AUDUSD Fundamentals (based on dailyfx article)
The Australian Dollar finds itself torn between conflicting forces as
year-end liquidation on trends dominating markets in 2014 gathers
momentum. Swelling risk appetite – embodied by a relentless push upward
by the S&P 500 – and a firming US Dollar have been defining themes
in the past year. Profit-taking on these trades ahead of the transition
to 2015 has produced a parallel downturn in the greenback and the
benchmark stock index.
This dynamic carries conflicting implications for AUDUSD. On one hand,
the prices are being offered support by a market-wide unwinding of
long-USD exposure. On the other, the shedding of risk-on exposure is
putting downward pressure on the sentiment-geared Aussie Dollar. Not
surprisingly, this produced relative standstill, with prices locked in a narrow range and waiting for guidance even as notable reversals are recorded elsewhere in the anti-USD space.
A shift in the relative monetary policy outlook may break the deadlock
in the week ahead. Shifting expectations over recent weeks have
delivered a priced-in G10 forecast that sees the RBA as one of the most
dovish central banks in 2015. Indeed, with OIS rates implying at least
one interest rate cut in the coming 12 months, the Australian monetary
authority leads on the conventional policy easing front. Only the BOJ
and the ECB may edge out Glenn Stevens and company for the most-dovish
crown, and then only via expansions of non-standard measures.
This stands in stark contrast with the policy trajectory at the
Federal Reserve. Markets are betting on at least one rate hike in 2015
and have been flirting with the possibility that US officials will be
able to squeeze in two of them before year-end. US economic news-flow
appears to be gathering steam relative to consensus forecasts once
again. Data from Citigroup suggests that, on the whole, realized
outcomes are now outstripping expected ones by the widest margin since
mid-September. This has already encouraged markets to bet on the sooner
arrival of the first post-QE rate hike. Next week’s FOMC policy
announcement – this time complete with an updated set of economic
projections and press conference from Chair Janet Yellen – may see the
timeline shorten further.
On the domestic front, minutes from December’s RBA meeting will be in
the spotlight. The markets were not meaningfully swayed against betting
on a 2015 rate cut by the neutral statement that emerged out of that
sit-down. This suggests that anything but a convincing hawkish
rhetorical shift – an outcome that seems overwhelmingly unlikely even
on a relative basis – will keep bets on a 25-75 basis point pro-USD
move in the policy spread comfortably in place. Taken together with
guidance from the Fed, that may tip the scales to produce a bearish
break out of consolidation for the Aussie.
GOLD (XAUUSD) Fundamentals (based on dailyfx article)
Gold prices are markedly higher this week with the precious metal
rallying 2.5% to trade at $1222 ahead of the New York close on Friday.
The advance comes amid a turbulent week for broader risk assets with
global equity markets selling off sharply on global growth concerns.
Weakness in the US Dollar and falling crude prices have further
impacted risk appetite with gold well supported as investors sought
alternative stores of wealth. Despite the gains however, prices
continue to hold below a key resistance threshold with the near-term
risk weighted to the downside heading into next week.
It was a rough week for equities with the SPX off more than 2.70% on
the week as growing political uncertainty in Greece and concerns over
the weakening outlook for global growth sparked a wave of profit
taking. The accompanied sell off in crude prices, which hit lows not
seen since 2009 on Friday, have continued to weigh on broader market
sentiment, with gold catching a bid early in the week.
Looking ahead to next week, US economic data comes back into focus
with the November Consumer Price Index and the highly anticipated FOMC
policy decision on Wednesday. As officials anticipate weaker energy
prices to boost disposable incomes for U.S. households, the recent
pickup in job/wage growth may embolden the committee to take a more
hawkish stance on monetary policy with speculation circulating that the
central bank may look to remove the “considerable time period” language
as it pertains to interest rates. Should the subsequent presser and
updated growth projection show a more upbeat assessment, gold could come
under pressure as investors begin to bring forward interest rate
expectations. That said, the trade remains vulnerable near-term just
below key resistance.
From a technical standpoint, gold has now pared 50% of the decline off
the July high with the move into the $1237 target we noted last week .
This level converges with a median line dating back to August 2013 and
near-term the risk remains weighted to the downside while below this
threshold. A breach above targets subsequent targets at $1248 and a key
resistance range at $1262/68. Interim support rests at $1206 and $1196
with only a move sub-$1179/80 shifting the broader focus back to the
short-side. Bottom line: longs at risk near-term sub $1237 with a
pullback likely to offer more favorable long-entries lower down. A
breach of the highs keeps the topside bias in play with such a scenario
eyeing targets into the 200-day moving average.
Gold forecast for the week of December 15, 2014, Technical Analysis (based on fxempire article)
The gold markets rose during the course of the week as you can see,
testing the $1250 level. That being the case, we think that the market
could run into a significant amount resistance here, but we do not have
the right setup to start selling yet. Ultimately, we think that this
market will test the $1150 level given enough time, so at this point
time we are not necessarily excited about buying gold. However, we
recognize that if we get at least a daily close above the $1250 level we
could start buying.
USD/JPY forecast for the week of December 15, 2014, Technical Analysis
(based on fxempire article)
The USD/JPY pair fell during most of the week, slicing down to the 118
level. With that being the case, we ended up finding support in that
general vicinity, and we believe that the markets will continue to find
buyers at lower levels. We think that the 115 level is the “floor” at
the moment, and we are looking for supportive candles in order to start
buying again. We have absolutely no interest in selling this pair, and
believe that just simply being patient is the way to find buying
opportunities again and again.
USD/CAD forecast for the week of December 15, 2014, Technical Analysis (based on fxempire article)
The USD/CAD pair initially fell during the course of the week, but then
shot through the resistance at the 1.15 level in order to continue to
show serious strength. With that, the market looks as if it’s ready to
continue going on its next leg up, and that pullbacks should offer value
in the US dollar. The 1.13 level should be massively supportive, so we
do not believe that the market will fall below there. Ultimately, we
believe that this market will then head to the 1.20 level given enough
NZD/USD forecast for the week of December 15, 2014, Technical Analysis (based on fxempire article)
The NZD/USD pair broke higher during the course of the week, as we found
a bit of support below. However, there is still a significant amount of
resistance above, at the 0.80 handle, and with that we feel that the
sellers will step in sooner or later. We have no interest in buying this
pair, as the Royal Bank of New Zealand continues to work against the
value the Kiwi dollar going forward, and as a result we feel the market
will ultimately go to the 0.75 handle.
GBP/USD forecast for the week of December 15, 2014, Technical Analysis (based on fxempire article)
The GBP/USD pair broke higher during the course of the week, testing the
1.57 region. The fact that we done so far into the previous two
shooting stars tells us that we could in fact see continuation as we
have certainly seen quite a bit of pressure put on the resistance.
However, we believe that the market should offer selling opportunities
at higher levels. We are especially keen on selling at the 1.60 handle,
as it should continue to be important based upon previous support, and
now what we believe to be future resistance.
EUR/USD forecast for the week of December 15, 2014, Technical Analysis (based on fxempire article)
The EUR/USD pair broke higher during the course of the week, but as you
can see struggled at the 1.25 handle. This is an area that has been
resistive in the past, so it makes sense that we would run into
resistance again. We believe that the downtrend is most certainly still
in effect, but we do not have a resistant candle to start selling yet.
Because of this, we are on the sidelines as far as longer-term trades
are concerned, but we certainly wouldn’t be interested in buying this
After all, we are heading towards the end of the year, and the liquidity
will all but disappear. With that, we think that short-term traders
only can be bothered to be in this marketplace, and that sudden erratic
corrections can occur at any time. I have a yellow box drawn on the
chart which for me signifies when the trend changes. If we get above
there, extensively the 1.30 handle, we could see the market go much
higher. Probably to the 1.135 level would be the next target at that
point time, but it takes a lot for that to happen in our opinion.
More than likely, the market will probably do very little over the next
couple of weeks, at least as far as anything along the lines of a
substantial move. Ultimately, the market could bounce a bit from here
and offer a selling opportunity but we would need to see the resistive
candle form in order to do so. Perhaps we may get a little bit of a late
December surprise, but ultimately we feel that this market is going to
continue going lower once the liquidity returns the marketplace.
Looking at the longer-term charts, we believe that the 1.2050 level is
the target given enough time, and as a result we are not interested in
buying under any circumstances, even though we do recognize that a bit
of a bounce could happen. We believe that 2015 will be very hard on the
Euro as well.
EUR/USD Weekly Outlook (based on investing actionforex article)
EUR/USD's rebounded last week indicated short term bottoming at
1.2246. Further recovery could be seen back to 1.2599 resistance.
Considering bullish convergence condition in daily MACD, break of 1.2599
will be the first sign of medium term bottoming and bring stronger
rebound to 1.2886 key resistance next. On the downside, break of 1.2246
is needed to confirm fall resumption. Otherwise, we'd expect more
corrective trading ahead.
In the bigger picture, overall price actions from 1.6039 long term
top is viewed as a corrective pattern. Fall from 1.3993 is tentatively
viewed as the third leg of such pattern and should target 1.1875 low
and below. On the upside, break of 1.2886 resistance will bring some
consolidations first before staging another decline.
In the long term picture, EUR/USD turned into a long term
consolidation pattern since reaching 1.6039 in 2008. Such consolidation
is still in progress. And break of 1.2042 will likely pave the way to
61.8% retracement of 0.8223 to 1.6039 at 1.1209. Before that, EUR/USD
would continue to engage in sideway trading between 1.1875 and 1.5143 in
Forex - Weekly outlook: December 15 - 19
The dollar gained ground against the euro on Friday following the
release of strong U.S. economic data and surged to more than five year
highs against the commodity-exposed Canadian dollar as oil prices
continued to drop.
EUR/USD was up 0.44% to 1.2461 in late trade. The dollar was boosted
after data showing U.S. consumer sentiment rose to an almost eight-year
high in December.
The preliminary reading of the University of Michigan's consumer
sentiment index rose to 93.8, the highest level since January 2007 and
ahead of forecasts of 89.7. Consumer sentiment was boosted by the
improving outlook for employment and wage growth and lower gasoline
The data underlined expectations for a hike in U.S. interest rates by the Federal Reserve next year.
The U.S. dollar index, which measures the greenback against a basket of
six major currencies, recovered from session lows of 88.12 following the
report to settle at 88.34, still off 0.26% for the day. On Monday the
index rose to a five year high of 89.53.
The dollar also pushed higher against the yen, with USD/JPY at 118.77 in late trade, off lows of 118.05.
Elsewhere, the Canadian dollar fell to five-and-a-half year lows, with
USD/CAD hitting highs of 1.1590, before easing back to 1.1578 in late
Oil prices dropped to their lowest level in five years on Friday after
the International Energy Agency cut its forecast for global oil demand
for the fifth time in six months.
Canada is a major oil exporter and the currency's sensitivity to crude prices has intensified as prices continued to tumble.
The Russian ruble fell to record lows against the dollar on Friday and
the Norwegian krone fell to 11-year lows after rate hikes by both
countries central banks on Thursday failed to offset the selling
pressure brought to bear by the continued decline in oil prices.
USD/RUB jumped 3.23% to 58.20 late Friday while USD/NOK was up 0.98% to
settle at 7.36 after hitting highs of 7.39 earlier, the most since
In the week ahead, investors will be awaiting the outcome of Wednesday’s
Federal Reserve policy meeting for further clarification on when
interest rates might start to rise. Japan’s central bank is also to hold
a policy setting meeting next week. The euro zone is to produce what
will be closely watched reports on private sector activity.
Monday, December 15