USD/JPY – A Retest of 122.00 Highs?

USD/JPY – A Retest of 122.00 Highs?

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Fundamentals
Although the US labor markets have started to slow and US data overall has shown some disappointments as of late, many traders in the fixed income markets remain convinced that the Fed may consider a rate hike as early as June. The US 10 year yields have started to rise and that has put the bid back into USD/JPY which recovered the 120 figure and looks ready to test the recent highs at 122.00 Tomorrow’s FOMC minutes could offer a clue as to how the Fed is leaning and if the tilt is hawkish than the pair has more upside left.

Technicals
USD/JPY has found strong support at the 118.00 level and has now made a higher low at 119.00 but the 122.00 overhang still provides considerable resistance. A break above however could target the pair to 125.00 over the medium term horizon.

AUD/JPY – Will It Retest 90.00?

AUD/JPY – Will It Retest 90.00?

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Fundamentals
The AUD/JPY has been in a long slow decline since the start of the year as combination of RBA rate cuts and no further accommodation from the BOJ have weighed on the pair. The market is convinced that RBA will cut rates again next week given the slowdown in the resources sector as Chinese demand wanes. However, Australia also has a burgeoning housing bubble problem and if tonight’s AU Building Approvals report sunrises to the upside with another string gain, traders my rethink their dovish thesis. Meanwhile is US data continues to surprise to the upside it will lend support through the yen side, so AUD/JPY could be in for a surprising bounce if it can hold the current 91.00 support.

Technicals
If the pair can hold ground at the 91.00 level AUD/JPY could be in the process of setting up a higher low which could propel it towards a retest of the swing highs near 94.00. A break however, could signal a move towards 90.00 as it tests the double bottom support.

AUD/NZD – Retest of Bottom of Building a Base?

AUD/NZD – Retest of Bottom of Building a Base?

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Fundamentals

The AUD/NZD cross is caught in an interesting tug of war as the pair approaches the key 1.0500 support level. On the one hand the expanding interest rate differential between the kiwi and the Aussie has clearly made the former the preferred choice of most investors. However the RBNZ is keenly aware of currency appreciation and does not want to see the kiwi trading above 90 cents. Already the country’s key dairy sector has seen sharp declines in demand as New Zealand products become expensive on the global stage. Therefore the RBNZ may temper it rate hike program and cause a readjustment of rate expectations in the marketplace. Meanwhile in Australia the RBA remains staunchly neutral but also very data dependent. This week the region will see some key releases including tonight Retail Sales and Wednesday’s labor numbers from Australia as well as today’s employment data from New Zealand. Depending on how the data prints the AUD/NZD cross could test further lows or put in a solid bottom.

Technicals

The AUD/NZD finds strong support at the 1.0500 level and may be in the process of forming a triple bottom. A break below opens up a run to the key 1.000 level while upside remains capped by the 1.1000 figure.

GBP/CAD – Retest of Yearly Highs?

GBP/CAD – Retest of Yearly Highs?

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Fundamentals

Slowly but surely GBP/CAD is making its way to retest of the yearly highs as loonie weakness once again reasserts itself. Last week the USD/CAD tested the yearly highs at 1.1200 and only a slightly hotter CPI number kept the loonie from collapsing as traders worried that inflation would keep the BOC from easing policy further. However, the data from the ground has been horrid as Canadian economy remains in a funk. Tomorrow’s GDP which is already expected to print at -0.2% could miss the downside given the very severe weather conditions last month. If the data does print weaker than expected the loonie could take out the 1.1200 highs and send GBP/CAD to fresh yearly highs as well, especially if cable, which continues to find good support at the 1.6600 level remains well bid into the week’s end.

Technicals

The yearly high of 1.8669 looms large of the GBP/CAD pair and a move to 1.6700 could be in the offing if the highs are broken. On the other hand a break below the 1.8500 level could signal an exhaustion move and a possible double top in the pair