The Australian dollar experienced significant strength last week, off the back of US dollar weakness and strong domestic data. The US dollar weakened against major currency pairs as the Federal Reserve revised projections to two fewer rate hikes this year. The Fed has sold the market the notion that its consideration of tightening would be data dependent. Despite this approach, the Fed has held on rate changes at a time where CPI is increasing, oil prices and inflation are recovering and the unemployment rate is falling (4.9% relative to 5.0%). The Federal Reserve along with many central bankers have cited concerns over the potential for a deterioration in the global economic environment.
The Australian dollar rallied over the FOMC news as well as domestic unemployment data beating expectations by 0.2% (5.8% versus 6.0%). The AUD pushed to 0.76795 having since retraced to the 0.75930 level. With Governor Stevens speaking at the ASIC annual forum on Tuesday, this may provide opportunity for jaw-boning the AUD lower. Stevens talking-down the AUD, and US quarterly GDP figures released on Friday beating expectations, could provide scope for the Australian dollar to fall.
Currency Updates:
EUR/USD Intraday: bullish bias above 1.1240.
Pivot: 1.1240
Our preference: long positions above 1.1240 with targets @ 1.1345 & 1.1375 in extension.
Alternative scenario: below 1.1240 look for further downside with 1.1200 & 1.1165 as targets.
Comment: a support base at 1.1240 has formed and has allowed for a temporary stabilisation.
Supports and resistances:
1.1410 ***
1.1375 ***
1.1345 ***
1.1273 Last
1.1240 ***
1.1200 ***
1.1165 **
USD/JPY Intraday: key resistance at 112.30.
Pivot: 112.30
Our preference: short positions below 112.30 with targets @ 110.60 & 110.00 in extension.
Alternative scenario: above 112.30 look for further upside with 113.05 & 113.45 as targets.
Comment: as long as 112.30 is resistance, look for choppy price action with a bearish bias.
Supports and resistances:
113.45
113.05
112.30
111.54 Last
110.60
110.00
109.65
GBP/USD Intraday: the bias remains bullish.
Pivot: 1.4400
Our preference: long positions above 1.4400 with targets @ 1.4520 & 1.4610 in extension.
Alternative scenario: below 1.4400 look for further downside with 1.4330 & 1.4290 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Supports and resistances:
1.4665 ***
1.4610 ***
1.4520 ***
1.4463 Last
1.4400 ***
1.4330 ***
1.4290 **
AUD/USD Intraday: caution.
Pivot: 0.7575
Our preference: long positions above 0.7575 with targets @ 0.7640 & 0.7680 in extension.
Alternative scenario: below 0.7575 look for further downside with 0.7520 & 0.7475 as targets.
Comment: a support base at 0.7575 has formed and has allowed for a temporary stabilisation.
Supports and resistances:
0.7715
0.7680
0.7640
0.7586 Last
0.7575
0.7520
0.7475
SPI 200 (ASX) (M6) Intraday: the bias remains bullish.
Pivot: 5140
Our preference: long positions above 5140 with targets @ 5214 & 5240 in extension.
Alternative scenario: below 5140 look for further downside with 5120 & 5085 as targets.
Comment: a support base at 5140 has formed and has allowed for a temporary stabilisation.
Supports and resistances:
5265
5240
5214
5163 Last
5140
5120
5085
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