Analys från DailyFX
AUD/USD Key Levels Heading into US NFPs With Fed Outlook in Focus
Talking Points:
– AUD/USD looks vulnerable if NFPs pull forward Fed bets
– US NFPs in focus ahead as the market remains subdued in anticipation
– US holiday Monday complicating outlook for currencies
The AUD/USD is trading sideways, around 0.7550 at the time of writing, after the pair managed to find support at the 0.75 handle.
Looking ahead, Fed rate hike expectations are at center stage as we approach the August NFPs, with the Aussie looking vulnerable if the report pulls forward rate hike bets.
Against this backdrop we will form our outlook and look to find short term trading opportunities using different tools such as the Grid Sight Index (GSI) indicator.
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August US Non-farm Payrolls hits the wires 12:30 GMT. Expectations are for a 180K jobs increase, down from the 255K prior number.
The NFP report is always in focus, and today’s numbers are no different as Yellen said last week that “the case for an increase in the federal funds rate has strengthened”, which pulled forward Fed rate hike bets and gave the US Dollar a boost.
This makes for a potentially huge event today, with the market looking to confirm or contradict the shift in the projected rates timeline, potentially implying a binary response on a big beat or miss to expectations in the headline figure.
With that said, opportunity might lie in the nuances.
A slight miss to the headline figure, that neither confirms nor contradicts the build-up in Fed bets, might see a knee-jerk US Dollar sell reaction.
If the wage figures on the other hand print better than expected numbers, the market might interpret that as a positive for inflation (which is the “missing piece” for the Fed’s dual mandate) to an overall positive report.
Also worth watching today will be the speech by Fed’s Lacker on interest rates benchmarks in Richmond, who could potentially comment on the latest jobs report. This could see Lacker express his opinion on the market’s re-pricing of Fed rates path following the figures.
AUD/USD Technical Levels:
Click here for the DailyFX Support Resistance tool
We use volatility measures as a way to better fit our strategy to market conditions. The Australian Dollar is expected to be more volatile than most majors versus its US counterpart based on 1-week implied volatility measures (one Yen more).
With that said, volatility has been subdued lately with 20-day ATR measures sitting at the lowest levels since September 2014.
Further adding to complication is the US holiday Monday, which is notoriously quiet in a historical perspective– potentially implying a burst of volatility on the NFPs, with reduced participation, and follow-through remains in question as the US heads for a long weekend.
The answer to this question will likely depend on the report itself.
AUD/USD 30-Min Chart (With the GSI Indicator): September 2, 2016
(Click to Enlarge)
The AUD/USD is trading below potential short term resistance at 0.7575, with GSI calculating higher percentages of past movement to the upside in the short term.
The GSI indicator above calculates the distribution of past event outcomes given certain momentum patterns. By matching events in the past, GSI describes how often the price moved in a certain direction.
You can learn more about the GSI here, and download the Trade Station version here.
Given the NFPs volatility the main resistance levels to watch might be 0.7600, 0.7650 and the area above 0.77.
Levels of support may be 0.7500, 0.7460, and 0.7400.
We generally want to see GSI with the historical patterns significantly shifted in one direction, which alongside a pre-determined bias and other technical tools could provide a solid trading idea that offer a proper way to define risk.
We studied over 43 million real trades and found that traders who successfully define risk were three times more likely to turn a profit.
Read more on the “Traits of Successful Traders” research.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 51.5% of FXCM’s traders are long the AUD/USD at the time of writing after flipping long recently, offering a short bias on a contrarian basis.
You can find more info about the DailyFX SSI indicator here
— Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
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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