BI 160 x 600 Feb copy (2)
BI 160 x 600 Feb copy (2)

Category Archives: Forex Trading

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Markets advance as China announces new stimulus measures

 

US stocks advanced on Monday as investors’ confidence was boosted by announcements of new merger deals and dovish remarks by the head of China’s central bank and new policy measures to stimulate China’s housing market. UnitedHealth Group Inc. agreed to buy pharmacy benefit manager Catamaran Corp for $12.78 billion in cash. Teva Pharmaceutical Ltd. said it would buy Auspex Pharmaceuticals Inc for $3.5 billion. China reduced required down payment for second homes to 40 percent from 60 percent and broadened a sales-tax exemption on Monday for homeowners if they sell after holding a property for two years or more. The S&P 500and Dow Jones Industrial Average advanced 1.2% and 1.5% respectively. They had lost more than 2 % last week. Economic data indicated that US consumers barely increased spending, which rose a less-than-expected 0.1% in February. This is another sign that US economy slowed in the first quarter. Personal incomes, meanwhile, rose 0.4% in February for the fourth time in five months and the saving rate climbed for the third straight month. Pending home sales for February reached their highest level since June 2013. The ICE US dollar index, a measure of the dollar’s strength against a basket of six major currencies, ended up about 0.6% at 97.98. Today at 13:50 CET Fed’s Lockhart gives welcome at Georgia conference on Monetary Policy and Financial Stability. At 14:00 CET January Case-Shiller Home Price Index will be released. At 14:45 CET Chicago PMI for March will be released. The tentative outlook is positive for the dollar. At 16:00 CET March Consumer Confidence will be released by the Conference Board. The tentative outlook is neutral.

 

European stocks rose on Monday as investor optimism was bolstered by encouraging economic data, the prospect of more easing in China and sliding euro. The Stoxx Europe 600 index climbed 1.1%. Germany’s DAX 30 index rallied 1.8%, helped by weakening euro. Inflation data showed consumer prices in Germany grew 0.3% year-over-year in March, up from 0.1% in February. Economic confidence in the euro-zone rose markedly in March to the highest level since the summer of 2011. At 07:00 CET retail sales were released in Germany, showing a decline on a monthly basis for the first time since September. At 08:55 CET labor market data for March will be released in Germany. At 10:00 CET March consumer price index for euro-zone will be released by Eurostat. The tentative outlook is positive.

Nikkei fell today as investors took profits on the last trading day of the quarter and the last day of the fiscal year. Notwithstanding a sharp drop last week, the benchmark has gained 2.2 percent for the month and posted its three straight monthly gains. Yen continued the slide against the US dollar, which gained 0.8 percent vs yen on Monday for its biggest one-day rise in more than a month. Tomorrow at 00:50 CET in the morning the Bank of Japan’s Tankan survey results will be published. The tentative outlook is positive.

Oil prices are falling today on expectations that a possible deal over Iran’s nuclear program could result in easing of sanctions and increased exports, exacerbating global oversupply.

 

Gold prices are falling after dropping for two consecutive days on Monday as stronger dollar and rising equities are dulling investor demand for the safe haven asset.

http://www.ifcmarkets.com

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Gold bulls are thanking the Fed

 

Bullion Index report that, leading into the Federal Reserve March monetary policy meeting last week investors dumped gold sending it to a 4 month low, while at the same time trades went long dollars on expectation the Fed would suggest it will move as early as June on raising interest rates. While the Fed dropped the highly anticipated word ‘patient’ from their statement following the meeting, the statement however contained a number of surprises which have sent gold higher and the US dollar lower since its release. The Fed statement saw it lower the GDP growth forecast and importantly also lower its forecast for inflation. This is important to financial markets as the Fed has said it will look to tighten rates when it is “reasonably confident” that inflation will hit its 2% objective over the medium term. With the lowering of its inflation forecast this will see it take even longer to get back to its 2% inflation objective. The Fed now sees inflation running at between 0.6-0.7% for 2015 and between 1.6-1.7% in 2016, still materially lower than the 2% figure the Fed has said it needs to be confident of hitting before it pulls the trigger on rates.

 

 

Export growth in the U.S. is also weakening according to the Fed which is an acknowledgement by the Fed of the recent strength of the US dollar. Even taking into account the dollars biggest weekly fall since 2011 the dollar is still strong by any standard. According to the Bloomberg Dollar Index, a measure against a basket of 10 currencies, the US dollar is trading near its highest level in at least 10 years. The dollar strength is something that is coming into consideration by the Fed, traditionally it steers clear of commenting on the dollar. Any rate increase by the Fed is expected to send the dollar even higher. The strong dollar is making imports cheaper, reducing inflationary pressures, something the Fed is trying to lift, while at the same time making exports more expensive which puts pressure on GDP growth. A high dollar should be of a concern to the Fed.

 

The consensus in financial markets suggests the Fed is on track to raise rates in 2015, however it now seems the market is expecting rates to move later (e.g. September instead of June) and possible not hit the high levels previously expected.  Leading Banks such as Bank of America Merrill Lynch and Deutsche Bank suggest the Fed will increase rates in September, while a recent Reuters poll of top Wall Street banks also favour a September rate increase. I still believe we will not see a US rate increase in 2015 and even more so after the Fed statement and continuing weak data that seems to be coming out of the US such as the recent worse than expected durable goods data. The Fed noted in its statement that “economic growth has moderated somewhat” since its January meeting, that is not a foundation for a near term rate increase. Federal Reserve Bank of Chicago President and a voting member of the Federal Open Market Committee Charles Evans said in a speech this week that he thinks “economic conditions are likely to evolve in a way such that it will be appropriate to hold off on raising short-term rates until 2016”. He suggests that inflation will not hit the 2% target until 2018 and that inflation is currently “uncomfortably low”.

 

The Fed’s monetary policy is very much driven by data flow and what is expected and what is actually delivered and at the moment most of the data coming out is not setting the markets alight. The longer the Fed holds off moving on rates the better it will be for gold demand given it reduces the opportunity cost between holding non-interest bearing gold and investing in interest bearing assets or term deposits. Gold also performs well in times of uncertainty so with the increased confusion as to when and by how much the Fed will increase rates, it is only going to add support to the price of gold.

 

With weak data coming out of the US along with exceptionally low inflation rates, well below the Fed’s target of 2%, the Fed would be reckless to move on rates until they see solid evidence of underlying economic growth, positive wage growth and inflation heading to 2%. I do see that happening in 2015. The risks on moving too soon on rate hikes are too significant while the benefits remain relatively low which leads me to believe the Fed will be very conservative and hold off on raising rates until 2016. In the meantime while interest rates remain low and uncertainty is at the forefront of investors’ minds gold demand is going to increase.

 

Now that gold has broken through US$1,200/oz, the next upside target to watch is US$1,208/oz which is the 100 day simple moving average followed by US$1,22o/oz the 50 day simple moving average.

 

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Courtesy of: http://www.bullionindex.com.au/

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EURUSD long-term risks should still be on the downside

 

Credit Agricole report “some downside risks for EUR could linger as well. In particular, uncertainty about Greece should continue to haunt the single currency, with concerns about the country’s debt-sustainability likely to escalate as the bailout extension draws to an end in June.

Long-term risks should still be on the downside, however, and we expect EUR/USD to hit parity in Q3 with the USD-rally resuming as we get closer to the Fed’s first hike”.

Source: Credit Agricole

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Gold Trading Week Ahead

 

Bullion Index report: Late last week gold managed to stem the recent losses as the dollar rally paused. An 8 day run of consecutive losses on gold came to an end on Thursday, not before posting a new 4 month low.

Last week we saw solid buying from our clients at the low US$1,150’s/oz levels.

This week is going to be a key week for gold with the Federal Reserve’s two day policy meeting Tuesday and Wednesday. The main focus will be Fed Chair Janet Yellen’s press conference following the FOMC announcement at 2pm Wednesday New York time. The price of gold is being driven almost solely by US dollar movements at the moment (dollar up, gold down or dollar down, gold up), so if any wording coming out of the Fed next week hints at a June rate rise, look to see further US dollar strength and gold soften. If the Fed notes that it still remains ‘patient’, the market is going to take that as a post June rate rise which should give gold a boost. Gold investors should also look out for any commentary from Yellen surrounding the US dollar. Traditionally the Fed would not mention the US dollar however given its stunning run it may play a factor in the Fed’s monetary policy. If it does come into play then the Fed may look to hold off tightening until later on in the year or even possibly next year.

The Fed is facing one of its biggest decisions since the GFC, they do not want to go too early or too late when it comes to raising interest rates.

The other events of the week that gold traders should be aware of include; ECB President Mario Draghi’s speech on Monday, US Building Permits and Housing Starts on Tuesday, Swiss National Bank Monetary Policy Decision and Philadelphia Fed Manufacturing Index both on Thursday.

I do not expect to see any further big moves on gold until after Yellen’s press conference on Wednesday. Between the open on Monday and her press conference I expect to see investors adding to long gold trades on any dips.

Investors have been showing more interest in platinum in the past week as they look for value, platinum has recently hit lows not seen since mid-2009.

Gold closed at US$1,158.60oz in New York on Friday, down US$10oz on the week.

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Courtesy of:  www.bullionindex.com.au

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Credit Suisse revise EUR/USD forecast lower

 

Credit Suisse report “we are now of the view that the market is increasingly willing to hold short EUR positions on crosses in G10 space. If EUR really does replace JPY as the funding currency of choice due to negative rates, this trend can have a lot further to run, to EUR’s overall detriment.

We are revising our EURUSD forecast set to 1.05 in 3m (1.09 prior) and 0.98 in 12m (1.02 prior)”.

Source: Credit Suisse

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Credit Agricole remain short EUR/USD

 

In a note to clients, Credit Agricole report that “in order to push EUR/USD considerably lower from current levels Fed rate expectations may need to rise further. As there seems to be scope for the Fed to consider higher rates as soon as mid-year, we anticipate further diverging monetary policy expectations to the detriment of the pair.

We remain short EUR/USD targeting a move towards 1.06″.

Source: Credit Agricole

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Gold trading week ahead – Bullion Index

 

Bullion Index report “gold starts the new trading week at a 3 month low after a strong reaction to data out of the U.S. on Friday. News of better than expected jobs data in the U.S. saw gold shed 3% in the session as investors saw the improving employment outlook in the U.S. as a signal that the Fed will move on rates sooner rather than later.

Following on from a busy week last week from an economic data standpoint, this week sees a bit of a lull in key data as traders await the Federal Reserve meeting next week (17-18 March).

The big event of the week will be happening later today when the ECB kicking off its massive QE/ money printing program. Gold has been tracking the ECB balance sheet up and down in recent times so with the ECB today effectively printing more money will we see gold track back higher. At the moment gold is being driving by both the ECB and the Federal Reserve but the battle for gold is which way will it break especially now we are about to see an even more significant divergence in policies between the ECB and the Fed.

Other major events and data flows this week include, Greece’s Finance Minster presenting 6 reform proposals to Eurogroup members on Monday. On Tuesday the UK Manufacturing Productions numbers are out, this will give traders an indication as to the health of the UK economy, it has been improving fast so we will see if it is still on track. On Thursday  we see the U.S. Retail Sales data, if sales come in above expectation then we may see a rally in the US dollar an in turn a dip in the price of gold. If however it comes in below forecast then we may see gold bounce higher. The forecast is for retail sales in February to be +0.5%.

We expect to see investors adding to long gold trades at the current market levels.

Source: Bullion Index

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Buy GBP/CHF on dips – Capital Trust Markets

 

Capital Trust Markets reports the “recent price action in the GBPCHF pair suggests that it has more upside in the near term as buyers are here to stay.

Technical Analysis

The GBPCHF pair recently climbed towards the 1.4760 resistance area where the British pound sellers defended the upside. However, there is a major bullish trend line on the 4 hour chart of the GBPCHF pair, which might act as a catalyst in the near term if the pair moves lower from the current levels. The most important point is the fact that the 50 simple moving average on the 4 hour chart is also around the highlighted trend line. In short, there is a major support around the 1.4640 area where the British pound buyers might appear in the near term. The 4H RSI is above the 50 level, which is one more bullish sign moving ahead.

GBPCHF 03.03.2015

If the GBPCHF pair moves higher from the current levels, then the last high of 1.4760 level where buyers might continue to struggle in the near term. A break above the same might call for more gains.

The next area of interest can be seen around the 1.4800 area.

Swiss GDP

Later during the London session, the Swiss Gross Domestic Product will be released by the State Secretariat for Economic Affairs SECO. The forecast is slated for an increase of 1.7% in the fourth quarter of 2014, compared to the last gain of 1.9%.

Trade Idea

One might consider buying dips around the highlighted trend line in the GBPCHF pair.

Source: Capital Trust Markets

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Gold price forms a base at US$1,194

 

Gold prices have been range bound in recent trading session as traders await the nonfarm payroll data. Bullion Index report to its clients that while  the ADP Employment numbers for February are out later today in the U.S. that they do not expect to see any surprises and expect Friday’s nonfarms to be the key to driving gold in the short term. Bullion Index notes that spot gold is range bounce between US$1,194 and US$1,224. They maintain a buy limit at US$1,188oz.

Source: http://www.bullionindex.com.au

 

 

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Sell NZD/USD at 0.7600 limit – UBS

 

Swiss Bank UBS has suggested to clients to go short NZD. They report “NZD/USD should head lower. Sell rallies to 0.7600 with stops above 0.7720, targeting an eventual retest of 0.7300/0.7175″. Selling NZD against the USD is popular among brokers at the moment with BNZ also suggesting a short trade on NZD/USD.

Sell on limit at 0.7600, stop above 0.7720 with a limit at 0.7300 or lower.

Source: UBS

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UBS – Sell USD/CAD rallies to 1.2570

 

While other brokers such as SEB and SwissQuote recommend clients to look short USD/CAD, UBS has taken a different view noting USD/CAD “remains stuck right in the middle of the recent trading range. We expect the range play to continue. Sell rallies to 1.2570 with stops above 1.2670 and buy on dips to 1.24 with stops below 1.23″.

Source: UBS

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NZD/USD Look To Re-Enter Strategic Short – BNZ

 

BNZ look To re-enter a strategic short position on NZD/USD. In a note to clients they report “NZD has bounced back admirably from cyclical lows hit after the RBNZ dropped its tightening bias. But the medium-term outlook is still negative, even with recent strong gains in dairy prices at auctions. We would consider rallies toward 0.76 as
opportunities to enter strategic short positions, targeting 0.70″.

They also note “we feel that levels above 0.7550 offer attractive risk-reward for a strategic NZD/USD short, on the premise that the mega-rally in the USD continues to grind higher. We would set a wide stop, 0.77 or higher, as is prudent in volatile markets such as these”.

Sell NZD/USD at 0.7550, stop >0.7700 with a profit target of 0.7000.

Source: BNZ

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SwissQuote buy USD/CAD recommendation

 

SwissQuote report to clients that the “USD/CAD has seen a pickup in buying interest near the key support area between 1.2352 and 1.2314. However, the succession of lower highs remains thus far intact. Hourly resistances can
now be found at 1.2566 (02/03/2015 high) and 1.2664. An hourly support lies at 1.2449 (27/02/2015 low).

In the longer term, the technical structure looks like a rounding bottom whose maximum upside potential is given by the strong resistance at 1.3065 (09/03/2009 high). The recent weakness is seen as a medium-term corrective phase. Key supports stand at 1.2314 (22/01/2015 low) and 1.2047 (intraday low)”.

Buy limit 2 units at 1.2363, Obj: Close unit 1 at 1.2646, remaining at 1.2950, Stop: 1.2290

Source: SwissQuote

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BOC is likely to remain on hold this week buy USD/CAD – SEB

 

SEB is recommending to clients to buy USD/CAD on dips. They report “the Loonie is vulnerable to additional Bank of Canada (BOC) rate cuts and continued weak oil prices in H1 2015. We expect unchanged rates at tomorrow’s central bank meeting. We would look to buy on a dip in USD/CAD. An April rate reduction looks increasingly likely. We forecast USD/CAD at 1.30 in Q2 2015″.

Buy USD/CAD on dips below 1.24 as BOC is likely to remain on hold this week.

Source: SEB

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SEB sell order on AUD/USD

 

Trading company SEB have suggest to clients to get short AUD/USD. They report “the RBA left its cash rate unchanged at today’s meeting. However, the statement gives a clear signal more rate cuts should come. The AUD appreciated following the decision as a rate cut was widely expected. Use this uptick as an opportunity to short the AUD/USD”.

Sell AUD/USD at 0.7810 targeting 0.73, stop loss on daily close above 0.7930.

Source: SEB

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Platinum prices to hit US$1,500 – Bullion Index

 

With Platinum prices trading around US$1,182oz Bullion Index reports that platinum prices will hit US$1,500 by the end of 2015. They note “given an improving U.S. economy we are likely to see an increase demand from the U.S. for platinum, Thomson Reuters has noted that in 2014 platinum jewellery increased by over 60% in that year alone. We expect that trend to continue as sentiment improves in the U.S.  The interest rate cut in China this week will also provide a stimulus for Chinese demand. We expect with the increasing demand and the elimination of the oversupply we have seen in recent years that the price of platinum will reach US$1,500 by the end of 2015″.

Source: Bullion Index

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US dollar far from overvalued – SwissQuote

 

SwissQuote report that “although the recent rise in the value of the greenback has been impressive, valuation are far from overvalued. Indeed, looking at some fundamental measures like PPP, long-term valuations do not suggest any
significant exaggeration in the value of the US dollar. However, given that the ECB’s QE and part of the Greek uncertainties are behind us, most of these Euro negative factors are now discounted. As a remaining big driver
for Euro weakness is the timing of the Fed’s tightening cycle, which remains very uncertain, the appreciation of the US dollar is likely to slow in the near-term. However, if our June scenario is correct and given the more dovish stance from the markets, we continue to favour a mediumterm bullish view on the US dollar index. Any decline near 91.0 should be seen as a very attractive entry point”.

(Source: SwissQuote)

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USDCHF eyes 0.9529 as gold referendum looms

 

Capital Trust Markets reports “the US Dollar (USD) extended upside movement against the Swiss Franc (CHF) on Thursday, increasing the price of USDCHF to more than 0.9630 ahead of the Swiss Gold Referendum. The short term sentiment remains bearish due to Lower High on the daily chart thus the pair is expected to print a Lower Low below the 0.9529 support area.

Technical Analysis

As of this writing, the pair is being traded around 0.9635. A hurdle can be noted around 0.9660, the 61.8% fib level ahead of 0.9691, the 76.4% fib level and then 0.9740, the swing high of the last upside rally as demonstrated in the following chart.

On the downside, the pair is expected to find a support around 0.9610, the 38.2% fib level ahead of 0.9579, the 23.6% fib level and then 0.9529, the swing low of the recent downside move.

Gold Poll

Switzerland seems to be in the eye of a storm lately, as several indications have resulted in a code red situation. The Swiss Franc is trading at its highest level versus the Euro since 2011 when the central bank had to intervene in the forex market to safeguard its purchasing power. The USD/CHF exchange rate is also vital for the Swiss economy, and the Swiss National Bank needs to keep a very close eye on this exchange rate as (unfortunately for Switzerland), the CHF is still widely being considered as a safe haven. Back in 2011 the fear for the collapse of the Eurozone was absolutely real and investors were scrambling to get their hands on Swiss Francs in a flight to safety.

 Trade Idea

Keeping in view the overall technical and fundamental outlook, selling the pair around the current levels still appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing above the 0.9741 resistance area”.

(Source: Capital Trust Markets)

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Australian dollar against Japanese yen set for gains in the near term

 

Capital Trust Markets reports “the Aussie dollar has shown a lot of resiliency against most major currencies recently, raising the case of more upside in pairs like AUDUSD and AUDJPY.

Technical Analysis

There are a couple of important trend line formed on the 4 hour chart of the AUDJPY pair, which are likely to act as a support for the pair moving ahead. The pair recently climbed towards 102.80 area where it found sellers, and is currently trading lower. There is a chance that the pair might spike lower towards the first bullish trend line, which is also sitting around the 23.6% Fibonacci retracement level of the last leg from the 98.05 low to 102.83 high. Moreover, there is one more bullish trend line, connecting lows sitting just below the first trend line. So, there is a lot of support around the 101.80-60 area where buyers are likely to take a stand. If the pair continues to trade higher from the current or lower levels, then initial hurdle is around the last swing high of 102.83, followed by the all-important 103.00 area.

AUDJPY 11.24.2014

On the other hand, if the AUDJPY pair breaks the highlighted support zone, then it is likely to head towards the 100 simple moving average (SMA) – 4H, which is around the 50% fib retracement level.

Moving Ahead

There is no major release in Australia in the coming sessions, but in Japan the BOJ monetary policy meeting minutes will be released during the next Asian session. We need to see how the Yen pairs react after the release. Overall, buying dips is a good idea in AUDJPY moving ahead”.

(Source: Capital Trust Markets)

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Reduction in NZD short positioning

 

SwissQuote report “net short positions in New-Zealand dollar have been reduced from elevated levels. Even if NZD/USD is more sensitive to the upside given the large net short NZD positions, the technical structure remains negative as long as prices remain below the key resistance at 0.8052 (04/02/2014 low)”.

swissquote nzd nov14

(Source: SwissQuote)

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Canadian inflation data set for release on Friday morning

 

As the markets open in the US on Friday morning, we will get the latest Canadian inflation data reported out of the nation.

Capital Trust Markets reports “the Canadian dollar gained strength during today’s session on the back of better-than-expected wholesale sales data, and markets will be looking for strong inflation figures to reinforce the data and compound the bullish momentum. With this in mind, what’s expected and how can we set up to profit from a release either side of the consensus forecast? Here is what you need to know.

First, what did the wholesale sales data tell us about the Canadian economy? The data – reported at 1.8% growth versus a forecast of 0.7% – comes amid a spate of strong releases this month. Manufacturing sales beat expectations of 2.1% at the end of last week, while unemployment throughout October dipped to 6.5% with employment rising 43.1 K, and building permits reported at the beginning of the month expanding by 12.7% month over month during September. This being said, there are some concerns about deceleration in the house price growth over the last few months, and this is likely to force the bank of Canada to hold interest rates at their current lows so as to avoid jeopardizing any sustainable growth over the coming quarters. With this in mind, what of levels to keep an eye on in the USDCAD? Take a look at the chart below.

USDCAD

As the chart shows, we have seen a certain amount of consolidation in the pair over the past few weeks. However, we could see this consolidation come to an end and the US dollar resume its upside momentum versus its Canadian counterpart, as we approach a combination of key level and 200 SMA support. 1.1266 and 1.1464 are the levels to keep an eye on. Consensus forecasts the upcoming core CPI data (MoM) – the likely headliner – at 0.2% for October. With this in mind, look for anything below to reinforce aforementioned support and validate 1.1464 medium-term to the upside”.

(Source: Capital Trust Markets)

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AUDUSD broke important support – heavy downside expected

 

Capital Trust Markets reports “recent market sentiment suggests that the AUDUSD pair might head lower in the near term as the US dollar might gain traction moving ahead.

Technical Analysis

There was a monster trend line on the 4 hour chart of the AUDUSD pair, which was breached earlier during the Asian session. The most important point to note from the charts is the fact that the pair is now trading below all three key simple moving averages (100, 200 and 50). This might add pressure on the Aussie dollar buyers. Currently, the pair is trading around the 50% Fibonacci retracement level of the last leg from the 0.8540 low to 0.8795 high. So, there is a chance of a correction in the near term towards the broken support area which might act as a resistance now. Immediate resistance is around the 50 SMA, followed by the 100 SMA. The 4H RSI is well below the 50 level, which could encourage the Aussie sellers to take the pair lower moving ahead.

AUDUSD 11.19.2014

On the downside, initial support can be seen around the 0.8600 area. A break and close below the mentioned area might call for a move towards the 0.8550 level”.

(Source: Capital Trust Markets)

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Australian monetary policy meeting minutes set for release Monday evening

 

Shortly after the markets close in the US on Monday evening, the latest monetary policy meeting minutes will be reported out of Australia.

Capital Trust Markets reports “the meetings come at a time when markets are looking at the Australian property sector very closely in order to gain insight into whether the house prices and construction activity will continue to expand into 2015, or whether the current deceleration of those aforementioned will lead to a halting and eventual decline. This scrutiny surrounding the Australian economy means that any bias inferred by the monetary policy meeting minutes as far as possible interest rate policy is concerned could impact the value of the Australian dollar versus its major counterparts during the Asian session. With this in mind, what of the minutes likely to show and what are the levels to keep an eye on as we head into the release? Let’s take a look.

First, let’s look at the minutes. The likely outcome of the release will be that Australia’s monetary policy committee will hold interest rates low for the foreseeable future. The property market is expanding, but inflation remains low and wages – and in turn – retail activity are showing very little movement month on month. Through keeping interest rates at lows as we head into the end of the year and throughout the beginning of 2015, the reserve bank of Australia (RBA) hopes it will be able to stimulate Australian households into engaging in consumer activity. So what are the levels to keep an eye on as we head into the release? Take a look at the chart below.

2014-11-17_10-07-58

Action earlier today saw the AUD USD into the open of the Asian session, but at the open of the European morning session the pair dipped back below its 200 SMA (H4) to validate 0.8595 and 0.8761 as in term support and resistance respectively. These are the levels to keep an eye on. If we get a hawkish tone to the meeting minutes – unlikely – we could see a break back above the 200 SMA and the turning of the overall trend to the upside. Such a situation would validate 0.8910 longer-term. However, if we get a dovish tone the bearish momentum is likely to continue – a situation in which 0.8595 would serve as an initial downside target”.

(Source: Capital Trust Markets)

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