U.S. Dollar Rises vs Most Currencies as Fed Taper Talk Gathers Pace

The greenback, however, came off its highs in afternoon trading.

The dollar index earlier rose to 92.887, its highest since Aug. 27. It was last up slightly at 92.664.

A round of U.S. economic data is due out this week, starting with consumer prices on Tuesday, which will give the latest update on how hot inflation has been ahead of next week’s Fed meeting.

Philadelphia Fed President Patrick Harker became the latest official to say he wants the central bank to start tapering this year, saying in a Nikkei interview that he was keen to scale back asset purchases.

Tapering talk has boosted the dollar, said Erik Nelson, macro strategist at Wells Fargo Securities in New York.

“We noticed from the Fed communication that they would like to de-link the taper from the rate hike,” Nelson said. “But it will take a lot of convincing and frankly a lot of time for the market to change its reaction function. For now, a taper timeline is closely linked to a rate hike timeline in the market.”

Tapering typically lifts the dollar as it means a step toward tighter monetary policy. It also means the Fed will be buying fewer debt assets, which suggests there will be fewer dollars in circulation.

The Wall Street Journal reported on Friday that Fed officials will seek an agreement to begin paring bond purchases in November.

Aside from inflation, U.S. retail sales and production figures are also scheduled for release this week.

“Another high CPI (consumer price index) reading this week in the face of weakening economic data could begin to paint the Fed into a corner as pressure mounts for stimulus normalization,” said Christopher Vecchio, senior analyst at DailyFX.com, the research unit of forex broker IG.

The euro was among the currencies to lose ground to the dollar, dipping to $1.1770, its lowest in a little over two weeks, after the European Central Bank said last week it would start to trim its own emergency bond purchases. The euro was last down 0.1% at $1.1801.

Against the yen, the dollar was up 0.1% at 110 yen. The dollar also gained 0.5% versus the Swiss franc to 0.9228.

In the cryptocurrency market, bitcoin was down 2.8% at $44,762.

Litecoin, with a market cap of nearly $12 billion and one of the earliest digital currencies in circulation, fell 2.6% to $180.78, according to crypto data tracker CoinGecko, after Walmart Inc said a press release regarding the retailer’s partnership with the cryptocurrency was fake.

Litecoin rose as much as 27.4% on the fake news.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Iain Withers and Saikat Chatterjee in London; Editing by Angus MacSwan, Will Dunham and Dan Grebler)

AUD/USD Forex Technical Analysis – Momentum Trending Lower with .7292 – .7248 Next Major Target Zone

The Australian Dollar is under a little pressure against the U.S. Dollar early in the session on Monday as investors express caution ahead of a Reserve Bank of Australia speech and jobs data later in the week.

A strong U.S. Dollar is also weighing on the Aussie. The Greenback began picking up strength on Friday after a robust U.S. Producer Price Index (PPI) report encouraged investors to increase bets on an earlier-than-expected tapering by the Federal Reserve.

At 06:24 GMT, the AUD/USD is trading .7344, down 0.0010 or -0.13%.

The price action also suggests investors are pricing in a stronger-than-expected U.S. Consumer Price Index (CPI) report, due to be released on Tuesday.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7222 will change the main trend to down. A move through .7478 will signal a resumption of the uptrend.

The minor trend is down. It turned down earlier in the session when sellers took out last week’s low at .7347. This move shifted momentum to the downside. A trade through .7410 will change the minor trend to up.

The short-term range is .7222 to .7478. The AUD/USD is currency testing its retracement zone at .7350 to .7320.

The main range is .7106 to .7478. Its retracement zone at .7292 to .7248 is the next downside target zone and potential support area. It’s also the last support zone before the main bottom so look for buyers to come in to defend the uptrend.

The minor range is .7478 to .7336. Its retracement zone at .7407 to .7424 is the nearest upside target area.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to the short-term 50% level at .7350.

Bullish Scenario

A sustained move over .7350 will indicate the presence of buyers. This could lead to a labored rally with potential upside targets .7379, .7407, .7410 and .7424. The latter is a potential trigger point for an acceleration to the upside with .7478 the next likely upside target.

Bearish Scenario

A sustained move under .7350 will signal the presence of sellers. The next downside targets are layered at .7320, .7292 and .7248. The latter is the last potential support before the .7222 main bottom.

Taking out .7222 will change the main trend to down. This is also a potential trigger point for an acceleration to the downside.

For a look at all of today’s economic events, check out our economic calendar.

A Quiet Economic Calendar to Test Risk Sentiment and Dollar Appetite

Earlier in the Day:

It was a quiet start to the day on the economic calendar this morning. There were no majors stats for the markets to consider in the early hours.

The Majors

At the time of writing, the Japanese Yen was up by 0.03% to ¥109.910 against the U.S Dollar, with the Aussie Dollar up by 0.12% to $0.7365. The Kiwi Dollar was up by 0.04% to $0.7113.

The Day Ahead

For the EUR

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out to provide the EUR with direction.

The lack of stats will leave the EUR in the hands of market risk sentiment on the day.

At the time of writing, the EUR was down by 0.03% to $1.1811.

For the Pound

It’s also a particularly day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

At the time of writing, the Pound was down by 0.01% to $1.3838.

Across the Pond

There are no major stats due out of the U.S to provide the Dollar and the broader market with direction later in the day.

The lack of stats will leave the Dollar in the hands of market risk sentiment on the day. COVID-19 news updates and geopolitics will remain key drivers on the day.

At the time of writing, the U.S Dollar Spot Index was up by 0.06% to 92.641.

For the Loonie

It’s a quiet day ahead for the Loonie.

There are no major stats due out of Canada to provide the Loonie with direction. While there are no stats to consider, OPEC’s monthly report and impact on crude oil prices will influence.

At the time of writing, the Loonie was up by 0.10% to C$1.2679 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – A Busy Economic Calendar to Test Market Risk Sentiment…

On the Macro

It’s a busy week ahead on the economic calendar, with 62 stats in focus in the week ending 17th September. In the week prior, 42 stats had also been in focus.

For the Dollar:

Inflation figures for August kick things off on Tuesday. We’ve seen labor market numbers disappoint. Another spike in inflation, however, would raise questions over whether the FED can stand pat on policy.

On Wednesday, industrial production figures will be in focus ahead of a particularly busy Thursday.

Retail sales, Philly FED Manufacturing PMI, and weekly jobless claims will be in focus on Thursday.

Expect retail sales and jobless claims to be key.

At the end of the week, consumer sentiment figures for September will also influence.

In the week ending 10th September, the Dollar Spot Index rose by 0.59% to 92.582.

For the EUR:

It’s a quieter week on the economic data front.

Eurozone 2nd quarter wage growth and July industrial production figures will be in focus on Wednesday.

In the 2nd half of the week, trade data and finalized inflation figures for the Eurozone will also influence.

For the week, the EUR fell by 0.56% to $1.1814.

For the Pound:

It’s a busier week ahead on the economic calendar.

Employment figures will draw attention on Tuesday. August claimant counts and July’s unemployment rate will be key.

On Wednesday, inflation figures will also draw plenty of attention ahead of retail sales figures on Friday.

The week’s data set should give the BoE enough data to make a more informed decision on the policy front.

The Pound ended the week down by 0.23% to $1.3839.

For the Loonie:

It’s another quiet week ahead on the economic calendar.

Manufacturing sales on Tuesday and wholesale sales figures on Thursday will influence.

For the week, however, August inflation figures due out on Wednesday will be key stat.

While the stats will influence, crude oil prices and OPEC’s monthly report will also provide direction.

The Loonie ended the week down 1.34% to C$1.2692 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

Consumer and business confidence figures will be key on Tuesday and Wednesday.

On Wednesday, inflation figures will also draw interest, though expect employment figures on Thursday to have a greater impact.

Following the latest lockdown measures and the RBA’s more dovish stance, the markets will be looking to assess the damage.

The Aussie Dollar ended the week down by 1.39% to $0.7356.

For the Kiwi Dollar:

It’s another quiet week ahead.

2nd quarter GDP numbers are due out on Thursday ahead of Business PMI numbers on Friday.

Expect the GDP numbers to be key. While the RBNZ hit pause on lifting rates, the markets will be expecting solid numbers.

The Kiwi Dollar ended the week down by 0.63% to $0.7113.

For the Japanese Yen:

BSI large manufacturing conditions data for Q3 and trade data for August due out on Monday and Thursday will be key.

Finalized industrial production figures on Tuesday should have a muted impact on the Yen and the Asian markets…

The Japanese Yen fell by 0.21% to ¥109.94 against the U.S Dollar.

Out of China

Fixed asset investment, industrial production, and retail sales figures on Wednesday will be in focus.

Expect industrial production and retail sales figures to be the key numbers…

The Chinese Yuan ended the week up by 0.18% to CNY6.4443 against the U.S Dollar.

Geo-Politics

Iran, China, and Russia remain the main areas of interest for the markets. News updates from the Middle East, in particular, will need monitoring following recent events in Afghanistan.

AUD/USD and NZD/USD Fundamental Daily Forecast – Fed Tapering Fears Help Erase Early Gains

The Australian and New Zealand Dollars finished mixed on Friday. After giving back earlier gains, the Aussie closed lower while the Kiwi managed to post a slight advance.

Improved risk sentiment helped boost the currencies for most of the session but conditions changed following the release of a stronger-than-expected U.S. Producer Price Index report. The PPI’s solid gain in August indicated that high inflation is likely to persist for a while. This drove Treasury yields higher as well as the U.S. Dollar as investors increased bets on a Federal Reserve tapering announcement at its September 21-22 policy meeting.

On Friday, the AUD/USD settled at .7354, down 0.0016 or -0.21% and the NZD/USD finished at .7115, up 0.0005 or +0.07%.

Early Strength Fades

The AUD/USD and NZD/USD were trading higher earlier Friday as traders tried to recapture some of its weekly loss. The strength was supported by a jump in riskier assets as investors reacted to the news that U.S. President Joe Biden had a wide-ranging call with his Chinese counterpart Xi Jinping on Thursday. The news raised hopes that the simmering tensions between the two super powers would ease.

Bullish traders were also betting that rapid progress on coronavirus vaccinations domestically would help stimulate the economic rebound in coming months. While Australia is still reporting rising coronavirus cases, the share of the population vaccinated has also picked up markedly and should surpass that in the United States in the coming weeks, Reuters reported.

Meanwhile much of New Zealand, barring the city of Auckland, has already seen an easing of stay-at home rules and the government has been seeking extra shots from abroad.

The bullish news was offset during the U.S. session when robust producer inflation raised concerns that the Federal Reserve would have to begin reining in its massive stimulus sooner-than-expected.

US Dollar, Treasury Yields Jump on Fed Tapering Bets

U.S. producer prices increased solidly in August, leading to the biggest annual gain in nearly 11 years, suggesting that high inflation is likely to persist for a while as the unrelenting COVID-19 pandemic continues to pressure supply chains.

The producer price index for final demand rose 0.7% last month after two straight monthly increases of 1.0%, the Labor Department said. The gain was led by a 0.7% advance in services following a 1.1% jump in July.

The Aussie and Kiwi were also pressured by a rebound in the U.S. Dollar. The greenback rose after Cleveland Fed President Loretta Mester said on Friday that she would still like the central bank to begin tapering asset purchases this year, joining the chorus of policymakers making it clear that their plans to begin scaling back support were not derailed by weaker jobs growth in August, Reuters reported.

For a look at all of today’s economic events, check out our economic calendar.

Weekly Technical Market Insight: 13th – 17th September 2021

Charts: Trading View

US Dollar Index:

The US dollar—according to the US dollar index—staged a comeback last week, snapping a two-week bearish phase.

Supply-turned demand at 91.13-87.76 remains the centre of attention on the monthly timeframe, underpinning this year’s USD advance. In terms of trend, the greenback has been higher since bottoming in 2008. Though minimising the chart highlights the longer-term trend is in fact south, meaning the 2008 up move could simply be a pullback. Breaching 91.13-87.76 would help confirm a bearish standpoint.

A closer interpretation of price action on the daily timeframe shows that since mid-June the DXY has demonstrated a lack of interest to the upside. This is further confirmed by the relative strength index (RSI) displaying bearish divergence: average losses exceeding average gains. In addition, the indicator voyaged south of the 50.00 centreline, highlighting the bearish vibe and throwing light on the possibility of a price move towards support at 91.42 this week.

EUR/USD:

(Italics: previous analysis)

Europe’s single currency finished the week on the back foot against the buck, paring a portion of the recent two-week advance.

Technically speaking, prime support on the weekly timeframe resides at $1.1473-1.1583—sharing space with a 100% Fib projection at $1.1613 as well as a 1.27% Fib extension at $1.1550. Interestingly, long-term stops likely rest south of the $1.1640ish lows and perhaps accommodate enough energy to fill $1.1473-1.1583 bids. To the upside, the spotlight is on supply at $1.2412-1.2214. With respect to trend, we can see the market has largely been higher since the early months of 2020.

Lower on the curve, the daily chart remains languishing beneath late July tops at $1.1909. North of here, buy-stops could fuel moves to prime resistance at $1.2115-1.1990, a place active sellers may reside. The flip side, of course, is a run south back to Quasimodo support at $1.1689.

Against the backdrop of higher timeframes, H4 demand at $1.1783-1.1810, as expected, delivered little at the tail end of the week. Prime support inhabits $1.1764-1.1776, with sell-stops beneath the aforementioned demand potentially fuelling willing $1.1764-1.1776 bids.

The H1 chart shares a similar energy. Topping just ahead of a Fibonacci cluster around $1.1855ish, Friday took on lower price levels amidst a DXY recovery off session lows, reinforced by a solid US PPI print at 0.7 percent in August versus a 0.6 percent forecast. The chart’s focus has shifted to $1.18. Although $1.18 joins hands with a 61.8% Fib retracement and a 1.618% Fib projection at $1.1797, Quasimodo resistance-turned support at $1.1775 (unites with prime H4 support at $1.1764-1.1776) is positioned to welcome any $1.18 whipsaw.

Observed Levels:

Long term:

Higher timeframe analysis points to stops and possible breakout buying interest north of late July tops at $1.1909 on the daily scale. Chart studies, nonetheless, indicate breakout buying above $1.1909 may be short-lived as prime resistance at $1.2115-1.1990 is within touching distance.

Short term:

Lower timeframes show H4 demand at $1.1783-1.1810 and the $1.18 base (H1) merging. Both echo vulnerability this week, underpinning a possible whipsaw to H1 Quasimodo resistance-turned support at $1.1775, which overlaps with H4 prime support at $1.1764-1.1776.

AUD/USD:

(Italics: previous analysis)

Despite printing solid gains out of prime support at $0.6968-0.7242 on the weekly timeframe, buyers took a back seat last week. Should buyers regain consciousness, prime resistance at $0.7849-0.7599 calls for attention. With respect to trend, we’ve been higher since early 2020. Therefore, the response from $0.6968-0.7242 could be a dip-buying attempt.

In tandem with the weekly picture, prime support on the daily timeframe at $0.7286-0.7355 put in an appearance in the second half of the week. This followed a one-sided drop from prime resistance at $0.7506-0.7474. Candlestick movement out of current support, as you can see, implies a lack of buying interest, re-opening the risk of a decline back to the 1.618% Fib projection at $0.7126 this week.

Out of the H4 timeframe, technicians may argue the decision point from $0.7395-0.7410 aided Friday’s sell-off. Clear decision points commonly serve as resistance upon failing to deliver support at the initial test. Stacked demand is now close by between $0.7282 and $0.7343, and prime support rests at $0.7236-0.7266.

Risk aversion took hold Friday, weighing on risk currencies. Earlier, though, short-term flow on the H1 carved a picture-perfect stop run north of $0.74 into Fibonacci resistance between $0.7416 and $0.7409. Not only did this snare breakout buyers (bull trap), it tripped a portion of stops from sellers attempting to fade $0.74. Recent selling underlines the possibility of a whipsaw through demand at $0.7331-0.7350 to prime support at $0.7310-0.7322 (joined by a decision point at $0.7307-0.7324) this week.

Observed Levels:

Long term:

Despite a dull reception, prime support on the daily timeframe at $0.7286-0.7355 remains a focal point, braced by the fact weekly price exited prime support at $0.6968-0.7242. Consequently, long term suggests a bullish picture until daily prime resistance at $0.7506-0.7474.

Short term:

Focus is on the H1 timeframe early week. Friday nosediving below $0.74 renews the potential for a whipsaw below demand at $0.7331-0.7350 to prime support coming in at $0.7310-0.7322. Assuming the setup comes to fruition and $0.7310-0.7322 bids respond, this is in line with higher timeframe direction.

USD/JPY:

(Italics: previous analysis)

Since mid-July, ¥108.40-109.41 demand has failed to stir much bullish energy on the weekly timeframe. Nevertheless, recognising the area derives additional backing from neighbouring descending resistance-turned support, extended from the high ¥118.61, an advance is likely to welcome familiar supply at ¥113.81-112.22.

The lacklustre vibe out of weekly demand is established through a range on the daily timeframe between prime support at ¥108.96-109.34 and resistance from ¥110.86-110.27. The reluctance to commit outside of these areas toughens the consolidation. Range limits, therefore, are likely on the watchlist this week.

Relatively large-scale supply exists on the H4 timeframe at ¥110.82-110.39, an area capping upside since mid-July. With this area making an entrance twice in September thus far and price developing a possible double-top pattern around ¥110.44, a break of the formation’s neckline at ¥109.59 could spark bearish movement. The caveat, of course, is Quasimodo support at ¥109.48. This level—technically speaking—informs traders that a bear trap could be in the making. This means a whipsaw through the neckline (which forms support alongside the ¥109.59 31st August low) may fill sell stops that feed ¥109.48 bids.

The H1 timeframe has ¥110 in sight, an objective base that many traders will be watching early week. The interesting thing here is the prime resistances situated above between ¥110.15-110.12 and ¥110.13-110.07. Round numbers such as ¥110 often attract attention and when coming from below has traders attempting to fade the number and also play any breakout above. With prime resistance located directly above, this has ‘stop run’ written all over it, as per the black arrows.

Observed Levels:

Long term:

The daily timeframe’s range between prime support at ¥108.96-109.34 and resistance from ¥110.86-110.27 offers clear perimeters this week. Knowing the weekly timeframe has price modestly holding demand at ¥108.40-109.41, daily range support is interesting.

Short term:

The H4 timeframe emphasises either a decline this week based on the double-top configuration at ¥110.44, or a bullish scene in the form of a whipsaw through the formation’s neckline at ¥109.59 to Quasimodo support at ¥109.48. Prior to this occurring (if at all), H1 suggests a whipsaw through ¥110 into prime resistances between ¥110.15-110.12 and ¥110.13-110.07 to set up a potential short-term bearish theme early week.

GBP/USD:

(Italics: previous analysis)

In the shape of a hammer candlestick formation (bullish signal), supply-turned demand at $1.3629-1.3456 on the weekly timeframe stepped forward in July. The aforementioned zone, as you can see, remains active, welcoming an additional test mid-August. Yet, pattern traders will note August’s move closed south of a double-top pattern’s neckline at $1.3664, consequently broadcasting a long-term bearish warning. Conservative pattern sellers, however, are likely to seek a candle close beneath $1.3629-1.3456 before pulling the trigger.

More of a detailed view on the daily timeframe communicates a rangebound atmosphere. Since late June, buyers and sellers have been squaring off between a 61.8% Fib retracement at $1.3991 and a Quasimodo support from $1.3609. Directly above the consolidation, two tight-knit 100% Fib projections are seen around $1.4017—a double AB=CD bearish configuration for any harmonic traders reading. Momentum studies, according to the relative strength index (RSI), made its way above the 50.00 centreline and retested the barrier: average gains exceed average losses.

H4 prime resistance at $1.3940-1.3888 put in another appearance on Friday, forcing buyers to step aside. Although this implies a bearish follow-through this week, targeting prime support at $1.3689-1.3724, the fact we tested this area early September (orange arrow) might discourage further selling. What’s technically interesting on the H4 scale is above $1.3940-1.3888 we have the upper edge of the daily range at $1.3991 and the 100% Fib projections seen around $1.4017. Understanding this, traders could get the impression a medium-term stop run may materialise, taking stops not only from the H4 prime resistance, but also daily range resistance at $1.3991. The 100% Fib projections, therefore, could be an area we see healthy sellers attack the market this week.

Leaving $1.39 unchallenged Friday, sterling pared earlier gains off one-week tops versus the greenback. The session wrapped up exploring space south of the $1.3832 low—an important short-term level forming prior to Friday’s high $1.3888. Breaking beneath this has likely tripped intraday sell-stops, which perhaps contain enough fuel to fill bids at prime support from $1.3803-1.3819 early week, with an initial target of $1.3838.

Observed Levels:

Long term:

It’s a bit of a mixed bag on the weekly timeframe. On the one hand, supply-turned demand at $1.3629-1.3456 is in play, though on the other hand, price recently closed beneath a double-top pattern’s neckline at $1.3664 (bearish signal). In addition, we’re rangebound on the daily scale between $1.3991 and $1.3609.

Ultimately, longer-term traders are likely to keep a close eye on the daily chart’s range limits this week.

Short term:

In terms of the H1 timeframe, prime support at $1.3803-1.3819 is a key watch early week. A rebound from here targets at least $1.3838ish. Further upside may also hinder downside movement out of the H4 timeframe’s prime resistance at $1.3940-1.3888.

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The Weekly Wrap – Dovish Central Banks and Concerns over the Recovery Delivered Dollar Support

The Stats

It was a quieter week on the economic calendar, in the week ending 10th September.

A total of 42 stats were monitored, which was down from 81 stats in the week prior.

Of the 42 stats, 20 came in ahead forecasts, with 21 economic indicators coming up short of forecasts. There was just 1 stat that was in line with forecasts in the week.

Looking at the numbers, 21 of the stats reflected an upward trend from previous figures. Of the remaining 21 stats, 21 reflected a deterioration from previous.

For the Greenback, dovish FOMC member chatter failed to deliver Dollar weakness. Concerns over the economic recovery and dovish central banks drove Dollar demand in the week. In the week ending 10th September, the Dollar Spot Index rose by 0.59% to 92.582. In the previous week, the Dollar had fallen by 0.59% to 92.137.

Out of the U.S

Early in the week, JOLT’s job openings for July were upbeat with openings rising from 10.185m to 10.943m. Economists had forecast a decline to 10.000m.

On Thursday, jobless claims were also impressive. In the week ending 3rd September initial jobless claims fell from 345k to 310k.

At the end of the week, wholesale inflation was in focus. In August, the core PPI rose by 0.6% versus a forecasted 0.5%, with the Producer Price Index rising by 0.7% versus a forecasted 0.6%. Both had risen by 1.0% in July.

Out of the UK

Economic data was on the busier side. Early in the week, construction PMI and BRC retail sales monitor figures were skewed to the negative.

In August, the construction PMI fell from 58.7 to 55.2, with the BRC Retail Sales Monitor rising by just 1.5%. The Retail Sales Monitor had risen by 4.7%, year-on-year, in July.

At the end of the week, key stats included GDP, manufacturing and industrial production, and trade data.

In July, the UK economy expanded by 0.1% and grew by 7.5% year-on-year.

While industrial production rose by 1.2%, manufacturing production stalled in July.

Trade figures were mixed, however. The UK’s trade deficit widened from £11.99bn to £12.71bn in July, while the non-EU deficit narrowed from £7.19bn to £6.99bn.

In the week, the Pound fell by 0.23% to end the week at $1.3839. In the week prior, the Pound had risen by 0.78% to $1.3871.

The FTSE100 ended the week down by 1.53%, following a 0.14% loss from the previous week.

Out of the Eurozone

Economic data included factory orders, industrial production, and trade data from Germany.

While the stats were skewed to the positive, there was little support for the EUR, with the markets looking ahead to the ECB policy decision.

ZEW Economic Sentiment figures for Germany and the Eurozone were disappointing, however, pegging the EUR back.

At the end of the week, finalized inflation figures from Germany had a muted impact on the majors.

While there were plenty of stats for the markets to consider, it was ultimately the ECB monetary policy decision and press conference that was the main event.

In line with market expectations, the ECB held policy unchanged and talked of economic uncertainty stemming from the Delta variant. Lagarde did confirm plans to modestly reduce the asset purchasing program. The forward guidance was not enough to deliver a EUR rally, however.

For the week, the EUR fell by 0.56% to $1.1814. In the week prior, the EUR had risen by 0.70% to $1.1880.

The CAC40 fell by 0.39%, with the DAX30 and the EuroStoxx600 ending the week with losses of 1.09% and 1.18% respectively.

For the Loonie

Economic data included Ivey PMI and employment figures for August.

The stats were skewed to the positive. In August, the Ivey PMI rose from 56.4 to 66.0, with Canada’s unemployment rate falling from 7.5% to 7.1%.

While the stats were upbeat, the Bank of Canada’s monetary policy decision and forward guidance weighed.

In line with expectations, the BoC left policy unchanged, with the BoC also taking a cautious view on the economic recovery. Supply chain disruption and the Delta variant remained key concerns…

In the week ending 10th September, the Loonie fell by 1.34% to C$1.2692. In the week prior, the Loonie had risen by 0.76% to C$1.2524.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar slid by 1.39% to $0.7356, with the Kiwi Dollar ending the week down by 0.63% to $0.7113.

For the Aussie Dollar

There were no major stats for the markets to consider.

On Tuesday, the RBA delivered it’s September monetary policy decision, which was in line with expectations.

The RBA left policy unchanged and talked of the likely impact of the latest lockdown measures on the economy.

For the Kiwi Dollar

It was a quiet week, with retail sales in focus.

In August, electronic card retail sales tumbled by 19.8%, with the decline attributed to the latest lockdown measures introduced in mid-August.

The markets were forgiving, however, with a material decline in retail sales expected.

For the Japanese Yen

It was a relatively busy week, with the numbers skewed to the positive.

In July, household spending rose by 0.7%, month-on-month, coming in ahead of a forecasted 0.1% rise. Spending had tumbled by 5.1% in June. Year-on-year, spending was down by 0.9%, however, versus a forecasted 1.1% increase. Spending had been down by 3.2% in June, year-on-year.

In the 2nd quarter, the Japanese economy expanded by 0.5%, which was up from a prelim 0.4%. The economy had contracted by 0.9% in the previous quarter. Year-on-year, the economy grew by 1.9%, which was up from a prelim 1.6%. In the 1st quarter, the economy had contracted by 3.7%.

The Japanese Yen fell by 0.21% to ¥109.94 against the U.S Dollar. In the week prior, the Yen had risen by 0.12% to ¥109.72.

Out of China

Trade and inflation figures were in focus in the week.

In August, China’s U.S Dollar trade surplus widened from $56.59bn to $58.35bn. Economists had forecast a narrowing to $51.05bn. Exports rose by 25.6% versus a forecasted 17.1% increase, with imports up 33.1%. Economists had forecast imports to rise by 26.8%.

Inflation figures were skewed to the negative, however, with the annual rate of inflation softening from 1.0% to 0.8%. In August, consumer prices rose by just 0.1% after having risen by 0.3% in July.

Wholesale inflationary pressures were still evident, however. The annual rate of wholesale inflation picked up from 9.0% to 9.5% in August.

In the week ending 10th September, the Chinese Yuan rose by 0.18% to CNY6.4443. In the week prior, the Yuan had ended the week up by 0.25% to CNY6.4560.

The CSI300 and the Hang Seng ended the week up by 1.17% and by 3.52% respectively.

AUD/USD Weekly Price Forecast – Australian Dollar Bounces From 200 Week EMA

The Australian dollar has fallen rather hard during the course of the trading week, to reach down towards the 200 day EMA. Because of this, the buyers come back into pick up the market, and as I record this, we are sitting right around the 0.74 level. The question now is whether or not we can break above the 0.75 handle, as it is a large, round, psychologically significant figure and will attract a lot of attention. If we do, then that would be a good sign of things to come, perhaps sending this market much higher.

AUD/USD Video 13.09.21

On the other hand, if we were to break down below the 200 week EMA and extensively the 0.73 level, I think this market probably pulls back rather significantly to start falling again in the general direction of the 0.71 handle. That is an area that we had bounced from previously, so therefore a lot of people will be paying close attention to it.

Whether or not that happens easily is a completely different question, but right now it looks as if we are on the precipice of trying to figure out whether or not global growth continues, or are we about to see something rather ugly? If global growth starts to slow down again, the Australian dollar will more than likely be a bit of a victim as money will go flowing towards the US dollar. In fact, this pair probably right now is focusing more on the US dollar than anything else, so keep that in mind as we go forward.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Trying to Reach Higher

The Australian dollar has rallied a bit during the course of the trading session on Friday, as the US dollar is on the back foot. However, we still have the 200 day EMA above, so I do not necessarily think that it is so-called “clear sailing” to the upside right now. With this, I believe that what we are looking at is more chop in the same general direction. If we can break above the 0.75 level, then I believe that the Australian dollar becomes more of a “buy-and-hold” type of trade. Until then, I think you have to be very cautious about the potential of choppy behavior.

AUD/USD Video 13.09.21

Underneath, if we were to break the 0.73 handle, then it is likely that the market would crater. At that point, I would anticipate that the Aussie would go down towards the 0.71 handle, with the US dollar strengthening across-the-board. In other words, it would be a very bullish sign for the greenback in general.

Keep in mind that Australia is highly levered to China, and all things Chinese. With this, you have to keep an eye on the fact that quite a few of the economic numbers out of China have not been that impressive, and that of course could weigh upon exports coming out of Australia. The GDP number out of Oz was stronger than anticipated though, so it is worth noting that the market has found yet another reason to go higher based upon that. The question now is whether or not we can break above the 0.75.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Major Decision for Buyers on Test of .7412 to .7427

The Australian Dollar is trading higher on Friday as investors attempt to recover some of this week’s losses. The currency is being supported by a rebound in demand for riskier assets and as the rapid progress on coronavirus vaccinations domestically raised hopes for an economic resurgence in coming months.

At 08:41 GMT, the AUD/USD is trading .7402, up 0.0033 or +0.45%.

Reuters is also reporting that the market mood is being bolstered by news that U.S. President Joe Biden had a wide-ranging call with his Chinese counterpart Xi Jinping on Thursday, offering hope for some thawing in relations between the super powers.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7478 will signal a resumption of the uptrend. A move through .7222 will change the main trend to down.

The minor trend is also up. A trade through .7345 will change the minor trend to down. This will also shift momentum to the downside.

The AUD/USD is currently trading on the strong side of the long-term Fibonacci level at .7379, making it support.

The short-term range is .7222 to .7478. Its retracement zone at .7350 to .7320 is support. This zone stopped the selling at .7345 on Wednesday.

The intermediate range is .7106 to .7478. Its retracement zone at .7292 to .7248 is another support area.

The minor range is .7478 to .7345. Its retracement zone at .7412 to .7427 is the next upside target. Trader reaction to this area will determine the near-term direction of the AUD/USD.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Friday will be determined by trader reaction to .7379.

Bullish Scenario

A sustained move over .7379 will indicate the presence of buyers. If this creates enough upside momentum then look for a drive into .7412 to .7427.

Look for aggressive counter-trend sellers to come in on a test of .7412 to .7427. They are going to try to form a potentially bearish secondary lower top. Look for an acceleration to the upside if buyers can take out .7427. This could trigger a move into the main top at .7478.

Bearish Scenario

A sustained move under .7379 will signal the presence of sellers. The first downside target is .7350, followed by the minor bottom at .7345.

Taking out .7345 will change the minor trend to down. This could trigger a further break into .7320.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the Pound, the Loonie, and the Greenback in Focus

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar was in action in the early hours.

For the Kiwi Dollar

Electronic card retail sales tumbled by 19.8% in August. Sales had increased by a modest 0.7% in July.

According to NZ Stats,

  • Lockdown measures introduced in the 2nd half of the month left spending down.
  • In spite of the tumble, the fall in card retail sales was only half of that seen in April 2020.
  • Spending on consumables was the only category that saw an increase in spending, up 9.3%. Supermarkets and grocery stroed remained open, supporting the pickup in spending.
  • Durable spending slumped by 35.5%, however.

The Kiwi Dollar moved from $0.71066 to $0.71056 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.01% to $0.71062.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.06% to ¥109.790 against the U.S Dollar, while the Aussie Dollar was flat at $0.7368.

The Day Ahead

For the EUR

It’s a quiet day ahead on the economic calendar.  Finalized inflation figures from Germany are due out going into the European open.

Barring a material revision from prelim figures, however, we don’t expect the numbers to influence. Further market reaction to the ECB policy decision and press conference is likely early in the day.

At the time of writing, the EUR was flat at $1.1825.

For the Pound

It’s a busy day ahead on the economic calendar. Industrial and manufacturing production figures are due out along with trade data. GDP numbers for August are also due out and will draw plenty of interest.

While we can expect the manufacturing production and GDP figures to be key, there will also be plenty of interest on the trade data.

Following Brexit and ongoing issues, the markets continue to assess near to medium term impact on the UK economy.

At the time of writing, the Pound was flat at $1.3837.

Across the Pond

It’s a relatively quiet day ahead on the economic data front. Wholesale inflation figures for August will be in focus later in the day.

With inflation still a hit topic, expect plenty of interest and market sensitivity to the numbers.

On Thursday, the U.S Dollar Spot Index fell by 0.19%  to end the day at 92.479.

For the Loonie

It’s a busy day ahead for the Loonie.

August employment figures are due out later today. With little else for the markets to consider on the day, expect plenty of sensitivity to the numbers at the time of release.

Market sentiment towards the global economic outlook will remain the key driver, however.

At the time of writing, the Loonie was up by 0.02% to C$1.2662 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

September 10th 2021: Technical Market Insight

Charts: Trading View

Brief Economic Review:

  • The European Central Bank left interest rates unchanged, though did state that over the coming quarter it would ‘moderately’ cut back on PEPP purchases. The question is what is moderate?
  • Weekly initial unemployment claims out of the US slipped to 310,000 versus economist forecasts of around 335,000.

EUR/USD:

(Unchanged from previous analysis) Technical observations out of the monthly chart reveals large-scale support at $1.1816-1.1299 welcomed buyers in recent trade, with prime support resting at $1.1473-1.1583 which happens to share chart space with a 100% Fib projection at $1.1613. This, alongside a clear uptrend since early 2020, echoes a technically bullish picture, placing the retracement slide on the daily timeframe from late July tops at $1.1909ish in question. North of $1.1909, buy-stops could fuel moves to prime resistance at $1.2115-1.1990, a place active sellers may reside.

Meanwhile, H4 demand at $1.1783-1.1810 remains active, yet appears brittle. Prime support inhabits $1.1764-1.1776, with sell-stops beneath the aforementioned demand potentially helping to fuel willing $1.1764-1.1776 bids.

The H1 chart has the currency pair within reach of a Fibonacci cluster around $1.1844—a base with enough energy to possibly draw short-term bearish interest. The chart also centres focus on $1.18. Although $1.18 joins hands with a 61.8% Fib retracement and a 1.618% Fib projection at $1.1797, Quasimodo resistance-turned support at $1.1775 (unites with prime H4 support at $1.1764-1.1776) is positioned to welcome any $1.18 whipsaw.

AUD/USD:

(Unchanged from previous analysis) According to the weekly timeframe, August dipped a toe in prime support at $0.6968-0.7242—an area inspiring a two-week bullish phase. Chart studies point to $0.7849-0.7599 as a potential upside objective. In terms of trend, the unit has been higher since the beginning of 2020. Interestingly, the daily timeframe shows a prime support/target made an entrance at $0.7286-0.7355 this week, following a dip from prime resistance at $0.7506-0.7474.

The H4 continues to languish south of the decision point from $0.7395-0.7410. Stacked demand is close by between $0.7282 and $0.7343, and prime support rests at $0.7236-0.7266. H1 carved out a fresh short-term peak Thursday, touching $0.7395. While current price encourages a bullish setting, the possibility of a whipsaw lower through demand at $0.7331-0.7350 to prime support at $0.7310-0.7322 (joined by a decision point at $0.7307-0.7324) is an alternative bullish scenario worth noting.

A $0.7331-0.7350 whipsaw to $0.7310-0.7322 dovetails not only with daily prime support at $0.7286-0.7355, but also direction out of monthly prime support at $0.6968-0.7242.

USD/JPY:

Since mid-July, ¥108.40-109.41 demand has been in focus on the weekly timeframe. Though the lacklustre bullish vibe from the area is clearly visible on the daily scale by way of a range between prime resistance at ¥110.86-110.27 and support coming in at ¥108.96-109.34. Until a decisive break outside either of these areas materialises, we’re dealing with a rangebound market on the daily timeframe.

¥110.82-110.39 supply on the H4 chart has proven stubborn. Quasimodo support at ¥109.48 calls for attention, should sellers remain in the driver’s seat. With this on board, sellers welcoming the H1 decision point at ¥109.84-109.76 and targeting support from ¥109.59 could be in the offing. Note that below the latter, H4 Quasimodo support is seen at ¥109.48.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

Dollar Drops With US Yields, Euro Buoyed as ECB Trims Emergency Support

The greenback has largely moved in line with Treasury yields this week. Yields fell on Thursday after the Treasury completed $120 billion in coupon-bearing supply scheduled for this week.

Against a basket of peers, the dollar is holding above a one-month low reached on Friday when jobs data for August showed that jobs growth slowed.

The dollar index dropped 0.23% to 92.47, up from a one-month low of 91.94 on Friday.

Investors are focused on when the Federal Reserve is likely to begin paring bond purchases as it balances rising price pressures against a still relatively soft employment picture.

Chicago Federal Reserve President Charles Evans on Thursday said the U.S. economy is “not out of the woods yet,” and that despite strong economic growth and the promise of vaccines, challenges remain, including supply chain and labor market bottlenecks.

Fed Governor Michelle Bowman, meanwhile, added her voice to the growing number of policymakers who say the weak August jobs report likely won’t throw off the central bank’s plan to trim its $120 billion in monthly bond purchases later this year.

Data on Thursday showed that the number of Americans filing new claims for jobless benefits fell last week to the lowest level in nearly 18 months, offering more evidence that job growth was being hindered by labor shortages rather than cooling demand for workers.

The euro was also supported after the ECB maintained a dovish tone and offered no major surprises as it took a first small step toward unwinding the emergency aid that has propped up the euro zone economy during the pandemic.

In the past two quarters, the bank has purchased around 80 billion euros worth of debt each month. It provided no numerical guidance for the three months ahead, but analysts had predicted before the meeting that purchases would fall to between 60 billion and 70 billion euros in those months.

“The ECB is delivering mainly as expected today,” analysts at TD Securities said in a report. “Looking ahead, the focus will be on how the ECB defines “moderately” – anything less than €60bn/mo could be bearish.”

The euro gained 0.11% on the day to $1.1828.

Bitcoin edged higher it attempted to recover from a large and sudden price drop on Tuesday.

The cryptocurrency gained 1.28% to $46,680.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Karen Brettell; Editing by Philippa Fletcher and Jonathan Oatis)

 

AUD/USD Price Forecast – Australian Dollar Continues to Bang Around in Consolidation

The Australian dollar has gone back and forth during the course of the trading session on Thursday as the market is sitting in a major consolidation region. The 0.74 level has been pierced, and now looks as if it is trying to offer resistance. The real question here is whether or not we can turn around and go higher based upon the consolidation offering support? It is a bit of an open question at the moment, but if we can break above the highs of the previous session, then it is possible that we make another charge towards the 200 day EMA.

AUD/USD Video 10.09.21

Alternately, if we break down below the 0.73 level, then it is likely that this market goes lower. Remember that the Australian dollar is highly sensitive to the global outlook for growth, and of course commerce. Right now, there are a lot of concerns as to whether or not the global economy can continue strengthening, because of the pandemic and of course the fact that the Delta variant is starting to grab a lot of headlines. Australia has started loosened some of its restrictions, so that does help, but at the same time China is slowing down, which is a major problem for the Australian economy.

When you look at the recent action, we had been a bit parabolic, so pulling back and going sideways is still a bullish sign. It is difficult to imagine a scenario where we simply sit still, because quite frankly I think there are far too many issues out there that could come into the picture and cause volatility.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Testing Retracement Zone; Weakens Under .7350, Strengthens Over .7379

The Australian Dollar is trading lower for a fourth straight session early Thursday as investors continue to react the Reserve Bank of Australia’s (RBA) decision to stick to plans to taper its bond buying while extending the length of the program as the economy struggles with coronavirus lockdowns.

Initially, the Aussie firmed because the RBA tapered, but went down because the RBA will buy at a rate of 4 billion a week for longer. Essentially, the central bank is still injecting quite a lot of stimulus into the system.

At 04:55 GMT, the AUD/USD is trading .7351, down 0.0017 or -0.22%.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7222 will change the main trend to down. A move through .7478 will signal a resumption of the uptrend.

The AUD/USD is currently trading on the weak side of a longer-term retracement zone at .7379 to .7499, making it resistance.

The minor range is .7222 to .7478. Its retracement zone at .7350 to .7320 is currently being tested. Since the main trend is up, buyers could come in to support this zone.

The short-term range is .7106 to .7478. Its retracement zone at .7292 to .7248 is the primary downside target and value zone.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to .7350.

Bullish Scenario

A sustained move over .7350 will indicate the presence of buyer. The first upside target is .7379. Overtaking this level could trigger a surge into a pivot at .7412.

Bearish Scenario

A sustained move under .7350 will signal the presence of sellers. This could lead to a continuation of the labored sell-off with potential resistance level targets lined up at .7320, .7292 and .7248.

The Fibonacci level at .7248 is the last potential support level before the .7222 main bottom.

For a look at all of today’s economic events, check out our economic calendar.

A Quiet Economic Calendar Leaves the ECB and the EUR in the Spotlight

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar this morning. Inflation figures from China were in focus this morning.

From China

In August, the annual rate of inflation softened from 1.0% to 0.8%, with consumer prices rising by just 0.1% in the month. Both sets of figures fell short of forecasts.

By contrast, however, the annual wholesale rate of inflation accelerated from 9.0% to 9.5%. Economists had forecast for the annual wholesale rate of inflation to hold steady at 9.0%.

The Aussie Dollar moved from $0.73548 to $0.73528 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.12% to $0.73552.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.05% to ¥110.190 against the U.S Dollar, while the Kiwi Dollar was down by 0.13% to $0.7090.

The Day Ahead

For the EUR

It’s a big day ahead on the economic calendar.  Early in the day, trade data from Germany will be in focus. We don’t expect July figures to have a material impact, however.

The ECB monetary policy decision and all-important press conference will be the main event of the day. Uncertainty over the economic outlook has tested the EUR early in the week. Expect any hawkish outlook and plans to begin taking the foot of the gas to support a EUR breakout.

At the time of writing, the EUR was down by 0.01% to $1.1815.

For the Pound

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will continue to leave the Pound in the hands of market risk sentiment on the day.

At the time of writing, the Pound was down by 0.08% to $1.3760.

Across the Pond

It’s a relatively quiet day ahead on the economic data front. Weekly jobless claims will be in focus later in the day.

Following the disappointing NFP numbers, a marked fall in claims would reignite talks of a nearer term shift in policy.

At the time of writing, the U.S Dollar Spot Index was up by 0.10% to 92.749.

For the Loonie

It’s a particularly quiet day ahead for the Loonie.

There are no material stats due out to provide the Loonie with direction. The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.12% to C$1.2706 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

September 9th 2021: Technical Market Insight

Charts: Trading View

EUR/USD:

Technical observations out of the monthly chart reveal large-scale support at $1.1816-1.1299, though prime support rests at $1.1473-1.1583 which happens to share chart space with a 100% Fib projection at $1.1613. This echoes a technically bullish picture, placing the retracement slide on the daily timeframe from late July tops at $1.1909ish in question. North of $1.1909, buy-stops could fuel moves to prime resistance at $1.2115-1.1990, a place active sellers may reside.

Shorter-term flow has H4 shaking hands with demand at $1.1783-1.1810, following a three-day long decline from $1.1939-1.1902 supply. The chart has labelled this area as brittle, as prime support inhabits the $1.1764-1.1776 neighbourhood and sell-stops beneath the aforementioned demand could help fuel willing $1.1764-1.1776 bids. In conjunction with the H4, the H1 chart centres its attention on $1.18. Although $1.18 joins hands with a 61.8% Fib retracement and a 1.618% Fib projection at $1.1797, the Quasimodo resistance-turned support at $1.1775 (which converges with prime H4 support at $1.1764-1.1776) is positioned to welcome any $1.18 whipsaw.

AUD/USD:

According to the weekly timeframe, August dipped a toe in prime support at $0.6968-0.7242—an area encouraging a two-week bullish phase. Despite this week turning lower, chart studies point to $0.7849-0.7599 as a potential upside objective. Consequently, further upside could be in the offing. Interestingly, from the daily timeframe, prime resistance made an entrance at $0.7506-0.7474 and recently hit its support target at $0.7286-0.7355. This could see longer-term movement attempt to scale through stacked supply between $0.7617 and $0.7408 to $0.7621: a Quasimodo support-turned resistance.

Against the backdrop of the bigger picture, the H4 scale, as expected, took hold of the lower side of the decision point from $0.7395-0.7410. Stacked demand is close by between $0.7282 and $0.7343, though prime support rests at $0.7236-0.7266. Lower on the curve, the H1 timeframe shows what appears feeble demand at $0.7331-0.7350, open to a possible whipsaw into prime support from $0.7310-0.7322, which is joined by a decision point at $0.7307-0.7324. A $0.7331-0.7350 whipsaw to $0.7310-0.7322 would be in line with the daily timeframe ‘hitting target’ and possibly reversing, as well as monthly direction.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

Dollar Pares Gains on Dovish Fed Speak, Before ECB Meeting

New York Fed Bank President John Williams said that more progress is needed in the labor market to achieve the “substantial further progress” for the Fed’s maximum employment goal.

He added, however, that it may be appropriate for the Federal Reserve to start reducing the pace of its asset purchases later this year if the economy continues to improve.

“The Fed is clearly in wait-and-see mode over the next couple of months to see how the economy holds up. Fed’s Williams delivered some dovish comments that support the idea that the soonest the Fed could taper is December,” Edward Moya, senior market analyst at OANDA in New York, said in a report.

Separately, the Fed said in its latest Beige Book that the U.S. economy “downshifted slightly” in August as the renewed surge of the coronavirus hit dining, travel and tourism.

The dollar index, which measures the currency against six rivals, gained 0.14% to 92.66, after earlier rising to 92.86, the highest since August 27.

Benchmark 10-year Treasury note yields fell to 1.33%, after earlier trading at 1.38%. The yields have risen since data on Friday showed that U.S. jobs growth slowed while wage inflation was higher than expected.

An uptick in inflation is complicating the picture for Fed officials who want to see further progress in employment before reducing bond purchases.

“At its very worst, there is some concern that nominal wages are still lagging consumer price increases by cycle extremes … and that nominal wages are struggling to keep up with prices, which is how a wage-price spiral develops,” Alan Ruskin, a macro strategist at Deutsche Bank, said in a report on Tuesday.

Data on Wednesday showed that U.S. job openings rose to almost 11 million in July.

The euro dipped before the European Central Bank meeting set for Thursday. The ECB could tighten policy sooner than many anticipate as inflationary pressures could prove to be persistent, ECB policymaker Robert Holzmann said in a contribution to Eurofi Magazine on Wednesday.

Analysts polled by Reuters see PEPP purchases falling possibly as low as 60 billion euros a month from the current 80 billion, before a further fall early next year and the scheme’s end in March.

The single currency was last down 0.13% on the day at $1.1823.

The greenback also gained against Canada’s loonie on worries that the global economic outlook is deteriorating even as the Bank of Canada looked past a soft patch in the domestic economy.

Sterling dropped after the British government on Tuesday announced a tax hike to fund health spending and social care.

Meanwhile, cryptocurrencies struggled to rebound from hefty losses from Tuesday, when El Salvador became the first country to adopt bitcoin as legal tender and several trading platforms said they experienced performance issues.

Bitcoin dipped 1.22% to $46,283 after sinking as low as $42,900 on Tuesday. Earlier that day it had touched an almost four-month high of $52,956.

For a look at all of today’s economic events, check out our economic calendar.

(Editing by Sandra Maler)

 

AUD/USD Price Forecast – Australian Dollar Stabilizing

The Australian dollar has gone back and forth during the course of the trading session on Wednesday as we are hanging about the 50 day EMA, showing signs of noisy behavior. The market still has a significant amount of support near the 0.73 level, and I am still looking at that as an area that if we break below it, the Australian dollar will fall quite significantly. In general, at that point I would anticipate a resumption of the overall selling pressure that we had seen, but it is also worth noting that we recently went parabolic and simply shot through an area that should have been difficult.

AUD/USD Video 09.09.21

On the other side of the equation, if we break above the top of the candlestick for the trading session on Wednesday, I anticipate that the market will probably go looking towards the 200 day EMA again. Clearing that will bring a lot of technical traders into the upside, as we should continue to go higher, testing the 0.75 level. That of course is an area that would look important, as it is a large, round, psychologically significant figure. Breaking out above that then opens up the possibility of a move towards the highs again.

I do believe that the market is ready to make a bigger move, so the question now is whether or not this was a breakout followed by a pullback to find support, or if it was a fake out “blow off top?” All things being equal, this is a market that I the end of the week should give us a nice signal for a bigger move.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Weakens Under .7350, Strengthens Over .7379

The Australian Dollar is under pressure for a third session on Wednesday after a wave of global risk aversion and a surge in U.S. Treasury yields boosted its U.S. counterpart.

Traders are still responding to Tuesday’s decision by the Reserve Bank of Australia (RBA) to stick with plans to trim its bond buying to A$4 billion a week, but also extend that out to February as a nod to coronavirus uncertainties.

At 08:52 GMT, the AUD/USD is trading .7362, down 0.0026 or -0.35%.

While the RBA Board conceded that the economic recovery from current Delta lockdowns would likely be drawn out, it also predicted a very strong pick up over all of 2022.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7478 will signal a resumption of the uptrend. A move through .7222 will change the main trend to down.

Early Wednesday, the AUD/USD is trading on the weak side of a long-term retracement zone at .7379 to .7499, making it resistance. This zone stopped the rally on September 3 at .7478.

The minor range is .7222 to .7478. Its retracement zone at .7350 to .7320 is the first downside target. Since the main trend is up, buyers are likely to come in on a test of this area.

The short-term range is .7106 to .7478. Its retracement zone at .7292 to .7248 is the primary downside target and the last potential support before the .7222 main bottom.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to .7379.

Bearish Scenario

A sustained move under .7379 will indicate the presence of sellers. The first downside target is .7350, followed by .7320.

If .7320 fails then look for the selling to possibly extend into .7292 to .7248 over the near-term.

Since the main trend is up, the selling is likely to be labored with possible support at a number of retracement levels from .7350 to .7248.

Bullish Scenario

A sustained move over .7379 will signal the presence of buyers. If this move creates enough upside momentum then look for the move to possibly extend into a minor pivot at .7414. Counter-trend sellers could come in on a test of this level. Taking it out could drive the AUD/USD into .7478.

For a look at all of today’s economic events, check out our economic calendar.