Fundamental Currency Analysis

September 10th, 2014,  Guest post by Jay Hawk at Orbex

Fundamental Currency Analysis

USD: The U.S. Dollar was trading lower in Asia today and is currently trading just off of its daily high of 84.2560 at 84.2240, down -0.0540 or -0.06 percent midsession. The Greenback was off on the back of JOLTS Job Openings, which showed an increase of +4.67M jobs in July, slightly lower than the expected +4.72M. Later today, U.S. economic releases will have Crude Oil Inventories (-1.0M) and a 10-year Bond Auction.


EUR: The Euro is trading steady against the Greenback in Asia today. Later today, Eurozone economic releases include French Industrial Production (-0.4%) and a German 10-year Bond Auction (1.08/1.6).


GBP: Sterling is trading slightly higher against the Greenback as it consolidates after Monday’s sharp decline. UK economic data yesterday had Manufacturing Production increase +0.3% in line with expectations, however, the UK Trade Balance showed an expanding deficit of -10.2B versus a consensus of -9.1B. Also out was the NIESR GDP Estimate, which increased +0.6% versus a previous reading of +0.5%. Today’s major economic news is the Inflation Report Hearings with testimony from BOE officials before Parliament’s Treasury Committee.


CHF: The Swiss Franc is trading steady against the U.S. Dollar today with no economic data expected out of Switzerland.


JPY: The Japanese Yen continued its slide against the U.S. Dollar today after yesterday’s release of Japanese Core Machinery Orders, which increased +3.5% m/m missing expectations of  a +4.1% rise.


AUD: The Aussie is trading sharply lower against the U.S. Dollar today after the release of the Westpac Consumer Sentiment index, which showed a decline of -4.6%, significantly lower than the previous release showing an increase of +3.8%.


CAD: The Loonie is trading slightly higher against the U.S. Dollar today with no significant Canadian economic releases due out until Thursday.


NZD: The Kiwi is trading slightly lower against the Greenback today with traders expecting the release of the RBNZ’s Official Cash Rate (3.5%) decision, Press Conference and Rate Statement later today.


Highlighted Chart of the Day: AUD/USD


A daily candlestick chart of the AUD/USD currency pair appears above illustrating the 0.9201 to 0.9504 trading range breakout now targeting 0.8898. The rate has also broken below its rising 200 day Moving Average shown in green, and its 14 day RSI that appears in blue in the indicator box is confirming the decline as it approaches oversold territory. (See additional technical analysis in the section below.)


Technical Analysis for the Majors


EUR/USD: The Euro remained below its psychological 1.3000 level this morning, although it failed to fall below yesterday’s recent low at the 1.2859 level, after bouncing to 1.2957. Its falling 200 day MA now lies at 1.3609, and its 14 day RSI is less oversold at the 23.19 level this morning compared with yesterday. Resistance is seen at 1.2957 and 1.2987, while support shows at 1.2881 and 1.2859/66. Outlook is neutral near term but bearish medium term.


USD/JPY: USD/JPY pushed up to a new recent high at the 106.52 level this morning. Support is seen at 106.03 and 105.70, with resistance at 106.52 and 107.18. The rate’s descending triangle pattern breakout of August 19th still suggests an upside target of 107.51. Its 14 day RSI is less overbought this morning at 73.91 and failed to confirm the recent high. The rate remains well above its gently rising 200 day MA currently reading at 102.38. Outlook is near and medium term bullish.


GBP/USD:  Cable consolidated its losses below 1.6138 this morning but without falling below yesterday’s recent low at the 1.6058 level. Also, the previous weekend gap remains unfilled, and the rate’s 200 day MA is at 1.6747 with an increasingly negative slope. Its 14 day RSI remains in oversold territory at the 17.10 level and confirmed the recent low. Resistance shows at 1.6138 and 1.6172, with support seen at 1.6058/63 and 1.5936. Outlook is neutral near term but bearish medium term.


USD/CHF:  The Swissy consolidated its gains above 0.9313 this morning after rallying to a new recent high at 0.9379 yesterday. Support is noted at 0.9334 and 0.9313, with resistance at 0.9379 and 0.9396. The rate’s 14 day RSI remains in overbought territory at the 72.73 level after supporting the recent rally with a new high. The rate remains well above its rising 200 day MA now situated at the 0.8946 level. Outlook is neutral near term and bullish medium term.


AUD/USD:  The Aussie fell sharply to 0.9155 thus far this morning after breaking down out of its 0.9201 to 0.9504 medium term trading range yesterday. The downside break of this 303 pip range targets 0.8898. Also, the rate has now broken below its rising 200 day MA now at the 0.9227 level for the first time since March. Its 14 day RSI is approaching oversold territory at the 31.40 level and has been confirming the decline. Support is seen at 0.9156, with resistance noted at 0.9201 and in the 0.9284/91 regions. Outlook is bearish near term and neutral turning bearish medium term. (See highlighted chart above.)


USD/CAD:  The Loonie has not exceeded its new recent high at the 1.1030 level made yesterday in this morning’s session. The rate has even pulled back below the 1.0996 peak of August 26th that now provides resistance, with support noted at 1.0941 and 1.0901. Its 14 day RSI remains in upper neutral territory and now reads at the 62.28 level. The rate is also still trading above its now flattening 200 day MA currently situated at 1.0937. Outlook is bullish near term and turning bullish in the medium term.


NZD/USD: The Kiwi consolidated this morning above its new recent low at the 0.8221 level made yesterday. It still lies between the falling upper trendline of its medium term down channel now drawn at the 0.8319 level and its parallel lower support line drawn at 0.8084.  Its 14 day RSI has fallen into oversold territory at the 27.26 level, and the Kiwi remains comfortably below its now gently falling 200 day MA at 0.8514.  Support is noted at 0.8221, with resistance seen at 0.8248 and 0.8265. Outlook is now bearish in the near term and medium terms.

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