Comments and forex-analytics from FBS

[ryuroden]

EUR/JPY: technical update

EUR/JPY is rising since the end of July when it hit the minimal levels since 2000 around 94.10 yen. The pair has entered the descending daily Ichimoku Cloud for the first time since it broke below the cloud in early May. On the downside, the Cloud’s bottom will provide support for the single currency.

Euro’s currently testing the 98.65 level (61.8% Fibo retracement of the decline from June 21 maximum). If EUR/JPY gets higher, it will get chance to revisit 101.60 yen.

At the same time, EUR/JPY still remains within longer-term downtrend and at some point it’s likely to return to the 94.00 zone. Analysts at MIG Bank recommend looking for “signs of weakness closer to the resistance at 101.63 to initiate a short position”.

We concede a correction towards 98.00 (50% Fib. retracement and the lower boundary of the Ichimoku cloud). What’s more, on the H4 chart RSI indicator is close to 70.

Chart. Daily EUR/JPY

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

August 23: forex news

On Wednesday the main market event was the release of the Fed meeting minutes. Many Fed policymakers think additional stimulus probably will be needed soon unless the economy shows signs of a rebound. On the back of this data EUR/USD reached a 6-week high at $1.2552. Today’s session may bring plenty of potentially negative data for the single currency: German final GDP, German and French PMIs and EU flash PMI (7:00-8:00 GMT). In the US initial jobs claims will be printed at 12:30 GMT and new home sales – at 14:00 GMT. A meeting between Merkel and Hollande scheduled for today could offer enough news to move the pair either way.

High-yielding currencies such as AUD and NZD also rocketed on Fed’s news, offsetting previous losses they suffered ahead of today’s PMI releases in Europe. However, there growth was limited after HSBC China PMI printed the lowest level of 2012 at 47.8, down from 49.3 in July. AUD/USD, therefore, reached $1.0544, but then slid to the levels around $1.0500. NZD/USD jumped to $0.8184 on easing prospects, but then slipped to the $0.8160 area. USD/CAD trades around 0.9890.

GBP/USD rose to $1.5907 after a three-day growth. The pair will be strongly influenced by the EU data. USD/JPY trades around 78.55 yen after a drop to 78.30 on the Fed (lowest since August 13).

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

AUD/USD: technical picture

AUD/USD trades around $1.0500, on the upside for the fourth day in a row. On the H4 chart Aussie’s consolidating in the $1.0535/0420 band. The general uptrend since June is still intact.

Chart. H4 AUD/USD

Although US dollar was weakened by the talks of more easing from the Fed, AUD/USD doesn’t hurry to renew the recent highs around $1.0600: there’s a strong resistance there coming from the line which connects 2011 and 2012 maximums. For now the pair still has some scope for the sideways moves. According to analysts at NAB, AUD/USD is likely to trade above $1.0500 in a near-term as the greenback will remain under pressure at least until Jackson Hole.

Note that there are plenty of resistance levels on the upside (see the chart). Once $1.0420 support is breached, we’d look for a decline to another critical level of $1.0280 (200-day MA). Strategists at RBC are bearish on AUD/USD despite the fact the pair performed well over the past year and expect the RBA to lower rates by 0.75% in the next 12 months – the action which would weaken Aussie.

Chart. Daily AUD/USD

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

GBP/USD: an impressive advance

On Thursday GBP/USD tested the levels above $1.5900 (61.8% Fibo retracement from the May decline). This week the pair demonstrates impressive growth, climbing more than two big figures since Monday, when it was trading below $1.5700.

Sterling was pushed up by easing hints from the US (dovish FOMC meeting minutes) and China (weaker HSBC PMI). Tomorrow we expect the release of the revised Q2 UK GDP. The market expects UK Q2 GDP to be revised upwards from -0.7% to -0.5% q/q.

After such advance British currency is clearly overbought (see the RSI at H4 chart), so some correction’s on its way. The general outlook for the pair will remain positive as long as it’s trading above 200-day MA at $1.5715. Once above $1.5930, the pair will be on its way to $1.6000.

From a technical point of view, next resistance for GBP/USD lies at $1.5930 (February 8 maximum), $1.6000 (March 27 maximum, psychological level). On a downside, next support lies at $1.5785 (50% retracement), $1.5750 (50-day MA), $1.5715 (200-day MA), $1.5660 and $1.5620.

Chart. Daily GBP/USD

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

The Fed: what's next? The bets

So, the Fed!

The minutes of the FOMC most recent meeting released yesterday showed many policy makers favor additional accommodative measures to be taken “fairly soon” to stimulate growth unless the US economic recovery strengthens. Such news made US dollar weaken versus the majority of its main counterparts.

The next FOMC meeting takes place on September 12-13. Also note that Fed's annual symposium at Jackson Hole will take place on August 30-September 1. The Fed keeps its benchmark rate near zero since December 2008 and pledged to do so until the end of 2014. The central bank has conducted 2 rounds of asset purchases totaling $2.3 trillion in 2008-2011.

BNP Paribas: “The minutes were quite dovish and are consistent with our economists’ view that QE3 is more likely than not in September.”

Wells Fargo: “They’re closer to doing QE3 than I would have guessed. It may not be September. It could be October.”

Capital Economics: “The probability of Fed action coming in mid-September now seems to be higher. One or two of us economists thought the slightly better data in recent weeks might have put the Fed off, but I wouldn’t have thought so reading these minutes.”

Photo from fxtimes.com

Still, there are deep disagreements within the Fed on the costs and benefits of bond-buying programs. The minutes showed Fed officials decided not to act right away because they wanted to gather more data on the economy and evaluate how earlier measures were working. Since the Fed last met at the beginning of August, US economic data has improved pushing S&P 500 almost to a 4-year high, though the labor market remains a concern.

Mizuho: “The minutes were surprisingly dovish. With US easing expectations rekindled, the dollar could stay under pressure for a while, at least until Jackson Hole. The Fed will probably refrain from taking drastic easing action due to the upcoming US presidential elections... while keeping a vigilant stance against downside risks in the US economy.”

Credit Agricole: Another round of QE is “inconceivable” in the light of recent rises in commodities prices, signs of stability in the European debt crisis and recent improvement in U.S. economic indicators. Additional measures, if any, would be limited to those such as extending the current policy guidance of keeping short-term interest rates near zero at least through 2014.

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

USD/JPY: back below 200-day MA

USD/JPY dropped yesterday by more than 70 pips breaching 200- and 50-day MAs. The pair’s now trying to return above the previous resistance of 78.60 (the top of the sideways channel with existed in the first half of the month.

Credit Agricole: Since there is limited scope for the dollar to fall further (the risk of Japan’s intervention), dip-buying should keep the greenback in a 78.00/79.80 range over the next week.

Sumitomo Mitsui: “When the Fed eases its policy, the dollar could fall below 78 yen. But I don't expect the dollar to fall substantially below 78 yen before any actual easing by the Fed.”

Commerzbank: Medium term bullish view on USD/JPY as long as it’s staying above 77.90 (August 1 minimum). The target is 80.00 on the upside, 77.64 (June minimum) on the downside.

Chart. Daily USD/JPY

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

MIG Bank: EUR/GBP will decline

Analysts at MIG Bank claim that as long as EUR/GBP is trading below 0.7963 (August 6 maximum), its upward move will be regarded as correction. In their view, the pair will return to the old trading range between 0.6500 and 0.7000 within which it was trading in 2003-2007. The specialists recommend selling euro around 0.7960 targeting 0.7760/0.7400 (July minimums/2008 minimums).

Weekly. EUR/GBP

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

CIBC: outlook for forex majors

Analysts at CIBC World Markets note that during August there has been some cautious optimism with respect to the global growth outlook and notes this has prompted a rally in risk assets and currencies.

At the same time, CIBC thinks that the greenback may strengthen as the demand for its main alternatives – EUR and GBP – will be undermined by recessions in the euro area and in the UK. Moreover, any disappointing news about Chinese economic growth may increase pressure on commodity currencies and support USD as safe haven. American currency will be also helped by any delays of the Fed’s further QE. Such delays may happen as US economic performance has so far improved and US economy continues to growth at a moderate pace.

According to CIBC, both CAD and AUD are trading at unsustainable levels. The analysts expect CAD to fluctuate around parity versus USD in coming quarters: the catalysts for a further rally in the Canadian dollar are difficult to identify, as interest rates are unlikely to move higher and there is modest global demand for Canadian exports, though Canada retains top credit rating. AUD remains the most overvalued major currency, its strength doesn’t correspond Australian economic fundamentals.

As for EUR, CIBC think that it will be vulnerable until the ECB to show greater resolve and the euro region returns to growth. CIBC expects JPY to keep trading at the elevated levels. There is another round of global risk aversion before the end of this year CIBC sees scope for a reversal in US treasury-Japanese government bond spreads, so capping upside gains in the USD/JPY.

Image from whitneycarter.wordpress.com

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

Key options expiring today

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

Here are the key options expiring today:

EUR/USD: $1.2450, $1.2500, $1.2510, $1.2550;

GBP/USD: $1.5700;

USD/JPY: 78.50, 79.55. 79.75'

AUD/USD: $1.0290, $1.0300.

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments fot this article!

[ryuroden]

EUR/USD: news from the battlefield

EUR/USD is trading about 50 pips below 6-week maximum at $1.2589 reached yesterday.

Sumitomo Mitsui: “Various potential pitfalls for the euro are coming up, so people want to sell when it rises. They sell and then buy back, sell and then buy back. There has been a continuation of that. The moves that have taken place are nothing more than position unwinding. Such unwinding may persist in the near term given a recent accumulation of short euro positions.”

Commerzbank: EUR/USD has already practically reached the targets $1.2597 (78.6% Fib) and $1.2600 by printing a daily maximum around $1.2590. The medium term downtrend will eventually resume. We’ll understand that this is happening when euro drops below $1.2342 (Tuesday’s minimum). We’ll stop speaking about correction and will admit euro’s strengthening when the single currency overcomes resistance of $1.2705/48.

Rise above $1.2590 may trigger further advance of EUR/USD to $1.2626 (June 7 maximum) and $1.2668 (June 11 maximum). Decline below yesterday’s minimums at $1.2523 would confirm continuation of the bearish trend, towards next downward target at $1.2410.

Watch USA durable goods at 12:30 GMT.

Chart. H4 EUR/USD

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

NZD: technical picture

NZD/USD tested yesterday an important resistance of 0.8200 (2008 maximums, resistance line connecting 2011 and 2012 maximums). Yesterday’s daily candle looks very bearish.

NZD has support at 0.8100 (late June maximums), 0.8040 (August minimums) and 0.8000 (around here daily MAs intersect).

New Zealand released trade balance data: the nation’s trade surplus narrowed from 287M revised in June to 15M in July. Note, however, that with all the talk about potential easing from the major central banks, so it will very difficult for the bears to push the pair lower.

Analysts at NAB say: “As speculation regarding further quantitative easing from the Fed is renewed we see the NZD/USD finding eventual support and backing. Despite the volatility associate with the currency and the upcoming events, over the medium term we see the NZD/USD supported by relative growth and interest rate differentials, and maintain a year-end target of 0.8200.”

Commerzbank keeps insisting on the close coming downward reversal underlining that there’s resistance at 0.8223 (recent maximum) and 0.8260 (March resistance).

Chart. Daily NZD/USD

There’s the scope for some consolidation in the short term. The situation at H4 doesn’t look bad, kiwi isn’t overbought.

Chart. H4 NZD/USD

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

MIG Bank: trading GBP/USD

GBP/USD is experiencing a correction after a rally to 3-month maximum of $1.5912 (61.8% Fibo retracement from May decline).

Analysts at MIG Bank are bullish on British currency. The specialists say that sterling is likely to retreat to previous high at $1.5800, but then it will resume growth as it managed to break to the upside its 2-month consolidation. The bank recommends placing buy limit at $1.5810 targeting 1.5912/1.6190/1.6302 at stopping at $1.5708.

On a downside, support lies at $1.5785 (50% retracement), $1.5750 (50-day MA), $1.5715 (200-day MA), $1.5660 and $1.5620. Resistance for GBP/USD lies at $1.5930 (February 8, April 10 maximum), $1.6000 (March 27 maximum, psychological level).

Chart. Daily GBP/USD

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

USD/JPY: dollar may still recover

USD/JPY has been declining since Monday. The pair recoiled down from the 100-day MA and the top of the daily Ichimoku Cloud and returned to the previous sideways range within which it was trading in the first half of August. On the downside US dollar is supported by the risk of Japan’s interventions, on the upside – limited by the MAs and the recent highs.

USD may once again try to reach 80.00 yen, but we don’t this will happen last now. The final week of August will be highlighted with the expectations of more QE and this has to be a restraining factor for US currency.

Next week watch for US preliminary Q2 GDP and pending home sales. Both indicators are expected to improve. Standard Chartered believe that Japanese CPI data due next week will likely intensify concerns about deflationary pressure.

Analysts at Commerzbank stick to medium-term bullish view saying that USD/JPY will be targeting 80.00 as long as it trades above 77.90 (August minimum). Barclays sees see little downside risk from these levels, given Japanese policymakers' focus on the level of USD/JPY, while relative monetary policy and the risk of a sovereign downgrade suggest significant USD/JPY upside.

Chart. Daily USD/JPY

[ryuroden]

August 27: forex news

After its descent from maximums around $1.2590 EUR/USD manage to hold above $1.2500. The pair passed Asian session flat above this level. Watch for German Ifo business climate at 08:00 GMT – the report may show that the indicator fell to a 2-year low (Cons.: 102.7; prev.: 103.3). German Finance Minister Wolfgang Schaeuble meets his French counterpart Pierre Moscovici today to discuss Greek budget targets.

Today we’ll hear from the FOMC officials: Chicago FRB President Evans speaks at 10:00 GMT, while Cleveland FRB President Sandra Pianalto – at 16:15 GMT. France and Germany will sell short-term treasury bills.

UK Markets are closed for the bank holiday. GBP/USD went down from last week’s maximum at $1.5912 to trade above $1.5800. The People’s Bank of China lowered yuan’s fixing by the most in 3 weeks and the government urged greater support for exporters. AUD/USD touched $1.0370 and then consolidated above 15 pips from this point. USD/JPY rose from last week’s lows in the 78.30 area, but remained below resistance at 78.80.

Asian stocks show mixed results, with Nikkei +0.54% and Shanghai -0.84%, and all the rest in the middle. Gold reached today 4-month maximum of $1677.

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

Edited August 27, 2012 by ryuroden

[ryuroden]

CFTC traders positioning data

The latest Commitments of Traders (COT) report for week ended on August 21 was released on Friday, August 24, by the Commodity Futures Trading Commission (CFTC).

Large currency speculators continued to decrease their overall USD long positions which declined during a week from $8.92 to $4.57 billion. The market’s sentiment for EUR improved after dipping the previous week. GBP positions switched from short to long ones. CAD longs rose a fourth consecutive week and surged to their best level since May 15. AUD long positions climbed to the highest level since April 12, 2011. NZD longs increased for an 11th straight week and continued to be at the highest level since the beginning of March.

Take a look at the following table.

It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound. Although the CME speculators represent a small fraction of trading in the currency markets, their trades are widely seen as typical of hedge fund investors' currency movements.

In the COT report all the market players are divided into three categories: hedgers (commercials), big speculators (non-commercials) and small traders (non-reportable positions). We analyze only non-commercial positions (mainly, these are banks and investment funds).

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

FX majors from top forecasters

Here are the forecasts for EUR/USD, GBP/USD, USD/JPY, USD/CHF and EUR/JPY from top forecasters. Data were submitted on August 24.

Source: FX Week

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

EUR/USD: range trading is expected this week

EUR/USD is taking a pause after reaching last week the 7-week high at $1.2590.

On the one hand, the single currency may find support ahead of Ben Bernanke’s speech in Jackson Hole on Friday, August 31. On the other hand, many analysts think it would be quite difficult for euro to overcome the recent maximum in the near term.

Credit Agricole: “There's a lot of event risk, and I think this event risk will keep the euro capped. The currency will struggle to get above $1.26 this week.”

Mizuho Securities: “We can see fundamentals deteriorating in the euro region. The euro is in a long-term downtrend.”

Saxo Capital Markets: “We're having the same old issues coming out on the headlines about Greece. That's a capping point for the euro. This week EUR/USD is going to stay in range roughly between $1.2650 and $1.2400, not really breaking out of the highs that we saw last week.”

Chart. H4 EUR/USD

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

USD/JPY: technical update

USD/JPY managed to rise from last week minimums around 78.30 and tested 78.80 (38.7% of the recent 130-pip decline, daily Kijun-sen). For now, this resistance remains unbroken. Today the market players seem uncertain: the greenback swayed up and down and is now once again close to the opening level around 78.70.

The next resistance for the pair lies at 79.00 (psychological level, 50-day MA), 79.25 (200-day MA), 79.45 (100-day MA) and 79.65 (August 20 maximum). Support for US dollar lies at 78.60, 48.45 (today’s minimum, June 4 maximum), 78.30, 78.15, 78.00 and 77.90 (August 1 minimum).

If the prices manage to break above 78.80/90, the bulls will likely test 79.25. Otherwise, USD/JPY will keep moving sideways above 78.00 as it did in the second half of July and in the first half of August.

Chart. Daily USD/JPY

[ryuroden]

AUD/CAD: selling opportunity

Analysts at Barclays Capital claim that although Canadian data have been rather weak so far due to external factors, domestic factors remain solid, so one may expect Canada’s modest economic growth for in the coming months. Among the positive factors the specialists mention pick-up in the US economy and the rebound in oil prices. “While disappointing retail sales and trade balance data suggest downside risks to our forecast, job growth and manufacturing shipments remained solid,” says Barclays.

Barclays proposes buying loonie versus its Australian counterpart as Canada’s economic prospects seem brighter than those of Australia. Aussie will stay under the negative impact of soft Chinese HSBC PMI data.

From the technical point of view we see that a close below the 100-day MA at 1.0290 and 1.0270 (50% retracement of the advance from May low to August highs) would make AUD/CAD vulnerable for a slide to 1.0200 and then to 1.0100.

Chart. Daily AUD/CAD

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

Macroeconomic indicators

The table below provides recent data on the main macroeconomic indicators and is an extremely valuable resource for any trader.

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

AUD/USD: technical update

AUD/USD is testing the levels below $1.0400 for the second trading day in a row. The uptrend channel within which Aussie traded since mid-June has been broken to the downside.

If the pair declines below $1.0370 (23.6% Fibo retracement of the pair’s advance from June minimum to August maximum; today’s low), it may slide to $.0220 (38.3% retracement). Support levels for Aussie lie at $1.0340 (50-day MA), $1.0300 (200-day MA).

Also watch if the pair closes below $1.0440 (former trend line support, July 19 maximum, August 21 minimum) or not. This level will play the role of the near-term resistance. In addition, there are more support/resistance levels to watch taking into account new declining channel since August 9. There’s more of the resistance at $1.0475 (April 27 maximum), $1.0500, $1.0535 and $1.0600.

Westpac: Aussie’s affected by the declined iron ore prices and lower mining investment plans. However, the Fed QE3 hopes should limit losses to $1.0350/75.

Chart. Daily AUD/USD

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

Jackson Hole may disappoint

Dovish FOMC meeting minutes released last week did move the markets. However, many analysts doubt that the Fed’s Chairman will use his Jackson Hole speech to suggest QE3.

JPMorgan Chase: “We don’t think Bernanke wants to make Jackson Hole into a policy-signaling event. That may be reserved for the FOMC meetings on September 12-13”.

High Frequency Economics: “The Fed Chairman’s Jackson Hole address has traditionally been used more for laying out broad themes than for sending specific policy signals. Nor do we expect Mr. Bernanke to send a definitive signal this year.”

Barclays: “It would be odd” for Bernanke to “take a strong position in advance of receiving the August jobs numbers a week later. We’re not looking for QE3 in September or beyond because we do expect stronger data in the second half of the year.”

BNZ: “Some of the market impact of Bernanke’s speech has been nullified by last week’s dovish Fed minutes. The speech is expected to be used to map out the policy (easing) options facing the Fed. If this has the effect of hardening Fed easing expectations then the USD should continue to suffer.”

Jackson Hole, Wyoming

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

August 28: forex news

Demand for risk has decreased due to continued talk of China’s slowing economy, commodity price declines and low expectations coming out of Jackson Hole. Japan’s government downgraded its assessment of the national economy for the first time in 10 months. Moreover, investors expect sour data from Germany today.

Australian new home sales fell by 5.6 % in July reminding that housing construction remains one of the weakest sectors of the economy. AUD/USD fell to $1.0350. NZD weakened versus the majority of its counterparts as the world’s largest dairy exporter Fonterra cut its forecast payout to farmer suppliers. USD/JPY slid to 78.50, closer to the lower border of its range. USD/CAD is consolidating right above 0.9900.

EUR/USD is trading below $1.2500. In Europe watch for the release of German Gfk consumer sentiment at 06:00 GMT, Spanish final Q2 GDP at 07:00 GMT and EU M3 money supply at 08:00 GMT. Herman Van Rompuy, the president of the European Council, meets Spanish PM Rajoy at 11:00 GMT. Spain and Italy will try to sell short-term debt.

Later today in the US watch for S&P/CS Composite-20 HPI at 13;00 GMT and CB Consumer Confidence at 14:00 GMT.

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

Key options expiring today

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

Here are the key options expiring today:

EUR/USD: $1.2305, $1.2500 (large), $1.2505, $1.2550 (large);

GBP/USD: $1.5750, $1.5775, $1.5780, $1.5800;

USD/JPY: 79.00;

AUD/USD: 1$.0375, $1.0400, $1.0450;

EUR/JPY: 96.50, 97.35, 99.25 (large);

AUD/JPY: 83.65.

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!

[ryuroden]

AUD/USD is under pressure

AUD/USD hit 5-week minimum today at $1.0345 due to the worries about China’s economic slowdown. Shanghai Composite fell to 3 1/2-year minimums on Monday.

Bank of Tokyo-Mitsubishi UFJ: “Given that the Aussie's fair value based on purchasing power parity is around $0.70, a level above $1.05 would be difficult to maintain. On the other hand, the Australian central bank is not as inclined to ease as the Fed and the ECB. There’s buying in the Aussie by central banks which want to increase the Aussie in their foreign reserves. So we do not expect it to fall below parity against the dollar.”

Skandinaviska Enskilda Banken AB: “If AUD/USD goes below $1.0342, it may decline to $1.0170. Since Friday’s low point, a three wave upside correction has been completed and the market made a second attempt to extend the break lower.”

Commerzbank: “There will be direct bearish bias while the pair trades below $1.0545 (last week’s high).”

On the daily chart we see AUD/USD struggling between the support of the 50-day MA ($1.0345) and the 23.6% Fibo retracement of the advance from June minimums to August highs ($1.0370).

Chart. Daily AUD/USD

Have a profitable trade with FBS!

If you have any questions to our analysts, you're welcome to ask or comments for this article!