Forex Market Analysis brought to you by David Long, Proprietary Trading Manager at Knowledge to Action
Commodities took a large nose dive again over night and the Aussie bellwether, copper, was down 3.8%. Oil also off 2.5% and the soft commodities also saw large selling. The rot started early in the European session but accelerated during the US session as the posted a poor jobs and followed it up with retraction in manufacturing. This saw a sell-off in the US equities, therefore a rally in US$, but the Aussie was further moved by the commodity world. The Aussie moved further than the cable or euro being a commodity influenced currency. Meanwhile the FOMC saw little change in rhetoric or spending.
All eyes now turn towards the ECB tonight. They are expected to lower rates and this is seen as a positive move by the bankers and therefore the Euro$ is attracting bidders. I am not so certain they will move rates though. If they do not then the 1.31 will not hold the sellers. If they do then it will test the highs from overnight but not too high as most of this is priced in.
DATA HIGHLIGHTS AHEAD (times are in AEDST) – 950am BOJ minutes. 1130am AU building approvals. 630pm UK construction. 945pm EUR Interest rates. 1030pm ECB press conference. 1030pm US trade balance.
AUDUSD –Was looking toppy above 1.03 and I think it is expensive over 1.0180 so expect this to test March lows in days to come.
EURUSD – Large high test bar, testing the 50% retracement from Feb high to Apr low. Will be inside this range until tonight’s announcement. If they do cut, expect to see 1.34 in May.
GBPUSD – Inching higher and like Australian drivers, totally refusing to let me merge into the lane. Like the euro, the cable touched the 50% fib of 15606. I am bullish the cable and see 1.58-1.59 in time to come.
NZDUSD –The kiwi caught the Aussie cold, it did hold above minor support but I expect to see 84 trading next week on the kiwi.
USDCAD – This confounding currency. US$ bullish and commodities, particularly oil big sellers and yet, yet the Loonie has a 50pip day!
USDJPY – Tightly held too and as I have said, will be aimless for some time yet.
GOLD – Along with the important usable commodities, the precious metal got sold off and 1477 will prove a tough ceiling for a while, until the next “catastrophe”.
David Long/ Proprietary Trading Manager
Knowledge to Action – Specialist Forex Education
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