake some of its recent losses against its European and lower yielding majors; while high beta FX has led the rally higher. In fact, the GBPUSD is now teetering at major support.
GBPUSD H8 Chart: June 27 to October 15, 2013
The GBPUSD has traded in an uptrend since the first week of July but a sustained hold below the ascending channel for the past few days suggests that the next move is lower. Indeed, the rest of $1.6000 in the GBPUSD today failed, and fresh week lows were set. A daily close under 1.5920 – the October lows – would seek a test of the gap open for the week of September 15 to 20 at 1.5870 over the coming session.
Taking a look at European credit, rising yields across the continent come on the back of stronger equity markets, indicating a risk-positive atmosphere as the US fiscal deadlock nears its resolution. The Italian 2-year note yield has increased to 1.549% (+0.1-bps) while the Spanish 2-year note yield has increased to 1.365% (+0.14-bps). Likewise, the Italian 10-year note yield has increased to 4.254% (+0.4-bps) while the Spanish 10-year note yield has increased to 4.278% (+2.0-bps); higher yields imply higher prices.
Read more: Euro Needs Signs of Continued Economic Recovery Before Next Rally
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators. Want the forecasts to appear right on your charts? Download the DailyFX News App.
— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
-
Analys från DailyFX8 år ago
EUR/USD Flirts with Monthly Close Under 30 Year Trendline
-
Marknadsnyheter1 år agoUpptäck de bästa verktygen för att analysera Bitcoin!
-
Marknadsnyheter4 år ago
BrainCool AB (publ): erhåller bidrag (grant) om 0,9 MSEK från Vinnova för bolagets projekt inom behandling av covid-19 patienter med hög feber
-
Analys från DailyFX11 år ago
Japanese Yen Breakout or Fakeout? ZAR/JPY May Provide the Answer
-
Analys från DailyFX11 år ago
Price & Time: Key Levels to Watch in the Aftermath of NFP
-
Analys från DailyFX7 år ago
Gold Prices Falter at Resistance: Is the Bullish Run Finished?
-
Nyheter5 år agoTeknisk analys med Martin Hallström och Nils Brobacke
-
Marknadsnyheter6 år ago
Tudorza reduces exacerbations and demonstrates cardiovascular safety in COPD patients