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Australiandollar

AUD/JPY, Has it Topped Again?The Australian Dollar might have topped against the Yen. AUD/JPY turned lower in early September after negative RSI divergence showed that upside momentum was fading. Prices left behind a key zone of resistance between 81.657 and 82.028 . This also followed a break under an Ascending Channel . A bearish ' Death Cross ' may emerge on the 4-hour chart between the 20- and 50-period Simple Moving Averages (SMAs). Key support zone to clear could be the 79.820 - 80.140 inflection range, where beyond that exposes August lows (77.880 - 78.129). Pushing above 82.028, with confirmation, may overturn these downside technical warnings . FX_IDC:AUDJPY
by QM_Dubrovsky
GBP AUD - FUNDAMENTAL DRIVERSGBP FUNDAMENTAL BIAS: BULLISH 1. Virus Situation The successful vaccination program has allowed the UK to open up faster and sooner than peers & provides a favourable environment for GBP. 2. The Monetary Policy outlook for the BOE The BoE meeting on 5 August provided a flurry of comments with something for both the doves and the hawks. The QE vote split was more dovish (7-1) with BoE’s Saunders the only dissenter, while upgrades to growth and inflation were positive, even though price pressures is still views as mostly ‘transitory’. Reasons for a patient stance was the uncertainty surrounding the virus at the time as well as waiting for the end of the furlough scheme to assess the impact on the labour market. Thus, the bank will be in wait-and-see mode until at least Oct or Nov. The other important change was the reduction in the bank’s QT threshold from 1.5% to 0.5%, with the bank looking at a bank rate of 0.5% to stop reinvesting maturing assets and a rate of 1.0% to start selling assets and reducing its balance sheet . Market participants are mixed about what this means (it’s positive since the bank has enough confidence to lower the balance sheet even while rates are low, but on the other hand it means rates can stay lower for longer which is a negative). However, all in all the most important take away was the continued optimism about the economy despite virus uncertainty and comments that modest tightening will be required. 3. The country’s economic developments Hopes of a fast economic recovery has seen the BOE and IMF upgrade GDP projections for the UK which has widened the growth differentials between other major economies and has been a positive input for GBP. However, a lot of these positives are arguably already reflected in the price which means a continuation of the recent misses in economic data could make further solid gains more difficult for the GBP to maintain. The other factor to watch is potential tightening of the fiscal taps by the government with proposals of higher National Insurance taxes to fund the government’s planned social care overhaul. For now, this doesn’t change the med-term outlook, but if the proposed tax hikes are enough to see expectations of robust consumer spending being paired back that could be a strong med-term headwind for the Pound. 4. Political Developments Remember Brexit? Yeah, me neither, but recent rhetoric between the UK and EU hasn’t gone in a very positive direction with the UK side explaining to the EU that they are looking at all the options on the table (including article 16) if they can’t reach an agreement with the EU regarding the Northern Ireland Protocol. For now, Sterling has looked through all the rigmarole and should continue to do so as long as the cans are kicked down the road. 5. CFTC Analysis Latest CFTC data for the GBP (updated until 31 August) showed a positioning change of +1845 with a net non-commercial position of -14900. The recent flush lower in positioning means current levels for GBP still look attractive for med-term buyers. There are med-term risks on the horizon as we’ve explained above but we maintain med-term longs from 1.3700 and will look to add more incremental longs in the weeks ahead. AUD FUNDAMENTAL BIAS: NEUTRAL 1. The country’s economic and health developments There are three key factors that created recent uncertainty for Australia’s med-term outlook: The virus situation where most recent data have shown further increases in case numbers and no sign of restrictions lifting anytime soon. A Q3 GDP contraction is priced in and has pushed back tapering & hike expectations. Then there is China, where we’re watching the health of the economy after the slowdown has been bigger and faster than most had anticipated, also causing the PBoC to do a 0.5% RRR cut a few weeks ago. China is Australia’s biggest trade partner and the 2nd largest contributor to global GDP so it’s an important driver for AUD to keep on the radar. Politically, the risk of further tariffs and bans on Australian goods is also something to keep on the radar. Iron Ore is Australia’s biggest export (24%), and the almost 40% drop from YTD highs in the past few weeks is expected to negatively impact the country’s terms of trade. It’s true that the 19% rise in Coal prices (18% of exports) from the start of August has taken some of the sting out of the Iron Ore drop, but it’s not been enough to avoid a negative impact on overall terms of trade. 2. The Monetary Policy outlook for the RBA The RBA surprised markets with their previous meeting by not announcing a delay to their September tapering as most participants had expected. They kept their planned QE tapering of A$1bln in place for Sep until mid-Nov where they still plan to decide the future of their QE program. The meeting minutes pressured AUD this week as it showed that the board considered the case for delaying the tapering. This was interesting because the bank seemed content about the economic outlook during their statement. With the minutes showing that a possible delay in tapering was on the cards, attention turns to this week’s upcoming meeting where consensus expects the bank to announce a delay in their planned September tapering due to the escalation in the country’s virus situation. 3. Developments surrounding the global risk outlook. As a high-beta currency, AUD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the AUD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the AUD in the med-term, but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 4. CFTC Analysis Latest CFTC data for the AUD (updated until 31 August) showed a positioning change of -3478 with a net non-commercial position of -60078. The AUD’s outperformance this week was mostly due to stretched net-shorts getting an overdue squeeze higher. The positive data and risk sentiment helped, but the moves were typical squeeze behaviour. Keep in mind that the bulk of the AUD’s upside took place from Wednesday, so the most recent CFTC data won’t reflect that. Thus expect a sizeable reduction in net-shorts with next week’s data.
by thunderpips
3
AUDNZD: Have You Seen This Pattern? 🇦🇺🇳🇿 AUDNZD is retesting a broken daily structure. Trading in a bearish trend I am looking for a trend-following trade. The price formed a double top pattern on hourly time frame. 1.0415 - 1.0417 is its neckline. Wait for its hourly violation (hourly candle close below), then short aggressively or on a retest. Goals will be 1.038 / 1.035 Remember, in case of a violation of an upper yellow resistance to the upside, the setup will be invalid. ❤️Please, support this idea with a like and comment!❤️
Short
by VasilyTrader
19
AUDNZD: Important Breakout & Bearish Continuation 🇦🇺🇳🇿 Hey traders, AUDNZD broke below 1.041 key daily structure support. After a long-lasting bearish accumulation on that and the formation of a descending triangle, the price managed to violate its neckline and drop lower. Now we will expect a bearish continuation within a falling parallel channel. Consider its boundaries for trend-following/counter-trend entries. Good luck! ❤️Please, support this idea with a like and comment!❤️
Short
by VasilyTrader
15
GBPAUD: Key Level & Confirmation 🇬🇧🇦🇺 Hey traders, GBPAUD is approaching a major daily demand area. 1.875 - 1.8785 is our potential reversal zone. To catch a pullback from that structure, I need a bullish breakout of a falling wedge pattern on 4H. (at least 4H candle close above its resistance) Then I will buy with the following targets: 1.888 1.895 Remember, in case of a bearish breakout of the underlined yellow zone the setup will be invalid and further decline will be expected. ❤️Please, support this idea with a like and comment!❤️
Long
by VasilyTrader
9
GBP AUD - FUNDAMENTAL DRIVERSGBP FUNDAMENTAL BIAS: BULLISH 1. Virus Situation The successful vaccination program has allowed the UK to open up faster and sooner than peers & provides a favourable environment for GBP. 2. The Monetary Policy outlook for the BOE The BoE meeting on 5 August provided a flurry of comments with something for the doves and the hawks. The QE vote split was a tad more dovish with a 7-1 split with BoE’s Saunders to only dissenter, while the upgrades to growth and inflation were positive but with similar comments of ‘transitory’ price pressures muting any real market impact . The reasons for the bank to remain patient right now in terms of policy normalization is the current uncertainty surrounding the virus and of course the bank waiting for the end of the furlough scheme to assess the impact on the labour market. That means, that the bank would arguably be in wait-and-see mode until at least October or November. The other change that was important to take note of was the reduction in the bank’s QT threshold from 1.5% to 0.5%, with the bank looking at a bank rate of 0.5% to stop reinvesting maturing assets and a rate of 1.0% to start selling assets and reducing the balance sheet . Market participants are mixed about what this means for the bank as on the one end it’s positive since the bank has enough confidence to lower the balance sheet even while rates are low, but on the other end it also means that rates can stay lower for much longer which is more negative. Arguably the most important comments to take away was their continued optimism about the economy despite the uncertainty as well as their comments that modest tightening will be required. 3. The country’s economic developments Hopes of a fast economic recovery has seen the BOE and IMF upgrade GDP projections for the UK which has widened the growth differentials between other major economies by quite a bit. As the economy continues to rebound this should continue to be supportive for GBP as long as the data reflects that. Something to be mindful of is that a lot of these positives are arguably reflected in the price. Thus, if we start to see some disappointing data, that could mean that decent upside would be more difficult for Sterling to maintain. 4. Political Developments Remember Brexit? Yeah, me neither, but this week the rhetoric between the two sides continued to go in the wrong direction with the UK side explaining to the EU that they are looking at all the options on the table (include article 16) if they can’t reach an agreement with the EU regarding the Northern Ireland Protocol. For now, Sterling has looked through all the rigmarole and should continue to do so as long as the cans are kicked down the road. 5. CFTC Analysis Latest CFTC data for the GBP (updated until 17 August) showed a positioning change of -21396 with a net non-commercial position of -16745. The big push lower in positioning means current levels for GBP still look attractive for med-term buyers, especially with the positioning seeing quite a flush lower in the past few weeks. The miss in both retail sales and inflation last week did see some additional pain on the Pound two weeks ago, and this week’s flash PMI’s didn’t help either, but med-term outlook remains bullish and thus positioning attractive at these levels. AUD FUNDAMENTAL BIAS: NEUTRAL 1. The country’s economic and health developments The key factors that have created uncertainty for the med-term outlook for the AUD are The virus situation rising cases prompted new lockdowns with the military being deployed in parts of the country to help reinforce lockdown rules. A Q3 contraction is largely expected and pushed back rate hike expectations to 2023. On the China front, we’re watching Iron Ore prices that have fell over 30% from their 2021 highs with China’s economic slowdown and attempts at reducing emissions by raising steel product tariffs touted as main drivers. As Iron Ore is almost 24% of Australia’s exports and over 80% of that goes to China it’s an important one to keep track of as further downside should negatively impact Australia’s terms of trade. Staying with China, the health of the Chinese economy is still in focus after the PBoC’s recent 0.5% RRR cut. The easing has raised concerns about a bigger-than-expected slowdown and as Australia’s biggest trade partner and the second largest contributor to global GDP it’s an important driver to keep on the radar. Politically, the risk of further tariffs and bans on Australian goods is also something to keep on the radar. 2. The Monetary Policy outlook for the RBA The RBA surprised markets with their previous meeting by not announcing a delay to their September tapering as most participants had expected. They kept their planned QE tapering of A$1bln in place for Sep until mid-Nov where they still plan to decide the future of their QE program. The meeting minutes pressured AUD this week as it showed that the board considered the case for delaying the tapering This was interesting because the bank seemed very content about the economic outlook during their statement. But the minutes showed that a possible delay was on the cards, and if they were already concerned at the meeting the recent escalation should provide even more angst and could still see a delay in the tapering taking place. 3. Developments surrounding the global risk outlook. As a high-beta currency, AUD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the AUD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the AUD in the med-term, but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 4. CFTC Analysis Latest CFTC data for the AUD (updated until 24 August) showed a positioning change of -6233 with a net non-commercial position of -56600. Another big reduction in net-shorts for the AUD, and even though our bias for the AUD remains neutral, the speed of the recent build up in net- short positioning is still looking stretched at 3.02 deviation on a 1-year lookback and a 2.10 deviation on a 6-month lookback, thus watch out for mean reversion squeezes higher on good news.
by thunderpips