AUD/CAD & AUD/USD Analyses: Australian Dollar is Performing Better than the US and Canadian Dollars

As Canada is World’s one of the largest oil exporters, its currency has a major dependency on oil price. Oil demand is decreasing due to the pandemic and with the new virus strain spreading so fast and European countries shutting down their borders, demand for oil decreases. The situation might get even worse if the spread of this new strain gets out of control and located in different countries worldwide, especially in the US.

Australian dollar, unlike its counterpart CAD, is gaining due to the rising amount of demand for gold. The weakening US Dollar, new Covid-19 variance, US stimulus package might nudge investors to purchase the precious metal. As the Canadian Dollar is dependent on oil, Australian dollar is dependent on gold, as Australia is the 3rd largest Gold producer in the World.

Both pairs, AUD/CAD and AUD/USD are about to complete the 5th motive wave of the Elliott Wave cycle and each pair is approaching an important resistance, which could halt the further growth.

AUD / USD quote on Overbit

As seen on the chart above, AUD/USD was halted by the resistance at $0.76398. The pair was able to quickly recover and is now looking towards breaking the aforesaid resistance and continue the uptrend. Elliott Wave count on the Daily chart of the pair suggests that there should be one last impulse before the pair can go into a deeper correction and the level where this 5th wave could end is near $0.79900 as there is a strong resistance.

AUD / USD quote on Overbit

If AUD/USD fails to break the resistance, it should not drop below the $0.74045 – $0.74000, where an EMA50 support and previous high, which also is wave 3 are located. Nevertheless, continuation of the uptrend towards $0.79900 looks more realistic.

AUD/CAD weekly chart clearly demonstrates where the pair could stop its impulsive uptrend move, the dynamic resistance of March 23, 2013.

AUD/CAD chart by TradingView

The Elliott Wave count of this pair also suggests the end of the motive at 0.99890. The pair is back inside that descending channel, hence the levels of this channel will play a significant role in price action of AUD/CAD.

AUD/CAD chart by TradingView

Currently, the pair is testing an important resistance, despite the indication of overboughtness of the pair by RSI, MACD, MA100 and EMA50 acted as a support and signal the continuation of the uptrend. If the pair fails to break the current resistance at 0.97740, it might drop towards 0.96510 but never below that, otherwise the EW count would become invalid.

Both Australia and Canada won’t be publishing important economic data this year, the only drivers for the stability of these currencies will be developments in the US and Covid-19 statistics including the developments of the new variant of the virus. Unlike Australia and Canada, the United States will publish two important economic reports forecasts of which look positive, these would be Pending Home Sales (MoM) as per November and CB Consumer Confidence for December.

Bullish Bounce Targeting 1.9100 and Above

Dear Traders,

The AUD/CAD has formed a bullish consolidation pattern straight above the POC zone.

0.9030-50 is the POC zone and we might see a bounce towards 0.9105 and 0.9150. At this point the price is supported above the W L3 which also adds to the bullish confluence. If the AUD strength continues, we should not see the price dropping to 0.9030. Have in mind that the pair is very slow as it makes only 38 pips of ATR(5) so the patience is needed for the price to develop.

The analysis has been done with the CAMMACD.MTF template.

For more daily technical and wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

A World Searching for a Recession

It’s hard to go past the US ISM manufacturing print, as the recent regional manufacturing data points had given us a belief that the national print would at least be in the expansion. However, that wasn’t the case and the reality of the index dropping to 49.1 – the first contraction since August 2016 – is that the idea of the US economy is the shining light and an island onto its own has been questioned.

We know manufacturing is highly cyclical, but we can see that every sub-component in the index is below the 50 expansion/contraction level, and that is a worry. Just take a look at the correlation with the Goldman Sachs current activity indicator, with manufacturing PMI data a major contributor to the read.

The world searching for a recession

The ‘recession’ word has crept into the narrative yet again, and one way I can visualise this is to search using Google Trends for keywords. Or, I can look at the story count on Bloomberg. Here I have scanned for the story count for ‘recession’ (white) and ‘currency war’ (orange). It seems Bloomberg editorial has been putting pen to paper and focusing on the currency war angle, which is a reflection of readers interest.

Of course, the aforementioned news flow has benefited the usual suspects, gold, silver, JPY, implied volatility (the VIX index closed at 19.66%), rates and bonds – it’s all one big correlated trade. With small-caps underperforming once again (the Russell 2000/US2000 closed -1.5%) and the S&P 500 is eyeing a re-test of 2900. Asian equities are holding in ok, and while the ASX 200 is lower by 0.8%, the Hang Seng and Nikkei 225 are flat.

I would also add that overnight we heard from St Louis Fed President James Bullard, who changed his call to a 50bp cut (from 25bp) in the September FOMC meeting and as a result we’ve seen buying across the fed fund futures curve – with the market now pricing a 25% chance of 50bp cut. This has taken US 2-year Treasury’s -5bp lower to 1.44%, with small selling in the USD.

The message from Dr. Copper

Take a look at high-grade copper. If copper has a PhD in economics, then maybe this is telling us a message.

The USD index (USDX) has failed to close above trend resistance, and for those trading EURUSD (given the EUR contributes a 57% weight to the USDX basket), we’ve seen a pronounced pin bar reversal on the daily, and a higher high through today’s trade would be interesting given the love for the USD. We react to price moves.

Fed speakers to focus on

One key aspect will the upcoming Fed speaker fest. The highlight will be NY Fed President John Williams, who some will recall was so dovish in the lead-up to the August FOMC meeting, that the NY Fed had to put out a statement shortly after his speech, to walk back his view. Clearly, the market will be looking to see how he sees the world and whether his communication with the market improves.

It does feel to me as though there is further USD upside, at least in the short-term, and aside from the manufacturing data and woeful University of Michigan consumer confidence report last week, we are yet to see fragility feed into CB consumer confidence report (red line), consumption statistics or service sector reads. One suspects this will presumably be more affected should cracks emerge in labour market reads. It makes this week’s US ISM services and payrolls report just that bit more important and expect markets to be sensitive to these reads.

Silver is flying

As mentioned, there has been some love for precious metals, and there has been a focus away from gold (to an extent) towards silver. If this hasn’t come across your radar, take a look at the daily chart of silver (USD denominated), it’s flying.

Just look at the gold/silver ratio, it’s getting chopped up, and that is usually a bullish sign for precious metals.

Staying in FX, we’ve seen a renewed bid in the AUD, largely as a result of a less dovish-than-feared RBA meeting, but todays Q2 GDP print, while in-line with estimates at 0.5% QoQ has seen a further position adjustment from AUD shorts. AUDCAD has had a strong move, putting in a sizeable bullish outside day reversal, with price eyeing a move into the 0.9050 and the top of the trading range it’s formed since late July.

Consider we have the Bank of Canada meeting tonight (00:00aest), and while the market puts a 6% chance of a cut, CAD traders will feed off the tone (and the level of flexibility reserved for a cut in the October meeting. One to watch.

Of course, GBP has been well traded with better GBP buyers emerging, notably on the run below 1.2020. Even though there has been a small bid in the sterling, I don’t think it necessarily surprised that parliament passed a motion facilitating an extension of the Brexit timetable, which should be formally approved on Wednesday and will then require the blessing of the EU. There is much to write on the subject, but the thought turns to a snap election called for 14 October and whether Corbyn accepts this challenge or refuses, with the view to battle a GE early in 2020.

The US session keyed off with a Trump tweet and yet another defiant message that gave us no indication the respective Xi-Trump camps are anywhere near to forging a deal. But the tweet set a risk-off tone in markets, and this was then given additional tailwind by a shocker of an ISM manufacturing print in the US, but also in Canada.

It’s hard to go past the US ISM manufacturing print, as the recent regional manufacturing data points had given us a belief that the national print would at least be in expansion. However, that wasn’t the case and the reality of the index dropping to 49.1 – the first contraction since August 2016 – is that the idea of the US economy is the shining light and an island onto its own has been questioned.

We know manufacturing is highly cyclical, but we can see that every sub-component in the index is below the 50 expansion/contraction level, and that is a worry. Just take a look at the correlation with the Goldman Sachs current activity indicator, with manufacturing PMI data a major contributor to the read.

The world searching for a recession

The ‘recession’ word has crept into the narrative yet again, and one way I can visualise this is to search using Google Trends for keywords. Or, I can look at the story count on Bloomberg. Here I have scanned for the story count for ‘recession’ (white) and ‘currency war’ (orange). It seems Bloomberg editorial has been putting pen to paper and focusing on the currency war angle, which is a reflection of readers interest.

Of course, the aforementioned news flow has benefited the usual suspects, gold, silver, JPY, implied volatility (the VIX index closed at 19.66%), rates and bonds – it’s all one big correlated trade. With small-caps underperforming once again (the Russell 2000/US2000 closed -1.5%) and the S&P 500 is eyeing a re-test of 2900. Asian equities are holding in ok, and while the ASX 200 is lower by 0.8%, the Hang Seng and Nikkei 225 are flat.

I would also add that overnight we heard from St Louis Fed President James Bullard, who changed his call to a 50bp cut (from 25bp) in the September FOMC meeting and as a result we’ve seen buying across the fed fund futures curve – with the market now pricing a 25% chance of 50bp cut. This has taken US 2-year Treasury’s -5bp lower to 1.44%, with small selling in the USD.

The message from Dr. Copper

Take a look at high-grade copper. If copper has a PhD in economics, then maybe this is telling us a message.

The USD index (USDX) has failed to close above trend resistance, and for those trading EURUSD (given the EUR contributes a 57% weight to the USDX basket), we’ve seen a pronounced pin bar reversal on the daily, and a higher high through today’s trade would be interesting given the love for the USD. We react to price moves.

Fed speakers to focus on

One key aspect will the upcoming Fed speaker fest. The highlight will be NY Fed President John Williams, who some will recall was so dovish in the lead-up to the August FOMC meeting, that the NY Fed had to put out a statement shortly after his speech, to walk back his view. Clearly, the market will be looking to see how he sees the world and whether his communication with the market improves.

It does feel to me as though there is further USD upside, at least in the short-term, and aside from the manufacturing data and woeful University of Michigan consumer confidence report last week, we are yet to see fragility feed into CB consumer confidence report (red line), consumption statistics or service sector reads. One suspects this will presumably be more affected should cracks emerge in labour market reads. It makes this week’s US ISM services and payrolls report just that bit more important and expect markets to be sensitive to these reads.

Silver is flying

As mentioned, there has been some love for precious metals, and there has been a focus away from gold (to an extent) towards silver. If this hasn’t come across your radar, take a look at the daily chart of silver (USD denominated), it’s flying.

Just look at the gold/silver ratio, it’s getting chopped up, and that is usually a bullish sign for precious metals.

Staying in FX, we’ve seen a renewed bid in the AUD, largely as a result of a less dovish-than-feared RBA meeting, but todays Q2 GDP print, while in-line with estimates at 0.5% QoQ has seen a further position adjustment from AUD shorts. AUDCAD has had a strong move, putting in a sizeable bullish outside day reversal, with price eyeing a move into the 0.9050 and the top of the trading range it’s formed since late July.

Consider we have the Bank of Canada meeting tonight (00:00aest), and while the market puts a 6% chance of a cut, CAD traders will feed off the tone (and the level of flexibility reserved for a cut in the October meeting. One to watch.

Of course, GBP has been well traded with better GBP buyers emerging, notably on the run below 1.2020. Even though there has been a small bid in the sterling, I don’t think it necessarily surprised that parliament passed a motion facilitating an extension of the Brexit timetable, which should be formally approved on Wednesday and will then require the blessing of the EU. There is much to write on the subject, but the thought turns to a snap election called for 14 October and whether Corbyn accepts this challenge or refuses, with the view to battle a GE early in 2020.

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Chris Weston, Head of Research at Pepperstone.

 (Read Our Pepperstone Review)

Australian Dollar tango down

Some traders prefer to avoid such market conditions and trade elsewhere. For those, we made this video. Today,3 occasions on the pairs without the USD.

First one is the AUDCAD, where the price is falling down sharply after two bearish price patterns. First, major one, is the flag, which is present in the proper downtrend and was giving us a hint, that this trend was about to be continued. The breakout happened after the price drew a second pattern – double top formation. Currently, we are close to mid-term lows, which can be a good occasion for taking some profits and, in consequence, reversal.

Second instrument is the EURAUD, where we can also witness the weakness of the Australian currency. Setup presented here is the Head and Shoulders pattern, with a false breakout to the downside. Movement south stopped on the long-term up trendline and since that, we do have a strong upswing. In my opinion, the positive sentiment should be continued.

CHFJPY is the last instrument in this analysis. Here, the price is creating the third bearish correction pattern in a row. We already had one flag and a pennant and now, we are having flag again. The sell signal will be created, when the price will break the lower line of the flag and horizontal support on the 109.1. Chances for that are quite high.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

A Day of Event Risk For Traders

I touched on the Jerome Powell’s testimony to the House Services Panel (tonight at midnight) in yesterday’s daily, and that continues to be the dominant event risk.

I will add that Powell speaks on behalf of the Fed and a collective view, rather than his personal thoughts. This is important as there are eight voters, who are yet to be convinced a cut is needed in the near-term, and one could argue that the recent ISM manufacturing and services, and payrolls are no smoking gun.

It’s probably why we continue to see selling in the August fed funds futures contract (the red line), where traders use this tradeable instrument to bet on the probability, and the extent, of a July cut from the Fed. Go back to the 24 June, and the yield here was 2.02%, which given the fed fund effective rate (https://fred.stlouisfed.org/series/FEDFUNDS) sits at 2.38% (green line), it shows we were pricing in 36bp of cuts (if we look at the difference between the two variables). The yield on the August contract has since risen to 2.14%, and we see 24bp of cuts currently priced. So, I would expect this to get some focus over the next 24 hours or so, and importantly we should see the USD, gold and equities keying off this instrument.

On a side note, Pepperstone is planning to roll out interest rates and bonds to clients in the next few months, so I will keep you appraised here. As even if you solely trade equities, FX or gold, they can be useful in understanding what’s priced in, and this can really help with our risk-to-reward assessment. Especially when holding positions over events.

Source: Bloomberg

Fed member Harker offers his thoughts

Philadelphia Fed President Harker was interviewed in the Wall Street Journal, causing a bit of a stir, easing USDJPY above 108.80, a level I mentioned yesterday, and for those who like to trade inverse head and shoulders patterns, then consider the technical target here. Harker’s view that “there’s no immediate need to move rates in either direction at this point in my view though slowing global growth and uncertainty over trade policy have created clear risks to that outlook”, has genuinely resonated here.

It’s also been a key reasoning why AUDUSD has traded through the 20-day MA and looks heavy. A 4.1% decline in the July Westpac consumer confidence (out today at 10:30AEST) has hardly inspired AUD bulls either. 50bp off the cash rate may have helped stabilise sentiment towards the housing market, but consumers seemingly need a bit more encouragement. That said, the probability of a November cut has actually fallen a tad to 52%.

AUDCAD a key play

As I wrote in today’s ‘chart of the day’ (https://pepperstone.com/uk/market-analysis/chart-of-the-day-audcad), AUDCAD is interesting given the cross sits at the lowest levels since 2010 and is one to watch ahead of tonight BoC meeting, which also comes out at 00:00aest. Consider there are actually a few things going right for the Canadian economy, and this could come across in a more balanced statement. With 11bp of cuts priced into Canadian swaps over the coming 12 months, we should consider if the statement goes anyway to justifying this.

For me, diverging paths at a central bank level are the perfect breeding ground for trend traders. Its where we see a blow out in bond yield differentials, with FX coming along for the ride. That’s exactly what we see now, where we see the yield differential between Aussie 2-year and Canadian 2-year bond yields, as highlighted by the red line, getting ever wider. I have overlapped AUDCAD here, to show the influence.

As the event risk rolls on, we also get the FOMC minutes for June at 04:00aest, and it feels like the market is going to focus on the eight members who called for rates to be kept on hold in 2019. We also know that these members were open to a cut, they just wanted more information to compel them to call for a cut – the question is, what exact information would they like to see? Perhaps that comes tomorrow when we get the June CPI print.

Elsewhere in G10 FX, volumes in GBP have ramped up, notably in GBPUSD, which got a lot of attention on the break of 1.2506. Rallies remain an opportunity to sell, although I will say that despite all we hear in the Tory party leadership battle, and measures to make no-deal Brexit a higher hurdle, that traders are still very sanguine on Brexit. If I look at GBPUSD 1-month implied volatility, there are just no concerns here at all that price is going to have a sizeable move. To put into context, the market feels (with a confidence level of 68.2%) that GBPUSD will trade 120-pips either side of the current spot price (1.2452), putting a 240-pip range in play. Still incredibly hard to buy GBP on a timeframe over 4-hours.

DAX and FTSE at a make or break

Aside, from the pre-positioning in FX I’ve mentioned above, we see a better feel to equities again through Asia. The German DAX (GER30) and FTSE 100 (UK100) are two markets on my radar, as the price has come back to test their respective break-out points, and the buyers have supported. A rally tonight off this level is what technical traders would guide as support and could be a clear bullish signal.

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Chris Weston, Head of Research at Pepperstone.

 (Read Our Pepperstone Review)

Equity Bears are Crying in Their Soup Today

Lots of theories on this one but I’m sticking with the knock-on effect of improving China data and the anticipation US-China trade resolution. China’s total trade with the U.S slumped by 11% in the first three months of this year, suggesting a that if a US-China trade solution is sealed, it will provide a significant and needed boost to Chinas economy and will be much need shot in the arm for the global economy .

In addition, China has agreed to open its cloud-computing sector to foreign companies to sweeten the pot suggesting China is looking to make this deal happen.

Asia market was mixed despite the improving China data and the increasing likely hood of a US-China trade deal; we think that has more to do with possible leverage curbs as foreign investors turned cautions given past leverage unwinding moves in China market. But the market is very frothy due to the MSCI rebalancing vacuum effect, so investors may simply be booking profits while keeping some powder dry to engage on market dips.

Oil market

Thursday market sell of driven on the back of the possibility of OPEC opening the spigots full bore if the priced move to high, is starting to look more like a temporary case of the hic-ups than anything else. Mind you we still believe that OPEC will up supply as we near the US primary driving season for no other reason to avoid going toe to toe with the wrath of President Trump .

But for today at least the bulls are back in charge due to the likely hood that output from either Iran or Venezuela could drop further. While the threat of oil disruption from OPEC’s persistent ‘rabble-rouser’ producer, Libya remains front in centre. All this suggest OPEC+ potentially runs the risk of over-tightening the market on the back of their supply discipline.

As well the positive shift in risk sentiment and the weaker USD is helping market along nicely today .

That’s what it’s all about trading the topsy turvy oil market for you.

Gold

Gold bulls are trying to get off the mat after yesterday’s beat down, but bullish ambitions are thwarted by improving equity market sentiment as the S&P pushes above the critical 2900 level.

Currency markets

By new standards, it has been unusually active currency markets coming on the heels of EURJPY demand out of Tokyo on suspected flows regarding MUFG’s takeover of the aviation arm of DZ Bank. That is the talk on the street despite this deal first reported on March 1 so one can never be entirely sure what’s driving the move, but that story does seem to fit the narrative I guess.

Euro

But EURUSD move is supported by German 10 Government Bond Yield as the resurgent China data is having a positive knock-on effect in the trade-sensitive EU. For the Euro near term ambitions, we still think all roads lead through Beijing and the positive knock-on effect from China’s stimulus. For the near-term EU fortunes and by proxy the EURO, let’s hope the Chinese authorities don’t put an abrupt end to their current stimulatory cycle .

Shallow pockets of liquidity and the loonie

The market is overweight US dollar, so any negative dollar news will create a decent reversal and will be accentuated by shallow pockets of liquidity despite higher market turn over. While that seems a bit of contradiction what I mean in layman terms, spreads are a bit wider than usual due to the current G-10 fx liquidity profile. So we can see some outsized moves due to this A prime example of shallow pockets of liquidity, the USDCAD has reversed course today after making a push to 1.3400 on Thursday and is now eyeing a test of 1.3300 on general USD malaise and a significant force higher on WTI.

Yen

USDJPY has been particularly busy rocketing up nearly 100 pips from yesterday Thursday’s low water market and driven on the back of suspected talked about real flows, but the pair is catching an updraft from improving risk sentiment

Aussie

The Aussie and a bit of an upside-down day getting hammer lower on the back of the RBA financial stability report which not to unexpectedly stated risks in the household sector had increased and that the danger of a downturn in the global economy had increased uncertainty. The Aussie fell to .7115 before recovering as the external factors behind being long Aussie started to kick in including stronger China data ( China surging export surge is helping the Aussie along nicely today). As well the anticipation of a US-China trade deal is too juicy to ignore as it will provide a much-needed shot in the arm to Aussie dollar sentiment given Australia key role in the global supply chain.

This article was written by Stephen Innes, Head of Trading and Market Strategy at SPI Asset Management

EURUSD with an Impressive Counter Attack

Only the scale of this rise was slightly beyond our expectations. EURUSD climb significantly higher and on a daily chart managed to create a very strong bullish candlestick pattern – bullish engulfing. A formation is not happening in a random place, we managed to go back above the two horizontal supports and inside the symmetric triangle pattern. This is actually a false breakout too and can be considered as a strong buy signal.

The second instrument is the AUDCAD, where we can see a very clean bearish setup. Price is in a downtrend, which started with the head and shoulders pattern. After this, we had a rectangle and now we have a pennant. This is a trend continuation pattern, so should result in a further drop. The sentiment is negative, as long as we stay below the yellow resistance.

The last one is gold, where we are still waiting for the price to break the 1315 USD/oz resistance. That should give us a buy signal, which will be based on an activation of the inverse head and shoulders pattern bouncing from crucial support on the 1307 USD/oz. Chances for that are pretty good.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Softness Back in Vogue for Central Bankers

These 180 degrees turn compare to the previous rhetoric came as a surprise to the markets. Earlier the RBA noted that it was choosing the right moment to raise rates from a historical low.

However, such softening of rhetoric is not the exception, but the rule at the moment. From the beginning of the year, in official comments, the Fed made it clear that they were not sure about further rate increases, the ECB noted the need to monitor the situation and indicated that they did not want to rush to increase rates and were generally concerned about the economic slowdown.

The central banks of developing countries altogether moved to active steps in their policy. The National Bank of China reduced reserve requirements, which is another form of policy easing. In Armenia and Georgia, central banks cut rates in January. Most economists expect rate cuts in the near future in Thailand, Philippines, and India. In Indonesia, the Central Bank also sharply softened the rhetoric, despite strong economic data.

Thus, most central banks either try to defuse the situation or in fact resort to stimulating the economy through policy easing. This is positive news for the stock markets of these countries and contributes to a positive attitude in global indices.

It is worth recalling that there is no smoke without fire. Central Banks soften the rhetoric, as the risks of the economy overheating are gone from the agenda. Due to trade wars and global economy cyclical slowing, it is no longer necessary to restrain growth, now it needs to be stimulated.

In the short term, it supports emerging markets rally and contributes to the stability of their currencies. However, the big question is whether these measures are enough to rid the world of a new recession.

Analogies come to mind that the 2019 year can be compared to 2006 or 2007 when markets grew on soft rhetoric, but this was not enough to prevent the global financial crisis in 2008.

This article was written by FxPro

Technical Outlook For USD/CAD, AUD/CAD & NZD/CAD: 07.12.2018

USD/CAD

Even after trading at the highest levels in eighteen-months, the USDCAD has to close beyond 1.3410 on a weekly closing basis in order to aim for 1.3450 and the 1.3500 resistances-levels; however, the 1.3585-1.3600 confluence-region, including upper-line of an ascending trend-channel & horizontal-barrier, can confine the pair’s upside if at all it crosses 1.3500 mark. In case prices rally above 1.3600, the 1.3650 & 1.3740 may offer intermediate halts prior to highlighting the 1.3800 resistance. Alternatively, the 1.3330 & the 1.3260 could serve as immediate supports for the pair, breaking which 1.3180 & 1.3125 might gain traders’ attention. Given the sellers’ refrain to respect 1.3125, the 200-week SMA level around 1.3000 seems crucial to watch.

AUD/CAD

Not only six-week old upward slanting trend-line but 200-day SMA could also challenge the AUDCAD’s downside, which in-turn signal brighter chances of its pullback to the 0.9700 and then to the 0.9770 numbers to north. Should the quote manages to hold its strength past-0.9770, the 0.9800, the 0.9840 and the 0.9885 are likely following resistances to appear on the chart. Meanwhile, a D1 close beneath the 0.9660 TL-support needs to conquer 200-day SMA level of 0.9635 to revisit the 0.9600 and the 0.9550 rest-points. Moreover, pair’s sustained downturn below 0.9550 can avail 0.9515 and the 0.9465, including 100-day SMA, as supports.

NZD/CAD

NZDCAD’s failure to hold 0.9185-75 breakout maintains the importance of resistance-turned-support, breaking which the pair can come back to an ascending TL, at 0.9120. If at all the 0.9120 fall short of limiting the price decline, the 0.9100, the 0.9035 and the 0.9000 could become Bears’ favorites. On the contrary, the 0.9260, the 0.9285 and the 0.9315-25 can keep trying to restrict the pair’s near-term advances, which if broken may escalate its rise to 0.9365 level. Additionally, the 0.9400 and the 0.9445 might please Bulls beyond 0.9365.

AUDUSD tests the broken neckline

One of the best looking setups among major pairs can be seen on the AUDUSD, where we do have a beautiful reversal pattern and according to the price action rules, we should soon see the further rise. We are talking here about the setup on the daily chart, which only adds the credibility (setups on daily weekly charts are always the most powerful).

AUD/USD Daily Chart
AUD/USD Daily Chart

Since the beginning of September, the AUDUSD was creating the Inverse Head and Shoulders, so a strong bullish reversal formation. In our case, everything went according to the plan and on Friday, buyers managed to break the neckline (grey) of this structure. In the same time, that resistance was the 23,6% Fibonacci of the main yearly downtrend. The new week starts with a small pull-back, which is rather typical for this kind of a price action. Simply – broken resistance is being tested as a support.

Price closing a day above the grey area will be a strong signal to buy. On the other hand, price coming back deep below the neckline will mean a false breakout and can crash the bullish dreams for a long time. There is one rule with trading the false breakouts – you do not mess with them.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Important AUD Pairs’ Technical Outlook: 14.11.2018

AUD/USD

While pullbacks from 0.7235-40 indicate the AUDUSD’s dip to re-test fortnight old ascending TL, at 0.7180 now, it’s further declines are less likely as not only upward slanting support-line but the 0.7165-60 area also stands ready to challenge the sellers. As a result, chances of the pair’s U-turn to 0.7265 on the break of 0.7240 are much brighter while 0.7300-0.7305 could confine the quote’s upside then after. If at all the pair rises past-0.7305, the 61.8% FE level of 0.7340 may flash on the chart. On the contrary, pair’s slide beneath 0.7160 can recall the 0.7125 and the 0.7100 supports whereas 0.7055 might trouble additional south-run. Assuming the Bears’ refrain to respect 0.7055 level, the 0.7020 and the 0.7000 can become their favorites.

EUR/AUD

EURAUD’s bounce off the 1.5575-65 could help the pair to visit 1.5700 round-figure while the 1.5800 & 200-day SMA level of 1.5855 might raise the bar for its extended rise. Should prices rally beyond 1.5855, the 1.5885-90, the 1.5950 and the 1.5980-85 can entertain the buyers. Alternatively, a D1 close below 1.5565 highlights the importance of 1.5530 and the 1.5460 as rest-points, breaking which 1.5360 may appear on the pessimists’ radar to target. Moreover, pair’s sustained downturn after 1.5360 could question the strengths of 1.5270, 1.5200 and 1.5150 as supports.

AUD/CAD

Even after breaking eight-month old descending resistance-line & 100-day SMA confluence, the AUDCAD still struggles to lure Bulls as 0.9570 repeatedly activates the pair’s profit-booking moves. Though, the pair needs to provide a daily closing beneath 0.9485-80 support-confluence in order to claim 0.9410 rest-point. If at all the pair continue trading downwards below 0.9410, the 50-day SMA level of 0.9335 and the 0.9250 trend-line number seem crucial to observe. Let’s say the pair manage to surpass 0.9570 barrier, then it can aim for 0.9610 and the 200-day SMA level of 0.9665. It should also be noted that successful clearance of 0.9665 enables the pair to confront 0.9720 & 0.9780 resistance-levels.

AUD/CHF

Inability to conquer 200-day SMA keep making the AUDCHF liable to meet the 0.7220 and the 0.7170 mark, comprising 100-day SMA. However, 0.7120-30 horizontal-region and the 0.7085 TL support can limit the pair’s further downside, if not then 0.7025 and the 0.7000 may gain market attention. Meanwhile, the 0.7295-0.7300 resistance-zone, encompassing 200-day SMA, acts as immediate upside hurdle for the pair, breaking which 0.7320 and ten-month long downward slanting resistance-line, at 0.7400, could play their roles. In case the quote successfully crosses 0.7400 mark, the 0.7445 & the 0.7500 could be looked closely if holding long position.

Technical Outlook For USD/CAD, EUR/CAD & AUD/CAD: 02.11.2018

USD/CAD

Five-week old “Rising-Wedge” is again at test with the USDCAD’s latest dip beneath the formation support. If the pair sustains recent breakdown, it confirms the bearish chart pattern that theoretically signal its plunge to 1.2770, which is below October lows. However, the 1.3000 and the 1.2930-25 could offer immediate supports to the pair prior to fetching it to the 1.2885-80 horizontal rest-zone. In case prices continue declining past-1.2880, the 1.2840 & 1.2800 are likely buffers that may be availed ahead of visiting the aforesaid 1.2770 mark. Meanwhile, an uptick beyond 1.3070 support-turned-resistance can put the Bearish formation on hold and push the quote towards 1.3110 & 1.3150 barriers to north before making it confront the 1.3170 resistance-line. Assuming the pair’s successful rise above 1.3170, the 1.3200, the 1.3225 and the 1.3290 might entertain the Bulls.

EUR/CAD

Unlike USDCAD, the EURCAD still struggles with 1.4950-40 area, breaking which it can surge to the 1.5000 round-figure but a downward slanting TL, at 1.5015 may limit the pair’s further advances. Given the pair’s ability to surpass the 1.5015 hurdle, the 1.5050 & the 1.5090 can act as intermediate halts during its rally to 1.5130-35 horizontal-region. Alternatively, the 1.4900 and an ascending trend-line, at 1.4865, might confine the pair’s short-term downturn, which if broken highlights the importance of 1.4840 support-level. Should sellers refrain to respect the 1.4840 mark, the 1.4800 & the 1.4750 could flash in their radars to target.

AUD/CAD

Having clearly breached the 50-day SMA & descending trend-line confluence around 0.9325-20, the AUDCAD is expected to aim at 100-day SMA level of 0.9510. If at all the pair continue being favorite to buyers after 0.9510, the 0.9550, the 0.9590 and the 200-day SMA level of 0.9680 could be their next bets. On the downside, the 0.9365 seem nearby support for the pair prior to retesting the 0.9325-20 support-confluence. It should also be noted that the pair’s D1 close below 0.9320 may again highlight the 0.9290, the 0.9220 and the 0.9190 for Bears to observe.

 

How to Trade the AUD in the Upcoming Days?

Since the beginning of 2018, the Australian dollar has depreciated by 6-8% against major counterparts. The currency keeps depreciating and traders are more and more curious about the future tendency.

The analysis of the Commodity Futures Trading Commission (CFTC) displays the net short positioning of the AUD. And it’s clear that shorts of the AUD prevail.

AUD/USD

What factors pull the AUD down?

The first and the major reason of the AUD weakness is trade wars. First of all, the Australian dollar is considered as the risky currency. Traders will never invest in such currencies in times of uncertainties. Secondly, the trade war affects the Chinese economy. China is the main trade partner of Australia. Problems in the Chinese economy will affect the trade relations between these two countries.

Furthermore, a risk-off sentiment that pulls the Asian stock market down affects the currency a lot. Any volatility on the stock market is reflected in the depreciation of the currency.

The second reason is the policy of the Reserve Bank of Australia. According to the central bank, the declining Aussie helps improve economic growth, hiring, and wages. Therefore, the rate hike is planned not earlier than in 2019.

The third reason is economic data that are highly volatile and differ from time to time. For example, the last jobs data that were released on October 18 were mixed, as a result, the AUD fell.

What can change the Australian downtrend?

It’s early to talk about the strengthening of the AUD because up to now, there are no crucial fundamental factors that may become drivers for the Australian currency.

If only the USD plunges significantly, the AUD will get a chance to turn the situation in its favor. Moreover, an improvement in the trade disputes may boost the Australian currency.  However, there are no clues that these factors will occur soon.

Let’s have a look at the short-term trading

AUD/USD

Although the pair keeps trading within the downward channel, it doesn’t mean that the AUD won’t have a chance to rise within the channel.

Events to take into consideration:

AUD:

Oct. 31: CPI, Trimmed Mean CPI

USD:

Oct. 30: CB Consumer Confidence

Moreover, a relief in political and trade issues may improve the investors’ sentiment.

Up to now, the pair has been moving down, however, it still has a long way to the next support. If the pair gains a foothold below 0.7041, it will provoke a further fall to 0.6938. Technical indicators don’t signal an upward move, however, as soon as RSI is below 30 level and the parabolic SAR forms 3 dots above the price, the pair will get a chance to turn around. In the case of positive economic figures and market sentiment, this chance will appear sooner. The important resistance is at 0.7150. The next resistance will lie at 0.7220.

AUD/USD Daily Chart
AUD/USD Daily Chart

Making a conclusion, we can say that the AUD/USD pair is anticipated to trade within the downward channel, as there are no boosters to break this negative trend for the AUD. However, even within the channel, the pair may move up in case of positive economic data and the development in the market risk sentiment.

Technical Outlook For USD/CAD, EUR/CAD, GBP/CAD & AUD/CAD: 20.09.2018

USD/CAD

Having breached five-month long ascending trend-line, the USDCAD seems well inclined to test the 200-day SMA level of 1.2865, which if broken could open the door for the pair’s drop to 1.2810-2800 support-zone. In case sellers refrain to respect the 1.2800 mark, the 1.2730, the 1.2700 and the 1.2620 are likely following numbers to appear on the chart. Should prices witness pullback from present levels, the support-turned-resistance line near 1.2955 and the 1.3000 round-figure could entertain short-term buyers prior to challenging them with 1.3050, comprising 100-day SMA. Moreover, pair’s sustained trading beyond 1.3050 can avail 1.3100 as an intermediate halt while aiming the 1.3170 TL resistance.

EUR/CAD

EURCAD’s bounce off the 1.5060-5050 support-zone can help it revisit the 1.5140 and the 1.5170 resistance but immediate downward slanting TL, at 1.5230, may limit the pair’s further upside. Even if the pair manage to surpass the 1.5230 barrier, it could only target 1.5300 level as a bit longer resistance-line, at 1.5345, might confine the quote’s additional rise. Meanwhile, a downside break of 1.5050 highlights the importance of 1.5000 psychological magnet, breaking which 1.4940 and the 1.4900 can please the Bears. Given the pair’s extended downturn beneath 1.4900, the 1.4840 and the 1.4800 may gain market attention.

GBP/CAD

In spite of the GBPCAD’s recent U-turn, the pair might find it hard to justify its strength unless clearing the 1.7165-70 resistance-confluence, including 100-day SMA & six-month descending trend-line. If at all there is a D1 close beyond 1.7170 by the pair, the 1.7280 and the 200-day SMA level of 1.7385 can become Bulls’ favorites. Alternatively, 1.6920-10 can offer nearby support to the pair during its decline, which if broken could drag it to 1.6825 and the 1.6720 numbers. Additionally, the 1.6590 and the 61.8% FE level of 1.6450 might appear in the pessimists radar past-1.6720 break.

AUD/CAD

With the adjacent upward slanting trend-line indicating AUDCAD’s strength, the pair is likely heading towards 0.9430 resistance-line but overbought RSI might disappoint optimists then. In case the pair crosses the 0.9430 upside hurdle, the 0.9475, the 0.9515 and the 0.9560 should be watched carefully while holding long positions. On the downside, 0.9370 TL and the 0.9330 can act as buffers ahead of visiting the 0.9315 rest-point. However, pair’s dip beneath the 0.9315 might not hesitate recalling the 0.9270 and the 0.9215, encompassing 61.8% FE, as quotes.

The Australian Dollar Is “Captured” By “Bears”

The Australian Dollar keeps testing its short-term “bottom”. This morning, AUSDUSD was trading in the downside area it last reached in January 2017. It seems like another new low are just around the corner because the Aussie became very sensitive to all negative things that are happening on the global market, such as “trade wars” pressure the USD is trying to bring on China.

This week, there may be additional information on trade and economic relations between the USA and China. Most likely, the USA will announce the extension of import duties on Chinese goods before September 6th. The volume expected to be about 50 billion USD, but different sources provide different numbers. Some even say it will be 200 billion USD. The only thing that is known for sure is that the above-mentioned duties on several goods will increase up to 25%. This is intended to make Chinese goods less profitable and the domestic demand is expected to switch to local offers.

The statistics published in the morning by China showed that the Manufacturing PMI from Caixin dropped up to 50.6 points in August after being 50.8 points in the previous month. The indicator is slowing down, which is a direct result of trade issues between the USA and China.

Domestic statistics from Australia, in its turn, weren’t too great as well and showed a decline in the Retail Sales. The indicator didn’t change in July, although it was expected to add 0.3% m/m after expanding by 0.4% m/m in June. The components of the report show that consumers cut their expenses on clothing, footwear, and household goods, as well as department stores retailing. This decline was somehow eliminated by increased demand for cafes, restaurants and takeaways, and food.

Obviously, a slowdown in the Retail Sales is a negative signal for the Aussie.

The H1 chart of AUDUSD shows a descending impulse inside the long-term downtrend. The main downside target is the support line of the major channel at 0.7125. Also, one should pay attention to the short-term trend channel, because the current pullback may reach its resistance line and break the key level at 0.7225. If it happens, the price may reverse the long-term trend. The main target of short-term uptrend will be the resistance line of the long-term channel at 0.7325.

AUD/USD 1H Chart
AUD/USD 1H Chart

This article was written by Dmitriy Gurkovskiy, a Chief Analyst at RoboForex

USD/CAD Daily Price Forecast – Fading NAFTA Optimism Pressures Canadian Loonie.

The USD/CAD pair failed to capitalize on the weekly bullish gap and was now seen consolidating in a range, just above mid-1.3000s. The pair broke to the upside last Friday and reached a fresh weekly high at 1.3087. Price was holding near the highs, with a bullish tone, consolidating important daily gains. From the weekly low the pair raised almost 200 pips.

The move to the upside followed comments from Canadian negotiator Freeland who said “we’re not there yet” regarding the trade deal with the US and Mexico. PM Trudeau added that a “no deal” on NAFTA was better than a bad one. Also, the pair moved higher on the back of a stronger US dollar which gained momentum amid risk aversion market sentiment. Meanwhile, US President Donald Trump on Saturday threatened to exclude Canada from a new NAFTA agreement after the recent US-Canada trade negotiations ended without any agreement. Trump also warned the Congress not to interfere with these negotiations or he would simply terminate the trilateral NAFTA pact altogether.

Exit From NAFTA Looks Highly Likely For Canada

While Canadian Prime minister is ready for NAFTA exit instead of agreeing to a bad deal, Loonie struggles to come to terms on NAFTA proceedings which kept weighing on the Canadian Dollar at the start of a new trading week. The pair touched an intraday high level of 1.3077, albeit struggled to gain any follow-through traction despite a combination of supporting factors. A modest US Dollar uptick, coupled with a mildly negative tone around crude oil prices, which tend to undermine demand for the commodity-linked currency – Loonie, did little to inspire the bulls and eventually led to a subdued/range-bounce price action through the early European session earlier today.

Moreover, traders also seemed reluctant to place any aggressive bets amid holiday-thinned liquidity conditions on the back of a bank holiday, both in the US and Canada. Moving ahead, this week’s important macro releases scheduled at the beginning of a new month, including the keenly watched US non-farm payrolls data, and the latest BoC monetary policy update on Wednesday will play a key role in determining the pair’s next leg of directional move.

Despite last week’s strong up-move, the pair remains within a short-term descending trend-channel held over the past two months or so. Hence, it would be prudent to wait for a decisive move beyond the channel resistance, currently near the 1.3100 handles, before placing any major bets in Greenback’s favor. On the flip side, a slide back below the key 1.30 psychological mark would reinforce the trend-channel and turn the pair vulnerable to head back towards challenging the 1.2900 handle support.

 

EURUSD comes back above the crucial resistance!

EURUSD used the inverse head and shoulders formation to climb back above the major horizontal resistance, which is the neckline of much bigger and more relevant H&S pattern. That can be potentially a huge buy signal but first, we need to see the bounce from this line, which would be a confirmation of the false breakout pattern.

NZDUSD has reached an important resistance created by the correction equality pattern and the horizontal line on the 0.672. The first contact brings us a bearish bounce, which may be showing us a comeback to the main downtrend.

The last one is the AUDCAD, where the price tested the major long-term horizontal resistance. It seems that supply is back on the market because the price is declining sharply. The sentiment remains negative, as long as the price stays below the grey area.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Technical Update For USD/CAD, EUR/CAD, GBP/CAD & AUD/CAD: 16.08.2018

USD/CAD

Although short-term ascending trend-line favors the USDCAD‘s rise, seven-week long downward slanting TL, at 1.3175 now, becomes a tough challenge for the pair to clear in order to justify its strength in targeting the 1.3215-20 and the 1.3285-90 resistances. In case the pair manage to conquer 1.3290, the 1.3325 and the 1.3385 can please the buyers. On the downside, the 1.3070 TL support and the 1.3020 seem nearby rests for the pair to avail during its declines before visiting the 1.2960-55 support-zone. However, pair’s drop beneath the 1.2955 might not hesitate testing the 1.2920 and the 1.2855 levels.

EUR/CAD

EURCAD’s U-turn from 1.4800-1.4795 can’t be considered as a sign of its strength as 1.5005-10 and the 1.5060 barriers still stand tall to restrict the pair’s upside momentum. In case prices surpass 1.5060 hurdle, the 1.5100 and the 1.5185 are likely following numbers to appear on the chart. Meanwhile, the 1.4900 and the 1.4840 can offer intermediate halts to the pair’s downturn prior to dragging it to 1.4800-1.4795 area. Additionally, pair’s extended south-run past-1.4795 may aim for 61.8% FE level of 1.4745 and the 1.4700 round-figure.

GBP/CAD

With the oversold RSI & 1.6585-1.6600 region playing their roles to trigger the GBPCAD’s pullback, the pair may revisit the 1.6770-80 horizontal-resistance, breaking which the 1.6920 and the 1.7000 may entertain the Bulls. Though, the 1.7050-70 area could confine the pair’s advances beyond 1.7000, if not then the 1.7160 & 1.7220 might gain market attention. Assuming that the pair fails to hold its recent recovery and dips below 1.6585 on a daily closing basis, the 1.6475 and the 1.6380-60 can flash in the sellers’ radar. Should the quote keep trading southwards after 1.6360 then chances of its plunge to the 1.6200 and to the 1.6000 can’t be denied.

AUD/CAD

Alike EURCAD, the AUDCAD also seems recovering and may soon question the 0.9575 resistance but its further escalation can be limited by the 0.9625 and the 0.9665 resistances. Given the pair rallies above 0.9665, the 0.9700 and the 0.9725 could mark their presence as quotes. Alternatively, the 0.9485, the 0.9445 and the 0.9415 may keep troubling the pessimists prior to offering them the 61.8% FE level of 0.9375.

Situation on the AUD after the data from the job market

Overnight, the market received data about the condition of the job market from Australia. The unemployment rate dropped, which was a good sign, but the employment change was worse than expectations. In overall, traders used this data to buy AUD, which is now strengthening across the market. On the EURAUD, we bounced again from the horizontal resistance on the 1.571, third time in a row. That is rather a very negative sign and we should see a further drop soon, especially that we are inside of a bearish flag formation.

AUDUSD is aiming higher for the horizontal resistance marked with a green color. That creates a nice buying opportunity for the short-term traders. Chances that we will test this area are pretty high.

AUDCAD is also about to test an important horizontal resistance. In addition to that, the price is about to draw a hammer on the weekly chart. End of the week will be especially interesting on this instrument. Price closing above the orange area will be definitely a strong signal to buy.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

USDCAD defends the long-term up trendline

Last week was great for the USD. Dollar Index made new long-term highs and the EURUSD broke important supports. On almost all instruments with the USD, we can find interesting setups. Today, we present you the USDCAD, where the buy signal is still relatively fresh.

It seems like this pair is coming back to the uptrend, after being in a deeper correction since the end of June. Our positive view on the USDCAD is based on the few factors. First one is the long-term up trendline, which supports higher lows and highs since the beginning of February (green). At the beginning of August, the price bounced again, which confirms the uptrend in 2018. The second factor is the flag (blue lines). This is a trend continuation pattern, so we should see the breakout of the upper line soon. Last but not least is the breakout of the horizontal resistance on the 1.31 (red). The price being above that line is a confirmation of the positive sentiment.

USD/CAD Daily Chart
USD/CAD Daily Chart

With this setup, in the next few weeks, we should see the further upswing. All we need for a legitimate trigger is the daily candlestick closing above the blue line, which can happen as soon as today.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis