BRL, Ibovespa May Rejoice as Pension Bill Survives First Vote


TALKING POINTS – BRAZILIAN REAL, IBOVESPA, PENSION REFORM, BOLSONARO

  • Pension reform survives first congressional vote
  • Ibovespa, BRL to rise when Brazil markets wake?
  • What are the next steps for passing the reforms?

See our free guide to learn how to use economic news in your trading strategy!

The Brazilian Real and Ibovespa will likely find a boost early into Wednesdays’ trading session following the announcement that Bolsonaro’s pension reforms survived the first round of voting. After eight hours of debate, the Constitutional and Justice Committee in the lower house voted 48 to 18 in favor of granting constitutional legality to the pension reforms.

The major step forward will likely reinvigorate hope that the government may yet be able to pass the pension reforms before 2020. However, there remains an arduous journey ahead for the bill with anticipations that progress may be slow, and the key piece of legislature may be watered down by the time it is signed into law. Many economists and policymakers believe the future of Brazil rests on these reforms.

Want to know why? See my updated Brazilian Real, Ibovespa outlook here!

The disorganized government still has to contend with a fractured Congress where the difficulty of gaining cross-party support is compounded by Bolsonaro’s reluctance to cooperate out of a concern it could lead to compromise and corruption. There is also a lingering concern about a possible trucker strike over increased diesel prices which has the potential to disrupt market activity and further weigh on sentiment.

Looking ahead, Brazilian assets will continue to find themselves caught in a tug of war between fear and hope over the ability of the government to pass the reforms. For the past few months, the performance of the Real and Ibovespa has moved in almost complete lockstep with developments over the controversial bill. When trading BRL, keeping up to date on these reforms is crucial to maintain a well-informed trading strategy.

How Does Brazil’s Legislature Work?

BRL, Ibovespa May Rejoice as Pension Bill Survives First Vote

FX TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter





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USD/PHP Uptrend Ahead? USD/SGD Aims for Range Ceiling, Breakout?


ASEAN Technical Outlook – USD/PHP, USD/SGD, USD/IDR, USD/MYR

  • USD/PHP may be readying up for a new uptrend next
  • USD/MYR uptrend is taking a break under resistance
  • USD/SGD aiming for range ceiling as USD/IDR rises

Trade all the major global economic data live as it populates in the economic calendar and follow live coverage for key events listed in theDailyFX Webinars. We’d love to have you along.

USD/PHP Technical Outlook

The Philippine Peso weakened against the US Dollar after support held above 51.59, sending USD/PHP prices reversing above a falling resistance line from the middle of March (red line on chart below). This occurred amidst a surge in crude oil prices on Iranian supply disruption fears. PHP is aiming for a close above near-term resistance at 52.12. If cleared and confirmed, this may open the door to testing 52.55 in the medium-term. Feel free to follow me on Twitter @ddubrovskyFXfor more timely updates on ASEAN currencies.

USD/PHP Daily Chart

USD/PHP Uptrend Ahead? USD/SGD Aims for Range Ceiling, Breakout?

USD/MYR Technical Outlook

Extensive weakness in the Malaysian Ringgit seems to have taken a pause. USD/MYR’s uptrend since late March was unable to clear the psychological barrier at 4.1448, as noted in last week’s outlook. This does come after confirming closes above the descending trend line from November (blue-dashed line below). Clearing resistance will be needed to confirm uptrend extension. But, the close under the near-term rising support line from early April (rising red line below) warns of a turn lower towards the next barrier at 4.1070.

USD/MYR Daily Chart

USD/PHP Uptrend Ahead? USD/SGD Aims for Range Ceiling, Breakout?

USD/SGD Technical Outlook

Meanwhile, the Singapore Dollar is coming under pressure from its US counterpart as USD/SGD remains in prolonged consolidation mode since the beginning of this year. Recent price action hints that the Singapore Dollar may weaken further towards range resistance at 1.36155. If cleared, this may overturn the dominant downtrend from November. Afterall, the pair has managed a close above the falling trend line from then (red line on chart below). Otherwise, near-term support appears to be at 1.3516.

USD/SGD Daily Chart

USD/PHP Uptrend Ahead? USD/SGD Aims for Range Ceiling, Breakout?

USD/IDR Technical Outlook

The Indonesian Rupiah appears to be aiming for another retest of the well-defined falling resistance line from December. This comes after near-term support at 14010 held, stemming USD/IDR declines after closing under the rising trend line from February (red-dashed line below). If resistance is broken, this may open the door to testing the psychological barrier just under 14340. Otherwise, support appears to be above 13848.

USD/IDR Daily Chart

USD/PHP Uptrend Ahead? USD/SGD Aims for Range Ceiling, Breakout?

**All Charts Created in TradingView

Read this week’s ASEAN fundamental outlook to learn about the underlying drivers for these currencies!

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter





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Dollar Short of Breakout, SPX Hits New Technical High, Earnings Stir Trade Wars


Volatility Talking Points:

  • The DXY Dollar Index put in for another test of well-worn resistance at 97.75 but the currency wouldn’t put in for its breakout yet
  • A charge to new record highs from the Nasdaq draws a pacing contrast to the S&P 500 while global indices are still dithering
  • US earnings is a top theme with Microsoft, Caterpillar and Boeing ahead; but recognition of trade wars should raise traders’ attention

Do you trade on fundamental themes or event risk? See what live events we will cover on DailyFX this week (BOC rate decision, Australian CPI and US GDP) as well as our regular webinar series meant to help you hone your trading.

Which is More Important to Risk Trends: Earnings or Trade Wars?

There is often a dubious approach in the markets whereby participants evaluate the shape of the fundamental and speculative landscape in a way that fits prevailing trends. That is in contrast to evaluating the backdrop independent of the ‘animal spirits’ and perhaps discovering where a market has moved dangerously of course from what would generally be considered ‘value’. Arguably one of the most popular benchmarks for risk trends nowadays remains the US indices, and they paint a picture of confidence with borderline mania. Looking for fuel to that fire, we could tap the potential of US earnings as one of the few high-profile themes currently active – growth concerns are on hold for Friday’s GDP update and central bank support is now a passive theme after the first quarter rebound. Procter & Gamble was the most prominent American corporation reporting this past session reporting the strongest sales in eight years, but the markets still judged the stock’s prospects harshly. Twitter’s beat was taken at face value, but it is not counted among the trendsetting tech companies. Boeing and Caterpillar before the bell Wednesday will better reflect the US economy as Dow components while Microsoft and Facebook will represent unmistakable tech titans.

Chart of S&P 500 (Daily)

S&P 500

While there is an important signal of US financial and economic health to be drawn from these reports along with the manipulation it manages for speculative appetite, we should also consider their capacity to offer insight into broader macroeconomic themes. One such theme that was clearly stirred Tuesday through earnings was trade wars. Motorcycle manufacturer Harley-Davidson reported further declines in profit as tariffs resulting from the United States’ trade wars (in different stages) with China and the EU took their toll. It is worth recalling that President Trump called for a boycott of the American company’s products last year when it announced plans it would manufacturer some of its bikes in Taiwan to avoid some of the tariff burden. This earnings season, the US President commented in a tweet that the burden on HOG was unfair and that “we will reciprocate” against the EU. Add that to the tally of threats with the possibility of a general tax on auto and auto imports his administration is considering after receiving its report from the Commerce Department and the more recent evaluation of an $11 billion tax in retaliation for perceived unfair subsidies afforded by the EU to plane manufacturer Airbus. Speaking of, Boeing and CAT will offer critical views of trade wars themselves.

S&P 500 Earns a ‘Technical’ All-Time High While the US Dollar Backs Down from Breakout

Despite the uneven backdrop for earnings and themes like trade wars, there was little hesitation for US equities. Indices in the world’s largest economy were broadly higher through the day. That said, there was a difference in progress and pace depending on the sectoral weightings of the specific index. This disparity was in full display with the remarkable performance from the tech-heavy Nasdaq. Having already moved to record highs last week, the return of European and APAC liquidity Tuesday would add considerable heat to the rally. From its sister S&P 500, the day’s advance brought it back to its highs and earned a ‘technical’ record reflected in the highest close – but not an intraday top. From the blue-chip Dow, we are still 0.6 percent from a record high close and 1.1 percent from the intraday mark. From this relationship, a general trend – which we have discussed before – emerges. US equities relative to the rest of world (S&P 500 to VEU) shows a strong preference for US assets. The same performance disparity is apparently relative to emerging markets, junk bonds, carry trade and more risk assets. From this, we see a pull for speculative performance (momentum, progress) rather than a universal search for ‘value’ on discounted, economic-dependent assets. Remember that in your evaluation of follow through on risk trends.

Chart of Ratio of Nasdaq to S&P 500 (Daily)

Ratio of Nasdaq to S&P 500

Where the breakout for US equities was a point of debate, there was no mistaking the Dollar’s shortcoming at resistance. The ICE’s DXY Dollar Index moved up to make a fourth major test of a 97.75 ceiling. Faced with the decision to make a serious commitment to a bullish run, the Greenback would hold the line and tentatively retreat. This doesn’t register as a full-scale reversal back into a very mature range, but it has certainly raised the scrutiny over the currency’s fundamental drive moving forward. What is fueling bulls to not only forge a break higher but keep it rising? Data this past session lacked for gravity, though the housing starts figures were strong. Earnings and relatively growth considerations are not showing through in targeted assets, the competitive monetary policy environment is not improving in the USD’s favor and there certainly isn’t an absolute demand for total safe haven. This won’t prevent further bullish progress for a break say for EURUSD below 1.1200 or USDJPY above 112.20, but it will work against the development of reliable momentum.

Twitter Poll on Dollar

Watching for Volatility from the Canadian, Australian and New Zealand Dollars

The Dollar isn’t the only major struggling with clear motivation. The Euro seemed to show little regard for the unexpected worsening of Eurozone consumer confidence or the improvement in the debt to GDP ratio for 2018 (from 86.8 to 85.1 percent). In the background, worry over Italy’s pressure on European unity was revived when the leader of the member economies’ finance ministers voiced concern over the country’s trajectory and credibility, yet the jump in Italian 10-year bond yields resulted in no material Euro response. In similar measure, the Brexit-focused Pound was unmoved by reports that some in the UK government were pushing Prime Minister May to offer a clear timeframe for her stepping down from the top spot as well as suggestion that the she would put forward the same withdrawal agreement – that had been rejected three times before – as soon as next week. I am not waiting with bated breath for a clean break from the Sterling and will eye moves like that from GBPUSD with a high level of dubiety.

Chart of EURGBP (Daily)

Chart of EURGBP

In contrast to these fundamentally put-upon majors, we have less restricted and single-tracked currencies to consider. Take for example the Canadian Dollar. The Bank of Canada (BOC) rate decision is on deck for Wednesday. The policy group is not expected to change its official standing but that isn’t the high-water mark for market movement. If there is anything in the central bank’s rhetoric that signals any risk of a future cut has been washed away, the Loonie could rally. Of course, with only a modest probability of a cut before year’s end priced in, it could also spark a significant decline. The Australian Dollar faces a similar type of evaluation but with greater extremes in preset forecast. According to swaps, the RBA is most likely among the major central banks to cut before year’s end. If data like the 1Q CPI reading raises that prospect, there is only so much more discount that can be added to the currency’s current standings. On the other hand, a scenario that reduces – or obviates – a cut can leverage a greater bullish move. Consider that for pairs like AUDUSD, AUDJPY and AUDCAD. If your aim is to get further away from fundamentals, the New Zealand Dollar is a close AUD cousin that has lost more significant ground and could muster a speculative appetite. The Swiss Franc is in a similar situation with a tumble that has now forced further USDCHF and EURCHF bullish breaks, but its own fundamental participation is severely lacking. We discuss all of this and more in today’s Trading Video.

Probability of Major Central Banks Hiking Rates Versus Cutting Rates According to Swaps (Daily)

Probability of Central Bank Hikes to Cuts Through End of 2019

If you want to download my Manic-Crisis calendar, you can find the updated file here.



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AUD Plummets on Australian CPI, Eyeing US-China Trade War Next


TALKING POINTS – AUSTRALIAN DOLLAR, AUSTRALIA CPI, RBA

  • Australian CPI undershoots forecasts
  • Aussie and bond yields tumble on news
  • AUD eyeing upcoming US-China trade talks

See our free guide to learn how to use economic news in your trading strategy!

The Australian Dollar fell against all of its major counterparts following the release of several weak local CPI publications while domestic bond yields fell almost seven percent. Year-on-year headline inflation came in at 1.3 percent, the softest outcome since the third quarter of 2016. Quarter-on-quarter data showed similar weakness, clocking in at 0.0 percent, the softest outcome in three years.

AUDUSD, AUDJPY, AUDNZD – Daily Chart

AUD/JPY, AUD/NZD, AUD/USD Price Chart

Considering economic indicators have been tending to outperform relative to economists’ expectations, the disappointing data fell out of line with the broader uptrend in economic performance. The weaker inflationary data may prompt the RBA to tilt towards more of a cut than a hike. Overnight index swaps are currently showing an 86.7 percent probability of a cut by November.

Policymakers have become increasingly worried with slower global growth and the status of US-China trade relations. “Downside risks to the global outlook have increased” as stated in the monetary policy statement of February. A similar message was echoed in the RBA meeting minutes released earlier this month which sent the Aussie and Australian bond yields lower amid expectations of a dovish shift.

Looking ahead, the Australian Dollar will be eyeing the upcoming meeting in Beijing between Chinese officials and US Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin. This will be followed be a visit with Vice Premier Liu He who will lead a Chinese delegation to Washington on May 8. While the US-China trade war looks like it is coming to an end, fears over slower global growth may weigh on the Aussie along with concerns over another US-led trade war. This time, with Europe and possibly Japan.

FX TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter





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AUD/USD May Turn on Channel Support. S&P 500, US Dollar, Yen Climb


Asia Pacific Market Open Talking Points

  • Currencies and equities diverged today from a sentiment perspective
  • S&P 500 hits record high, US Dollar rose despite more Fed rate cut bets
  • AUD/USD drops to rising channel support, may rise on Australian CPI

Trade all the major global economic data live as it populates in the economic calendar and follow the live coverage for key events listed in the DailyFX Webinars. We’d love to have you along.

FX News Tuesday

The highly liquid US Dollar and anti-risk Japanese Yen were the best-performing majors on Tuesday. These currencies can do well during times of market pessimism, yet the S&P 500 closed at a record high as it rose over 0.8% in its best day in over three weeks. Better-than-expected earnings reports sent shares from Twitter (+15.71%), Lockheed Martin (+5.66%) and Hasbro (+14.23%) rallying.

However, US front-end government bond yields fell and fed funds futures showed an increase in dovish Fed monetary policy expectations. Meanwhile, the sentiment-linked Australian, Canadian and New Zealand Dollars weakened. Ahead of the Bank of Canada rate decision later in the day, trader position hints of a bearish bias in USD/CAD.

Want to learn more about how sentiment readings may drive the Canadian Dollar? Tune in today at 00:00 GMT for a livesession as I cover how sentiment can be used to identify prevailing market trends!

Taking a closer look at this trading dynamic also reveals that there was a sharp depreciation in the British Pound in the lead-up to the Wall Street market open on the chart below. Around that time, a report from the National Post showed that UK Prime Minister Theresa May was facing increased pressure to depart, creating greater uncertainty over who would replace her with Brexit delayed until October 31.

Divergence Between Fed Rate Cut Bets and Wall Street

AUD/USD May Turn on Channel Support. S&P 500, US Dollar, Yen Climb

Chart Created in TradingView

Wednesday’s Asia Pacific Trading Session

The Australian Dollar will be awaiting local first quarter inflation data where CPI is expected to slow to 1.5% y/y from 1.8% in the fourth quarter of 2018. Lately, Australian economic news flow has been tending to outperform relative to economists’ expectations. This suggests that the health and vigor of the economy may be understated. As such, this may lead to an upside surprise and bolster the Aussie.

Another development that may boost the pro-risk AUD and NZD is if Asia Pacific equities echo the rosy performance on Wall Street. But that seems unclear at this moment given the diverging performance between equities and FX from a sentiment perspective over the past 24 hours. S&P 500 futures are flat at the time of this writing heading into Tokyo Stock Exchange open.

AUD/USD Technical Analysis

So far this week, AUD/USD has spent most of its times falling towards rising channel support as anticipated. Now, it sits right on the floor as the former descending resistance line from January (blue-dashed line below) caught the wick. As such, AUD/USD is in a good position to rebound towards resistance in the event of a supportive inflation report that may cool RBA rate cut bets.

AUD/USD Daily Chart

AUD/USD May Turn on Channel Support. S&P 500, US Dollar, Yen Climb

Chart Created in TradingView

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter





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Slowing Australia CPI to Keep AUDUSD Rate Under Pressure


Trading the News: Australia Consumer Price Index (CPI)

Updates to Australia’s Consumer Price Index (CPI) may fuel the recent decline in the AUD/USD exchange rate as the headline reading for inflation is expected to narrow to 1.5% from 1.8% per annum in the fourth-quarter of 2018.

Image of DailyFX economic calendar

Signs of slowing price growth may spur a bearish reaction in the Australian dollar as it puts pressure on the Reserve Bank of Australia (RBA) to further insulate the economy, and the central bank may adopt a more dovish tone over the coming months as ‘growth in household consumption is being affected by theprotracted period of weakness in real household disposable income and the adjustment in housing markets.

In turn, a print of 1.5% or lower may drag on AUD/USD as it encourages Governor Philip Lowe & Co. to adjust the forward-guidance for monetary policy, but an above-forecast CPI reading may curb the recent weakness in the Australian dollar as it dampens bets for an RBA rate-cut. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Impact that the Australia CPI report had on AUD/USD during the previous release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

4Q

2018

01/30/2019 00:30:00 GMT

1.7%

1.8%

+27

+95

4Q 2018 Australia Consumer Price Index (CPI)

AUD/USD 10-Minute Chart

Image of audusd 10-minute chart

Australia’s Consumer Price Index (CPI) narrowed less-than-expected during the last three-months of 2018, with the index slipping to 1.8% per annum from 1.9% per annum in the third-quarter, while the core rate of inflation held steady at 1.8% for the seventh consecutive quarter. A deeper look at the report showed 12 of 15 components reflecting a slowdown year-over-year, with the gauge for tradeable goods slipping to 0.6% from 1.4% in the third-quarter, while the gauge for non-tradable inflation climbed to 2.4% from 2.2% during the same period.

The Australian dollar gained ground following the above-forecast CPI print, with AUD/USD clearing the 0.7200 handle to close the day at 0.7247. Learn more with the DailyFX Advanced Guide for Trading the News.

AUD/USD Rate Daily Chart

Image of audusd daily chart

  • Keep in mind, the AUD/USD rebound following the currency market flash-crash has been capped by the 200-Day SMA (0.7187), with the exchange rate marking another failed attempt to break/close above the moving average in April.
  • However, the broader outlook for AUD/USD has become clouded with mixed signals as the exchange rate threatens the downward trend from late last year, while the Relative Strength Index (RSI) appears to be stuck in a wedge/triangle formation.
  • Nevertheless, the rebound from the March-low (0.7003) may continue to unravel amid the lack of momentum to close above the Fibonacci overlap around 0.7170 (23.6% expansion) to 0.7180 (61.8% retracement), with the close below the 0.7090 (78.6% retracement) to 0.7110 (78.6% retracement) pivot raising the risk for a move back towards 0.7020 (50% expansion) as the exchange rate carves a series of lower highs & lows.
  • A break of the March-low (0.7003) raises the risk for a move back towards 0.6950 (61.8% expansion), with the next area of interest coming in around 0.6850 (78.6% expansion).

Additional Trading Resources

New to the currency market? Want a better understanding of the different approaches for trading? Start by downloading and reviewing the DailyFX Beginners Guide!

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader series on how to effectively use leverage along with other best practices that any trader can follow.

— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.



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US Dollar Price Action Setups in EUR/USD, GBP/USD and AUD/USD


Forex Talking Points:

– If you’re looking to improve your trading approach, our Traits of Successful Traders research could help. This is based on research derived from actual results from real traders, and this is available to any trader completely free-of-charge.

– If you’re looking for a primer on the FX market, we can help. To get a ground-up explanation behind the Forex market, please click here to access our New to FX Trading Guide.

If you’d like to sign up for our webinars, we host an event on Tuesday and Thursday, each of which can be accessed from the below links:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

US Dollar Rallies to Fresh Yearly High

The US Dollar finally did it: The US currency has set a fresh yearly high, trading above the same 97.70 level that had thrice turned around bullish advances in the prior six months. This level was last in play in early-March, almost six weeks ago now after the ECB announced a fresh round of TLTRO’s. That announcement pushed EUR/USD down to a fresh low of 1.1175, and USD rocketed-higher to re-test the prior double-top at 97.70. But – a day later, an abysmal NFP report was released out of the US, and the US Dollar promptly fell and continued to sell-off for the next week-and-a-half.

But now that the US Dollar has re-engaged with the 97.70 level, are bulls home free, and can prices continue to rally to fresh highs in the US currency? In this webinar, I looked at themes and scenarios on either side of the equation.

US Dollar Daily Price Chart

us dollar usd daily price chart

Chart prepared by James Stanley

EUR/USD: Bear Trap, or Bearish Breakdown?

I had looked at the short-side of EUR/USD coming into this week, waiting for prices to move down for a re-test of the big support zone that’s held the range for the past six months. The wait wasn’t long, however, as prices have already traversed ground between 1.1187-1.1212. Perhaps disconcertingly, sellers haven’t been able to make much ground below support; and given a relative lack of drive on the economic calendar, this may be more of another bear trap scenario in EUR/USD.

This can open the door for possible multi-direction strategies around EUR/USD, with long positions possible with stops set below the March low and initial targets set to the 1.1250 level. And the stop at or around 1.1175 can be coupled with a short-side entry order, so if the breakout does take place, the long can be closed along with the initiation of a fresh short-side entry.

EUR/USD Four-Hour Price Chart

eur/usd eurusd four hour price chart

Chart prepared by James Stanley

GBP/USD Breaks Out to Fresh Two-Month Load: Re-Load Possibility

I’ve been looking at the short-side of GBP/USD over the past couple of weeks, and the descending triangle in the pair has finally started to fill-in as sellers have pushed down to fresh two-month-lows.

At this point, the concern would be chasing a train that’s already left the station, and traders looking to establish bearish exposure can look to resistance potential at prior support, taken from the prior April lows up to the 1.3000 psychological level (shown in red below).

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

USDCHF Goes Near-Parabolic

I was looking for resistance here last week. Since then, a parabolic move has pushed price action far beyond both of those points, and prices are now sitting at fresh two-year highs. At this point, I do not have aim to try to fade a near-parabolic-like move, nor do I want to chase an already mature breakout. Standing back for more clarity.

USDCHF Daily Price Chart

usd/chf usdchf daily price chart

Chart prepared by James Stanley

USD/JPY Choppy, Continues to Shy Away from 112.00: Deeper Retracement May be Needed

While USD/CHF has gone near-parabolic to go along with this recent round of USD-strength, USD/JPY remains fairly muted. The bullish theme from two weeks ago was stopped dead in its tracks last week, and while prices remain very near that resistance, the fact that bulls haven’t yet been able to make more ground amidst a strong showing from the US Dollar, and this would indicate that prices may need to pullback before bulls might be able to finally take-out that high.

This places emphasis on support potential in zones from 111.13-111.28 and, a bit deeper, from 110.75-110.86.

USD/JPY Four-Hour Price Chart

usdjpy usd/jpy eight hour price chart

Chart prepared by James Stanley

AUD/USD: Range Support Soon to Come Back into Play?

Going along with this morning’s rush of USD-strength has been a bearish move in AUD/USD, as prices pushed back-below the .7100 handle. Prices are now getting very close to the ‘s1’ zone from the range formation, and that runs from .7050-.7075. This comes with the potential for stops below the .7000 big figure, which currently marks the three-month-low in the pair and looking for prices to revert back towards range resistance zones at .7125-.7150 and .7185-.7206.

AUD/USD Eight-Hour Price Chart

aud/usd audusd eight hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX





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XAU Offers a Glimmer of Hope at Fresh 2019 Lows


Gold prices have plummeted nearly 6% from the yearly high with today’s decline taking prices into multi-month trend support at fresh yearly lows. These are the updated targets and invalidation levels that matter on the XAU/USD charts this week. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guide

Gold Daily Price Chart (XAUUSD)

Gold Price Chart - XAU/USD Daily - GLD

Technical Outlook: In my latest Gold Weekly Technical Outlook we noted that, “While a break of the monthly opening-range lows does keep the focus lower into the close of April,” price was approaching major support into fresh yearly lows. A break below the 1275/76 support zone was halted today at the August trendline support and leaves the immediate short-bias vulnerable while above this slope.

So, did Gold just bottom? A breach / close back above the yearly opening-range low at 1276 would be needed to alleviate further downside pressure targeting the January trendline (currently ~1285) backed by broader bearish invalidation at the 100-day moving average / monthly open at 1290/92. A downside break would keep the short-bis viable targeting more significant support at 1253/58– a region defined by the 100% extension of the yearly decline and the 50% retracement of the late-2018 advance. Look for a bigger reaction there IF reached.

Why does the average trader lose? Avoid these Mistakes in your trading

Gold 120min Price Chart (XAUUSD)

Gold Price Chart - XAU/USD 120minute - GLD

Notes: A closer look at price action shows Gold trading within the confines of a descending pitchfork formation extending off the March / April highs with price responding to confluence support today at the lower parallel. It’s a make-or-break here.

A breach above near-term resistance targets the yearly open at 1280 backed closely by the median-line / 38.2% retracement at 1283 – a rally surpassing this threshold would be needed to shift the near-term focus higher targeting the monthly open & the upper parallels.

Learn how to Trade with Confidence in our Free Trading Guide

Bottom line: Gold has responded to near-term down-trend support and leave the immediate decline vulnerable while above today’s low. From a trading standpoint, good spot to reduce short-exposure and lower protective stops – be on the lookout for possible exhaustion off this low with a close above 1283 needed to suggest a near-term recover is underway. Continued weakness would keep the focus on 1258. Review our latest Gold 2Q forecasts for a longer-term look at the technical picture for XAU/USD prices.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Gold Trader Sentiment

Gold Trader Sentiment - XAU/USD Price Chart - GLD Positioning

  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +2.68 (72.8% of traders are long) – bearishreading
  • The percentage of traders net-long is now its lowest since April 9th
  • Long positions are6.5% lower than yesterday and 6.6% lower from last week
  • Short positions are 0.9% higher than yesterday and 13.2% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold (XAU/USD) price trend may soon reverse higher despite the fact traders remain net-long.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

Active Trade Setups

– Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex





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Dow Jones, Nasdaq 100 Await Key Earnings to Drive Price Action


Dow Jones, Nasdaq 100 Talking Points:

  • The Dow Jones will likely see its price action driven by Boeing and Caterpillar Wednesday
  • For the Nasdaq, Facebook and Microsoft will look to sway tech sentiment and bolster the S&P 500
  • Interested in stock market sentiment? See how IG Clients are positioned on the S&P 500 with Retail Sentiment Data and sign up for one of our Sentiment Walkthrough Webinars to learn more about the tool

Dow Jones, Nasdaq 100 Await Key Earnings to Drive Price Action

With the S&P 500 and Nasdaq closing at all-time highs, the Dow Jones has some catching up to do. In need of a catalyst, first quarter earnings from companies that are responsible for considerable weight in the Industrial Average may provide the required spark.

Dow Jones Earnings: Wednesday, April 24

Boeing, which is responsible for nearly 10% of the Dow Jones’ weighting, is slated to report earnings on Wednesday before market open. The company has found itself under fire in a fledgling US-EU trade war as it simultaneously grapples with a catastrophic technical malfunction in select models of its aircraft. It should come as no surprise that Boeing shares have dragged on the Dow. In turn, the company has seen its influence and correlation with the broader index slip.

Dow Jones Price Chart: Daily Time Frame (January 2018 – April 2019) (Chart 1)

dow jones price chart with boeing

Dow Jones price chart overlaid with Boeing stock and the correlation coefficient between the two

Also listed on the Dow Jones, Caterpillar (CAT) will report before the opening bell. The company is often viewed as a barometer for global growth and any insight into the state of the global economy will be heavily sought ahead of the first print of US GDP on Friday. Together, the two components are responsible for 13.25% of the Average.

earnings implied volatility

Nasdaq 100 Earnings: Wednesday, April 24

The tech-heavy Nasdaq will in turn evaluate earnings from its own heavyweight components, and the world’s second-largest public company by market capitalization will lead the charge. Given its size, Microsoft has the lowest implied volatility – of the companies highlighted in this article – heading into tomorrow’s release. Further, implied volatility in the coming weeks suggests price action will remain relatively tame. That said, Microsoft will have considerable influence over broader earnings season sentiment – with particular sway in the tech sector.

Alongside Microsoft, FAANG member Facebook will also report first quarter earnings tomorrow after market close. The two companies are the second and fifth highest weighted members on the Nasdaq and account for over 15% of the index. In contrast with Microsoft, Mark Zuckerberg’s Facebook boasts the highest implied volatility ahead of earnings with an expected price range of $171 to $196 following the report.

Potential Impact on the S&P 500

After solid earnings drove the S&P 500 to all-time highs in Tuesday trading, fuel for continuation will be needed. Tomorrow’s post-earnings price action could make or break the case for higher-highs with Boeing, Caterpillar, Microsoft and Facebook responsible for roughly 6.85% of the broader index’s price.

S&P 500 component weightings

Apart from the four corporations highlighted in this report, nearly 200 other companies will release their earnings on Wednesday. Outside of the names with a heightened impact on sentiment, Tesla, Visa and AT&T are some other high profile stocks due fiscal updates. For insight on these reports, follow @PeterHanksFX on Twitter.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: History Suggests the Stock Market Will Climb in the Weeks After Easter

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.





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AUD and CAD Eyed Ahead of Aussie CPI, BOC Rate Review


CURRENCY MARKET VOLATILITY – TALKING POINTS:

  • AUDUSD overnight implied volatility jumps to recent extremes in anticipation of the Australian Consumer Price Index release with the data likely swaying the RBA’s next monetary policy move
  • USDCAD overnight implied volatility also ticks higher ahead of the April BOC meeting with recent crude oil price gains likely weighing on the currency pair as well
  • Check out this article for information on the Top 10 Most Volatile Currency Pairs and How to Trade Them

The Australian Dollar and Canadian Dollar might pique the interest of forex traders tomorrow considering major event risk on deck which could send the currencies swinging despite collapsing forex market volatility. While implied price action for Aussie and Loonie currency crosses appears relatively muted, expected volatility over the next 24 hours remains elevated ahead of high-impact event risk posed by upcoming Australian inflation data and the Bank of Canada’s interest rate decision.

FOREX IMPLIED VOLATILITY AND TRADING RANGES

Currency Market Implied Volatility Trading Ranges for USD, AUD, CAD, EUR, GBP, NZD, CHF, JPYForex implied volatility AUDUSD, USDCAD, EURUSD, GBPUSD, USDJPY, USDCHF, NZDUSD

AUDUSD looks to be the most active major currency pair tomorrow with overnight implied volatility sitting at 11.35 percent. As such, forex traders might expect a move of 42 pips, which suggests AUDUSD will trade between 0.7140 and 0.7056 with a 68 percent statistical probability.

Check out this AUDUSD forecast for the latest Aussie outlook.

AUD could experience a sharp move if the latest Australia inflation report comes in materially above or below consensus, however. Market participants will closely watch for signs of stagnant price pressure across the Australian economy seeing that the most recent RBA minutes stated the central bank could cut rates if inflation and employment trend lower.

Although, the last AUDJPY implied volatility report indicated that evaporatingmarket volatility hashelped bolster ‘risky’ currencies like the Australian Dollar relative to ‘safe-haven’ crosses like the Japanese Yen. This theme could be reiterated if the Australia CPI data is reported in line with expectations and fails to spark a move in the Aussie.

FOREX ECONOMIC CALENDAR – AUD & CAD

Australian Dollar and Canadian Dollar Economic Calendar

Visit the DailyFX Economic Calendar for a comprehensive list of upcoming economic events and data releases affecting the global markets.

The loonie could also garner attention tomorrow despite USDCAD forex options traders only pricing overnight implied volatility of 5.26 percent. The lack of expected USDCAD price action might be explained by the market’s consensus that the Bank of Canada rate decision will leave its baseline borrowing cost unchanged at 1.75 percent according to overnight index swaps.

Check out this USDCAD forecastfor the latest loonie outlook.

In light of this, recent oil price behavior could be highlighted by BOC Governor Poloz as a positive tailwind for the Canadian economy. This could reduce the probability of future rate cuts and boost the country’s currency in turn. On the contrary, further dovishness has potential quickly thwart bullish CAD prospects and send the loonie lower.

TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

– Written by Rich Dvorak, Junior Analyst for DailyFX

– Follow @RichDvorakFX on Twitter





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