Talking Points:
- AUD/USD Breaks Out, Threatens Bearish Momentum Ahead of RBA March Meeting.
- USD/CAD Holds Monthly Opening Range as BoC Governor Poloz Talks Down Rate-Cut Bets.
- USDOLLAR Risks Larger Correction as Fed Chair Janet Yellen Remains in No Rush to Normalize.
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Chart - Created Using FXCM Marketscope 2.0
- AUD/USD breaking out following the positive data prints out of Asia-Pacific; will keep a close eye on former support around 0.8020 (38.2% expansion) to 0.8030 (61.8% retracement) as the Relative Strength Index (RSI) threatens the long-dating bearish momentum.
- Despite the surprise rate cut, seeing narrowing expectations for another move at the Reserve Bank of Australia’s (RBA) March 3 meeting as Governor Glenn Stevens adopts a more neutral tone.
- Nevertheless, DailyFX Speculative Sentiment Index (SSI) shows retail crowd turned net-short AUD/USD yesterday, with the ratio currently holding at -1.44.
USD/CAD
- USD/CAD may continue to consolidate and retail the opening monthly range as Bank of Canada (BoC) Governor Stephen Poloz argues that the surprise rate cut was an ‘insurance’ move; looks as though the central bank will retain its current policy at the March 4 meeting.
- With that said, may need a larger fundamental catalyst to spur a break of the February range; keeping a close eye on the RSI as it retains the bearish momentum from earlier this month.
- Long-term outlook remains bullish amid the policy divergence, but need a close above 1.2630 (23.6% expansion) to favor another run at 1.2800 (38.2% expansion).
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Read More:
Price & Time: The March Inflection Point in Crude
GBPNZD Responds to Key Support- Scalps Target Resistance at 2.0550
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11756.16 | 11779.21 | 11740.32 | -0.20 | 68.87% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar remains under pressure as Fed Chair Janet Yellen appears to be in no rush to normalize monetary policy; close below 11,774 (50% expansion) to favor downside targets as the bearish RSI momentum continues to take shape.
- U.S. Consumer Price Index (CPI) may also dampen interest rate expectations as the headline reading is expected to show the first annualized contraction since July 2009..
- Downside region of interest comes in around 11,721 (38.2%), which also lines up with channel support and the 50-Day SMA (11,705).
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| Release | GMT | Expected | Actual |
|---|---|---|---|
| MBA Mortgage Applications (FEB 20) | 13:00 | -- | -3.5% |
| MBA Mortgage Foreclosures (4Q) | 15:00 | -- | 2.27% |
| MBA Mortgage Delinquencies (4Q) | 15:00 | -- | 5.68% |
| New Home Sales (JAN) | 15:00 | 470K | 481K |
| New Home Sales (MoM) (JAN) | 15:00 | -2.3% | -0.2% |
| Fed Chair Janet Yellen Delivers Humphrey-Hawkins Testimony | 15:00 |
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--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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