CADCHF – Failure at 77 Cents

CADCHF – Failure at 77 Cents

Chart Of The Day

CADCHF -- Failure at 77 Cents

The Canadian dollar is under pressure today despite the turnaround in oil prices. The U.s. dollar is strong and investors are still worried about President Trump’s tweet about oil prices being too high last week. The unexpected drop in wholesale sales this morning put pressure on the loonie. This number isn’t closely followed but is a reflection of the overall demand. USD/CAD has broken above 1.2800 and is testing 1.2850. The next stop should be 1.29. At the end of last week, softer retail sales and consumer price growth reinforced the Bank of Canada’s caution. Although CAD policymakers sounded slightly less pessimistic this afternoon, they remain worried about NAFTA and feel that underlying issues are evolving well enough to send an unambiguously positive signal to the market.

Technically CAD/CHF is looking very ugly with the pair closing last week and opening today below the 200-day SMA and first standard deviation Bollinger Band. CAD/CHF should drop to 76 cents and if it falls below that, the next stop should be .7560, which is just above the 20 and 100-day SMA

AUD/USD – Headed for 77 Cents?

AUD/USD – Headed for 77 Cents?

Chart Of The Day

One of the weakest performing currencies on Monday was the Australian dollar. After selling off sharply at the end of last week, the selling continued despite the lack of US and Australian data. AUD spent most of the North American trading session in negative territory even though the USD struggled to rally. Tomorrow night we have Australian CPI numbers due or release and while the uptick in consumer inflation expectations suggest that price pressures increased, the forecast is very high. If CPI fails to rise by 0.8% or more and the year over year rate stays below 2%, we could see a correction in AUD/USD. Before then, we’re still looking for AUD to trade heavy. The USD on the other hand is holding strong as the market anticipates President Trump’s Fed pick and a House vote on the Budget Bill.

Technically, the outlook for AUD is very weak. The daily charts show a break below the 20-day and 100-day SMA while the weekly chart included in this note shows AUD/USD starting the week below the 20-week SMA. The 20-week SMA also coincides with the 23.6% Fibonacci retracement of the 2016 and 2017 rally AND the 23.6% Fib retracement of the 2011 to 2015 decline. Both charts show a potential move down to 77 cents and the potential for a steeper decline towards .7635.

AUD/USD Eyes 77 Cents Ahead of RBA

AUD/USD Eyes 77 Cents Ahead of RBA

Chart Of The Day

AUD/USD Eyes 77 Cents Ahead of RBA

The main focus tonight will be on Australia and the Reserve Bank’s monetary policy announcement. At their last meeting the RBA left rates unchanged and said, “Under present circumstances, an appreciating exchange rate could complicate the adjustment under way in the economy.” Investors interpreted these comments to mean discomfort with the current level of the currency and sent AUD tumbling lower as a result. There’s a small subset of investors looking for the RBA to ease this month because CPI declined in the first quarter and activity slowed according to the PMIs. However according to the following table, consumer spending rebounded, business confidence improved, the unemployment rate declined and market indicators ticked upwards. So like many of their peers, the RBA may wait and see how the economy performs in the next month before taking additional action.

Technically the uptrend in AUD/USD remains strong as long as the currency does not close below the 50-day SMA at 0.7540. Resistance is at the March high of 0.7722 and support is at the moving average. If the upside barrier is breached, AUD/USD will aim for its April high. If the moving average is broken, 75 cents will be tested with a possible move down to 0.7450.