18 August, 2015
The dollar continued on a steady-to-firm path during pre-European trade session in Asia, despite weakness in US Treasury yields amid growth worries and talk the FOMC will delay lift-off beyond September. EURUSD ebbed to a six-day low of 1.1051, and USDJPY lifted to the 124.50 area, though the pair remained well within its Monday range.
For the last three weeks the Stochastics Oscillator has been giving high quality signals at both ends of its range. This happens when market moves sideways in a well-defined range. I said in my Aug 11th report that I expect this week’s price action to be bound between major weekly support and resistance levels at 1.0848 and 1.1189. The upper end of the range was tested over the next three days but price failed to penetrate the level on a closing basis. Since then the pair has been drifting lower. The key word here is drifting. Price move hasn’t been strong and volatile but rather quite gradual. The pair has now reached the support range I mentioned in my Aug 13th report (1.1030 – 1.1070) and trades at 1.1060 at the time of writing. Therefore, I expect price will find support very close to the current price. The proximity of the 38.2% Fibonacci level at 1.1044 supports the idea. Reaction higher however, could be short lived to as there is resistance in 1.1114 – 1.1125 range. If this I’m right and this resistance holds the support area between 1.08048 and 1.0934 becomes a likely target area for shorts.
German Financial Minister Schaeuble calls on lawmakers to back Greek aid package. He sends a strong signal off support for Greece’s 3rd bailout package ahead of Wednesday’s vote in Germany’s lower house of parliament, where Schaueble and Merkel are facing growing dissent from their own party. Schaeuble told public broadcaster ZDF that he sees a dramatic change in the government’s readiness to reform and that: “I can argue with full conviction, partly because I haven’t taken this decision lightly myself… that the right thing to do is to vote for this”. Schaeuble, like Merkel before him, seemed to be trying to play down difference with the IMF over Greece’s debt sustainability and stressed that he is sure that the IMF will be involved in the program.
US NAHB homebuilder sentiment index rose to 61 in August from 60 in June and is the highest since November 2005. The single family sales index edged up to 66 versus 65 last month (revised from 66). The future sales index was steady at 70 (July revised down from 71). The index of prospective buyer traffic improved 2 points to 45 versus 43 previously, and is the best reading of the year, underpinned by the gains in employment and still low mortgage rates.
Currency Movers Charts
The AUD is down after the RBA meeting minutes indicated that the bank believes the Fed rate hike will cause further depreciation in the AUD against the USD. NZD gained ground earlier today on the back of news on milk prices going up. According to Reuters there is a growing expectation that milk prices will rise in tonight’s auction. This commodity being important for the New Zealand economy potential for higher prices has supported the currency today.
EURAUD is trading near the lower end of a daily shooting star candle and looks like it might push into the above resistance. AUDCAD is rolling over from a resistance at 0.9670 towards a support at 0.9431. NZD has risen most against the AUD and the AUDNZD pair has been trending lower for past few hours. This has brought the pair to a 50 day SMA and a daily pin bar. This however is taking place in the middle of the daily chart price range. NZDCAD is trending higher after it was able to hold above the 50 day SMA. However, there is a weekly resistance level at 0.87 area and the pair is approaching the level again.
Significant daily support and resistance levels for these pairs are:
Main Macro Events Today
Asian Market Wrap: Core yields moved higher and stock markets were underpinned as Trump tweeted enthusiastically about the summit with North Korea's leader...
Last week’s recovery move supported by persistent USD weakness. Reviving safe-haven demand/subdued US bond yields provides an...
The key commodity was pivoting around $1285 with support at $1282 and resistance around 1286. The London close, put pay to that as a raft of futures...
Still, U.K. and U.S. futures are also moving higher, indicating that abating fears over North Korea are keeping markets underpinned, while earnings optimism...
With a the NZD is overvalued on one side and Sabre rattling between North Korea and the US continuing overnight there was really only...
Asian stock markets moved higher, with a rally in banks underpinned by earnings reports and helping to offset pressure on exporters and automakers...
Gold remains bullish having posted at high over 1265 yesterday. My bias remains long and I entered again at 1258 last night. However, the intraday...
The Fed’s reluctance to commit to a time for QT beyond “relatively soon” and the fact that the Fed appeared to be moderately more concerned...
U.S. markets will have a lot on their plates this week as they continue to assess the June jobs data, global developments in the aftermath of the G20 meeting...