‘Follow the Money’: Major Players Betting on Vaccinations to Keep Global Economy Afloat

The coronavirus is in the news again, not last year’s pandemic fueling COVID-19 version, but the fast-spreading Delta variant. While dominating the mainstream news in the United States (See CNN and FoxNews), and globally on business website such as CNBC, Reuters and Bloomberg, to name a few, we’re not really seeing a major impact on the financial markets.

This is interesting to note because the mainstream story is centered on rising infection numbers, the slow pace of vaccinations and what is likely to happen if countries don’t start clamping down on the spread of the virus. In other words, people’s health. Some experts are even calling it a “life or death” situation.

In the financial markets, obviously we’re not seeing the same reaction as we did in 2020 with stocks dropping 20% in a matter of weeks and crude oil testing prices below $20 a barrel. Instead we’re seeing a relative calm.

Is this telling us to “follow the money?” Is this telling us that since the situation is not as bad as last year, there is no need to panic? Are the financial markets indicating there is not enough information yet to understand the impact of this new outbreak? Do we wait for the bad economic numbers or do we anticipate them?

The answer is all of the above.

Of course, I don’t recommend putting your finances ahead of your health. I don’t think anyone is doing that. Traders are making their decisions on what they know at this time. Some are even basing their decisions on their belief in the vaccinations.

In this case, they feel that enough people are vaccinated so major economic shutdowns are warranted at this time. But we’ve seen different reactions all around the globe, which could be adding to the confusion over what to do. Lighten up on the long side? Buy more, start selling? Move to the sidelines?

I don’t think I am going to be able to answer any of these questions in this article, but if I had to center on one, I’d have to say “follow the money”. But I should add that I am vaccinated, so I may be biased.

Here’s What Others are Saying and Doing

Fed’s Powell Downplays Delta Variant’s Threat to the Economy

The spread of the COVID-19 delta variant is raising infections, leading some companies and governments to require vaccinations and raising concerns about the U.S. economic recovery, according to the AP.

But on Wednesday, Federal Reserve Chair Jerome Powell injected a note of reassurance, suggesting that the delta variant poses little threat to the economy, at least so far.

“What we’ve seen is with successive waves of COVID over the past year and some months now,” Powell said at a news conference, “there has tended to be less in the way of economic implications from each wave. We will see whether that is the case with the delta variety, but it’s certainly not an unreasonable expectation.”

“Dining out, traveling, some schools might not reopen,” he said. “We may see economic effects from some of that or it might weigh on the return to the labor market. We don’t have a strong sense of how that will work out, so we’ll be monitoring it carefully.”

More Corporations are Requiring Workers to Get Vaccinated ~ Axios

The federal government in May said that it is legal for companies to require employees to get vaccinated for coronavirus.

Google CEO Sundar Pichai sent an email to employees announcing that those going back to the office needed to be vaccinated. The company is also extending its work-from-home policy through October 18.

Facebook said that anyone going back to work in their U.S. campuses must be vaccinated.

Netflix is requiring that the casts for all of its U.S. productions be vaccinated, as well as everyone who comes in contact with them.

Drop in UK COVID-19 Cases Indicates Infections Surge May Be Past Peak ~ Reuters

Early last week, the UK added to the confusion when it reported its lowest daily total of new coronavirus cases since July 4, adding to signs that a recent surge in infections driven by the spread of the Delta variant may have passed its peak.

Sydney Readies for the Army as Lockdown Fails to Squash Australia Delta Outbreak ~ CNN

Sydney’s poorest neighborhoods on Friday braced for military enforcement of the city’s toughest and longest lockdown of the COVID-19 pandemic as the infection as the infection numbers held persistently high five weeks since restrictions began.

The situation appears to be so bleak in Australia that economists are already predicting a third quarter contraction.

Oil Climbs, Notches Fourth Monthly Gain on Growing Demand – Reuters

The crude oil market is interesting since it sold off sharply early in July when the Delta-variant story first broke. The biggest concern was demand destruction.

Since then, however, both WTI and Brent have recovered enough to post a fourth monthly gain, with demand growing faster than supply and vaccinations expected to alleviate the impact of a resurgence in COVID-19 infections across the world.

Conclusion

The best advice appears to be: bet on the vaccinations to work, keep monitoring the global economy especially output and labor and keep an eye on gasoline demand.

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

The Week Ahead – Economic Data, Monetary Policy, and COVID-19 in Focus

On the Macro

It’s quieter week ahead on the economic calendar, with 51 stats in focus in the week ending 6th August. In the week prior, 71 stats had also been in focus.

For the Dollar:

From the private sector, ISM Manufacturing and Non-Manufacturing PMIs for July will be in focus.

Expect the Non-Manufacturing PMI due out on Wednesday to have the greatest impact.

On the labor market front, ADP nonfarm employment change and weekly jobless claims figures on Wednesday and Thursday will also influence.

Nonfarm payrolls at the end of the week, however, will be the key stat of the week.

In the week ending 30th July, the Dollar Spot Index fell by 0.79% to 92.174.

For the EUR:

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

Private sector PMIs for Italy and Spain together with finalized numbers for France, Germany, and the Eurozone will influence.

Expect Italy and the Eurozone’s PMIs to be key in the week.

German and Eurozone retail sales figures will also influence, with consumption key to a sustainable economic recovery.

For the week, the EUR rose by 0.84% to $1.1870.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar.

Finalized private sector PMIs for July are due out on Monday and Wednesday.

Expect any revisions to the services PMI to have a greater impact in the week.

Construction PMIs also due out, should have a muted impact, however.

While the finalized numbers will influence, the Bank of England monetary policy decision on Thursday will be the main event.

Last week, the IMF talked up the outlook for the British economy. It now rests in the hands of the BoE.

The Pound ended the week up by 1.13% to $1.3904.

For the Loonie:

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

Trade data on Thursday and employment change figures on Friday will be the key numbers.

While trade figures will influence, expect the employment change figures to have a greater impact.

The Loonie ended the week up 0.71% to C$1.2475 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

Manufacturing sector data, building permits, retail sales, and trade data will be in focus.

Retail sales and trade data, due out on Wednesday and Thursday, will be the key stats of the week.

On the monetary policy front, however, the RBA monetary policy decision on Tuesday will be the main event.

The Aussie Dollar ended the week down by 0.30% to $0.7344.

For the Kiwi Dollar:

It’s a quiet week ahead. Mid-week, employment change figures will draw interest ahead of inflation expectation numbers on Friday.

With little else for the markets to consider in the week, expect both sets of numbers to provide direction. The markets are expecting a further pickup in inflationary pressures…

The Kiwi Dollar ended the week flat at $0.6974.

For the Japanese Yen:

Finalized private sector PMIs and Tokyo inflation figures will be in focus in the 1st half of the week.

Expect any revision to the PMIs to be of greater influence.

Late in the week, household spending figures will also draw interest.

The Japanese Yen rose by 0.75% to ¥109.720 against the U.S Dollar.

Out of China

It’s a busier day, with private sector PMIs to provide the markets with direction.

Following NBS numbers from the weekend, the market’s preferred Caixin manufacturing PMI will set the tone. Over the weekend, the NBS Manufacturing PMI fell from 50.9 to 50.4…

With service sector activity a greater component of the economy, Wednesday’s services PMI will also influence, however.

The Chinese Yuan ended the week up by 0.31% to CNY6.4614 against the U.S Dollar.

Geo-Politics

Russia and China continue to be the main areas of interest for the markets. News updates from the Middle East will also need continued monitoring…

The Weekly Wrap – A Dovish FED and Weak Stats Left the Greenback in the Red

The Stats

It was a busy week on the economic calendar, in the week ending 30th July.

A total of 71 stats were monitored, which was up from 33 stats in the week prior.

Of the 71 stats, 37 came in ahead forecasts, with 30 economic indicators coming up short of forecasts. There were 4 stats that were in line with forecasts in the week.

Looking at the numbers, 42 of the stats reflected an upward trend from previous figures. Of the remaining 29 stats, 27 reflected a deterioration from previous.

For the Greenback, disappointing economic data and a dovish FED left the Dollar in the red. The Dollar Spot Index fell by 0.79% to 92.174. In the previous week, the Dollar had risen by 0.24% to 92.906.

Out of the U.S

Consumer sentiment and durable goods orders drew attention early in the week.

In June, durable goods orders ex transportation rose by 0.3%, following a 0.5% increase in May.

More significantly was a pickup in consumer confidence in July. The CB Consumer Confidence Index rose from 128.9 to 129.1. Economists had forecast a decline to 126.0.

On Thursday, jobless claims and 2nd quarter GDP numbers were in focus. The stats were skewed to the negative, however.

In the 2nd quarter, the U.S economy grew by 6.5%. This fell well short of a forecasted growth of 8.5%.

Jobless claims also fell short of expectations, with initial jobless claims falling from 424k to 400k. Economists had forecast a decline to 370k.

At the end of the week, personal spending and inflation figures came in ahead of forecasts, however.

Personal spending rose by 1.0% in June, with the annual rate of inflation seeing a pickup from 3.4% to 3.5%.

While the stats were material, the FED monetary policy and press conference were the main events of the week.

In line with market expectations, the FED left policy unchanged. The FED Chair also looked to assure the markets that there would be no near-term moves, the guidance considered dovish.

Out of the UK

It was a particularly quiet week. There were no major stats for the markets to consider in the week.

The lack of stats left the Pound in the hands of IMF economic growth forecasts, which delivered Pound support.

In the week, the Pound rose by 1.13% to end the week at $1.3904. In the week prior, the Pound had fallen by 0.14% to $1.3748.

The FTSE100 ended the week up by 0.07%, following a 0.28% gain from the previous week.

Out of the Eurozone

Through much of the week, the German economy was in focus.

Business and consumer sentiment figures delivered mixed results. While business sentiment waned in July, consumer confidence remained unchanged, in spite of the reopening of economies.

Unemployment figures from Germany were upbeat. The unemployment fell from 5.9% to 5.7% in July.

Inflationary pressures continued to surge, however, with Germany’s annual rate of inflation accelerating in July to 3.8%.

At the end of the week, 1st estimate GDP numbers and prelim inflation figures were the key stats of the week.

Quarter-on-quarter, the French economy grew by 0.9% versus a forecasted 0.7% in the 2nd quarter.

Germany saw growth of 1.5%, falling short of a forecasted 1.9%. In the 1st quarter, the economy had contracted by 2.1%.

For the Eurozone, the economy grew by 2.0%, coming in ahead of a forecasted 1.5%. The economy had contracted by 0.3% in the previous quarter.

Inflation also ticked up, aligned with member state numbers. According to prelim figures, the Eurozone’s annual rate of inflation accelerated from 1.9% to 2.2% in July, rising above the ECB’s 2% target.

For the week, the EUR rose by 0.84% to $1.1870. In the week prior, the EUR had fallen by 0.30% to $1.1771.

The DAX30 fell by 0.67%, while the CAC40 and the EuroStoxx600 ended the week up by 0.67% and by 0.05% respectively.

For the Loonie

It was a relatively quiet week on the economic data front.

Inflation and GDP numbers were the key stats of the week.

In June, the annual rate of inflation softened from 2.8% to 2.7%, bucking the trend seen across key economies.

The Canadian economy also continued to struggle in May, with the economy contracting by 0.3%. The economy had contracted by 0.5% in April.

In the week ending 30th July, the Loonie rose by 0.71% to C$1.2475. In the week prior, the Loonie had risen by 0.39% to C$1.2564.

Elsewhere

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

While the Aussie Dollar fell by 0.30% to $0.7344, the Kiwi Dollar ended the week flat at $0.6974.

For the Aussie Dollar

Inflation was the main area of focus. The stats were mixed, however, pegging the Aussie Dollar back.

In the 2nd quarter, the annual rate of inflation surged from 1.1% to 3.8%. The trimmed mean rate of inflation picked up from 1.1% to 1.6%, however.

Wholesale inflation also saw a pickup but at a softer pace than anticipated.

Australia’s annual wholesale rate of inflation ticked up from 0.2% to 2.2%. Economists had forecast a rate of 3.5%.

For the Kiwi Dollar

It was a busier week, with trade and consumer and business confidence in focus.

Trade data disappointed, with the trade surplus narrowing from NZ$498m to NZ$261m in June. The narrowing stemmed from a more marked increase in imports, however, rather than a fall exports, which limited the damage.

Business and consumer confidence figures were also skewed to the negative. The ANZ Business Confidence Index fell from -0.60 to -3.80, with the ANZ Consumer Confidence Index falling from 114 to 113.1.

The week numbers were not enough to sink the Kiwi.

For the Japanese Yen

It was another relatively busy week.

Early in the week, private sector PMIs were in focus. Later in the week industrial production and retail sales also drew attention on Friday.

While prelim private sector PMIs softened slightly in July, industrial production and retail sales impressed.

Industrial production jumped by 6.2% in June, reversing a 6.5% slide from May. More significantly, retail sales increased by 3.1%, reversing a 0.4% decline from May.

The Japanese Yen rose by 0.75% to ¥109.72 against the U.S Dollar. In the week prior, the Yen had fallen by 0.44% to ¥110.550.

Out of China

It was a quiet week on the economic data front. There were no major stats from China for the markets to consider.

In the week ending 30th July, the Chinese Yuan rose by 0.31% to CNY6.4614. In the week prior, the Yuan had ended the week down by 0.03% to CNY6.4813.

The CSI300 and the Hang Seng ended the week down by 4.98% and by 5.46% respectively.

AUD/USD Weekly Price Forecast – Australian Dollar Looking for Support

The Australian dollar has gone back and forth during the course of the week to show a little bit of hesitation with the negativity. If we can break down below the hammer from the previous week, then it is very likely that we go towards the 0.70 level, an area that I do think is a very real possibility as Australia continues to lock down its economy. This could send Australia into a “double dip recession”, which of course will cause major issues for the currency and of course the overall economic health of Australia.

AUD/USD Video 02.08.21

Furthermore, we are starting to see issues with the Chinese economy and therefore the Australians may suffer at the hands of that as well. The economic numbers in China have been less than impressive lately, so ultimately this is a market that I think will suffer. If we bounce from here, then it is likely that the 0.75 level above is going to be a significant resistance barrier based upon the previous action that we had seen and of course the fact that it is a large, round, psychologically significant figure.

One thing is for sure, this is a market that will continue to be very choppy and difficult to say the least, so with that being the case it is possible that the market is one that you are going to have to be very patient with, but it should eventually give us one of the signals to get short. On the other hand, if we were to take out the 0.76 level, then it is likely that the market would go looking towards the 0.78 handle.

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

AUD/USD Price Forecast – Australian Dollar Continues Consolidation

The Australian dollar has initially tried to rally during the trading session on Friday but then pulled back just a bit to slip back into the previous consolidation. This is an area that the markets have been bouncing around in for well over a week, as the Australian dollar is sitting on the precipice of a bigger move. One thing to keep in mind is that a lot of traders are paying close attention to the fact that Australia is trying to destroy its own economy. After all, you get what you ask for if you ask for it long enough. Locking down the economy is not good for the currency or anything else, so having said that it is not a huge surprise that the Aussie has struggled the way it has.

AUD/USD Video 02.08.21

To the upside, the market will more than likely struggle at the 0.75 level. The 0.75 level is a large, round, psychologically significant figure, and as a result it is very likely that we will see people react to it. Furthermore, we also have the 200 day EMA sitting just above there, with the 50 day EMA trying to break down through it and forming a bit of a barrier in and of itself.

If we break down below the 0.73 level, then it is likely that market would go looking towards the 0.70 level underneath which is a huge figure on the longer-term charts. If there is more of a “risk off move” in the world’s economy, then it makes quite a bit of sense that we would see that move play out in this pair as well as other commodity currencies.

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

AUD/USD and NZD/USD Fundamental Daily Forecast – Gains Being Capped Amid Weaker Global Equity Markets

The Australian and New Zealand Dollars are trading lower on Friday, pressured by a drop in demand for higher risk currencies that is being fueled by a plunge in global equity markets.

The Aussie and Kiwi are being underpinned, however, by a weaker U.S. Dollar. Meanwhile, the Covid situation in Australia is worsening, raising fears that the country will experience another virus-related contraction during the third quarter.

At 08:00 GMT, the AUD/USD is trading .7391, down 0.0002 or -0.03% and the NZD/USD is at .7006, down 0.0003 or -0.03%.

Global Stock Market Weakness Fueling Lower Demand for Risky Currencies

Futures contracts tied to the major U.S. stock indexes fell early Friday as a soft earnings report from Amazon threatened to dampen an otherwise strong month ahead of July’s final day of trading.

European stocks retreated Friday as investors reacted to another deluge of corporate earnings and economic data.

Shares in Asia-Pacific declined again on Friday, heading for their worst month since March 2020, as volatile trading continued for Chinese tech stocks and Hong Kong’s Hang Seng index tumbled.

The S&P/ASX 200 in Australia closed 0.33% down to 7,392.60. Markets will be tracking the Covid situation in Sydney, which reported a record daily rise in Covid cases Thursday despite an extended lockdown. Reuters reported that authorities have requested help from the military in enforcing the lockdown.

New Zealand Building Consents Rise in June

The number of new dwelling consents approved in New Zealand rose a seasonally adjusted 3.8 percent in June compared with a 2.4 percent drop in the previous month, data from Statistics New Zealand showed on Friday.

Excluding apartments, flats, and retirement village units, the number of consents for new houses was up 0.1 percent.

Building consents were 24.0 percent higher than the same month a year ago.

Australian Economic Data

Australia’s Q2 Producer Price Index (PPI) rose 0.7% on a quarterly basis, beating the 0.4% growth in Q1. The Private Sector Credit rose 0.9% in June.

US Set to Release Slew of Economic Reports

At 12:30 GMT, traders will get the opportunity to react to U.S. reports on Core PCE Prices, Personal Income and Personal Spending. These reports can move the U.S. Dollar.

Core PCE Inflation is expected to show a 0.6% rise for the month. Personal Income is expected to have declined by 0.4%, while Personal Spending is expected to have risen 0.7%.

At 13:45, the Chicago PMI report is expected to come in at 64.2, down from 66.1.

At 14:00 GMT, Revised University of Michigan Consumer Sentiment is expected to come in unchanged at 80.8.

The direction of the AUD/USD and NZD/USD on Friday will be determined by whether risk sentiment is on or off.

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

A Busy Economic Calendar Puts the EUR, the Loonie, and the Greenback in Focus

Earlier in the Day:

It was a busy quiet start to the day on the economic calendar this morning. The Kiwi Dollar and the Japanese Yen were in action in the early part of the day. Later this morning, the Aussie Dollar will also be in focus.

For the Kiwi Dollar

Consumer confidence and housing sector data were in focus this morning.

In June, building permits rose by 3.8%, reversing a 2.40% slide in May. Economists had forecast a 1.10% decline.

Of greater significance, however, was a modest fall in consumer confidence.

In July, the ANZ Consumer Confidence Index fell from 114.0 to 113.1. Economists had forecast a decline to 113.0.

According to the July survey,

  • A good time to buy a major household item rose 2 points to +24, a fresh post-COVID high.
  • Sentiment towards the finances in a year’s time also improved. A net 23% expect to be better off this time next year, up 1 point.
  • This was in contrast to sentiment towards current financial situations, which fell 6 points to +8%.
  • Views towards the economic outlook were also mixed.
  • Perceptions regarding the next year’s economic outlook fell 5 points to -2%, while the 5-year outlook rose by 2 points to +12%.

The Kiwi Dollar moved from $0.70039 to $0.70162 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.01% to $0.7011.

For the Japanese Yen

Industrial production increased by 6.2% in June, according to prelim figures, reversing most of a 6.5% slide from May. Economists had forecast a 5.1% increase.

According to the Ministry of Economy, Trade and Industry,

  • Industries that mainly contributed to the increase were motor vehicles, production machinery, and electronic parts & devices.
  • Industries that mainly contributed to the decrease were transport equipment (excl. motor vehicles) and ceramics, stone, & clay products.

According to the Ministry of Economy, Trade and Industry, retail sales increased 3.1%, reversing a 0.4% decline from May. Economists had forecast a 3.6% slide.

The Japanese Yen moved from ¥109.416 to ¥109.402 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.05% to ¥109.420 against the U.S Dollar.

For the Aussie Dollar

Wholesale inflation and private sector credit figures will draw interest.

On the inflation front, the annual wholesale rate of inflation is forecast to accelerate from 0.2% to 3.5%.

Quarter-on-quarter, economists have forecast for the producer price index to rise by 2.1%, following a 0.4% increase in the 1st quarter.

At the time of writing, the Aussie Dollar was flat at $0.7396.

The Day Ahead

For the EUR

It’s a particularly busy day ahead on the economic data front, with the 2nd quarter GDP numbers, consumer spending, and inflation in focus.

French, German, and Eurozone 1st estimate GDP numbers for the 2nd quarter will be the key stats of the day, however.

At the time of writing, the EUR was up by 0.03% to $1.1891.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

The lack of stats leaves the IMF’s growth forecasts for the UK, delivered earlier in the week, to continue to resonate.

At the time of writing, the Pound was up by 0.05% to $1.3966.

Across the Pond

It’s a busy day ahead on the economic calendar.

Personal spending and inflation figures for June together with finalized consumer sentiment figures for July will be in focus.

Barring any marked revisions to prelim consumer sentiment figures, expect the personal spending and inflation figures to be key.

Following the FED’s policy decision on Wednesday, any FOMC member chatter will also need monitoring.

On Thursday, the U.S Dollar Spot Index ended the day down by 0.50% to 91.864.

For the Loonie

It’s also a busy day on the economic calendar. Wholesale inflation, RMPI, and GDP numbers will be in focus.

With a lack of stats through much of the week, expect Loonie sensitivity to today’s numbers.

Away from the economic calendar, crude oil prices and market risk sentiment will also influence.

At the time of writing, the Loonie was down by 0.01% to C$1.2449 against the U.S Dollar.

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

AUD/USD Price Forecast – Australian Dollar Trying to Break Out

The Australian dollar has rallied a bit during the course of the trading session on Thursday, to break above the 0.74 level momentarily. We have given back some of those gains and I would also point out that there are a lot of areas above that could cause some issues. It is because of this that I am waiting for an opportunity to short the Australian dollar higher levels, because quite frankly we are still very much in a downtrend over the last several months.

AUD/USD Video 30.07.21

The 0.75 level above is probably going to be a significant resistance barrier, as it is a large, round, psychologically significant figure and of course an area where the 200 day EMA is getting awfully close to being broken through by the 50 day EMA. This of course would be the so-called “death cross”, while I am not a huge proponent of it, I also recognize that a lot of longer-term traders may come into the picture. Ultimately, I think this is a simple sign of downward pressure that should continue, and I think that given enough time we will probably sell into signs of exhaustion.

If we break above the 0.75 handle, then it is likely that we could go much higher, but I will cross a bridge one we get there. Quite frankly, I do not see that happening very easily, and I think that it is only a matter of time before we get a little bit more clarity, but quite frankly the bounce will more than likely give us an opportunity sooner rather than later, but a little bit of patience may go a long way in the next couple of trading sessions.

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

AUD/USD Weak USD Might Boost the AUD

0.7344-0.7420 is the zone where we see buyers. If the price makes a continuational move towards 0.7575 we should see a stronger momentum up. For bulls the most important is to have a close above 0.7411. That should make the new buyers join and lead the price higher towards the next level.

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

Cheers and safe trading,

Nenad

 

AUD/USD Forex Technical Analysis – Main Trend Changes to Up on Trade Through .7397

The Australian Dollar is trading higher on Thursday, following through to the upside following yesterday’s reversal to the upside. After an early session setback on Wednesday, the Aussie posted a dramatic recovery into the close following a lukewarm Federal Reserve statement and dovish remarks from Fed Chair Jerome Powell.

At 06:45 GMT, the AUD/USD is trading .7385, up 0.0011 or +0.15%.

On Wednesday, the Federal Reserve concluded its two-day meeting of the Federal Open Market Committee (FOMC) by making no move on asset purchases. Shortly thereafter, Powell cautioned in his press conference that although the economy is making progress toward its goals, it has a ways to go before the central bank would actually adjust its easy policies.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7397 will change the main trend to up. A move through .7290 will signal a resumption of the downtrend. Taking out .7397 will also turn .7317 into a new main bottom.

The minor trend is also down. A new minor bottom has formed at .7317.

The minor range is .7290 to .7397. Its pivot at .7343 is support.

The AUD/USD is currently straddling a long-term Fibonacci level at .7379.

The short-term range is .7503 to .7290. Its retracement zone at .7397 to .7422 is the next upside target. The upper or Fibonacci level at .7422 is a potential trigger point for an acceleration to the upside.

Daily Swing Chart Technical Forecast

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

Bullish Scenario

A sustained move over .7379 will indicate the presence of buyers. This could lead to a change in the main trend and a labored rally into .7397 to .7422.

The trigger point for an acceleration to the upside is .7422 with the primary upside target .7499 to .7503.

Bearish Scenario

A sustained move under .7379 will signal the presence of sellers. This could trigger a pullback into .7343. If this level fails then look for the selling to possibly extend into the .7317 minor bottom. Taking out this level could trigger a further break into the main bottom at .7290.

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

Economic Data from the Eurozone and the U.S Put the EUR and the Dollar in the Spotlight

Earlier in the Day:

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

For the Kiwi Dollar

Business confidence was in focus this morning.

In July, the ANZ Business Confidence Index fell from -0.6 to -3.8%. Economists had forecast an increased to 1.2%.

According to the latest ANZ Report,

  • While business confidence was down, firms’ own activity rose by 5 points to +32%.
  • Investment intentions increased by 7 points to 25.5%, while employment intentions eased by 1 point.
  • Cost expectations rose by 5 points to a net 86.2%. A net 62.8% of respondents intend to raise their prices, up 6 points. General inflation expectations rose by 19 bps to 2.41%.
  • Profit expectations increased by 2 points to 5.8%, however.
  • Export intentions rose by a modest 1 point to 13.4%.

The Kiwi Dollar moved from $0.69584 to $0.69545 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.07% to $0.6954.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.16% to ¥109.730 against the U.S Dollar, while the Aussie Dollar was down by 0.15% to $0.7365.

The Day Ahead

For the EUR

It’s a relatively busy day ahead on the economic data front, with the German economy back in the spotlight.

Unemployment and inflation figures will be in focus later today.  Expect plenty of interest in the numbers, with market sensitivity to inflation lingering despite the ECB’s latest shift in its price objective.

At the time of writing, the EUR was up by 0.03% to $1.1848.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

At the time of writing, the Pound was up by 0.06% to $1.3911.

Across the Pond

It’s a busy day ahead on the economic calendar.

1st estimate GDP numbers for the 2nd quarter and weekly jobless claims figures will be in focus later today.

We can expect plenty of interest in today’s numbers. Expect any sharp increase in jobless claims to overshadow positive GDP numbers, however.

At the time of writing, the U.S Dollar Spot Index was down by 0.09% to 92.235.

For the Loonie

It’s a quiet day on the economic calendar, with no material stats from Canada 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 up by 0.05% to C$1.2522 against the U.S Dollar.

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

AUD/USD Forex Technical Analysis – Late Session Reversal Could Lead to Early Test of .7397 – .7422 RT Zone

The Australian Dollar is trading higher late in the session on Wednesday after a dovish remark from Federal Chairman Jerome Powell triggered a wicked intraday reversal to the upside.

The Aussie was under pressure shortly after the Fed released its monetary policy statement at 18:00 GMT that said policymakers believed the economy was making progress toward its goals. Traders initially read this statement as hawkish.

However, in his press conference, Powell cautioned there was a ways to go before the central bank would adjust its easy policies. This dovish remark pushed Treasury yields and the U.S. Dollar lower, trigger a strong intraday reversal to the upside by the Aussie Dollar.

At 20:03 GMT, the AUD/USD is trading .7374, up 0.0016 or +0.27%.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however momentum is trending higher. A trade through .7397 will change the main trend to up. A move through .7290 will signal a resumption of the downtrend.

The minor range is .7290 to .7397. The AUD/USD is currently in a position to close on the strong side of its pivot at .7343, making it support.

The short-term range is .7503 to .7290. If the main trend changes to up then look for the rally to possibly extend into its retracement zone at .7397 to .7422.

Additional resistance is the long-term Fibonacci level at .7379.

Daily Swing Chart Technical Forecast

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

Bullish Scenario

A sustained move over .7379 will indicate the presence of buyers. This could create the upside momentum needed to take out the resistance cluster at .7397. Taking out this level will change the main trend to up with .7422 the next likely target.

The Fibonacci level at .7422 is the potential trigger point for an acceleration to the upside with the next major target zone coming in at .7499 to .7503.

Bearish Scenario

A sustained move under .7379 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the pivot at .7343, followed by .7317. Taking out .7317 will signal the return of sellers. This could extend the selling into .7290.

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

AUD/USD Price Forecast – Australian Dollar Gives Up Early Gains

The Australian dollar initially rallied during the trading session on Tuesday but gave back the gains to show less than extraordinary pressure. That being said, market is simply chopping around, and it is likely that once we get the Federal Reserve out of the way, then we might have a bit more clarity. At this point, I do like the idea of shorting this market on signs of exhaustion, like we had gotten early during the session. That being said, what I would really like to see is some type of massive bounce after the fact, and then go against it.

AUD/USD Video 29.07.21

To the downside, if we can break below the 0.73 level, then it is likely that we go much lower. At that point, it is very likely that we will eventually fulfill the move to the 0.70 level that I have been looking at for some time. Because of this, I believe at this point in time this is a “one-way trade”, especially as we are starting to get the 50 day EMA trying to cross below the 200 day EMA which is known as the “death cross.”

It is not until we break above the 0.75 level that I would be tempted to try to go long the Australian dollar, and that does not look like something that is going to happen anytime soon. That being said, if it was going to happen, then it could very well be a move back towards the highs just waiting to happen. In general, I still believe that negativity abounds as the Australian economy continues to get locked down.

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

Fed Day

The China-inspired losses saw the MSCI Asia Pacific Index fall to new lows for the year today, though Hong Kong’s Hang Seng posted a 1.3% gain. Europe’s Dow Jones Stoxx 600 is posting the first gain of the week, led by information technology, real estate, and consumer discretionary. Despite strong bank earnings, financials are matching the market, not outperforming it. US futures are oscillating around little changed levels.

The US 10-year benchmark yield is firm at 1.25%, while European yields are mostly slightly softer but sufficient to take German, French, Dutch, and Greek yields to new 3-4 month lows. The Antipodean currencies and yen are the heaviest against the US dollar, with the Canadian dollar the only major currency gaining on the greenback through the European morning. Emerging market currencies are mixed, leaving the JP Morgan EM FX index little changed.

The Chinese yuan gained for the first time in five sessions. API estimated a 4.7 mln barrel drop in US oil stocks and a large (6.2 mln barrel) drawdown in gasoline inventories, which, if confirmed, would be the largest since March. September WTI is around 1% higher today. Gold continues to move broadly sideways and is straddling the $1800-level today.

Iron ore and steel rebar futures fell in Shanghai, while copper is recovering from yesterday’s decline, which snapped a five-day advance. September lumber dropped 6.7% yesterday to bring this week’s decline to about 8.3% after jumping 18% last week on Canada’s wildfires. The CRB Index fell 0.6% yesterday to end is five-day, 6.8% advance.

Asia Pacific

Investors are continuing to try to make sense of Beijing’s aggressive moves that appear to be a broad offensive that can only result in a slowing if not reversing of past efforts to integrate into global capital markets. The ultimate goal is not clear. Beijing had appeared to be willing to use the capital inflows to ease restrictions on capital outflows. Some even speculated that this would gradually allow the yuan to be convertible.

Although we disagreed, many observers see that introducing the digital yuan as early as next year’s Olympics would challenge the US dollar’s role. The recent actions appear to deal a blow to such speculation. Lastly, there is some thought that the PBOC could ease policy again (following the recent cut in reserve requirements) to lend support to the stock market, if needed.

Australia’s Q2 CPI came in slightly above forecasts with a 0.8% rise after 0.6% in Q1. The year-over-year pace jumped to 3.8% from 1.1%. The underlying measures were as expected, with a 1.6% year rise (from 1.1%) for the trimmed mean and a 1.7% (from 1.3%) weighted median. Still, the data is unlikely to stand in the way of the RBA announcing increased bond purchases at next week’s meeting (August 3). The lockdown in Sydney and social restrictions elsewhere are threatening the economy.

Keep an eye on Japanese weekly portfolio flows that are released first thing tomorrow in Tokyo. In the previous week, ending July 9, foreigners appear to have bought a recorded amount of Japanese bonds (JPY2.57 trillion or ~$23.3 bln). To put the figure in perspective, the previous four-week average was around JPY546 bln. For their part, Japanese investors have sold foreign bonds for the past three weeks, and the average weekly sale of JPY804 bln is the most since early March. On the other hand, equity portfolio flows have been minor.

The dollar is consolidating in about a quarter of a yen below JPY110.00 so far today. The greenback has been recovering since dipping briefly below JPY109.60 near midday in NY yesterday. A move above JPY110.00 could see JPY110.20, but the subdued session will likely continue until the FOMC statement. The Australian dollar is stagnant. It remains within the range set on Monday (`$0.7330-$0.7390). There is an option for A$710 mln at $0.7390 that expires today and another for about A$515 mln at $0.7400 that expires tomorrow.

The dollar spiked to CNY6.5125 yesterday, its highest level in three months, and broke out of the CNY6.45-CNY6.50 month-old range. However, it was pushed back into the range today as the yuan rose for the first time in five sessions. The PBOC set the dollar’s reference rate at CNY6.4929, slightly lower than the median expectation picked up in Bloomberg’s forecast (CNY6.4935).

Europe

The UK and the EU are still at odds over the Northern Ireland Protocol. However, the EC moved to de-escalate the situation. Rather than push forward with its threat of imminent legal action as the end of the month should mark a new phase of enforcement, it appears to have granted a grace period of the summer to find an amicable solution.

Germany’s August GfK consumer confidence survey was unexpectedly weak. Rather than rising to 1.0 as economists projected, it remained at -0.3. The disastrous floods seem to be the main culprit. Tomorrow, Germany reports July CPI figures and employment data. The EU harmonized measure of CPI is expected to rise to 2.9% from 2.1% in June. Unemployment may have ticked down to 5.8% from 5.9%. It was at 5.0% steadily in H2 19.

The week’s highlight for the eurozone comes on Friday with the aggregate CPI (there seems to be upside risks to the 2.0% median forecast in Bloomberg’s survey) and the first look at Q2 GDP.

In the UK, Nationwide reported its house price index fell 0.5% in July. It is the first decline since March and the largest fall since last June. The year-over-year rate moderated to 10.5% from 13.4% in June. A tax break is winding down. On July 1, the stamp-duty threshold on new purchases was halved to GBP250k, adding GBP12.5k to the average home bought in London. Starting October 1, the threshold will return to GBP125k.

The euro is trading quietly in the upper end of yesterday’s range that saw it reach $1.1840, its highest level since mid-July. It has held above $1.18 so far today, and if sustained, will be the first session since July 12 that it has not traded with a $1.17-handle. There is a billion-euro option at $1.18 that expires today and another at $1.1820, and a third at $1.1850.

Tomorrow, there is a 1.36 bln euro option struck at $1.1850 that will also expire. It suggests that the area will likely be sticky. Sterling is firm but holding below $1.39 that it approached yesterday. An option for almost GBP400 mln is struck at $1.3925 that expires today. Tomorrow there is an option for almost GBP410 mln at $1.3900 that also will be cut. Initial support is seen near $1.3860 and then $1.3820.

America

Following Monday’s unexpected decline in June’s new home sales (-6.6%) and a downward revision to the May series (-7.8% rather than -5.9%), the US reported weaker than expected June durable goods orders, mitigated in part by the upward revisions to the May data. Separately, house price increases accelerated in May.

Today’s reports of the advance goods trade balance and retail and wholesale inventories will give economists the last opportunity to adjust the Q2 GDP forecasts ahead of tomorrow’s report. The median forecast in Bloomberg’s survey sees 8.5% annualized growth in Q2 after a 6.4% pace in Q1. The price deflator is expected to accelerate to 5.4% from 4.3%.

The outcome of the FOMC meeting is center stage today. No change in policy is expected, though some members seem to want to adjust the asset purchases immediately with special attention to the mortgage-backed securities. This seems unlikely. However, Powell is unlikely to push against expectations that an announcement could be made at the next FOMC meeting in September.

By pledging to give the market a clear advance warning, it would seem to need to say something relatively soon to keep its options open for an adjustment in the pace and possibly the composition of its purchase by the end of the year. Powell could deter dissents by striking a compromise by replacing the agency bonds purchases with more Treasuries, but this too seems unlikely. The FOMC statement is unlikely to deviate much from the last one, and the Fed is unlikely to see the rising Delta covid cases as substantially impacting its economic outlook.

Canada reports June CPI figures. The year-over-year rate is expected to ease (3.2% from 3.6%) for the first time this year. Canada has three core measures, two of which may have also softened (median and trim iterations). At the end of the week, Canada will report May’s monthly GDP. It is expected to have matched April’s 0.3% contraction, but the data seems dated.

Mexico’s June trade surplus was much smaller than expected ($762 mln vs. median Bloomberg survey forecast for $2 bln). Partly, it appears that domestic demand is improving, and this will likely be seen in the Q2 GDP report due at the end of the week. The median forecast anticipated a 1.8% expansion in the quarter after a 0.8% pace in Q1.

The US dollar is encountering selling pressure near CAD1.26 for the fifth consecutive session. Key support is seen near CAD1.2525, though there is an option for almost $390 mln at CAD1.2550 that expires today. Momentum indicators like the MACD and Slow Stochastic are trending lower, and the greenback’s recovery from the multi-year low set on June 1 near CAD1.20 looks over or nearly so.

The US dollar is trading near seven-day lows against the Mexican peso (~MXN19.9330). Chart support is seen in the MXN19.80-MXN19.82 band. Nearby resistance is pegged near MXN20.03.

This article was written by Marc Chandler, MarctoMarket.

AUD/USD and NZD/USD Fundamental Daily Forecast – Australian CPI Spikes in Q2, but Core Inflation Subdued

The Australian and New Zealand Dollars are trading steady-to-better early Wednesday, hovering just below recent peaks as investors turned to this week’s Federal Reserve meeting for clues on the policy outlook.

Traders are also monitoring the impact of rising cases of the highly contagious COVID-19 Delta variant and the unnerving plunge in Chinese equity markets earlier in the week that caused a ripple effect to global sentiment, creating a risk-off situation.

Meanwhile in Australia, the government reported that Australia’s consumer inflation rose at the fastest annual pace in almost 13 years last quarter.

At 03:49 GMT, the AUD/USD is trading .7361, up 0.0002 or +0.03% and the NZD/USD is at .6958, up 0.0009 or +0.01%.

Australian CPI Blows Hot in Q2, Core Inflation Far Cooler

Australia’s consumer prices rose at the fastest annual pace in almost 13 years last quarter as petrol jumped and government subsidies unwound, but a far tamer reading for core inflation suggested the spike would be fleeting, Reuters reported.

Wednesday’s data from the Australian Bureau of Statistics showed the headline consumer price index (CPI) rose 0.8% in the June quarter, from the previous quarter, just topping market forecasts of a 0.7% increase.

The CPI climbed a sharp 3.8% on a year ago, but largely because the index had been artificially depressed last year by lockdown relief measures notably on child care payments.

The more benign underlying trend was evident in the Reserve Bank of Australia’s (RBA) trimmed mean measure of inflation which rose just 0.5% in the quarter and 1.6% for the year.

Core inflation has run stubbornly short of the RBA’s 2-3% target band for more than five years, and the bank itself fears it will not reach 2% until the middle of 2023 even with interest rates at record lows.

Daily Forecast

Traders showed little reaction to the inflation news because the jump in prices has already been overtaken by events as coronavirus lockdowns in major population centers will almost certainly send the economy backwards this quarter, a powerful argument for extended monetary and fiscal stimulus.

The same goes for the Federal Reserve’s monetary policy decisions. Aussie and Kiwi traders just have too much on their plates to worry about U.S. monetary policy in my opinion.

Restrictions in both countries could weaken consumer spending and employment this quarter, piercing what had been a remarkably rapid economic recovery. Instead, economists are already predicting that Australia will go through a deep contraction in GDP over Q3 21 and that more fiscal and monetary stimulus will be needed once the government lifts its restrictions.

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

Economic Data Puts the EUR in Focus ahead of the FED Policy Decision and Press Conference

Earlier in the Day:

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

For the Aussie Dollar

Inflation was in focus this morning.

In the 2nd quarter, the annual rate of inflation accelerated from 1.1% to 3.8%. Economists had forecast a pickup to 4.0%.

Quarter-on-quarter, consumer prices rose by 0.8%, falling short of a forecasted 1.0% rise. In the 1st quarter, consumer prices had risen by 0.6%.

According to the ABS,

  • The most significant price rises in the June quarter were automotive fuel (+6.5%) and medical and hospital services (+2.4%).
  • Electricity prices rose by 3.3% as a result of the continued unwinding of the Western Australian Government’s A$600 electricity credit.
  • In the 2nd quarter, the trimmed mean annual rate of inflation picked up from 1.1% to 1.6%.

The Aussie Dollar moved from $0.73726 to $0.73660 upon release of the figures. At the time of writing, the Aussie Dollar up by 0.07% to $0.7367.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.08% to ¥109.870 against the U.S Dollar, while the Kiwi Dollar was up by 0.12% to $0.69640.

The Day Ahead

For the EUR

It’s a relatively quiet day ahead on the economic data front. Consumer sentiment figures from Germany will be in focus early in the European session.

With little else for the markets to consider, we can expect EUR sensitivity to the numbers. While economist have forecast for confidence to improve, the Delta variant could test consumer optimism near-term.

At the time of writing, the EUR was up by 0.03% to $1.1820.

For the Pound

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

Further demand for the Pound is likely following the IMF’s outlook towards the UK economy.

At the time of writing, the Pound was up by 0.06% to $1.3888.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. Trade data for June will be in focus later in the day. We don’t expect the numbers to have a material impact on the Dollar and the broader markets, however.

The market focus will be on the FED interest rate decision and press conference scheduled for late in the U.S session.

The question will be whether the FED Chair can continue to convince the markets of unwavering policy support.

At the time of writing, the U.S Dollar Spot Index was up by 0.02% to 92.453.

For the Loonie

It’s relatively quiet day on the economic calendar, with inflation figures in focus.

After a quiet start to the week, we will expect the Loonie to be responsive to the numbers.

Ultimately, however, market risk sentiment and crude oil prices will remain the key drivers on the day.

At the time of writing, the Loonie was up by 0.13% to C$1.2586 against the U.S Dollar.

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

AUD/USD Price Forecast – Australian Dollar Hovers As It Forms Base

The Australian dollar went back and forth during the course of the trading session on Tuesday in order to show signs of stability. It looks as if we are trying to find a little bit of a base for the short term, as the Aussie may have gotten a little bit oversold. At this point, if we do bounce from here, it is likely that we could see a lot of resistance just waiting to jump in at the 0.75 handle. Just above there, we have the 50 day EMA reaching towards the 200 day EMA in order to form a bit of a “death cross”, which of course makes longer-term traders look at this as a very negative market.

AUD/USD Video 28.07.21

If we do bounce from here, I believe that the 0.75 handle will be crucial. If we can break above there, then it could be an opportunity for the market to go much higher. That being said though, I do not think that the market is going to be easy to get above there, especially as Australia continues to lock itself down. With that being the case, the market is likely to see a lot of resistance.

On the other hand, if we were to break down below the lows that were made last week, it could send the Australian dollar down towards the 0.70 level that will attract a lot of attention. Ultimately, this is a market that I think continues to see a lot of negativity and therefore I am essentially just waiting for an opportunity to start selling again. At this point in time, I may simply have to sit on the sidelines before getting another opportunity.

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

Economic Data from the U.S to Put the Dollar in the Spotlight

Earlier in the Day:

It was a particularly quiet start to the day on the economic calendar this morning. There were no material stats to provide the markets with direction early in the day.

For the Majors

At the time of writing, the Japanese Yen was up by 0.13% to ¥110.250 against the U.S Dollar, while the Aussie Dollar down by 0.07% to $0.7380. The Kiwi Dollar was down by 0.14% to $0.6994.

The Day Ahead

For the EUR

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

The lack of stats will leave the EUR in the hands of market risk sentiment on the day, with COVID-19 remaining a key area of focus.

At the time of writing, the EUR was up by 0.01% to $1.1804.

For the Pound

It’s also particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

At the time of writing, the Pound was up by 0.02% to $1.3821.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. Durable and core durable goods and consumer sentiment figures are due out later today.

Expect core durable goods orders and consumer confidence figures to be the key drivers later in the day.

At the time of writing, the U.S Dollar Spot Index was down by 0.04% to 92.6140.

For the Loonie

It’s another quiet day on the economic calendar, with no major stats due out to provide the Loonie with direction.

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

At the time of writing, the Loonie was up by 0.04% to C$1.2546 against the U.S Dollar.

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

Elliott Wave Cycles Point Major Forex Pairs Trade At Bottom

Summary

  • Major pairs trade at the bottom
  • EURUSD tries to complete an ending diagonal
  • GBPUSD bounced with impulsive wave structures
  • Aussie is also trying to find the support

First support is at 1.1760 followed by 1.1700. Divergence on the RSI also indicates a potential bounce, ideally once an ending diagonal is finished.

EURUSD 4h Elliott Wave Analysis Chart

Graphical user interface, chart, scatter chart Description automatically generated

GBPUSD is turning around after a nice five wave drop to 1.3569. We have seen a drop below April level for a short period of time which gives an impression that market has bottomed, possibly even completed flat correction. However, the most important is current intraday bullish impulse from the low which suggests more upside ahead, especially after a broken channel resistance line near 1.3800

GBPUSD 4h Elliott Wave Analysis Chart

Graphical user interface Description automatically generated

AUDUSD turned back to the lows again but it came down out of wave 4) running triangle pattern which suggest the final leg, probably wave 5) of C is unfolding, before a reversal. So, bounce and recovery may occur anytime soon, ideally in impulsive fashion which is needed to confirm a change in trend.

AUDUSD 4h Elliott Wave Analysis Chart

Graphical user interface, chart Description automatically generated

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

AUD/USD Price Forecast – Australian Dollar Continues to Try to Recover

The Australian dollar fell initially during the trading session on Monday but has also seeing buyers come back into the marketplace near the New York opened, showing signs of stability again. Because of this, it looks like we might get a little bit of a bounce, but I still see a significant amount of resistance above, especially near the 0.75 level. That is a large, round, psychologically significant figure and of course where we see the 50 day EMA dipping towards the 200 day EMA. All of that combined should offer quite a bit of resistance. Furthermore, we have seen significant selling from that general vicinity as well, so I think a lot of it is going to be difficult to overcome.

AUD/USD Video 27.07.21

Keep in mind the Australian dollar has the unfortunate problem of internal lockdowns for the economy, and that of course will continue to work against the idea of a strengthening Aussie dollar more than anything else. Because of this, and the fact that we have seen the 10 year note continue to attract inflows, it is possible that it is only a matter of time before the US dollar might strengthen. Nonetheless, that does not mean that we cannot bounce a bit from here, and quite frankly it is starting to look like that. I will be looking for signs of exhaustion in order to start shorting, as the Australian dollar certainly looks threatened overall. That being said, I think the one thing you can probably count on is a lot of choppy behavior regardless of the direction.

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