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AUD USD - FUNDAMENTAL DRIVERSAUD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May policy decision, the RBA made a hawkish turn by raising the cash rate by 0.25% versus STIR expectations of a 15bsp move. Even though there were some hawkish takes looking for a 40bsp move, the 25bsp was still higher than consensus expectations. The bank noted that inflation pressures have risen more than they expected, even without a sharp rise in wages, and means that further increases in the cash rate will be required to bring inflation back in line with their target. They also surprised markets on the balance sheet side by announcing that they are starting passive QT by stopping the reinvestment of maturing bonds. The hawkish surprise was enough to see STIR markets price in >60% chance of a 50bsp hike for the June meeting despite comments from Gov Lowe who said they don’t preclude a bigger or smaller rate move than 25bsp in the future. All-in-all the decision from the RBA was hawkish and has finally kick started the bank’s hiking cycle and should provide support for the AUD in the med-term as long as the bank keeps tightening expectations intact. 2. Idiosyncratic Drivers & Intermarket Analysis Apart from the RBA, there are 3 drivers we’re watching for the med-term outlook: Recovery – unlike other nations where growth & inflation is expected to slow, Australia is expected to see recovery, mostly thanks to stimulus and recovery in China China – With the PBoC & CCP stepping up monetary and fiscal stimulus, any recovery in China bodes well for Australia (40% of exports goes to China). It has also meant that the virus situation in China posed short-term downside risks for AUD as it has pushed back recovery expectations. Thus, virus and stimulus developments in China remains key for the AUD. The AUKUS defence pact could see retaliation against Aussie goods and is worth keeping on the radar as well Commodities – Iron Ore (31%), Coal (14%) and LNG (10%) is more than 50% of Aussie exports, with rising prices giving the AUD huge support from terms of trade. If commodities remain supported it remains a support for AUD, but of course also means any sizeable corrections will weigh on the AUD. That means geopolitical and China demand developments remain key focus points. 3. Global Risk Outlook As a high-beta currency, the AUD usually benefits from overall positive risk sentiment as well as environments that benefit pro-cyclical assets. Thus, both short-term (immediate) and med-term (underlying) risk sentiment will always be a key consideration for the AUD. CFTC Analysis Very close to neutral signals for AUD positioning. Recent price action has been tricky with overall risk off sentiment and China growth concerns. That also means if risk sentiment can find some reprieve this week it could see some short-term recovery in the AUD and will be a key focus for the week ahead. 4. The Week Ahead The focus for the week ahead will be China covid developments, light econ data, election spill over, commodity price action and overall risk sentiment. The covid situation in China remains important, and the hope is that either the government eases up some of the draconian restrictions or we see some easing of restrictions. On the data front, we have light data like construction work done and private capital expenditures (these are important inputs into GDP so will garner attention). We also have speeches from a few RBA members which could offer some clues on whether markets should expect a 25bsp or a 40bsp for the upcoming meeting. Furthermore, commodity price action for things like Iron Ore and Coal prices will be eyed as usual, and it will be interesting to see what affect the green energy comments of the new PM will have on Coal prices. Any negative price action as a result of those comments will be important for the AUD. Apart from that, the election victory for the new PM was largely expected and should not create any meaningful volatility for the AUD but it’s worth keeping it on the radar at the start of the new week. Risk sentiment will also be in focus, especially after the stronger close on Friday for equities after a very negative week. Any recovery in risk sentiment could offer some upside for the AUD, while a continuation of the negative mood and price action is expected to weigh on the currency. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May meeting, the Fed delivered on hawkish expectations regarding rates by hiking the Fed Funds Rate by 50bsp and also confirmed that the committee expects further 50bsp hikes to be appropriate. The fed also stuck to a familiar hawkish tone by downplaying the prospects of an imminent recession by explaining that even though the economy contracted in Q1, that household spending and business investment remained strong. The Chair also stuck to their guns regarding the rate path by suggesting that they think reaching neutral (currently estimated at 2.4%) before year-end would be appropriate and will assess the need for further hikes when they get there. There were however some less hawkish elements which saw a very classic ‘sell-the-fact’ reaction in major asset classes. The first one was on the Quantitative Tightening front where the bank decided on a phased approach for balance sheet reduction by starting the monthly caps at 30bn (treasuries) and 17.5bn ( MBS ) and pushing it up to the expected $60bn (treasuries) and $35bn ( MBS ) over a three-month timeframe. The second less hawkish element was comments from Chair Powell who took 75bsp hikes off the table saying the committee was not actively considering rate moves of that size. Interestingly, it seems STIR markets did not really believe the Fed as the probability of a 75bsp hike stood at >70% directly following the presser. All-in-all, the meeting provided a short-term ‘sell-the-fact’ opportunity, but also cemented the view that despite signs of a slowing economy and despite clear stress in financial markets, the Fed is sticking to their aggressive tightening for now. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. The USD usually appreciates when growth & inflation slows (disinflation) and depreciates when growth & inflation accelerates (reflation). Thus, current expectations of a cyclical slowdown are a positive driver for the Dollar. Incoming data will be watched in relation to the ‘Fed Put’ as there are many similarities between now and 4Q18, where the Fed were also tightened into a slowdown. If growth data slows and the Fed stays hawkish it’s a positive for the USD, however if the Fed pivots dovish that’ll be a negative driver for the USD. 3. CFTC Analysis Aggregate USD positioning remains close to 1 standard deviation above the mean, and close to prior tops where the USD topped out in previous cycles. That does not change the bullish outlook for the USD in the med-term but means that we would wait for pullbacks before initiating new longs with price at new cycle highs. 4. The Week Ahead The USD had an interesting week, where negative data has seen a negative reaction to the USD. This was an important change as the USD has been mostly supported on bad data from the start of 2022 as markets were pricing in a global slowdown in growth. If this trend persists, and markets start pricing in higher probabilities of a less aggressive Fed on more negative data, that could spell some downside for the USD. That makes the Global S&P Flash PMI’s interesting for the USD in the week ahead. Apart from that, the week ahead is very light with the FOMC meeting minutes and Core PCE the main highlights. For the minutes, it’s unlikely that it provides new guidance after the huge amount of Fed speakers we’ve had after the meeting. For Core PCE , the print could be interesting for the USD. A surprise miss could create some risk positive price action and some USD downside which could offer some attractive short-term opportunities. Overall risk sentiment will be very important for the week ahead. Last week was a big capitulation week for risk and was further exacerbated by OpEx volatility . However, the strong recovery in risk assets, possibility driven by dealer and market-marker rebalancing was a promising sign. There is some speculation among analysts that the late-Friday push higher could mark the start of the next bear market going into Core PCE . Further risk off price action should be supportive for the USD, but as the USD is looking tactically stretched, we would prefer to look for some downside on any risk on catalysts.
by thunderpips
AUD USD - FUNDAMENTAL DRIVERSAUD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May policy decision, the RBA made a hawkish turn by raising the cash rate by 0.25% versus STIR expectations of a 15bsp move. Even though there were some hawkish takes looking for a 40bsp move, the 25bsp was still higher than consensus expectations. The bank noted that inflation pressures have risen more than they expected, even without a sharp rise in wages, and means that further increases in the cash rate will be required to bring inflation back in line with their target. They also surprised markets on the balance sheet side by announcing that they are starting passive QT by stopping the reinvestment of maturing bonds. The hawkish surprise was enough to see STIR markets price in >60% chance of a 50bsp hike for the June meeting despite comments from Gov Lowe who said they don’t preclude a bigger or smaller rate move than 25bsp in the future. All-in-all the decision from the RBA was hawkish and has finally kick started the bank’s hiking cycle and should provide support for the AUD in the med-term as long as the bank keeps tightening expectations intact. 2. Idiosyncratic Drivers & Intermarket Analysis Apart from the RBA, there are 3 drivers we’re watching for the med-term outlook: Recovery – unlike other nations where growth & inflation is expected to slow, Australia is expected to see recovery, mostly thanks to stimulus and recovery in China China – With the PBoC & CCP stepping up monetary and fiscal stimulus, any recovery in China bodes well for Australia (40% of exports goes to China). It has also meant that the virus situation in China posed short-term downside risks for AUD as it has pushed back recovery expectations. Thus, virus and stimulus developments in China remains key for the AUD. The AUKUS defence pact could see retaliation against Aussie goods and is worth keeping on the radar as well Commodities – Iron Ore (31%), Coal (14%) and LNG (10%) is more than 50% of Aussie exports, with rising prices giving the AUD huge support from terms of trade. If commodities remain supported it remains a support for AUD, but of course also means any sizeable corrections will weigh on the AUD. That means geopolitical and China demand developments remain key focus points. 3. Global Risk Outlook As a high-beta currency, the AUD usually benefits from overall positive risk sentiment as well as environments that benefit pro-cyclical assets. Thus, both short-term (immediate) and med-term (underlying) risk sentiment will always be a key consideration for the AUD. CFTC Analysis Very close to neutral signals for AUD positioning. Recent price action has been tricky with overall risk off sentiment and China growth concerns. That also means if risk sentiment can find some reprieve this week it could see some short-term recovery in the AUD and will be a key focus for the week ahead. 4. The Week Ahead The focus for the week ahead will be China covid developments, light econ data, election spill over, commodity price action and overall risk sentiment. The covid situation in China remains important, and the hope is that either the government eases up some of the draconian restrictions or we see some easing of restrictions. On the data front, we have light data like construction work done and private capital expenditures (these are important inputs into GDP so will garner attention). We also have speeches from a few RBA members which could offer some clues on whether markets should expect a 25bsp or a 40bsp for the upcoming meeting. Furthermore, commodity price action for things like Iron Ore and Coal prices will be eyed as usual, and it will be interesting to see what affect the green energy comments of the new PM will have on Coal prices. Any negative price action as a result of those comments will be important for the AUD. Apart from that, the election victory for the new PM was largely expected and should not create any meaningful volatility for the AUD but it’s worth keeping it on the radar at the start of the new week. Risk sentiment will also be in focus, especially after the stronger close on Friday for equities after a very negative week. Any recovery in risk sentiment could offer some upside for the AUD, while a continuation of the negative mood and price action is expected to weigh on the currency. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May meeting, the Fed delivered on hawkish expectations regarding rates by hiking the Fed Funds Rate by 50bsp and also confirmed that the committee expects further 50bsp hikes to be appropriate. The fed also stuck to a familiar hawkish tone by downplaying the prospects of an imminent recession by explaining that even though the economy contracted in Q1, that household spending and business investment remained strong. The Chair also stuck to their guns regarding the rate path by suggesting that they think reaching neutral (currently estimated at 2.4%) before year-end would be appropriate and will assess the need for further hikes when they get there. There were however some less hawkish elements which saw a very classic ‘sell-the-fact’ reaction in major asset classes. The first one was on the Quantitative Tightening front where the bank decided on a phased approach for balance sheet reduction by starting the monthly caps at 30bn (treasuries) and 17.5bn (MBS) and pushing it up to the expected $60bn (treasuries) and $35bn (MBS) over a three-month timeframe. The second less hawkish element was comments from Chair Powell who took 75bsp hikes off the table saying the committee was not actively considering rate moves of that size. Interestingly, it seems STIR markets did not really believe the Fed as the probability of a 75bsp hike stood at >70% directly following the presser. All-in-all, the meeting provided a short-term ‘sell-the-fact’ opportunity, but also cemented the view that despite signs of a slowing economy and despite clear stress in financial markets, the Fed is sticking to their aggressive tightening for now. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. The USD usually appreciates when growth & inflation slows (disinflation) and depreciates when growth & inflation accelerates (reflation). Thus, current expectations of a cyclical slowdown are a positive driver for the Dollar. Incoming data will be watched in relation to the ‘Fed Put’ as there are many similarities between now and 4Q18, where the Fed were also tightened into a slowdown. If growth data slows and the Fed stays hawkish it’s a positive for the USD, however if the Fed pivots dovish that’ll be a negative driver for the USD. 3. CFTC Analysis Aggregate USD positioning remains close to 1 standard deviation above the mean, and close to prior tops where the USD topped out in previous cycles. That does not change the bullish outlook for the USD in the med-term but means that we would wait for pullbacks before initiating new longs with price at new cycle highs. 4. The Week Ahead The USD had an interesting week, where negative data has seen a negative reaction to the USD. This was an important change as the USD has been mostly supported on bad data from the start of 2022 as markets were pricing in a global slowdown in growth. If this trend persists, and markets start pricing in higher probabilities of a less aggressive Fed on more negative data, that could spell some downside for the USD. That makes the Global S&P Flash PMI’s interesting for the USD in the week ahead. Apart from that, the week ahead is very light with the FOMC meeting minutes and Core PCE the main highlights. For the minutes, it’s unlikely that it provides new guidance after the huge amount of Fed speakers we’ve had after the meeting. For Core PCE, the print could be interesting for the USD. A surprise miss could create some risk positive price action and some USD downside which could offer some attractive short-term opportunities. Overall risk sentiment will be very important for the week ahead. Last week was a big capitulation week for risk and was further exacerbated by OpEx volatility. However, the strong recovery in risk assets, possibility driven by dealer and market-marker rebalancing was a promising sign. There is some speculation among analysts that the late-Friday push higher could mark the start of the next bear market going into Core PCE. Further risk off price action should be supportive for the USD, but as the USD is looking tactically stretched, we would prefer to look for some downside on any risk on catalysts.
by thunderpips
Joe Gun2Head Trade - Short term bullish channel on AUDUSDTrade Idea: Short term bullish channel Reasoning: Looking for a continuation in the short term Entry Level: 0.7095 Take Profit Level: 0.7170 Stop Loss: 0.7063 Risk/Reward: 2.43:1 Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
Long
by Signal_Centre
AUDUSD potential for a rise! | 23rd Mar 2022On the H4, with price moving above the ichimoku cloud , we have a bullish bias that price will rise to our 1st resistance at 0.72568 where the 50% Fibonacci retracement is from our 1st support at 0.70604 in line with the pullback support. Alternatively, price may break structure and head for 2nd support where the swing low support is. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Long
by FXCM
1
AUDUSD potential for a rise! | 23rd Mar 2022On the H4, with price moving above the ichimoku cloud, we have a bullish bias that price will rise to our 1st resistance at 0.72568 where the 50% Fibonacci retracement is from our 1st support at 0.70604 in line with the pullback support. Alternatively, price may break structure and head for 2nd support where the swing low support is. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Long
by Rockqet
AUD USD - FUNDAMENTAL DRIVERSAUD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May policy decision, the RBA made a hawkish turn by raising the cash rate by 0.25% versus STIR expectations of a 15bsp move. Even though there were some hawkish takes looking for a 40bsp move, the 25bsp was still higher than consensus expectations. The bank noted that inflation pressures have risen more than they expected, even without a sharp rise in wages, and means that further increases in the cash rate will be required to bring inflation back in line with their target. They also surprised markets on the balance sheet side by announcing that they are starting passive QT by stopping the reinvestment of maturing bonds. The hawkish surprise was enough to see STIR markets price in >60% chance of a 50bsp hike for the June meeting despite comments from Gov Lowe who said they don’t preclude a bigger or smaller rate move than 25bsp in the future. All-in-all the decision from the RBA was hawkish and has finally kick started the bank’s hiking cycle and should provide support for the AUD in the med-term as long as the bank keeps tightening expectations intact. 2. Idiosyncratic Drivers & Intermarket Analysis Apart from the RBA, there are 3 drivers we’re watching for the med-term outlook: Recovery – unlike other nations where growth & inflation is expected to slow, Australia is expected to see recovery, mostly thanks to stimulus and recovery in China China – With the PBoC & CCP stepping up monetary and fiscal stimulus, any recovery in China bodes well for Australia (40% of exports goes to China). It has also meant that the virus situation in China posed short-term downside risks for AUD as it has pushed back recovery expectations. Thus, virus and stimulus developments in China remains key for the AUD. The AUKUS defence pact could see retaliation against Aussie goods and is worth keeping on the radar as well Commodities – Iron Ore (31%), Coal (14%) and LNG (10%) is more than 50% of Aussie exports, with rising prices giving the AUD huge support from terms of trade. If commodities remain supported it remains a support for AUD, but of course also means any sizeable corrections will weigh on the AUD. That means geopolitical and China demand developments remain key focus points. 3. Global Risk Outlook As a high-beta currency, the AUD usually benefits from overall positive risk sentiment as well as environments that benefit pro-cyclical assets. Thus, both short-term (immediate) and med-term (underlying) risk sentiment will always be a key consideration for the AUD. 4. CFTC Analysis Very bearish CFTC signals with the most recent update as Leveraged Funds moved back into net-short territory, and a very sizable increase in shorts from Large Specs. This has been reflected in the recent AUD price action, as risk sentiment, China growth concerns and commodity downside has been a perfect trio of AUD downside. That also means if risk sentiment can find some reprieve this week it could see some short-term recovery in the AUD. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May meeting, the Fed delivered on hawkish expectations regarding rates by hiking the Fed Funds Rate by 50bsp and also confirmed that the committee expects further 50bsp hikes to be appropriate. The fed also stuck to a familiar hawkish tone by downplaying the prospects of an imminent recession by explaining that even though the economy contracted in Q1, that household spending and business investment remained strong. The Chair also stuck to their guns regarding the rate path by suggesting that they think reaching neutral (currently estimated at 2.4%) before year-end would be appropriate and will assess the need for further hikes when they get there. There were however some less hawkish elements which saw a very classic ‘sell-the-fact’ reaction in major asset classes. The first one was on the Quantitative Tightening front where the bank decided on a phased approach for balance sheet reduction by starting the monthly caps at 30bn (treasuries) and 17.5bn ( MBS ) and pushing it up to the expected $60bn (treasuries) and $35bn ( MBS ) over a three-month timeframe. The second less hawkish element was comments from Chair Powell who took 75bsp hikes off the table saying the committee was not actively considering rate moves of that size. Interestingly, it seems STIR markets did not really believe the Fed as the probability of a 75bsp hike stood at >70% directly following the presser. All-in-all, the meeting provided a short-term ‘sell-the-fact’ opportunity, but also cemented the view that despite signs of a slowing economy and despite clear stress in financial markets, the Fed is sticking to their aggressive tightening for now. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. The USD usually appreciates when growth & inflation slows (disinflation) and depreciates when growth & inflation accelerates (reflation). Thus, current expectations of a cyclical slowdown are a positive driver for the Dollar. Incoming data will be watched in relation to the ‘Fed Put’ as there are many similarities between now and 4Q18, where the Fed were also tightened into a slowdown. If growth data slows and the Fed stays hawkish it’s a positive for the USD, however if the Fed pivots dovish that’ll be a negative driver for the USD. 3. CFTC Analysis Aggregate USD positioning remains close to 1 standard deviation above the mean, and close to prior tops where the USD topped out in previous cycles. That does not change the bullish outlook for the USD in the med-term but means that we would wait for pullbacks before initiating new longs with price at new cycle highs.
by thunderpips
2
AUDUSD 4hour Analysis May 22nd, 2022AUDUSD Bullish Idea Weekly Trend: Bearish Daily Trend: Bearish 4Hour Trend: Bullish Trade scenario 1: Looking newly bullish on AUDUSD 4hour and we’re looking for higher lows above 0.70000 with strong bullish candlestick setups to enter on. Look to target higher toward 0.71700. Trade scenario 2: For us to consider AU bearish again on the 4hour we need to see a break below 0.70000. If this happens look to enter short on a lower high with strong bearish setups.
Long
by ForexLeague
AUD USD - FUNDAMENTAL DRIVERSAUD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May policy decision, the RBA made a hawkish turn by raising the cash rate by 0.25% versus STIR expectations of a 15bsp move. Even though there were some hawkish takes looking for a 40bsp move, the 25bsp was still higher than consensus expectations. The bank noted that inflation pressures have risen more than they expected, even without a sharp rise in wages, and means that further increases in the cash rate will be required to bring inflation back in line with their target. They also surprised markets on the balance sheet side by announcing that they are starting passive QT by stopping the reinvestment of maturing bonds. The hawkish surprise was enough to see STIR markets price in >60% chance of a 50bsp hike for the June meeting despite comments from Gov Lowe who said they don’t preclude a bigger or smaller rate move than 25bsp in the future. All-in-all the decision from the RBA was hawkish and has finally kick started the bank’s hiking cycle and should provide support for the AUD in the med-term as long as the bank keeps tightening expectations intact. 2. Idiosyncratic Drivers & Intermarket Analysis Apart from the RBA, there are 3 drivers we’re watching for the med-term outlook: Recovery – unlike other nations where growth & inflation is expected to slow, Australia is expected to see recovery, mostly thanks to stimulus and recovery in China China – With the PBoC & CCP stepping up monetary and fiscal stimulus, any recovery in China bodes well for Australia (40% of exports goes to China). It has also meant that the virus situation in China posed short-term downside risks for AUD as it has pushed back recovery expectations. Thus, virus and stimulus developments in China remains key for the AUD. The AUKUS defence pact could see retaliation against Aussie goods and is worth keeping on the radar as well Commodities – Iron Ore (31%), Coal (14%) and LNG (10%) is more than 50% of Aussie exports, with rising prices giving the AUD huge support from terms of trade. If commodities remain supported it remains a support for AUD, but of course also means any sizeable corrections will weigh on the AUD. That means geopolitical and China demand developments remain key focus points. 3. Global Risk Outlook As a high-beta currency, the AUD usually benefits from overall positive risk sentiment as well as environments that benefit pro-cyclical assets. Thus, both short-term (immediate) and med-term (underlying) risk sentiment will always be a key consideration for the AUD. 4. CFTC Analysis Very bearish CFTC signals with the most recent update as Leveraged Funds moved back into net-short territory, and a very sizable increase in shorts from Large Specs. This has been reflected in the recent AUD price action, as risk sentiment, China growth concerns and commodity downside has been a perfect trio of AUD downside. That also means if risk sentiment can find some reprieve this week it could see some short-term recovery in the AUD. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May meeting, the Fed delivered on hawkish expectations regarding rates by hiking the Fed Funds Rate by 50bsp and also confirmed that the committee expects further 50bsp hikes to be appropriate. The fed also stuck to a familiar hawkish tone by downplaying the prospects of an imminent recession by explaining that even though the economy contracted in Q1, that household spending and business investment remained strong. The Chair also stuck to their guns regarding the rate path by suggesting that they think reaching neutral (currently estimated at 2.4%) before year-end would be appropriate and will assess the need for further hikes when they get there. There were however some less hawkish elements which saw a very classic ‘sell-the-fact’ reaction in major asset classes. The first one was on the Quantitative Tightening front where the bank decided on a phased approach for balance sheet reduction by starting the monthly caps at 30bn (treasuries) and 17.5bn ( MBS ) and pushing it up to the expected $60bn (treasuries) and $35bn ( MBS ) over a three-month timeframe. The second less hawkish element was comments from Chair Powell who took 75bsp hikes off the table saying the committee was not actively considering rate moves of that size. Interestingly, it seems STIR markets did not really believe the Fed as the probability of a 75bsp hike stood at >70% directly following the presser. All-in-all, the meeting provided a short-term ‘sell-the-fact’ opportunity, but also cemented the view that despite signs of a slowing economy and despite clear stress in financial markets, the Fed is sticking to their aggressive tightening for now. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. The USD usually appreciates when growth & inflation slows (disinflation) and depreciates when growth & inflation accelerates (reflation). Thus, current expectations of a cyclical slowdown are a positive driver for the Dollar. Incoming data will be watched in relation to the ‘Fed Put’ as there are many similarities between now and 4Q18, where the Fed were also tightened into a slowdown. If growth data slows and the Fed stays hawkish it’s a positive for the USD, however if the Fed pivots dovish that’ll be a negative driver for the USD. 3. CFTC Analysis Aggregate USD positioning remains close to 1 standard deviation above the mean, and close to prior tops where the USD topped out in previous cycles. That does not change the bullish outlook for the USD in the med-term but means that we would wait for pullbacks before initiating new longs with price at new cycle highs.
by thunderpips
AUDUSD Despite the rebound still bearish unless this level breakThe AUDUSD pair has been trading within a long-term Channel Down since the February 25 2021 High. The recent rebound is fueled by the direct hit on the Channel's Lower Lows (bottom) trend-line and the gap that filled from June 2020. So far the pattern resembles the Channel Down of 2018/19. Both had a fake break above the 1D MA200 (orange trend-line), which eventually rejected the price. The current RSI sequence is similar to that of the last rebound in early March 2020, which after failing to break above the 0.5 Fibonacci level, it resulted into a massive collapse, which of course was attributed almost entirely to the COVID outbreak. Unless a similar event takes place, we can expect a smoother price action this time but still, a break below the Channel should aim at the next Gap Fill around the 0.6400 level. It would be safer to buy only if the price breaks above the 1D MA200 again. -------------------------------------------------------------------------------------------------------- Please like, subscribe and share your ideas and charts with the community! --------------------------------------------------------------------------------------------------------
by TradingShot
8
AUD USD - FUNDAMENTAL DRIVERSAUD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May policy decision, the RBA made a hawkish turn by raising the cash rate by 0.25% versus STIR expectations of a 15bsp move. Even though there were some hawkish takes looking for a 40bsp move, the 25bsp was still higher than consensus expectations. The bank noted that inflation pressures have risen more than they expected, even without a sharp rise in wages, and means that further increases in the cash rate will be required to bring inflation back in line with their target. They also surprised markets on the balance sheet side by announcing that they are starting passive QT by stopping the reinvestment of maturing bonds. The hawkish surprise was enough to see STIR markets price in >60% chance of a 50bsp hike for the June meeting despite comments from Gov Lowe who said they don’t preclude a bigger or smaller rate move than 25bsp in the future. All-in-all the decision from the RBA was hawkish and has finally kick started the bank’s hiking cycle and should provide support for the AUD in the med-term as long as the bank keeps tightening expectations intact. 2. Idiosyncratic Drivers & Intermarket Analysis Apart from the RBA, there are 3 drivers we’re watching for the med-term outlook: Recovery – unlike other nations where growth & inflation is expected to slow, Australia is expected to see recovery, mostly thanks to stimulus and recovery in China China – With the PBoC & CCP stepping up monetary and fiscal stimulus, any recovery in China bodes well for Australia (40% of exports goes to China). It has also meant that the virus situation in China posed short-term downside risks for AUD as it has pushed back recovery expectations. Thus, virus and stimulus developments in China remains key for the AUD. The AUKUS defence pact could see retaliation against Aussie goods and is worth keeping on the radar as well Commodities – Iron Ore (31%), Coal (14%) and LNG (10%) is more than 50% of Aussie exports, with rising prices giving the AUD huge support from terms of trade. If commodities remain supported it remains a support for AUD, but of course also means any sizeable corrections will weigh on the AUD. That means geopolitical and China demand developments remain key focus points. 3. Global Risk Outlook As a high-beta currency, the AUD usually benefits from overall positive risk sentiment as well as environments that benefit pro-cyclical assets. Thus, both short-term (immediate) and med-term (underlying) risk sentiment will always be a key consideration for the AUD. 4. CFTC Analysis Very bearish CFTC signals with the most recent update as Leveraged Funds moved back into net-short territory, and a very sizable increase in shorts from Large Specs. This has been reflected in the recent AUD price action, as risk sentiment, China growth concerns and commodity downside has been a perfect trio of AUD downside. That also means if risk sentiment can find some reprieve this week it could see some short-term recovery in the AUD. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May meeting, the Fed delivered on hawkish expectations regarding rates by hiking the Fed Funds Rate by 50bsp and also confirmed that the committee expects further 50bsp hikes to be appropriate. The fed also stuck to a familiar hawkish tone by downplaying the prospects of an imminent recession by explaining that even though the economy contracted in Q1, that household spending and business investment remained strong. The Chair also stuck to their guns regarding the rate path by suggesting that they think reaching neutral (currently estimated at 2.4%) before year-end would be appropriate and will assess the need for further hikes when they get there. There were however some less hawkish elements which saw a very classic ‘sell-the-fact’ reaction in major asset classes. The first one was on the Quantitative Tightening front where the bank decided on a phased approach for balance sheet reduction by starting the monthly caps at 30bn (treasuries) and 17.5bn ( MBS ) and pushing it up to the expected $60bn (treasuries) and $35bn ( MBS ) over a three-month timeframe. The second less hawkish element was comments from Chair Powell who took 75bsp hikes off the table saying the committee was not actively considering rate moves of that size. Interestingly, it seems STIR markets did not really believe the Fed as the probability of a 75bsp hike stood at >70% directly following the presser. All-in-all, the meeting provided a short-term ‘sell-the-fact’ opportunity, but also cemented the view that despite signs of a slowing economy and despite clear stress in financial markets, the Fed is sticking to their aggressive tightening for now. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. The USD usually appreciates when growth & inflation slows (disinflation) and depreciates when growth & inflation accelerates (reflation). Thus, current expectations of a cyclical slowdown are a positive driver for the Dollar. Incoming data will be watched in relation to the ‘Fed Put’ as there are many similarities between now and 4Q18, where the Fed were also tightened into a slowdown. If growth data slows and the Fed stays hawkish it’s a positive for the USD, however if the Fed pivots dovish that’ll be a negative driver for the USD. 3. CFTC Analysis Aggregate USD positioning remains close to 1 standard deviation above the mean, and close to prior tops where the USD topped out in previous cycles. That does not change the bullish outlook for the USD in the med-term but means that we would wait for pullbacks before initiating new longs with price at new cycle highs. 4. The Week Ahead In the week ahead, the main focus points for the USD will be Retail Sales & Industrial Production, Fed Speak and overall risk sentiment. For Retail Sales, consensus is looking for a stronger MM headline (0.8%) but a softer MM Core print (0.3%). For Industrial Production, forecasts expect a steady slowdown for both the MM (0.4%) and the YY print (2.0%). On a 6M annualized basis, the March data for Retail Sales and Industrial Production showed a surprise acceleration. Looking at the incoming expectations for the April data, that acceleration looked like a possible blip. If the deceleration trend continues, we would expect that to add fuel to the current growth concerns (which should be a positive for the USD, but at cycle and 20-year highs we won’t want to chase the USD higher on a miss but if we see a surprise beat that could ease up some of the recent market turmoil and could offer some short-term corrective price action in the USD). Fed speak will also be on the radar, where markets will be looking for any signals that Fed speakers are getting more worried about the effects of tightening financial conditions on the economy and broader markets, any less hawkish sounding comments could offer some reprieve for risk and push the USD lower. As always, we’ll also need to keep overall risk sentiment in mind, especially in the current cyclical environment and recent heightened volatility across major asset classes. Further risk off price action should be supportive for the USD, but as the USD is looking tactically stretched, we would prefer to look for some downside on any risk on catalysts.
by thunderpips
AUDUSD potential for a drop! | 19th May 2022With price moving below the ichimoku cloud, we have a bias that price will drop from our entry at 0.70378 in line with the horizontal overlap resistance and 50% Fibonacci retracement to our take profit at 0.68519 in line with the horizontal swing low suppport. Alternatively, price may break entry and head for stop loss at 0.70976 in line with the 61.8% Fibonacci retracement. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Short
by Rockqet
AUD USD - FUNDAMENTAL DRIVERSAUD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May policy decision, the RBA made a hawkish turn by raising the cash rate by 0.25% versus STIR expectations of a 15bsp move. Even though there were some hawkish takes looking for a 40bsp move, the 25bsp was still higher than consensus expectations. The bank noted that inflation pressures have risen more than they expected, even without a sharp rise in wages, and means that further increases in the cash rate will be required to bring inflation back in line with their target. They also surprised markets on the balance sheet side by announcing that they are starting passive QT by stopping the reinvestment of maturing bonds. The hawkish surprise was enough to see STIR markets price in >60% chance of a 50bsp hike for the June meeting despite comments from Gov Lowe who said they don’t preclude a bigger or smaller rate move than 25bsp in the future. All-in-all the decision from the RBA was hawkish and has finally kick started the bank’s hiking cycle and should provide support for the AUD in the med-term as long as the bank keeps tightening expectations intact. 2. Idiosyncratic Drivers & Intermarket Analysis Apart from the RBA, there are 3 drivers we’re watching for the med-term outlook: Recovery – unlike other nations where growth & inflation is expected to slow, Australia is expected to see recovery, mostly thanks to stimulus and recovery in China China – With the PBoC & CCP stepping up monetary and fiscal stimulus, any recovery in China bodes well for Australia (40% of exports goes to China). It has also meant that the virus situation in China posed short-term downside risks for AUD as it has pushed back recovery expectations. Thus, virus and stimulus developments in China remains key for the AUD. The AUKUS defence pact could see retaliation against Aussie goods and is worth keeping on the radar as well Commodities – Iron Ore (31%), Coal (14%) and LNG (10%) is more than 50% of Aussie exports, with rising prices giving the AUD huge support from terms of trade. If commodities remain supported it remains a support for AUD, but of course also means any sizeable corrections will weigh on the AUD. That means geopolitical and China demand developments remain key focus points. 3. Global Risk Outlook As a high-beta currency, the AUD usually benefits from overall positive risk sentiment as well as environments that benefit pro-cyclical assets. Thus, both short-term (immediate) and med-term (underlying) risk sentiment will always be a key consideration for the AUD. 4. CFTC Analysis Very bearish CFTC signals with the most recent update as Leveraged Funds moved back into net-short territory, and a very sizable increase in shorts from Large Specs. This has been reflected in the recent AUD price action, as risk sentiment, China growth concerns and commodity downside has been a perfect trio of AUD downside. That also means if risk sentiment can find some reprieve this week it could see some short-term recovery in the AUD. 5. The Week Ahead It’s all about China and Aussie data this week. On the China side, Monday’s Retail Sales and Industrial Production data is expected to show some serious degradation. A worse than expected print could put some pressure on the Antipodeans, but with a lot of bad news in the price (especially after the dismal Chinese PMI prints), a print that’s not as bad as expected could offer some reprieve for general risk sentiment. Apart from Chinese data, focus will also turn to the MLF (Monday) and LPR (Friday) rates, where any cuts from either could also provide some solace and show the PBoC’s resolve to fix the troubling growth situation. If the PBoC decides not to cut either, that would be seen as a negative unless they offer some other form of additional stimulus measures. The covid situation in China is important as well, and the hope is that either the government eases up some of the draconian restrictions or at least offers more material stimulus to support the economy. For the AUD data, the wage data will be the most interesting print with consensus looking for a jump to 2.5%. However, after the RBA’s comments that regional surveys are reporting higher wages, some are expecting a print close towards 3.0%. A print close to 3.0% should solidify hike expectations and could provide the AUD with a boost (especially if we print at or very close to 3.0%). For the jobs data, consensus is looking for the Unemployment Rate to tick down to 3.9%, and if we get that or lower it will be a record low for the series (which ought to be worth a few pips to the upside as long as risk sentiment and China plays their parts). USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy At the May meeting, the Fed delivered on hawkish expectations regarding rates by hiking the Fed Funds Rate by 50bsp and also confirmed that the committee expects further 50bsp hikes to be appropriate. The fed also stuck to a familiar hawkish tone by downplaying the prospects of an imminent recession by explaining that even though the economy contracted in Q1, that household spending and business investment remained strong. The Chair also stuck to their guns regarding the rate path by suggesting that they think reaching neutral (currently estimated at 2.4%) before year-end would be appropriate and will assess the need for further hikes when they get there. There were however some less hawkish elements which saw a very classic ‘sell-the-fact’ reaction in major asset classes. The first one was on the Quantitative Tightening front where the bank decided on a phased approach for balance sheet reduction by starting the monthly caps at 30bn (treasuries) and 17.5bn ( MBS ) and pushing it up to the expected $60bn (treasuries) and $35bn ( MBS ) over a three-month timeframe. The second less hawkish element was comments from Chair Powell who took 75bsp hikes off the table saying the committee was not actively considering rate moves of that size. Interestingly, it seems STIR markets did not really believe the Fed as the probability of a 75bsp hike stood at >70% directly following the presser. All-in-all, the meeting provided a short-term ‘sell-the-fact’ opportunity, but also cemented the view that despite signs of a slowing economy and despite clear stress in financial markets, the Fed is sticking to their aggressive tightening for now. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. The USD usually appreciates when growth & inflation slows (disinflation) and depreciates when growth & inflation accelerates (reflation). Thus, current expectations of a cyclical slowdown are a positive driver for the Dollar. Incoming data will be watched in relation to the ‘Fed Put’ as there are many similarities between now and 4Q18, where the Fed were also tightened into a slowdown. If growth data slows and the Fed stays hawkish it’s a positive for the USD, however if the Fed pivots dovish that’ll be a negative driver for the USD. 3. CFTC Analysis Aggregate USD positioning remains close to 1 standard deviation above the mean, and close to prior tops where the USD topped out in previous cycles. That does not change the bullish outlook for the USD in the med-term but means that we would wait for pullbacks before initiating new longs with price at new cycle highs. 4. The Week Ahead In the week ahead, the main focus points for the USD will be Retail Sales & Industrial Production, Fed Speak and overall risk sentiment. For Retail Sales, consensus is looking for a stronger MM headline (0.8%) but a softer MM Core print (0.3%). For Industrial Production, forecasts expect a steady slowdown for both the MM (0.4%) and the YY print (2.0%). On a 6M annualized basis, the March data for Retail Sales and Industrial Production showed a surprise acceleration. Looking at the incoming expectations for the April data, that acceleration looked like a possible blip. If the deceleration trend continues, we would expect that to add fuel to the current growth concerns (which should be a positive for the USD, but at cycle and 20-year highs we won’t want to chase the USD higher on a miss but if we see a surprise beat that could ease up some of the recent market turmoil and could offer some short-term corrective price action in the USD). Fed speak will also be on the radar, where markets will be looking for any signals that Fed speakers are getting more worried about the effects of tightening financial conditions on the economy and broader markets, any less hawkish sounding comments could offer some reprieve for risk and push the USD lower. As always, we’ll also need to keep overall risk sentiment in mind, especially in the current cyclical environment and recent heightened volatility across major asset classes. Further risk off price action should be supportive for the USD, but as the USD is looking tactically stretched, we would prefer to look for some downside on any risk on catalysts.
by thunderpips
AUDUSD potential for drop! | 17th May 2022On the H4, with price moving below the ichimoku , we have a bearish bias that price will drop from our 1st resistance at 0.70378 where the pullback resistance and 50% Fibonacci retracement is to our 1st support at 0.68870 in line with the swing low support. Alternatively, price may break 1st resistance structure and head for 2nd resistance where the 61.8% Fibonacci retracement is. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Short
by FXCM