USD tumbles on Clinton’s email case, US stocks erase gains

It was being a weak day for the US dollar and suddenly the decline accelerated after the FBI reopened the Clinton email case, less than two weeks before the presidential elections. The US dollar tumbled in the market and the yen surged amid risk aversion.

The Dow Jones index dropped quickly to 18,095 a 2-day low, before bouncing back to the upside. It was about to end Friday and the week practically unchanged around 18,180. Before the Clinton report, the stock index was up, testing the 18,250 area.

DXY down

The US dollar Index was falling, trading slightly above 98.55 and then tumbled to 98.17, hitting the lowest level in a week. It then bounced to the upside, but failed to regain the 98.50 zone.

Near the end of the week it was hovering around 98.30, marginally lower for the week. The recent slide pushed the index into negative territory for the week. It is going to be the first decline after rising 3.75% during the previous three weeks. On Tuesday it reached the highest level since March above 99.00 but it was rejected.

Heavy calendar ahead for the US

Next week, the week before the election, the campaign could get more intense. In the economic front, it will also be a busy week, that includes several employment reports and the FOMC meeting.

Regarding the Federal Reserve, analysts from Danske Bank, expect it to maintain the target range at 0.25-0.50%, in line with consensus, arguing that is near the presidential election. “The most interesting part is the FOMC statement”, but they don’t see any major changes to the FOMC statement, “as it was already quite hawkish last time, as it stated that the case for a rate hike had ‘strengthened’, although it may say that economic data have supported its view that growth has picked up pace.”

On Friday, the official employment report will be released. “We continue to receive mixed signals about the labour market”, said analysts from Danske, that estimate jobs growth of around 170,000 in October.

DXY
US Index

Written By: Matias Salord

EUR/USD Weekly Chart Analysis

The EUR/USD is going sideways between 1.0450 and 1.1450 since March 2015.

Currently, it is at 1.1165. Not too far from 1.1450. Approximately 285 pips.

As it is moving range bound, traders should keep their eyes on 1.1450 levels where the EUR/USD may find resistance and move lower. The European economy is still weak and there are better chances for this currency pair to go lower.

If we draw a Fibonacci Retracement line from 1.3967 (March high 2014) to 1.0517 (November low 2015) then we can see that the current price 1.1165 is very close to 23.6%. Means, it will find its first resistance at this level.  In a range bound price action, traders should always sit on the sideways until it hits the top or bottom. In this case, it has a little more room to go higher before finding the strong resistance at 1.1450.

There are some important news coming up next week (March 28 – April 1) for this currency pair. So, watch for those news. Most importantly, German Unemployment report and Eurozone March Consumer Price Index.  These two news will give some clue about the Euro Economy. Germany as being the biggest economy, there unemployment report matters for the Eurozone. Expect some volatility after these news.

Trade with logic not with emotion.

Happy Trading 🙂

EUR/USD Chart
EUR/USD Daily Chart

HOW HIGH USD/CAD CAN GO?

USD/CAD currently at 1.3330 just 85 pips shy of its recent high. This currency pair made its recent high of 1.3415 on Sept 24th but closed below for the week.

Now the question is how high it can go?

I wish, I have the answer for you. I am sure all market pundits are scratching their head to find the answer.

All I can tell you, that, this is not all time high for this currency pair. USD/CAD was at 1.6130 on Feb 2002. I have only analyzed data since 1998. USD/CAD was at current level 11 years ago.

So, what drives the currency price? “Economic condition” of a country among other things. Forex traders have to follow the fundamental issues of a country to determine the health of that country which also reflects on its currency. For that reason, traders all over the world keep their eyes on the economic calendar. Governments release economic data every week. GDP, Employment report, CPI, Retail Sales etc.

Canada is a commodity-dependent country. A big chunk of its revenue come from the oil industry. In recent years, the price of crude oil dropped significantly. A few years back, it was at USD $100 per barrel and now it’s $46. Some experts are calling for $20. Alberta and some eastern provinces are hurting from this price drop and for that reason Canada’s GDP is falling short. On the other hand, U.S. economy is much healthier among all other G7 countries. U.S. Federal Reserve Chair Janet Yellen is talking about rate hike this year, whereas Canada just cut its interest rate recently and may cut it again if the economy doesn’t improve. Rate differential is another big factor for currencies. If U.S. hike its interest rate, then, the U.S. dollar will go much higher against all other currencies including Canada. Canada needs higher oil price to boost its economy and I don’t see it in the near term.

USD/CAD has more room to go higher but 1.3450 may work as a short term resistance which is also at 61.8% Fibonacci Retracement.

We need to keep our eyes on Oil price as well as the Fed rate decision to determine USD/CAD price action. Trading opportunities are still there no matter what the outcome.

USDCAD-Monthly Chart

 USD/CAD Monthly Chart. Click on the chart to enlarge.

NZD/USD May Find Support Near 61.8% Fibonacci Levels

I see a trading opportunity with the NZD/USD at or near 0.6400. Why at .6400?
Because that’s also a 61.8% Fibonacci Retracement level. Price usually find support at that level and retrace back to its original direction. This is a very strong Fibonacci level.

If you look at the chart below, you will see that the current price is at 0.6631. That means, current price need to fall another 230 pips to touch that level. At this point, we need to wait patiently to see how far down NZD/USD can go from this current level.

I am not expecting any big move either way in the next few days as we are close to the end of the month. But I will watch New Zealand Business Confidence report, which is due on Thursday Jul 30th. at 9 p.m. EST. Previous month it was -2.3. Any negative news will bring this currency pair further down, but on the other hand positive news will move this higher.

In my opinion, .6400 will be an ideal place to go long if you have patience.

NZDUSDWeekly

NZD/USD weekly chart. Click on the chart to enlarge.

calendar

Economic Calendar. Click on the image to enlarge.

 

Australian Dollar Turned Bullish After RBA Rate Cut

AUD/NZD took a surprise uptrend right after 25 basis point rate cut by the Australian Central Bank. That rate cut didn’t come as a surprise as it was well expected by the market and economist.

But the surprise was that, no guidance was given for any future rate cut and that was enough reason for the Australian dollar to go higher against all other major currencies. Now, the market and currency traders are expecting no further easing form Australian Central Bank. Which is bullish for the Australian Dollar.

If that’s true, then Australian Dollar has more room to go higher against the New Zealand Dollar. Currently, it’s at oversold level.

There are two near term resistance waiting for AUD/NZD and they are at 1.0660 and 1.0815 respectively. Those two resistances are at 50% and 61.8% Fibonacci Retracement. AUD/NZD will go much higher, if they can break those two levels.


AUDNZD-Daily

AUD/NZD daily chart. Click on the chart to enlarge.


Screenshot of my AUD/NZD closed position. Profit $1,907.05 (Net of Commission).

 

AUD/NZD Next Support 1.0378

AUD/NZD broke it’s strong support of 1.0500 and currently at 1.0431.

This currency pair is bearish since 2012. The Australian economy is very much dependent on commodities market and China is their biggest buyer, but recent world economy downturn and slow down in China hurting Australian economy. On the other hand, New Zealand market which depends on dairy products have no problem selling their product worldwide and for that reason their economy is doing just fine.

While Australia is thinking of lowering their interest rate to boost economy, New Zealand is thinking to hike rate to cool down their hot housing market.

At this point, it’s hard to predict how low AUD/NZD will go. Some market pundits are predicting that the AUD/NZD will hit parity in the near future.

I am not that bearish at this point, but will look for next support at 1.0378 from this current level. If price breaks form that support then this may go much lower.

Traders who are long this currency pair should use stop loss just below the next support line to close position if price breaks that level.

AUDNZD Feb 11 2015Click on the chart to enlarge.

GBP/USD Week of Dec 8 – 12

Since my last blog on GBP/USD, I have received quite a few emails asking to post new analysis on this currency pair as the price broke and fell below 61.8% Fibonacci support.

Here is my take on GBP/USD:

You have probably noticed, GBP/USD is going sideways between 1.5600 and 1.5700. The reason, 1.5600 is working as a support and 1.5700/17 is now working as a resistance. Right now, GBP/USD at 1.5640.

If you look at the chart, you will see, I have drawn two new support for GBP/USD. One at or near 1.5600 and the other one, near 1.5400.

1.5600 and 1.5400 were May and July 2013 resistance. They will now work as a support.  I have marked both with yellow down arrow on the chart.

GBP/USD gave lots of opportunity to day traders in the last few weeks, but not enough for swing traders. This is normal in any market. Sometimes, you need to sit on your hand for the right opportunity.

GBPUSD Dec 8

Click on the chart for full view.