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Australiandollar

GBPAUD: Potential Trend-Following Trade Explained 🇬🇧🇦🇺 GBPAUD is very bullish from the beginning of November. Setting a new high the pair retraced. The market is approaching a key level at the moment. To buy it with confirmation, watch a double bottom formation on 1H time frame. 1.844 - 1.85 is its neckline. Your trigger to buy is an hourly candle close above that. Then you buy aggressively or on a retest. First goal - 1.855 In case of a bearish breakout of a blue zone, the setup will be invalid. ❤️Please, support this idea with like and comment!❤️
Long
by VasilyTrader
12
AUD CAD - FUNDAMENTAL DRIVERSAUD FUNDAMENTAL BIAS: NEUTRAL 1. Monetary Policy The RBA’s Nov decision was hawkish in deed but dovish in word. The bank abandoned YCC as markets suspected as the bank didn’t defend their 3-year AGB target in the days leading into the meeting. They also abandoned their date-based forward guidance that said a lift off in rates would only be appropriate in 2024, by rather saying that conditions for a hike will take ‘some time’. However, Governor Lowe tried his best to sound as dovish as possible saying they are prepared to look through temporary spikes in inflation and that market pricing for a hike by 2022 is far away from where their outlook is and is highly unlikely. Even though not all market participants would agree, we think the outlook for growth, inflation, employment, and wages suggest a late 2022 hike could be possible, especially if the economy sees a solid bounce after covid. However, for now, the bank has stuck to an overall dovish tone. Given the importance of wages to their inflation outlook, keeping close track of incoming macro data for both will be important. 2. Economic & Health Developments There are 4 key drivers we are watching for Australia’s med-term outlook: The virus situation – with Q3’s contraction out of the way, markets are watching Q4 data looking for signs of a strong rebound. Any good news of reduced restrictions will be important. China – the slowdown in China is important as it’s Australia’s biggest export destination. Markets are watching to see whether the CCP or PBoC steps up with stimulus for the economy which will be seen as a positive for the AUD. Politically, the recent AUKUS defence pact could see retaliation from China against Australian goods. Commodities – Iron Ore, (24% of exports) continues its decline, and Coal prices (18% of exports) are down from YTD highs as well. This is negative for terms of trade and a risk to keep on the radar. Global growth – as a favourite risk proxy, and closely tied to China, the market’s current question about whether we see reflation in Q4 will be an important consideration for the AUD. 3. Global Risk Outlook As a high-beta currency, the AUD benefited from the market's improving risk outlook coming out of the pandemic as participants moved out of safe-havens. As a pro-cyclical currency, the AUD enjoyed upside alongside other cyclical assets supported by reflation and post-recession recovery best. If 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 recent short-term jitters are a timely reminder that risk sentiment is also a very important short-term driver. 4. CFTC Analysis Latest CFTC data showed a positioning change of -16920 with a net non-commercial position of - 80185. With the recent risk off rout in markets the AUD has once again shifted to the highest held net-short among large specs and the 3rd largest net-short for leveraged funds. As outsized net-shorts are usually seen as a contrarian indicator we want to be mindful of potential squeezes, which means the AUD is likely to be more sensitive to positive data than negative data. 5. The Week Ahead The main calendar event for the AUD in the week ahead is Tuesday’s upcoming RBA meeting where markets are largely expecting the bank to stick to their overall dovish tone, especially with the recent Omicron variant giving the bank enough reasons to stick to a patient and accommodative stance. Also keep in mind that recent incoming data has been fairly mixed with better-than-expected Q3 GDP at -1.9% versus expectations of -2.7% and Retail Sales topping estimates at 4.9% versus expectations of 2.5% BUT the latest jobs data disappointed with the Employment Change revealing a surprise contraction and Unemployment jumping to 5.6% from 4.6%. So, no reason for the RBA to change much for the upcoming meeting. CAD FUNDAMENTAL BIAS: WEAK BULLISH 1. Monetary Policy At their Oct meeting the BoC surprised by putting an early end to QE purchases and updated forward guidance to suggest an earlier lift off in rates by projecting economic slack to be absorbed by the middle quarters of 2022. The initial reaction was bullish as one would expect but the biggest risk to further upside for the CAD from here is the fact that a lot of these positives that was confirmed by the BoC has already been reflected in both the CAD and rates markets over the past few weeks. The CAD has seen a similar run to the upside back in 1Q21 with the BoC’s hawkish tilt, and similarly to that we feel current prices for rates and the CAD already reflect a great deal of the positives. Thus, even though the med-term outlook remains tilted to the upside for the CAD, there is the risk of seeing some unwind of the recent upside and is something to be mindful of when making any medterm allocations to the upside in the CAD. Last week’s Oct CPI data was a good example of this where the currency saw outsized downside on an uninspiring print. It’s not that CPI was bad, it was broadly in line with expectations, but with all the positives already priced it would have taken a really exceptionally strong print to keep the CAD’s upside momentum going. Another interesting driver for the months ahead, which could put a break on the BoC’s hiking path, is the close to 350% debt to GDP for Canada, which will make it very painful if rates start rising and for some like HSBC means the hike cycle could be very short. 2. Intermarket Analysis Considerations Oil’s massive post-covid recovery has been impressive, driven by three drivers: supply & demand (OPEC’s production cuts); improving global economic outlook and improving oil demand outlook, even though slightly pushed back by Delta concerns; rising inflation expectations. Even though further gains for Oil will arguably prove to be an uphill battle, the bias remains higher in the medterm as long as current supportive factors and drivers remains intact. Oil prices rallied after the US’s SPR release failed to spark any meaningful follow through, but last week’s covid scare was enough to see WTI drop over 12% in the session. Thus, this week’s upcoming OPEC meeting will be very important, as any announcement to pause planned productions cuts could spark some additional upside again. 3. Global Risk Outlook As a high-beta currency, the CAD benefited from the market's improving risk outlook coming out of the pandemic as participants moved out of safe-havens. As a pro-cyclical currency, the CAD enjoyed upside alongside other cyclical assets supported by reflation and post-recession recovery best. If expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the CAD in the med-term, but recent short-term jitters are a timely reminder that risk sentiment is also a very important short-term driver. 4. CFTC Analysis Latest CFTC data showed a positioning change of -10940 with a net non-commercial position of - 14075. A lot of the previous froth that was priced into the CAD just a few weeks ago has arguably been substantially reduced given the oil and Omicron related downside in risk assets over the past few sessions. That means buying opportunities is starting to look attractive again. 5. The Week Ahead The main calendar event for the CAD in the week ahead is Wednesday’s upcoming BoC meeting. At the meeting markets will be focused on whether the recent Omicron variant is of any major concern to the BoC and whether the bank is also growing more concerned about inflation like the Fed. With the overall economic outlook evolving broadly in line with the bank’s MPR, there is expectations that the bank could err on the hawkish side despite the Omicron concerns, which should be positive for the CAD. Attention will be placed on any comments regarding the output gap to see whether the bank sees the gap being closed earlier (possibly Q1) which would imply the bank is bringing forward hike projections.
by thunderpips
58
AUD USD - FUNDAMENTAL DRIVERSAUD FUNDAMENTAL BIAS: NEUTRAL 1. Monetary Policy The RBA’s Nov decision was hawkish in deed but dovish in word. The bank abandoned YCC as markets suspected as the bank didn’t defend their 3-year AGB target in the days leading into the meeting. They also abandoned their date-based forward guidance that said a lift off in rates would only be appropriate in 2024, by rather saying that conditions for a hike will take ‘some time’. However, Governor Lowe tried his best to sound as dovish as possible saying they are prepared to look through temporary spikes in inflation and that market pricing for a hike by 2022 is far away from where their outlook is and is highly unlikely. Even though not all market participants would agree, we think the outlook for growth, inflation, employment, and wages suggest a late 2022 hike could be possible, especially if the economy sees a solid bounce after covid. However, for now, the bank has stuck to an overall dovish tone. Given the importance of wages to their inflation outlook, keeping close track of incoming macro data for both will be important. 2. Economic & Health Developments There are 4 key drivers we are watching for Australia’s med-term outlook: The virus situation – with Q3’s contraction out of the way, markets are watching Q4 data looking for signs of a strong rebound. Any good news of reduced restrictions will be important. China – the slowdown in China is important as it’s Australia’s biggest export destination. Markets are watching to see whether the CCP or PBoC steps up with stimulus for the economy which will be seen as a positive for the AUD. Politically, the recent AUKUS defence pact could see retaliation from China against Australian goods. Commodities – Iron Ore, (24% of exports) continues its decline, and Coal prices (18% of exports) are down from YTD highs as well. This is negative for terms of trade and a risk to keep on the radar. Global growth – as a favourite risk proxy, and closely tied to China, the market’s current question about whether we see reflation in Q4 will be an important consideration for the AUD. 3. Global Risk Outlook As a high-beta currency, the AUD benefited from the market's improving risk outlook coming out of the pandemic as participants moved out of safe-havens. As a pro-cyclical currency, the AUD enjoyed upside alongside other cyclical assets supported by reflation and post-recession recovery best. If 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 recent short-term jitters are a timely reminder that risk sentiment is also a very important short-term driver. 4. CFTC Analysis Latest CFTC data showed a positioning change of -16920 with a net non-commercial position of -80185. With the recent risk off rout in markets the AUD has once again shifted to the highest held net-short among large specs and the 3rd largest net-short for leveraged funds. As outsized net-shorts are usually seen as a contrarian indicator we want to be mindful of potential squeezes, which means the AUD is likely to be more sensitive to positive data than negative data. 5. The Week Ahead The main calendar event for the AUD in the week ahead is Tuesday’s upcoming RBA meeting where markets are largely expecting the bank to stick to their overall dovish tone, especially with the recent Omicron variant giving the bank enough reasons to stick to a patient and accommodative stance. Also keep in mind that recent incoming data has been fairly mixed with better-than-expected Q3 GDP at -1.9% versus expectations of -2.7% and Retail Sales topping estimates at 4.9% versus expectations of 2.5% BUT the latest jobs data disappointed with the Employment Change revealing a surprise contraction and Unemployment jumping to 5.6% from 4.6%. So, no reason for the RBA to change much for the upcoming meeting. USD FUNDAMENTAL BIAS: WEAK BULLISH 1. Monetary Policy Another bank that was hawkish in deed by dovish in word in their Nov policy decision. The Fed announced tapering as expected, with purchases to be reduced at a pace of $10bln in Treasuries and $5bln in MBS per month and explained that a mid-2022 conclusion is their base case. There were also some hawkish language changes about inflation, with the bank dropping previous comments that called inflation transitory and replacing it with ‘expected to be transitory’, basically leaving some optionality to pivot more aggressively with tapering should price pressures stay sticky for too long. However, Fed Chair Powell did a really good job to put on a familiar dovish front by explaining that they see the current price pressures as driven by supply bottlenecks and still see those pressures cooling down in in 1H22, essentially giving themselves half a year of ‘tolerating’ the current inflation overshoot. Apart from that, Chair Powell explained that they would need to see maximum employment before their conditions for a lift off in rates would be met, and also explained that it’s likely that full employment could be reached by mid-2022. That endorsed the idea that a 2h22 hike is possible, but the Chair refused to provide any idea of what maximum employment would look like. On the rate front, Powell also explained that they think they can be patient with rates right now as they want more time to see in what shape the economy is in after the current covid shocks have calmed and after bottlenecks have eased. Overall, a policy meeting that was hawkish in their actions but dovish in their words. 2. Real Yields With a Q4 taper start and a faster 2022 taper on the table, further material downside in real yields looks like a struggle, and upside from here should be supportive for the USD. However, we are growing cautious of nominal yields right now as an aggressive Fed is not a positive for US10Y. But it also means there are risks that inflation expectations fall and place upside pressure on real yields. 3. Global Risk Outlook Based on the recent global economic data the expectations of a possible reflationary setup have developed as the Citi Economic Surprise Index continues to push higher. Even though this was seen as a possible negative for the USD, the recent hawkish tilt from the Fed (accompanied by the Omicron variant) has seen drastic curve flattening in anticipation that the Fed might be on its way to a policy mistake, and we could see a possible repeat scenario like we had back in 4Q18. If that happens, it should be an additional tailwind for the USD, which means for now a lot of hinges on the new variant. 4. CFTC Analysis Latest CFTC data showed a positioning change of +104 with a net non-commercial position of +35879. USD longs are looking stretched, and arguably have been looking stretched for the past few weeks. With large speculators at their highest level since 2019, there is some scope for some mean reversion lower in the USD. It’s also important to remember that a lot of the Fed hawkishness should now be reflected in the price. The biggest risk to upside is if the med-term growth and inflation outlook materially deteriorate from here. 5. The Week Ahead With Fed Chair Powell already giving the markets the prewarning of a faster tapering decision next week, there isn’t much that will change that with this week’s line up of economic data. The biggest even will no doubt be the CPI print on Friday, where markets are expecting a new cycle high for consumer prices. With so many expectations baked in for the Fed and with so many higher inflation projections doing the rounds, the highest tradable event for the USD this week would be a huge surprise miss as that will catch everyone by surprise and offer some decent downside in the short-term for the USD. Even though a beat in the CPI data should see further expectations of tighter policy, markets are so close to pricing in 3 hikes for next year again which means the upside on a beat might be more limited compared to the Nov CPI print.
by thunderpips
2
Today’s Notable Sentiment ShiftsAUD – The Australian dollar rallied to a one-week high on Tuesday, supported by the risk-on tone throughout the day’s sessions and an overall positive tone from the RBA at their December policy meeting. Scotiabank noted that “The Australian dollar is leading gains among the major currencies on the session following comments from the RBA indicating that it did not expect the Omicron variant to derail the recovery… That seems to be developing into a broader working theory for markets as the variant appears – at the moment – to be more infectious but less than the Delta variant.” CAD – The Canadian dollar strengthened to a two-week high against its US counterpart on Tuesday as concern about the economic threat of the Omicron coronavirus variant receded, and data showed Canada posted its biggest trade surplus in nearly a decade. Chief analyst at Forexlive, Adam Button, argues that “the market is taking an optimistic view of the severity of the Omicron variant and the Canadian dollar is benefiting from that… There are signs that central banks aren’t overly concerned about Omicron, and that may translate into a hawkish Bank of Canada.”
by thunderpips
2
AUDCHF: Key Level & Your Trading Plan 🇦🇺🇨🇭 Hey traders, Like many swiss pairs, AUDCHF is on a key level at the moment. Depending on the reaction of the price to that structure we will either see a pullback or a strong bearish wave. Your confirmation to buy will be a bullish breakout of a falling wedge pattern on 4h. You need at least a 4H candle close above to validate the breakout. Then a pullback to 0.6595 will be expected. In case of a bearish breakout of a blue zone on a daily, a bearish continuation will be expected. ❤️Please, support this idea with like and comment!❤️
Long
by VasilyTrader
7
AUDUSD, is now on a monthly support zoneFor 33 days AUDUSD has been on a downtrend and now it reached a strong monthly support zone, the conversion line and base line in ichimoku are starting to go horizontally which kind of signals the end of the downtrend, also the blue line in stoch RSI cut the red line upwards. Seems like we can go long on AUDUSD for a couple of days. Guys I'll be happy to have your comments about this and learn from you as well. Have a good trading!
Long
by UnknownUnicorn5926699
7
AUDCAD: Bearish Accumulation & Potential Bearish Wave 🇦🇺 🇨🇦 AUDCAD is trading in a bearish trend on a daily. However, since August the pair stopped falling and the price formed a classic bearish accumulation pattern: Setting equal lows and lower highs, the price is stuck on 0.909 - 0.912 horizontal demand zone. To catch the next bearish swing, wait for a bearish breakout of the underlined blue support. We need at least daily candle close below to confirm a breakout. Next support will be 0.895 ❤️Please, support this idea with like and comment!❤️
Short
by VasilyTrader
15
AUDUSD Long off Daily ChartAUDUSD looking great for a long setup. Not the best risk:reward ratio on this one, but a great setup. Let's take a look. First, let's start with the AUDUSD chart on the daily timeframe. Price has stayed in this relatively small channel for the past couple of months quite nicely. We've taken a bounce near the bottom, with a strong bullish candle. Furthermore, there is a mild divergence in the RSI. Although AUDUSD is making higher low, the RSI actually reached 35.93 at this low vs 36.26 at the previous (lower) low. Not a strong divergence, but there nonetheless. On the AUD basket I use, we can see a similar trendline supporting some AUD strength. This basket is the AUD compared to the other major currencies, and we can see an overall period of strength coming off this supporting trendline. Finally, we have the USD basket, similar to the DXY. The 1.106-1.114 zone has served as a nice resistance zone for the past couple of months. In fact, we may have a bit of a head and shoulders forming here. The USD has potential for weakness here. It has not shown clear signs of a downward move, but if we wait too long for this trade, we may not find a solid risk:reward ratio. RISK MANAGEMENT NOTE: If you know my trading system, you know I do not over-expose on trades. I risk 2% per trade, but if I have two entries on one currency (such as AUD), I will enter with 1% risk on each of the two. I am already short EURAUD off the 15 minute chart since last night (14/11/21). I have legged in several times, and my stop is well clear of breakeven. Thus, I took a full 2% risk on this trade. ENTRY: 0.73504 STOP: 0.726 (below the last swing low on the daily chart) TP: 0.753 (right at the previous swing high on the daily chart) This leaves us with a roughly 1:1.8 risk:reward ratio.
Long
by MRobertsTrading