Analys från DailyFX
Global Growth Fears Quelled After Chinese, Euro-Zone PMIs; AUD on Top
INTRADAY PERFORMANCE UPDATE: 09:50 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.32% (+0.80% prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
Signs of a stabilizing China and improvement in European growth prospects have helped cushion what has been deteriorating risk appetite this week. Mainly, global concerns have been manifested in the form of collapsing emerging markets, which has boosted those currencies with strong short-term growth momentum like the British Pound.
The calm developing, however, hasn’t necessarily made its way into FX markets. The Australian Dollar is the only currency to outperform the US Dollar today, though gains have been difficult to hold on to. Similarly, signs that the Euro-Zone may stay out of recession in the 3Q’13 haven’t produced a stronger Euro. In both of these cases, it is due to the turn in the US Dollar.
The release of yesterday’s July FOMC Minutes proved to be more ‘boom’ than ‘bust,’ as the Federal Reserve policymakers have made it abundantly clear that they are seeking to taper QE3 sooner than later.
This belief is largely predicated on the notable shift in the inflation discussion – more were concerned than at the June meeting that the upswing in US growth prospects would push inflation back to the Fed’s +2% medium-term goal sooner than later. Layering concerns in over asset bubbles in global equities and sovereign bonds, a clearer picture shows the stars are indeed aligning for a ‘Septaper.’
AUDJPY 5-min Chart: August 22, 2013 Intraday
Taking a look at European credit, peripheral bond yieldshave continued to leak higher as European equity markets have struggled the past few days, proving to be a further negative influence on Thursday.Should this relationship persist – weaker credit and equities – the Euro could face increased pressure over the next several sessions.
The Italian 2-year note yield has increased to 1.893% (+1.8-bps) while the Spanish 2-year note yield has increased to 1.792% (+2.1-bps). Likewise, the Italian 10-year note yield has increased to 4.392% (+2.9-bps) while the Spanish 10-year note yield has increased to 4.538% (+2.3-bps); higher yields imply lower prices.
Read more: USD/JPY Hits Fresh High as July FOMC Minutes Reinforce ‘Septaper’
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
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FX TECHNICAL ANALYSIS – CHART OF THE DAY
GBPUSD (H4) – This week I’ve said: “The pair continues to impress since early-July but there are signs of near-term exhaustion developing.…in between $1.5720 and 1.5760 this week.” Now:
– Rejection at 1.5720/60 did indeed.
– A Bearish Rising Wedge has developed off of the August 2 and August 13 lows.
– The downturn is confirmed by both the H4 and daily Slow Stochastics (5,3,3) dropping out.
– The H4 RSI uptrend off of the August 1 and August 13 lows has broken to the downside.
– The H4 indicators have hit/are nearing oversold conditions, suggesting that a bounce may be coming soon, which would look to be sold.
– Support comes in at $1.5500/10 (23.6% Fibonacci retracement July low to August high).
– A bearish bias is warranted against 1.5720/60.
— 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
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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
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