Australian Dollar Rallies Undisturbed by Poor Data

The Australian dollar continued to rise today following yesterday’s surge. The poor macroeconomic data released over the current session did not bother the currency much.

Yesterday’s rally was caused by the policy minutes of the Reserve Bank of Australia, which market participants considered hawkish. The notes showed that Australian policy makers targeted 3.5% as the neutral level for the key interest rate, and that is far above the current 1.5%.

As for today’s data, the leading index dropped sharply in June, and the report said:

The index is pointing to a slowdown in momentum in Australia’s growth profile with the first below trend reading since July 2016. The deterioration mainly reflects international factors including a sharp turnaround in Australia’s commodity prices in Australian dollar terms.

AUD/USD advanced from 0.7915 to 0.7942 as of 13:00 GMT today following yesterday’s gain by 1.5%. EUR/AUD dropped from 1.4591 to 1.4523.

This post was originally published by EarnForex

Australian Dollar Unable to Keep Gains Caused by China’s PMI

A private report released today showed that China’s manufacturing sector switched to growth. The Australian dollar attempted to rally with the help from the good news from Australia’s biggest trading partner. Yet the currency lost its gains versus its most-traded rivals (with the exception of the soft Japanese yen) as the report was not as good as it looked at first glance.

The Caixin China General Manufacturing PMI climbed from 49.6 in May to 50.4 in June, exceeding analysts expectations of 49.9. The reading above 50.0 means that the sector is expanding. Yet the report did not sound particularly optimistic, saying:

The manufacturing sector recovered slightly in June, but based on the inventory trends and confidence around future output, the June reading was more like a temporary rebound, with an economic downtrend likely to be confirmed later.

AUD/USD was up from 0.7681 to 0.7695 intraday but backed off to trade at 0.7651 as of 12:10 GMT today. AUD/JPY rallied from 86.10 to 86.54.

This post was originally published by EarnForex

Technical Outlook For AUD/USD, EUR/AUD, GBP/AUD & AUD/CAD: 22.06.2017

AUD/USD

AUDUSD’s pullback moves from 0.7540 could be challenged by the 0.7565-70 horizontal-line, which in-turn might trigger the pair’s fresh drop towards 0.7540 re-test, breaking which 0.7520-15 area becomes crucial for traders to watch. Should sellers refrain from respecting the 0.7515 support, the 0.7500 may act as an intermediate halt during the quote’s south-run to 0.7475 and then to the 0.7450 rest-points. In case if the pair surpasses 0.7570, the 0.7585, the 0.7600 and the 0.7615 may offer consecutive resistances prior to propelling prices to early-month high around 0.7635. Moreover, pair’s successful trading above 0.7635 could give rise to expectations of witnessing 0.7685 and the 0.7700 resistances.

EUR/AUD

euraud

With the 1.4800 – 1.4810 horizontal-line seems restricting the EURAUD’s immediate advances, pair’s pullback to 1.4750 and then to the 1.4700 become wise to expect; however, 1.4635-30 could restrict its additional downside. If prices continue trading southwards after 1.4630 break, the 1.4570, the 1.4520 and the 1.4440-35 may come-back in Bears’ radar. Meanwhile, an extended up-move beyond 1.4810 could enable the buyers to aim for 1.4840 and the 1.4900 round-figure while 1.4925-30 is likely a strong barrier for them to conquer during following rise. Should there be additional optimism, which fuels the pair’s run-up beyond 1.4930, the 1.5000 psychological magnet and the 1.5070 may get popularity.

GBP/AUD

gbpaud

Ever since the GBPAUD registered a gap-down opening around UK election results, the pair continued following a short-term descending trend-channel which restricts its moves. At present, the quote might rise to the channel-resistance of 1.6810, which if broken could stretch its recovery to 1.6870 and then to the 1.6985 ahead of flashing 1.7000 mark on the chart. Though, pair’s further advances above 1.7000 needs to justify their strength by clearing 1.7050-60 horizontal-line. Alternatively, the 1.6720, the 1.6675 and the 1.6625 are likely immediate supports for traders to observe during the pair’s U-turn ahead of checking the channel-support figure of 1.6560. Should the pair defy channel formation by declining below 1.6560, the 1.6530 and the 1.6500 may entertain sellers before pleasing them with 1.6420 support.

AUD/CAD

audcad

AUDCAD is one more AUD pair which indicates near-term decline. The pair signals immediate test to 1.0025 ahead of printing 1.0000 as a quote. During the pair’s additional south-run below 1.0000 and the 0.9980, 0.9960 and the current month low of 0.9945 could be considered as consecutive rests, which if broken strengthen bears to demand 0.9930 support. On the upside, 1.0075, 1.0090 and the 1.0110 can be expected a nearby resistances for the pair. In case of the pair’s sustained trading above 1.0110, seven-week old descending trend-line, at 1.0155, might try to limit the pair’s up-move, clearing which chances of witnessing 1.0200 can’t be denied.

Cheers and Safe Trading,
Anil Panchal

AUD/USD Forex Technical Analysis – June 20, 2017 Forecast

The AUD/USD is trading higher shortly before the U.S. opening and after the release of the Reserve Bank of Australia monetary policy meeting minutes. The minutes didn’t reveal anything new so there was little reaction by investors. The RBA expects to see economic growth but it’s not ready to change its policy on interest rates. The central bank doesn’t want to cut rates any further out of fear of igniting the housing market, but it stands ready to take action if the labor market were to turn south.

AUDUSD
Daily AUD/USD

Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7635 will signal a resumption of the uptrend. This could create enough upside momentum to fuel a rally into the March 30, 2017 top at .7679.

The AUD/USD is currently straddling a pair of Fibonacci levels at .7606 and .7589. Holding above these levels will mean the buying is getting stronger. This would turn these levels into support.

If .7589 fails as support, we could see a move into a series of retracement levels at .7553, .7545 and .7539.

Forecast

Based on the current price at .7612, and the earlier price action, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the Fib level at .7606.

Holding above .7606 will indicate the presence of buyers. Overcoming the uptrending angle at .7612 will indicate the buying is getting stronger. This could create the upside momentum needed to challenge the high at .7635.

The high at .7635 is the trigger point for an acceleration to the upside with potential targets .7668 and .7679.

A failure to hold .7606 will signal the presence of sellers. This could lead to a labored break into .7589 and .7587.

Look for an acceleration to the downside if .7587 fails as support. The next targets are .7553, .7545 and .7539.

Essentially, look for an upside bias to develop on a sustained move over .7612 and for a downside bias to develop on a sustained move under .7587.

Morning Market Update – AUD eases up

The minutes from the June Reserve Bank of Australia (RBA) meeting revealed that the interest rates will be kept unchanged at 1.5%. The board suggested that the developments in the labor and housing markets should be watched carefully. Australia House Price Index (QoQ) met the forecasted value of 2.2% in the first quarter and Australia House Price Index (YoY) rose up to 10.2% in the first quarter from a previous value of 7.7%.

Chicago Fed President, Charles Evans, stated that the Fed should wait till the end of the year before formulating another interest rate hike. The People’s Bank of China (PBOC) set the Yuan reference rate at 6.8096 versus Monday’s fix of 6.7972.

Moving on for the day, we look forward to Switzerland’s SECO Economic Forecasts. Late in the day, we have the Swiss National Bank (SNB) Chairman Jordan’s speech and the US Fed Vice Chairman Stanley Fischer’s speech.

The Canadian Wholesale Sales saw a slight drip with the forecasts at 0.6% when compared to the previous value at 0.9%. Germany might see some downfall with the Producer Price Index not favoring them with forecasts at 2.8% compared to the previous value at 3.4%. We have the Bank of England’s (BoE) Governor Carney’s speech which will have an impact on the pound.
For more detailed analysis from the author, please visit NoaFX.

Morning Market Update – Australian dollar in trouble

United Kingdom British Retail Consortium (BRC) like-for-like retail sales (YoY) were registered at -0.4% and went above the forecasted values (-0.5%). With the upcoming UK elections on June 8th, we expect the pound to be swaying in the markets. In addition, London faced three terrorist attacks in the recent months and the public might not be very supportive to further cuts in the policing budget.

Japanese Labor Cash Earnings (YoY) came in at 0.5% in April versus the previous value of -0.4%. New Zealand saw some better results with New Zealand’s ANZ Commodity Price Index rising up to 3.2% from a previous value of -0.2%.

Australia’s current account data for March showed a negative result than what was expected and caused worry for the Australian dollar. The only major news for the day comes from the Reserve Bank of Australia’s Interest Rate Decision which is expected to be fully on hold with a rate of 1.5%. The GDP growth looks weaker and the housing price inflation has slowed down. The Canadian Ivey Purchasing Managers Index showed some improvement and indicated how the market will move further in the day.

Technical Outlook For AUD/USD, EUR/AUD, AUD/JPY & AUD/NZD: 01.06.2017

AUD/USD

AUDUSD’s break of 0.7420 seems presently dragging the pair towards more than five-month old ascending trend-line, at 0.7360, breaking which 0.7330 and the 0.7280 are likely following supports to appear on the chart. Given the pair continue declining after 0.7280 break, the 0.7240 & 0.7220 may offer intermediate halts before 0.7160 number pleases sellers. During the quote’s reversal from current levels, 0.7420 & 0.7470 can entertain short-term buyers; however, 50-day SMA and a nearby trend-line, around 0.7500, could restrict its further upside. If Bulls manage to propel prices above 0.7500, chances of witnessing the 0.7520 and the 0.7555-60 resistances can’t be denied.

EUR/AUD

euraud

With the overbought RSI raising barriers for EURAUD’s further up-moves, pair’s drop below 1.5110 can quickly fetch it to 1.5070, 1.5040 and then to 1.5000 psychological mark. Though, support-line of immediate ascending trend-channel, at 1.4960 now, becomes crucial during the pair’s additional declines after 1.5000, which if broken could trigger its south-run to 1.4920, 1.4880 and the 1.4800 consecutive support-levels. On the upside, 1.5230 and the channel-resistance of 1.5290 could act as adjacent stops, breaking which 100% FE level of 1.5330 should be traders’ favorite. Moreover, pair’s successful trading above 1.5330 enables it to challenge 1.5350 and the 1.5420 north-side figures.

AUD/JPY

audjpy

Even if six-week old ascending trend-line triggered AUDJPY’s bounce, break of immediate resistance-line, at 82.65, becomes necessary for the pair to aim for 83.00 and the 83.40 TL. Given the quote surpasses 83.40, the 83.80 & the 84.20 may act as buffers while 84.50-55 horizontal-line seems crucial in case of its additional north-run. If at all the pair clears 84.55 barrier, it can target 85.00 and the 85.50 resistances. Meanwhile, the 81.85 continue being strong nearby support for the pair, breaking which it can drop to 81.55, the 81.00 and then to 100% FE level of 80.80. Should bears dominate prices after 80.80, the 80.00 psychological magnet could be an intermediate stop prior to reigniting possibilities of 79.15 come-back.

AUD/NZD

audnzd

While a closing break of nine-month old ascending trend-line, at 1.0460, could extend AUDNZD’s south-run towards 1.0410 and then to 1.0370, oversold RSI indicates brighter chances for the pair’s U-turn towards 1.0510 and the 1.0570. Though, pair’s break of 1.0570 needs to justify its strength by clearing 200-day SMA level of 1.0600 and the 1.0610-15 horizontal-line, after which buyers can aim for 1.0650 & 1.0690 resistances. Alternatively, the 1.0370 break can make traders witness 1.0330 and the 1.0300 round-figure before last-year low, near 1.0230, reprints on the chart.

Cheers and Safe Trading,
Anil Panchal

Aussie Down as Chinese Economic Data Overshadows Australian Reports

The Australian dollar fell today against its major peers as poor China’s macroeconomic data overshadowed decent reports released in Australia. China is the biggest trading partner of Australia, therefore its economic performance has a big impact on the Australian currency.

Australian retail sales climbed 1.0% in April from March, seasonally adjusted, far above market expectations of 0.3%. Private capital expenditure rose 0.3% in the March quarter from the previous three months, a bit less than was predicted by analysts (0.4%). But the real bummer was the Caixin China General Manufacturing PMI, which dropped from 50.3 to 49.6 in May, falling below the neutral 50.0 level (thus indicating contraction of the sector) for the first time in almost a year.

AUD/USD dropped from 0.7428 to 0.7397 as of 10:24 GMT today. EUR/AUD gained from 1.5128 to 1.5177, and its daily high of 1.5225 was the highest since June 2016.

This post was originally published by EarnForex

Technical Update Of Important JPY Pairs: 24.05.2017

USD/JPY

Even after clearing the 111.70-75 horizontal-line, the USDJPY failed to extend it’s north-run and is presently re-testing the resistance-turned-support, breaking which it can visit 111.50 & the 111.00 round-figure. However, an upward slanting trend-line, at 110.50, may restrict the pair’s additional decline following 111.00 break, which if cleared can fetch prices to 110.00, 109.60 and the 109.30 consecutive rest-points. Meanwhile, 112.00, the 112.40 and the 112.60 TL-mark are likely nearby resistances that can confine the quote’s immediate advances. Should the pair manage to surpass 112.60, it becomes capable enough to challenge 113.15, 113.65 and the 114.00 north-side numbers.

GBP/JPY

gbpjpy

Unlike USDJPY, the GBPJPY is expected to extend its latest recovery towards 145.75 and the 147.00 before targeting the 147.90 – 148.00 horizontal-line again. If Bulls propel the pair beyond 148.00 on a daily closing basis, the 149.20 and the 150.00 can entertain follow-on buyers while 151.20 could give rise to chances of its pullback. Should prices take a U-turn from present levels, the 144.50 and the 143.30 can act as adjacent stops prior to dragging them to 142.70 and the 50-day SMA level of 141.40. During the course of pair’s additional downside below 141.40, the 140.00 may offer a barrier ahead of the 138.30-20 region’s, comprising 200-day SMA and the seven-month old ascending trend-line, capacity to limit the south-run.

AUD/JPY

audjpy

Following its four-day long recovery, the 50-day SMA level of 83.80 currently becomes important for AUDJPY traders to observe, breaking which the 84.20 and the 84.40-50 horizontal-line gains attention. Given the pair’s capacity to surpass 84.50, the 84.80 and the 100-day SMA level around 85.00 may please buyers, breaking which chances of the quote’s rally towards 85.80-85 can’t be denied. Alternatively, 83.10 and the 82.70 are likely supports that the pair can avail during its pullback, which if broken could extend the profit-booking in direction to 82.30, 81.80 and the 81.45 consecutive supports.

CHF/JPY

chfjpy

CHFJPY presently confronts the five-month old descending trend-line, at 114.80, which seems the only barrier for the pair to crack before it could revisit the 115.50. Should prices sustain their upward trajectory beyond 115.50, the 61.8% FE level of 116.10, the 116.80 and the 117.40 may be flashed on the chart. On the downside, a daily close below 114.20 can trigger the pair’s fresh pullback towards 113.70, 113.30 and the 112.85 while 100-day SMA level of 112.50 becomes crucial which can restrict its additional south-run. If at all Bears dominate the quote after 112.50 break, the 111.80 and the 111.50 can come in their radar.

Cheers and Safe Trading,
Anil Panchal

Important JPY Pairs’ Technical Outlook: 04.05.2017

USD/JPY

Although USDJPY’s recovery from 108.30-35 support-zone presently helps the pair to meet seven-week high, the 113.20-30 resistance-confluence, comprising 100-day SMA & upper-line of near-term descending trend-channel, seems a tough nut to crack as the RSI is also near the overbought levels. As a result, pair’s pullback to 112.30 and then to the 50-day SMA level of 111.70 becomes more likely before the 110.50 and the 110.00 could reappear on the chart. Should prices drop below 110.00, the 109.20 & the 108.35-30 again grabs attention, breaking which channel support-line at 107.80 might give rise to chances favoring pair’s U-turn. Alternatively, if the quote manages to close beyond 113.30, it can aim for 114.00 and the 114.40 nearby resistances while the 115.00 and the 115.55-60 could please Bulls during its run-up beyond 114.40.

AUD/JPY

audjpy

With the AUDJPY’s inability to drop below fortnight old ascending trend-channel, it seems wise to expect the pair’s pullback towards 84.00, 84.20 and the 84.55 consecutive nearby resistances. If price-recovery gets stretched beyond 84.55, the 84.90 and the channel’s upper-line, at 85.35-40, may trigger its U-turn, failing to which can help buyers to target 85.80 & the 86.20 upside numbers. Given the pair’s favor to sellers, with a dip below 83.30, the 82.90 & 82.40 should be observed closely, breaking which 81.80 and April lows around 81.50 can offer intermediate halt during the pair’s southward trajectory to 61.8% FE level of 80.80.

CAD/JPY

cadjpy

Considering the CADJPY’s momentum during last fortnight, the pair seems portraying a short-term “Rising-Wedge” Bearish formation. However, present up-move could end-up flashing 82.50-55 on the chart before the pattern resistance, near 82.75-80, tries to limit its following advances. If prices fail to respect 82.80, chances of witnessing a rally to 83.00 and then 83.30 can’t be denied, which if broken may give rise to 83.70 and the 84.20 north-side numbers. On the downside, 82.00 and the formation support of 81.65 are likely important rests that should be watched, breaking which the bearish pattern gets confirmed and can fetch the quote to 81.20. Should Bears dominate momentum after 81.20 break, 80.55 and the 61.8% FE level of 80.10, closely followed by 80.00 psychological magent, should come into the sellers’ radar.

NZD/JPY

nzdjpy

Even after breaking a two-month old descending trend-line resistance, the NZDJPY currently witnesses a pullback towards resistance-turned-support around 77.10; though, the pair is expected to bounce-off the same, if not, then 76.75 and the 76.30 can again be witnessed. Given the pair’s inability to stop its downside below 76.30, the 76.00 and the April low around 75.60 may become following supports to watch. Meanwhile, 77.80 and the 78.00 can act as immediate resistances during the pair’s U-turn, breaking which 78.40 and the 78.80-85 horizontal-line seem crucial. In case if buyers propel prices beyond 78.85, 79.60 and the 80.00 can be their favorite numbers.

Cheers and Safe Trading,
Anil Panchal

Technical Checks For USD/JPY, AUD/USD & AUD/JPY: 31.03.2017

USD/JPY

While USDJPY’s U-turn from 110.00 – 110.10 horizontal-region presently signal the pair’s extended recovery towards 112.50-55, 50-day SMA level of 113.10 might restrict its further upside. Given the pair continue rising beyond 113.10, 113.60, 113.95 and the descending trend-line mark of 114.15 are likely consecutive resistances to appear on the chart. If at all prices surpass 114.15 on a daily closing basis, chances of witnessing 115.00 and the 115.50 can’t be denied. Meanwhile, 111.35 and the 110.40 can entertain short-term sellers before the 110.10 – 110.00 comes into play. In case of the pair’s sustained trading below 110.00, the 109.30, 50% Fibonacci Retracement level of 108.80 and the 200-day SMA figure of 108.30 may please Bears.

AUD/USD

audusd

Following its failure to extend early-week pullback beyond 0.7680, the AUDUSD now rests around 50-day SMA figure of 0.7630, breaking which 0.7610 and the 0.7590 can quickly be flashed on the chart. During the pair’s additional weakness below 0.7590, the 0.7545, 100-day SMA figure of 0.7510 and the 0.7490-95 horizontal-line should be watched by traders, clearing which chances of the pair’s drop to 0.7455 and the 0.7420 can’t be denied. Alternatively, 0.7680 and the 0.7715 are likely immediate resistances to observe, breaking which downward slanting trend-line of 0.7740, adjacent to latest high around 0.7750, become important. If at all Bulls propel the quote beyond 0.7750, the 0.7780, 0.7830 and the 61.8% FE level of 0.7850 can be targeted while buying the pair.

AUD/JPY

audjpy

With comparative strength of the JPY, AUDJPY recently reversed from 85.75-85 horizontal-region and is currently breaking immediate ascending trend-line support of 85.50. If the pair successful breaks 85.50, the 85.00 and the 84.80 might offer intermediate halts before the 84.55 and the 84.30 grabs attention. Should prices continue declining below 84.30, the current-month low of 83.80 becomes crucial, which if broken could trigger pair’s fresh south-run towards 61.8% FE level of 83.10. On the upside, a clear break of 85.85 enables the pair to aim for 86.20 and 86.60 nearby resistances, surpassing which 87.00, 87.20 and the 87.50 can be witnessed. However, pair’s successful trading beyond 87.50 opens the door for its rally to surpass 88.20 resistance-mark.

Cheers and Safe Trading,
Anil Panchal

Important JPY Pairs’ Technical update: 22.03.2017

USD/JPY

With the present run for risk-safety providing noticeable strength to safe-havens, USDJPY dropped below 111.30-50 horizontal-region and a closing break beneath the same could flash brighter chances of its extended south-run towards 110.70 & 110.20. Given the pair keep trading down after conquering 110.20 support, the 109.40 & 108.60 might offer intermediate halts prior to dragging it towards 200-day SMA figure around 108.00. In case if the 111.30-50 area again play its role in triggering the pair’s U-turn, 111.85, 112.30 & 112.50 are likely nearby resistances to watch. However, the quote’s additional up-move beyond 112.50 might find it hard to surpass 100-day SMA figure of 113.30, which if cleared enables it to aim for 114.00 and 114.50 numbers to north.

EUR/JPY

eurjpy

Even if the JPY strength dragged EURJPY to test 120.00 support-confluence, oversold RSI on H4 and the pair’s repeated failures to break near-term important level indicates its pullback towards 120.30 & 120.50 immediate resistances. During the quote’s extended up-move above 120.50, the 120.70 and 121.20 are likely following resistances that should gain traders’ attention before the channel’s upper-line figure of 121.40 comes into lime-light. If at all price recovery clears 121.40, it becomes wise to expect 122.00 to appear on the chart. On the contrary, break of 120.00 – 119.90 can act as a trigger for the pair’s additional south-run to 119.50 & 119.00. However, 118.65 and 118.20 may offer strong supports after the pair plunges below 119.00.

GBP/JPY

gbpjpy

Alike previous two pairs, GBPJPY also trades at short-term important support-zone of 138.45-55 and signals pullback to 139.00. In case of the pair’s extended recovery beyond 139.00, the 139.60 and the 140.00 can entertain short-term buyers before offering them 140.55-60 resistance-area, which is expected to limit the pair’s following up-moves. Should Bulls dominate prices and clears 140.60, the 141.00, 141.20 & 141.80 might come forward. Meanwhile, pair’s break of 138.45 can fetch it to 137.80 and the 137.00 ahead of reigniting possibilities to witness January lows, around 136.40. Given the quote fails to respect 136.40, sellers can target 135.30 support-mark.

AUD/JPY

audjpy

Although break of four-month old ascending trend-line pushed AUDJPY to re-test early January lows, 100-day SMA, at 85.10, restricts the pair’s present downturn and might support it to reclaim 85.90 support-turned-resistance-line. While pair’s successful closing above 85.90 negate its latest breakdown, 50-day SMA figure of 86.40 and the 86.70 can confine its following advances ahead of 87.30, including descending trend-line mark, gains importance. Alternatively, 100-day SMA’s inability to confront bears could further drag the quote to 84.50 and the 83.75 support-levels. If sellers dominate prices after 83.75 break, the 83.20 and 82.60 can come in their radars.

Cheers and Safe Trading,
Anil Panchal

Aussie to Appreciate Against Yen Despite Lacking Appetite versus US Dollar and Euro

The Reserve Bank of Australia (RBA) maintained the status quo at its March monetary policy meeting. The cash rate target remained unchanged at the historical low of 1.5%.

The accompanying statement matched the dovish expectations. The RBA cited that prospects for higher global growth, the US-based reflation rally and the recovery in commodity prices improved the economic fundamentals in Australia. Nevertheless, the policymakers highlighted that the Chinese growth risks, mixed labour market conditions and variable housing market across the country encourage the RBA to leave the rates low for a longer period of time. The current inflation level is also convenient to keep the lending conditions loose in Australia in order to support the country’s decision to proceed with a structural shift from the mining to construction sector.

In this context, the RBA is unlikely to raise rates in 2017.

Historically Low Australian Rates are Discouraging for Carry Trades

Australian dollar is historically known to bear high interest. This is why, it has long been one of carry traders’ favourite long leg. In fact, the AU 2-year sovereign paper yielded above 7%, as the 10- year yields were just shy of 7% in 2008, before the subprime crisis brought all central banks to aggressively loosen their monetary conditions for many years to follow.

As such, the Reserve Bank of Australia lowered its interest rates from 7.25% to 1.5% from 2008 to 2016. As a result, the AU 2-year yields fell below 1.5% and stand below the 2% level as of today, while the 10-year yield traded below the 2% level in 2016 and recovered to almost 3% as the RBA soften its dovish stance this week, without however signaling a change to its rate policy any time soon. Instead, the bank said to stay accommodative for quarters to come.

During the same period, the low rate currencies, also known as funding currencies in carry traders’ jargon, experienced sharp falls on their interest rates and yields as well. The Federal Reserve’s (Fed) Funds rate were lowered from 5.25% to 0%, Bank of Japan (BoJ) abandoned its rate target for a period of time and decide to target -0.10% starting from 2016, the European Central Bank (ECB) pulled the deposit facility rate from 3.25% to -0.40%, as the Swiss National Bank (SNB) dared even deeper negative rates and fixed its sight deposit rate to -0.75%.

The zero-rate environment in the US, Japan and Europe lifted the Australian dollar from 2008 to 2011. The Australian rates had a relatively better return and the Aussie was appreciating.

The AUD/USD traded from 0.60 to nearly 1.10 then started sliding lower. The pair traded at 0.6800 in 2016 as the RBA hinted that 0.65 level would be convenient for boosting the economic recovery.

Since 2016, the AUD/USD remains ranged between 0.70-0.78.

What will Happen with Higher US Yields?

The Fed’s shift to a faster monetary policy tightening and the resulting higher US rates are a clear game changer onwards. Given that the RBA is not close to move anytime soon, the narrowing AU-US rate differential will likely discourage carry traders from buying the relatively lower yielding Aussie, and funding the long leg with a relatively higher yielding US dollar.

As of today, the AU 10-year yields are just shy of 3%, while the US 10-year yields advanced to 2.62%, the highest level on the Trump reflation rise.

As a consequence, the AUD/USD is expected to remain offered pre-0.78 and gradually lose ground toward the 0.72/0.70 range.

Positive Potential against the Yen, Mixed Outlook against the Euro

Despite the dovish European Central Bank (ECB) outlook, the EUR/AUD recovered past 1.40 handle and could extend gains toward the 200-day moving average, 1.4487. Nevertheless, the upside potential could remain capped by the long-term bearish trend top and encourage a pullback to 1.40 level and below.

The Aussie has potential to appreciate against the Japanese yen, given that the Bank of Japan (BoJ) is set to remain seated on the historically low rates as well.

The AUD/JPY should continue its climb toward the 0.90 mark by the end of the first quarter of 2017.

This article is written by Ipek Ozkardeskaya, a senior market analyst at LCG

Morning Market Update – All Eyes on RBA Decision

Asian Markets

Minneapolis Federal Reserve Bank President Neel Kashkari made a press release to the National Association for Business Economics. He said that “The fact of the matter is borrowing costs for homeowners, for consumers, for businesses are near record lows.” He added that, “If the banks were capital constrained, you and I as borrowers would be competing for scarce loans, which would be driving up the borrowing costs of those loans. That’s not happening today.”

Fed President Neel Kashkari brushed off further proposals from banks regarding the strict bank regulations which had put the bank dealers in peril. Australia AiG Performance of Construction Index came in at 83.1, rising from a previous value of 47.7. Several individual units such as fresh orders, new deliveries, etc. contributed to the completion of the expansion territory.

The British Retail Consortium said that the British Like-for-like sales in the United Kingdom went down by 0.4 percent in February. Online sales went up annually by 7.7 percent and the sales in brick and mortar stores dropped down by 2.4 percent. The People’s Bank of China (PBOC) set the Yuan reference rate at 6.8957 this Tuesday morning, compared to Monday’s rate of 6.8790. With a heavy debt for China, the government has ensured a stable financial situation in the economy by trimming the debt rates.

Other Markets

All eyes now remain on the RBA policy decision, which will be announced shortly today. The markets expect the RBA to maintain its neutral bias and keep the policy steady. RBA will shortly announce the change in interest rates along with the supporting documents. The bank is likely to remain firm despite the economic performances around and has a forecasted value of 3% growth for this year.

Euro’s Gross Domestic Product monthly and yearly data are expected to be released and forecasted to remain the same at 0.4% and yearly at 1.7%. We expect it to remain the same and this puts a pressure for the Euro. The US data for Trade Balance is forecasted at -$44.5B versus the previous month’s value of -$44.3B and this should keep the dollar on the rise and is seen as a positive growth in the trade balance.

The Consumer Credit released by the Board of Governors of the Federal Reserve looks stronger when compared to the previous month’s value of $14.16B versus the forecasted value at $17.10B. The Canadian Ivey Purchasing Managers Index signals a stronger data at 58.9 compared to previous month’s data at 57.2 and this makes the Canadian dollar stronger. The Gross Domestic Product released by Japan shows better results for the day.
For more detailed analysis from the author, please visit NoaFX.

Important AUD Pairs’ Technical Update: 22.02.2017

AUD/USD

Even if 0.7730-35 restricted AUDUSD’s up-moves during last-week, support-line of a month old ascending trend-channel, at 0.7650 now, triggered the pair’s bounce and is presently helping it to aim for the same resistance-region. If at all the quote manage to surpass 0.7735, it needs to justify buying momentum with a successful break above 0.7750 downward slanting TL, breaking which channel resistance-line of 0.7810 and 2016 high around 0.7835 comes into play. On the downside, channel-support of 0.7650 and 0.7600 round figure, comprising 23.6% Fibonacci Retracement of its January – April 2016 rally, becomes crucial to watch. Should Bears dominate prices and drag them below 0.7600, 0.7570 & 0.7525 are likely intermediate halts that can be availed before expecting the pair’s bounce from 200-day & 100-day SMA confluence region of 0.7505-10.

AUD/JPY

audjpy

Unlike other AUD pairs, AUDJPY signals short-term pullback as it recently broke immediate ascending trend-channel and is indicating 86.70 & 86.50 support re-test. Given the pair’s extended downside below 86.50, the 86.30 & 86.00 can please sellers before the 85.80 support-line comes into play. If the TL fails to disappoint Bears, chances to witness southward trajectory towards 85.40 & then to 85.00 can’t be denied. Meanwhile, 87.10 & 87.40 can continue acting as adjacent resistances, breaking which 87.50 horizontal-line and 87.60 channel resistance should be observed closely. Should the pair clears 87.60, it becomes capable enough to challenge 88.20 & 61.8% FE level of 88.55.

AUD/CAD

audusd

On Wednesday, the AUDCAD successfully cleared 1.0090 – 1.0100 horizontal-line and is progressing towards 1.0150 resistance before meeting 61.8% FE of its latest moves at 1.0165. During the pair’s additional upside beyond 1.0165, the 1.0220 & 1.0270 might act as buffer before 1.0300 grabs market attention. In case if the pair closes below 1.0090, an upward slanting trend-line support of 1.0045 becomes important, breaking which 0.9985 & 100-day SMA level of 0.9970 can please sellers. Should the pair keep declining below 0.9970, it becomes wise to expect 0.9920 & 0.9900 to appear on the chart.

AUD/CHF

audchf

AUDCHF’s gradual recovery since the start of 2017 enabled it to surpass nearly three-year old horizontal-line, around 0.7750-40. However, the pair presently confronts 200-week SMA figure of 0.7775, which if conquered on a closing basis, could trigger its north-run towards 0.7860 & 0.7920 resistances. If at all the quote manages to break 0.7920, the 0.8000 psychological mark can become buyers’ favorite. Alternatively, the pair’s pullback from the current levels can re-ignite importance of 0.7750-40, breaking which 0.7700 & the 0.7670 might follow the downturn. Should prices continue declining below 0.7670, the 0.7590 & 0.7540 are likely supports to be observed.

Cheers and Safe Trading,
Anil Panchal

AUD/JPY GANN Long Term Analysis

Let’s have a quick Look on the past performance of AUDJPY during Last the few months. Different studies would help us to attain confluence increasing probability of bearish prognosis AUDJPY for the upcoming 2 to 3 months on a weekly chart.

AUD/JPY Weekly Chart
AUD/JPY Weekly Chart

Bearish shark (Bearish W shape Harmonic) formed along skewed double Top pattern. PRZ validated a bearish ride triggered and executed in well manner. The price get into corrective wave and it seems to be an exhaust candle as it at running BAMM support level of Last W harmonic pattern formed. (Bearish A Shark). At the same time the price is in converging state at bigger scale indicating sign of Seller empowering over buyer in long run. Secondly harmonic BAMM level is acting as running support and price after down rally have correction to running support level. Now Correction seems to be mature as we can see in this chart.

AUD/JPY Weekly Chart
AUD/JPY Weekly Chart

If we look into these levels of 90.139 to 88.227, it seems to be a very strong resistance level. If price rejected from this zone and reverse to form a valid swing point and validating swing rejection it would touch 76.277 in the next two and half months.

Price is struggling at strong resistance zone of 90.139 and 88.227 formed bearish W shaped pattern that indicating it’s going to establish bearish trend soon.

If we have look at the price Action of AUDJPY we can see a falling wedge with valid breakout and at fast momentum attain required break out level. Second seem to be at maturity of second Bearish Elliot wave. Now warming up to start of third Elliot wave.

GANN study also prove prognosis of upcoming bearish wave.

AUD/JPY price having down ride reversed for correction from GANN 270 Degree natural level. This is a very strong area for any expected reversal. Price had taken almost 90 degree correction and now struggling at GANN angle 180 Degree. It now in retesting phase of 180 Degree level having correction of 90 Degrees.

If we look at GANN Square of 90, it’s also shows that price failed to cross its balance point of 180 Degrees. Showing that the master direction is still bearish. Go short on break down of 85.887 and support level needed to monitor are

Price                      GANN Natural level (Degree)

81.316                   215

76.869                   270

72.548                   315

Long Term Outlook    (BEARISH)