Last week the US dollar index (DXY) closed at a 15-month low and beneath 100 for the first time since April 2022. Yet subsequent price action has seen a lack of conviction form bears, allowing prices to form a double bottom just above the March 2022 high and close with a Spinning Top doji yesterday.
Given US yields are showing signs of stability (and hinting at...
AUD/USD pulled back for a second day on Monday thanks to weak data from China and rising geopolitical tensions as Russia have backed to of a key gain deal. Support was found around the weekly pivot point, RBA ‘pause’ high and 38.2% Fibonacci retracement level, and the subsequent rally suggests a swing low is in place.
The RBA minutes are due in ~2 hours, and...
The China A50 trades within a bearish channel on the daily chart, although we strongly suspect it wants to break out of it to the upside.
If you look at the steady stream of weak data coming out of China over the past few months, why is the China A50 not breaking to new lows? In fact, each time the market has pulled back to the 12,400 area since early June...
A strong 2-day rally this week suggests AUD/NZD has printed its swing low at 1.07266. Whilst NZ inflation data was stronger than expected in Q2 and saw AUD/ZD pull back to 1.0800, we suspect it is still lower from the prior reads to allow the RBNZ to hold rates steady with an economy already in a recession.
We therefore see today's retracement lower to 1.080 as...
We’ve become so accustomed to headlines of ‘peak inflation’ and falling input prices that some have been throwing the wonderful ‘deflation’ word around. And we think most would enjoy a bit of deflation, as that would result in lower interest rates. However, with commodity prices (particularly oil) being a key driver of inflation, a lot of the softness can be tied...
Commodities were broadly lower yesterday with the CRB index falling to a 4-day low. Geopolitical tensions are rising following Russia’s decision to back out of a key grain deal which allowed Ukraine to export grain through the Black Sea. Weak data from China and news that Libya will restart oil production also saw WTI fall for a second day.
What has caught our...
Gold futures have fallen nearly 9% since the May high, but there are signs that it is trying to form a base around $1900.Whilst the psychological round number has helped to play a part, it also coincides with a volume cluster in the rally at the beginning of March. We therefore see the potential for a minor bounce at a minimum from current levels whilst prices...
We outlined a bearish bias in a previous USD/CAD article which clearly did not play out, thanks to hawkish comments from Fed members, hawkish FOMC minutes and stronger economic data for the US. However, a strong Canadian employment report on Friday has now seen odds shift in favour of a 25bp BOC hike this week – and if that is to be coupled with a soft(er) than...
USD/JPY has delivered a decent trend for bulls so far this year, having risen 14% since the January low. Yet we have been fully aware that net-short exposure to yen futures has approached a historical extreme as USD/JPT prices rose towards 145.
Incidentally, 145 was the upper range of the liquidity gap we mentioned in a previous article which has now been...
USD/JPY has been playing nicely with our analysis of late, having rallied to 145 and close the 300-pip liquidity gap we warned of before accelerating lower this week in line with our bearish bias.
But given levels of support nearby and a few metrics on hand, bears may want to be cautious around current levels.
USD/JPY is trying to close lower for a fifth day...
GBP/USD remains in a strong uptrend on the daily chart, although prices began retracing on June 16th. We're now looking for momentum to revert to its bullish trend.
Whilst prices failed to hold above May high, they're now back above them having formed a 3-day bullish reversal pattern (Morning Star). A small bearish inside day formed due to the 3-day weekend in...
AUD/USD retracted around -4.4% from the June high, and it appears we may have seen a swing low around 66c. The pullback found support around a volume cluster from the previous rally and formed a 3-day bullish reversal pattern (morning star reversal). Soft US inflation helped weigh on the US dollar, and an RBA hike tomorrow could send the Aussie higher.
Money...
Divergent monetary policies between the Fed and BOJ have allowed USD/JPY to extend its bullish trend on the daily chart. Whilst the Fed are very close to their terminal rate, they have to keep the threat of further hikes on the table to tame inflation expectations. When coupled with the ultra-easy policies of the BOJ, we've seen USD/JPY return to its cycle highs....
Canadian consumers want to have their inflationary cake and eat it, with a hot retail sales report bolstering bets that the BOC could hike again at their next meeting in July. Whilst a hike is not yet a given, the BOC did deliver a hawkish hike earlier this month - and with consumers continuing to spend, it keeps the pressure on the BOC for further hikes.
Yet a...
GBP/USD has pulled back from its highs and looks like it wants to build a base above the May 2022 high. An inverted hammer formed on the daily chart around the 10-day EMA and momentum has turned higher ahead of the European Open.
The near-term bias remains bullish above Friday’s low and for an initial move to 1.2800 or around the 1.2850 highs. A break above...
WTI crude posted a strong rally from the $67 support level thanks to another strong drawdown of crude inventories. The fact it rallied over 3% despite the stronger US dollar and hawkish comments from Powell makes us wonder if it could have broken above $70 were the dollar not to dominate FX majors on Wednesday. Still, prices are trading within a range between $67...
USD/CHF remains within a longer-term downtrend on the daily chart, and momentum has has been pointing lower since the May 31 high. A bearish engulfing candle formed (which is also part of a double top) around 0.9000 to suggest a swing high has formed on the daily chart.
From here's we'd consider bearish setups on lower timeframes up to (or around) Tuesday's low,...
AUD/NZD has fallen 3% since the April high, although it looks set to build a base above the April low. A Rikshaw Man Doji formed on the daily chart above this key support level and a bullish RSI is forming on the RSI (2) to hint at a near-term inflection point.
What may help it rally from here is Bloomberg's report that the RBA considered three rate paths ahead...
