Talking Points:
- AUD/USD Fails to Benefit From Sticky China CPI- Australia Home Loans to Contract.
- USD/CAD Breakout Favors Topside Targets Ahead of Canada Employment Report.
- USDOLLAR Post NFP Rally Gathers Pace Ahead of Fed Stress Test.
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Chart - Created Using FXCM Marketscope 2.0
- Despite the stickiness in China’s Consumer Price Index (CPI), AUD/USD remains at risk for a further decline as the Relative Strength Index (RSI) fails to retain the bullish momentum from the previous month.
- A dip below 30 in the RSI may open up the downside targets, with a break below/close 0.7570 (50% expansion) to 0.7590 (100% expansion) exposing the 0.7500 handle (61.8% expansion).
- Despite the fresh monthly lows in AUD/USD, the DailyFX Speculative Sentiment Index (SSI) shows retail crowd has turned net-long on March 9, with the ratio currently standing at +1.03.
USD/CAD
- Close above 1.2630 will reinforce the approach to ‘buy dips’ in USD/CAD as it breaks out of the triangle/wedge formation, while the RSI clears the bearish momentum.
- Canada’s Employment report remains the key event risk for the loonie as the economy is expected to shed 5.0K jobs in February, while the jobless rate is projected to increase to 6.7% from 6.6% during the same period.
- Next key topside objective comes in around 1.2797 (January high) to 1.2800 (38.2% expansion).
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Read More:
COT-Australian and Canadian Dollars are the Most One Sided
EUR/USD, EUR/GBP Trends Firm; EUR/JPY, USD/CAD Test Breakout Levels
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 12028.23 | 12056.82 | 11992.52 | 0.35 | 127.52% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar post-NFP rally may accelerate as the RSI pushes deeper into overbought territory; need the oscillator to fall back below 70 to look for a near-term pullback.
- Will keep a close eye on the Fed’s Stress Test results, but may see USDOLLAR strength persist ahead of the Federal Open Market Committee (FOMC) meeting on March 18 as market participants raise bets for a mid-2015 rate hike.
- Close above 11,997 (100% expansion) to 12,001 (78.6% expansion) may generate a more meaningful run at 12,073 (100% expansion).
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| Release | GMT | Expected | Actual |
|---|---|---|---|
| NFIB Small Business Optimism (FEB) | 13:00 | 98.9 | 98.0 |
| Wholesale Inventories (MoM) (JAN) | 14:00 | -0.1% | |
| Wholesale Trade Sales (MoM) (JAN) | 14:00 | -0.5% | |
| JOLTS Job Openings (JAN) | 14:00 | 5050 |
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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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