Can AUDUSD Push Past .8000?

Can AUDUSD Push Past .8000?

Chart Of The Day

The Aussie has been on a quite a tear lately picking up nearly 500 points since the middle of December mainly on anti-dollar flows. But as it has approached the key resistance at the 8000 figure the pair has stalled.

Data from Down Under has been good but not great and therefore is unlikely to change RBA’s neutral posture anytime soon. As we noted earlier today, “Australian employment data beat to the upside printing at 34K vs. 9K eyed as labor conditions Down Under continue to show robust growth. Aussie popped on the news but quickly retreated as the .8000 level is proving to be formidable resistance to bulls. Although the job picture in Australia shows steady improvement, wage growth remains subdued and RBA is likely to remain resolutely neutral especially with the currency trading near the .8000 level”

For now, the 8000-8100 corridor remains the key resistance barrier and with triple top keeping a lid on any move higher, but a break about that level would send the shorts scurrying and propel the pair towards the next target at.8500.

Has EURUSD Made a Turn?

Has EURUSD Made a Turn?

Chart Of The Day

After a massive 400 pip rally over the past week, the euro finally ran into a wall at the 1.2300 level. The pair sold off all night long in Europe and early North American trade on news that the Merkel-SPD coalition talks have hit a snag. As we noted earlier, “So far only the Berlin and Saxony-Anhalt regions have voted against the deal. With opposition coming mainly from East German locales SPD leader Schultz has until Sunday to line up the votes and get the deal done. If the coalition talks fail, EURUSD will no doubt see a gap down open on Sunday, but it hard to say whether the political turmoil will have any long-term impact on the euro itself.

The German economy has been operating very well this year and Ms. Merkel could presumably govern in a minority rule if need be.”

Still, with ECB getting worried about the quick pace of euro appreciation the single currency may have trouble forging ahead, but for now, the trend remains up and unless the pair gives up the 1.2200 figure on a closing basis it may be premature to call the top in the move.

EURUSD – Three Times the Charm?

EURUSD – Three Times the Charm?

Chart Of The Day

After correcting for the past few days, the EURUSD skyrocketed right back through the 1.2000 figure after ECB minutes revealed that the Council is clearly starting to think about a taper. With EZ economy enjoying its best performance in more than a decade, there is plenty of scope for EU yields to rise further and the market clearly agrees.

The euro has been capped at the 1.2100 level which is a three year high, failing to take out the figure in several prior attempts. But with ECB clearly turning hawkish and with US data signaling a slowdown in inflation, three times may be the charm for the pair and it could finally clear the 1.2100 figure for good. Tomorrow US Retail Sales figure could be the catalyst for the move if the number misses forecasts and FX markets grow even more skeptical about the prospect of further Fed tightening.

GBPUSD – Double Top or Fresh Highs?

GBPUSD – Double Top or Fresh Highs?

Chart Of The Day

Cable has stalled ahead of the 1.3600 figure since the start of the year failing to make fresh multi-month highs. The pair looks to be carving out a double top near the key 1.3500 figure, but the battle between bulls and bears is not over. A small retrace down to the 1.3300 level will still keep the uptrend intact.

In the meantime, however, a small correction appears to be due especially if US yields continue to rise and UK data starts to falter. Tomorrow’s Trade Balance is expected to miss and could be the catalyst for a move below the 1.3500 figure opening the way for a deeper correction to 1.3300. A break above 1.3600 however, will put a much more bullish structure on the chart paving the path to post Brexit highs above 1.3700

EURJPY – 140.00 in View?

EURJPY – 140.00 in View?

Chart Of The Day

EURJPY posted its best reading in nearly two years today pushing through the 136.00 by morning US trade. The pair is signaling that market is looking for synchronous global growth that will tighten monetary policy everywhere but Japan allowing the pair to make a move towards the key 140.00 level over the next few weeks.

Today’s strong ADP data has the market thinking that NFPs will be solid as well, and if the number proves to be strong in both payrolls and wages USDJPY should verticalize well above the 113.00 level and pull EURJPY along with it, making the 140.00 target within reach.

EURUSD – Breakout to New Highs?

EURUSD – Breakout to New Highs?

Chart Of The Day

The EURUSD is closing in on multi-month highs as the pair reaches for the 1.2100 figure amidst very bullish sentiment in the market. The market clearly wants to take the pair higher on the assumption the better growth in the region will force the ECB to taper QE sooner rather than later. ECB officials, meanwhile, are wary of the rising euro, fearing that it may reignite deflationary pressures in the region, but with growth at decade level highs, they may have no choice but to tighten policy over the near term horizon and the market is clearly anticipating the move.

Tomorrow the market will get a look at German Unemployment data which should confirm that labor demand in EZ powerhouse economy remains buoyant and could serve as a catalyst for move higher that could take the pair through the 1.2100 figure.

AUDNZD – Back to 1.1000?

AUDNZD – Back to 1.1000?

Chart Of The Day

New Zealand Dairy Auction was a disaster today. Price dropped by their biggest amount in a year as the rate declined by -3.9%. Overall in the past half year price have fallen in 4 out of the past 5 months and that does not bode well for the kiwi economy as milk is the country’s primary export. The NZDUSD slid below the 7000 figure, but we believe the fall cab steepen substantially over the next few days as New Zeland reports Trade Balance and GDP figures.

If the data disappoints then kiwi could slide below .6900 and that is likely to push AUD/NZD above the 1.1000 level. AUD/NZD has found solid support above the 1.0850 level and now looks ready to take off above the 1.1000 figure to challenge the highs from the start of the month.

AUDJPY – Can it Break Through 87.00?

AUDJPY – Can it Break Through 87.00?

Chart Of The Day

Australian employment shocked the market with yet another stunning gain yesterday. Australia generated 61K new jobs versus 19K eyed as the unemployment rate remained steady at 5.4% while participation rate climbed to 65.5% from 65.1% the month prior. The news caps an incredibly strong year for jobs in the Australian economy which saw employment expand at 3.2% pace in 2017. Furthermore fully 80% of the jobs have been full-time jobs suggesting that broader GDP growth should remain sound for the foreseeable future.

Over the past few months, the Australian economy has been dogged by weak Retail Sales, muted inflation, and sagging housing prices all of which have weighed on demand and have kept the RBA firmly in neutral territory. But the solid pace of job growth stands as a strong counterpoint to the recent soft data and should translate into better demand into the start of 2018.

At the same time, US data is also showing strong gains as US Retail Sale blew past expectations today rising 1%. Although that has not translated into strength in USDJPY just yet, the market will have to respond sooner rather than later especially if US data continues to improve. That puts AUDJPY on pace to target 87.00 over the next several days.

Is EURJPY the True  FOMC Play?

Is EURJPY the True FOMC Play?

Chart Of The Day

For the past few weeks, EURJPY has been contained to a 132.00-133.00 zone as the push/pull tug of war between bulls and bears provided no clear winner. The market essentially remains in a “show me” mode as traders await the FOMC rate decision and more importantly its guidance about the growth and inflation in 2018.

While the chance of a rate hike tomorrow is 100%, the much more important question is whether the Fed has now moved unambiguously into a tightening mode as it tries to normalize policy. If the statement tomorrow looks past the weak inflation numbers and instead upgrades the growth forecast the dollar is likely to rally hard against the yen, but may not necessarily gain much ground against the euro as markets will assume that Fed’s upbeat outlook will spill over into global demand and will, therefore, force the ECB to become more hawkish as well. That’s why EURJPY may be the best yen cross for a bullish FOMC day especially if it breaks above the 135.00 resistance level clearing the way for a strong rally into the year-end.

GBPJPY – Headed to 153.00?

GBPJPY – Headed to 153.00?

Chart Of The Day

GBPJPY finds itself at the intersection of the two biggest stories this week -- the US payrolls data tomorrow and the Brexit negotiations with EU. The pair was extremely volatile today jumping up and down at every positive or negative headline and could remain so until the end of week’s trade, but should developments follow the scripts of the bulls, the pair could skyrocket through key resistance at the 153.00 level taking out the yearly highs.

If UK and Ireland can come to terms the prospect of a soft Brexit is sure to increase sending cable to a test of post-Brexit highs above the 1.3600 level, that in turn could lift GBPJPY towards 155.00 especially if tomorrow’s NFP show strong wage growth. The one-two confluence of positive factors could send the pair to fresh yearly highs. Of course, headline risk works both ways and the pair could tumble hard below 150.00 if both stories disappoint.

More Seesaw for Cable?

More Seesaw for Cable?

Chart Of The Day

Sterling continued to seesaw in Asia and early London trade dropping to a low of 1.3360 on disappointment that there was no announcement of a deal yesterday, only to pop back on comments from Philip Hammond that talks were progressing well. Behind the scenes, the key issue is the status of Northern Ireland and the unfettered movement of goods services across all of the Irish isles. PM May appears ready to concede those points to the Irish, but the carve out of these rights could open up pandora’s box of problems for Ms. May as the Scotts and even the city of London -- both hot spots of Remain sentiment may seek the very same privileges. In addition, Ms. May’s junior coalition partners the hard right DUP party could withdraw from the government on any such deal. For now the markets are in a wait and see mode, but volatility in cable is sure to explode on any tangible news one way or the other.

Any positive news could send the GBPUSD pair to fresh yearly highs above 1.3600, but if the deal falls through the decline could take the pair all the way to 1.3000

USDJPY – Will the Gap Hold?

USDJPY – Will the Gap Hold?

Chart Of The Day

The dollar was better bid today with USDJPY gapping higher on the week’s open in Asia as currency markets breathed a sigh of relief that the Flynn indictment may not have been as politically damaging to Donald Trump as initially reported. The passage of the tax cut bill by Senate was also viewed as bullish for US growth with benchmark 10-year yield popping to 2.40% in morning European dealing.

But tomorrow we get an insight into how well the US economy is doing. ISM Non-Manufacturing report covers more than 70% of the US economy and is the 2nd most important data point for investors after the NFPs.

The market is looking for a modest pullback on the headline, but the true interest of traders will the employment component which tends to be the single best forecaster of the job report and the price paid component which could an early hint that inflationary pressures are finally making their way through the economy.

If ISM beats to the upside it could unleash a rally in rates, and USDJPY could head towards 114.00 as all systems will signal go for US growth.