News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • The Australian Dollar may extend its slide lower despite the planned easing of Covid-19 restrictions, as the market continues to price in an RBA rate cut on October 6. Get your #currencies update from @DanielGMoss here: https://t.co/HJpngnerzY https://t.co/g6X8ABQDwY
  • The Indian Rupee may be at risk to the US Dollar as USD/INR attempts to refocus to the upside. This is as the Nifty 50, India’s benchmark stock index, could fall further. Get your USD/INR market update here:https://t.co/ed4QR7QQOn https://t.co/gDWYNtm2UY
  • Technical indicators are chart analysis tools that can help traders better understand and act on price movement. Learn more about the importance of technical analysis here: https://t.co/NpC1D8y4Aa https://t.co/Q7TcbrYXjl
  • #Gold prices have plunged nearly 11% off the record highs with a breakout risking further losses. Here are technical trade levels that matter on the XAU/USD weekly chart. Get your #metals update from @MBForex here: https://t.co/7p3jPx6nQd https://t.co/yxymjCHti6
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true.Simplify your trading strategy with these four indicators here:https://t.co/A4dqGMPylo https://t.co/yZzArpGs2h
  • GBP turbulence persists as investors eye the next round of EU-UK Brexit negotiations. Cautious optimism signals a deal is near. Get your #currencies update from @JMcQueenFX here: https://t.co/WjU4oYpmf7 https://t.co/VcNnCjm0B2
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/AiLoS7DrEQ
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/3Wked6GBOp https://t.co/HicBmGrokK
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here:https://t.co/7kPzAoNoLG https://t.co/5lbyBJeeA7
  • Entry orders are a valuable tool in forex trading. Traders can strategize to come up with a great trading plan, but if they can’t execute that plan effectively, all their hard work might as well be thrown out. Learn how to place entry orders here: https://t.co/lAFyv1gM0P https://t.co/ubLimoYAcr
USD Losses to Be Short-Lived, AUD Trend at Risk on Slower Inflation

USD Losses to Be Short-Lived, AUD Trend at Risk on Slower Inflation

2012-08-15 14:55:00
David Song, Strategist
Share:

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10047.17

10062.3

10033.93

0.08

52.86%

USD_Losses_to_Be_Short-Lived_AUD_Trend_at_Risk_on_Slower_Inflation_body_ScreenShot090.png, USD Losses to Be Short-Lived, AUD Trend at Risk on Slower Inflation

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) remains 0.07 percent higher from the open after moving 53 percent of its average true range, and the recent weakness in the greenback may be short-lived as the rebound in the 30-minute relative strength index gathers pace. As the index continues to mark a series of higher highs paired with higher lows, we should see the upward trending channel from earlier this month continue to take shape, and we will maintain our bullish forecast for the greenback as it builds a base above the monthly low (9,980). In turn, we should see the dollar continue to retrace the decline from the previous month, and the bullish sentiment surrounding the USD may pick up over the near-term as the Federal Reserve moves away from its easing cycle.

USD_Losses_to_Be_Short-Lived_AUD_Trend_at_Risk_on_Slower_Inflation_body_ScreenShot091.png, USD Losses to Be Short-Lived, AUD Trend at Risk on Slower Inflation

Although the slew of dismal developments coming out of the world’s largest economy dampened the outlook for growth and inflation, we expect the FOMC to maintain its current policy throughout the remainder of the year as policy makers continue to see a limited risk for a double-dip recession. Indeed, Goldman Sachs scaled back their bet for another round of quantitative easing at the September 13 meeting, but saw scope for QE3 towards the end of the year amid the ‘sluggish’ recovery. In contrast, we do not expected to see additional asset purchase from the FOMC as economic activity gradually gathers pace, and Fed Chairman Ben Bernanke may continue to soften his dovish tone for monetary policy amid the stickiness in underlying inflation. Nevertheless, as the USDOLLAR continues to come off of trendline support, we may see the index make a run at the 78.6 percent Fibonacci retracement around the 10,118 figure, but we would like to see a close above the 20-Day SMA (10,046) to see additional dollar strength over the remainder of the week.

USD_Losses_to_Be_Short-Lived_AUD_Trend_at_Risk_on_Slower_Inflation_body_ScreenShot092.png, USD Losses to Be Short-Lived, AUD Trend at Risk on Slower Inflation

The greenback strengthened against two of the four components, led by the 0.39 percent decline in the Euro, while the Australian dollar advanced 0.08 percent amid the pickup in market sentiment. However, we may see the high-yielding currency come under pressure should the economic docket for the region show easing inflation expectations paired with weaker wage growth, and we may see the AUDUSD fail to maintain the upward trending channel from June as market participants see the Reserve Bank of Australia carrying out its easing cycle over the coming months. According to Credit Suisse overnight index swaps, market participants still see borrowing costs falling by at least 50bp over the next 12-months, and the interest rate outlook continues to instill a bearish outlook for the aussie-dollar as the pair appears to be carving out a lower top around the 1.0600 figure.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, send an e-mail with subject line "Distribution List" to dsong@dailyfx.com.

Join us to discuss the outlook for the major currencies on the DailyFX Forums

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES