Analys från DailyFX
US Dollar Claws Back Losses; AUD/USD Slides Sharply Under $0.9100
ASIA/EUROPE FOREX NEWS WRAP
The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is up modestly on the day (+0.53%) as growth concerns out of China alongside revived Portuguese political issues has placed risk-appetite on hold as the second week of July comes to a close. The notable loser is the Australian Dollar, down nearly one and one-half points with a majority of the losses occurring over the past hour or so on seemingly no news; the AUDUSD was last seen around $0.9050.
The selloff in the commodity currencies at the end of the week serves as a stark contrast to emerging market and Asian currencies on the whole, of which the latter has collectively increased by +0.5%, as measured by the Asian Dollar Index. Market participants, despite the perceived dovish nature of Fed Chairman Bernanke on Wednesday, have seemingly scaled back their short-term expectation that the Fed might not taper in 2013. Rather, despite dovish posturing, the uptick in US economic data is paving the way towards the beginning of the taper in September.
As the Fed heads towards the exit, a number of other central banks have geared up or are in the process of gearing up their easing measures; I believe that this is a way of providing a “liquidity counterweight” so as to prevent significant capital outflows once QE slows. Already, the Bank of England and the European Central Bank have introduced “forward guidance”; and the Reserve Bank of Australia has a 68% chance of cutting its main benchmark interest rate by 25-bps at its next meeting. From a monetary perspective then, the US Dollar looks like it stands on increasingly strong fundamental footing – I prefer buying dips in USD-based pairs.
Taking a look at European credit, peripheral yields have continued to push higher, especially in Portugal, proving to be a somewhat of a negative influence on the Euro today. The Italian 2-year note yield has increased to 1.677% (+3.3-bps) while the Spanish 2-year note yield has increased to 2.032% (+0.8-bps). Likewise, the Italian 10-year note yield has increased to 4.492% (+2.9-bps) while the Spanish 10-year note yield has decreased to 4.795% (-0.8-bps); higher yields imply lower prices.
RELATIVE PERFORMANCE (versus USD): 11:00 GMT
CAD: -0.14%
CHF: -0.38%
JPY: -0.39%
EUR:-0.47%
GBP:-0.53%
NZD:-0.62%
AUD:-1.43%
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.53% (-0.63% prior 5-days)
ECONOMIC CALENDAR
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— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
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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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