AUDUSD for Monday, August 11, 2014 (based on seekingalpha article)
The Australian dollar is trading in a very small trading range
between 0.9270 and 0.9280 after dropping so sharply in to finish out
last week from above 0.9350 down to a two week low at 0.9240. In the
middle of last week the Australian dollar surged higher to a one week
high near 0.9375, before easing back and then falling sharply. It had
done well of late to cling onto the 0.93 level after its sharp fall last
week which saw it move from above 0.9400 down to a seven week low just
below 0.9300, and in more recent days receive solid support there too. A
couple of weeks ago it was easing back below both the 0.9425 and 0.9400
levels with the former providing some resistance. The Australian dollar
reached a three week high just shy of 0.9480 a few weeks ago after it
enjoyed a solid period which saw it surge higher through the resistance
level at 0.9425 to the three week around 0.9480, before easing back
towards that level. The Australian dollar enjoyed a solid surge higher
reaching a new eight month high above 0.95 at the end of June, only to
return most of its gains in very quick time to finish out that week.
the middle of June the Australian dollar has made repeated attempts to
break through the resistance level around 0.9425, however despite its
best efforts it was rejected every time as the key level continued to
stand tall, even though it has allowed the small excursion to above
0.95. After the Australian dollar had enjoyed a solid surge in the first
couple of weeks of June which returned it to the resistance level
around 0.9425, it then fell sharply away from this level back to a one
week low around 0.9330 before rallying higher yet again. Its recent
surge higher to the resistance level around 0.9425 was after spending a
couple of weeks at the end of May trading near and finding support at
0.9220. The 0.9220 level has repeatedly reinforced its significance as
it is again likely to support price should the Australia dollar retreat
Throughout April and into May the Australian dollar
drifted lower from resistance just below 0.95 after reaching a six month
high in that area and down to the recent key level at 0.93 before
falling lower. During this similar period the 0.93 level has become very
significant as it has provided stiff resistance for some time. The
Australian dollar appeared to be well settled around 0.93 which has
illustrated the strong resurgence it has experienced throughout this
year. For the best part of February and March the Australian dollar did
very little other than continue to trade around the 0.90 level, although
at the beginning of March it crept a little lower down to a three week
low below 0.89. Towards the end of March however, the Australian dollar
surged higher strongly moving to the resistance level at 0.93 before
consolidating for a week or so.
Yen off highs as geopolitical tensions ease, sentiment fragile (based on reuters article)
Yen retreats from Friday's highs as safety demand slows
Markets still keeping a wary eye on geopolitical developments
The yen eased versus the dollar on
Monday, having backed off from peaks hit late last week as a slight relaxation
in geopolitical tensions dampened demand for the safe-haven Japanese currency.
The dollar inched up 0.1 percent to 102.17 yen, having bounced off
Friday's two-week trough of 101.51. The euro edged up 0.1 percent to 136.91 yen
, well off an 8-1/2 month low of 135.73 set on Friday.
News on Friday that Russia was ending military drills near the Ukrainian
border helped U.S. stocks post their best one-day gain since March.
Asian shares were last up 0.9 percent, regaining some
footing after having suffered their biggest weekly fall in nearly five months
In a further boost to risk sentiment, Israel and the Palestinians agreed on
Sunday to an Egyptian proposal for a new 72-hour ceasefire in Gaza starting at
"The conclusions from the weekend are that conflicts are cooling, and the
risk-off events of the past two weeks may see upside risk as de-escalation
spreads across the conflicts," said Evan Lucas, strategist at IG in Melbourne.
Trading the ZEW Economic Sentiment (based on forexminute article)
EUR/USD is trading at the crossroads ahead of a couple of ZEW Economic
Sentiment data, most important of which for Germany and the Eurozone as a
whole. Let’s take a look at the fundamental factors first.
German ZEW Economic Sentiment – Forecast: 18.2, Previous 27.1
Eurozone ZEW Economic Sentiment – Forecast: 41.3, Previous 48.1
The readings since 2010 for both of these data points show that
sentiment has been positive since 2013, but looks to have made a
downturn early this year. Readings have missed forecasts and have been
trending down. This reflects the credit issues lingering in the
Eurozone, slower growth seen in Q2, and the geopolitical tensions
escalating in Q3.
The EUR/USD has been falling since the 1.3993 high made in May, which is
also the current high on the year. As we began this week, EUR/USD still
looks pressured in the 1H chart.
EUR/USD 1H Chart 8/12
Here are some observations:
1) Price structure of the Monday (8/11) session has been corrective. It looks like a flag pattern.
2) The bullish momentum from Friday’s push looks lost as the 1H RSI dips below 40 at the start of the 8/12 Asian session.
3) Failure of price to push and stay above the 200-, 100-, and 50-
simple moving averages (SMAs) is a sign that bulls are losing control.
4) However, the rising trendline from last week is still intact.
5) There is also a key support/resistance pivot at 1.3365.
Scenarios Around the ZEW Economic Sentiment data:
1) Now, a break below 1.3365 could be a bearish continuation signal. IF
the ZEW comes in worse than expected, AND price indeed falls below
1.3365, we should look for a bearish outlook toward the 1.3340 area,
then the 1.3295-1.33 lows from Nov. 2013. If there is a pullback after
the break below 1.3365, there should be sellers in the 1.3390-1.34 area
if this bearish scenario were to materialize.
2) Now, if the data is soft, and price dips below 1.3365, but you get a
sharp rejection and price climbs quickly back up above 1.34, we are
likely in a bullish correction scenario for the short-term, with upside
toward the 1.3444 August high, and a key resistance.
3) If data is better than expected and you see an initial reaction push
towards 1.3390-1.34 area but settle and fail to break by day’s close, we
are likely to see further weakness toward the 1.3340 area.
4) If good data can push EUR/USD back above 1.34, there is a chance that
EUR/USD has legs this week for a bullish correction toward the 1.3444
area. However, because this is consolidation mode, it might be prudent
to wait for price to break above 1.34, then wait for a pullback to the
1.3390-1.34 area before confirming the bullish attempt.
We know EUR/USD has been bearish, but it looks due for a
consolidation, or a short-term bullish correction. If ZEW economic data
is soft, look for price to remain neutral-bearish. Strong data might
pave the way for a more bullish consolidation with upside limited to
1.3444 for now. Basically, going with the prevailing bearish trend, we
should have a more bearish bias, unless price is able to stay north of
2014-08-12 01:30 GMT (or 03:30 MQ MT5 time) | [AUD - NAB Business Confidence]
if actual > forecast = good for currency (for AUD in our case)
[AUD - NAB Business Confidence] = Level of a diffusion index based on surveyed businesses, excluding the farming industry. It's a leading indicator of economic health - businesses react quickly
to market conditions, and changes in their sentiment can be an early
signal of future economic activity such as spending, hiring, and
Australia Business Confidence Climbs In July
An index measuring business
confidence in Australia touched a four-year high in July, the latest
survey from National Australia Bank revealed on Tuesday - showing a
score of +11.
That's up from +8 in June.
The index for business conditions came in with a score of +2, rising from +2 in the previous month.
the individual components of the survey, home construction, retailing,
sales, profitability and employment all showed improvement in July, the
AUDUSD Technical Analysis (based on dailyfx article)
The Australian Dollar has
resumed its descent in recent trading with an absence of bullish
reversal signals casting doubt on the potential for a recovery. This
sets the Aussie up for a make-or-break moment as it drifts towards its
range-bottom at 0.9210. A daily close below the nearby barrier would
pave the way for a sustained decline to the 0.8990 mark.
Test of 0.9210 To Offer Make-Or-Break Moment:
2014-08-13 00:30 GMT (or 02:30 MQ MT5 time) | [AUD - Westpac Consumer Sentiment]
[AUD - Westpac Consumer Sentiment] = Change in the level of a diffusion index based on surveyed consumers. Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity.
Trading the News: Bank of England (BoE) Inflation Report (based on dailyfx article)
The Bank of England’s (BoE) Inflation report is likely to heavily
influence the near-term outlook for the GBP/USD as the central bank
looks to move away from its easing cycle.
Why Is This Event Important:
Indeed, the updated forecasts for growth and inflation is likely to spur
increased volatility in the British Pound, but we would need to see
Governor Mark Carney show a greater willingness to normalize monetary
policy in 2014 for the GBP/USD to resume the upward trend carried over
from the previous year.
Sticky inflation paired with the ongoing improvement in the labor market
may spur a greater dissent within the Monetary Policy Committee (MPC),
and the GBP/USD may carve a key low in August should the fresh batch of
central bank rhetoric boost interest rate expectations.
Nevertheless, the BoE may introduce a more relaxed approach in
normalizing policy amid the ongoing slack in the U.K. economy, and the
GBP/USD may face a larger decline over the remainder of the month if
Governor Carney adopts a more neutral tone for monetary policy.
How To Trade This Event Risk
Bullish GBP Trade: BoE Sees Scope to Raise Benchmark Interest Rate in 2014
2014-08-13 12:30 GMT (or 14:30 MQ MT5 time) | [USD - Retail Sales]
[USD - Retail Sales] = Change in the total value of sales at the retail level. It's the primary gauge of consumer spending, which accounts for the majority of overall economic activity
U.S. Retail Sales Unexpectedly Flat In July
Retail sales in the U.S. unexpectedly came in unchanged in the month
of July, according to a report released by the Commerce Department on
The Commerce Department said retail sales were
virtually unchanged in July after edging up by 0.2 percent in June.
Economists had been expecting another 0.2 percent increase.
a modest drop in auto sales, retail sales inched up by 0.1 percent in
July compared to a 0.4 percent increase in the previous month.