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USDOLLAR Holds Range Amid Debt Limit- AUD Sold Ahead of RBA

USDOLLAR Holds Range Amid Debt Limit- AUD Sold Ahead of RBA

David Song, Strategist

Talking Points:

- USDOLLAR Retains Sideways Trend Amid Budget Talks

- Bearish AUDUSD Setup Continues to Take Shape

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10536.37

10575.11

10530.1

-0.28

83.89%

USDOLLAR Daily

Forex_USDOLLAR_Holds_Range_Amid_Debt_Limit-_AUD_Sold_Ahead_of_RBA_body_Picture_3.png, USDOLLAR Holds Range Amid Debt Limit- AUD Sold Ahead of RBA

Chart - Created Using FXCM Marketscope 2.0

  • 10,530 to 10,565 Range in Focus Going into October, U.S. Debt Ceiling
  • Interim Resistance: 10,582 (23.6 expansion) to 10,589 (50.0 retracement)
  • Soft Support: 10,469 (June low)
  • Relative Strength Index Creeping Higher; Bullish Divergence?

Release

GMT

Expected

Actual

Fed's Eric Rosengren Speaks on U.S. Economy

12:30

Personal Income (AUG)

12:30

0.4%

0.4%

Personal Spending (AUG)

12:30

0.3%

0.3%

Personal Consumption Expenditure Deflator (MoM) (AUG)

12:30

0.1%

0.1%

Personal Consumption Expenditure Deflator (YoY) (AUG)

12:30

1.2%

1.2%

Personal Consumption Expenditure Core (MoM) (AUG)

12:30

0.1%

0.2%

Personal Consumption Expenditure Core (YoY) (AUG)

12:30

1.3%

1.2%

U. of Michigan Confidence (SEP F)

13:55

78.0

77.5

Fed's Charles Evans Discusses U.S. Economy, Monetary Policy

14:15

Fed's William Dudley Speaks on U.S. Economy

18:00

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) retained the range-bound price action from earlier this week despite the mixed batch of data coming out of the world’s largest economy, and the greenback may continue to track sideways going into October amid the threat of a government shutdown.

In light of the limited reaction to the data prints from earlier this week, it seems as though market participants are largely waiting for on a near-term resolution to the debt limit, but we’ve been here before and the threat of a U.S. default is likely to be short-lived as a bill that would keep the government running for a few more month makes its way through Congress.

Nevertheless, we have more Fed officials scheduled to speak ahead of the highly anticipated Non-Farm Payrolls report, including Chairman Ben Bernanke, and the dollar may face increased volatility in the days ahead as Kansas City Fed President Esther George, the lone dissenter on the FOMC, argues that the committee should start with a $15B taper.

Forex_USDOLLAR_Holds_Range_Amid_Debt_Limit-_AUD_Sold_Ahead_of_RBA_body_ScreenShot158.png, USDOLLAR Holds Range Amid Debt Limit- AUD Sold Ahead of RBA

AUDUSD Daily

Forex_USDOLLAR_Holds_Range_Amid_Debt_Limit-_AUD_Sold_Ahead_of_RBA_body_Picture_1.png, USDOLLAR Holds Range Amid Debt Limit- AUD Sold Ahead of RBA
  • Downward Trend Taking Shape; Lower High Carved in September
  • Watch Negative Slope on Relative Strength Index
  • Interim Resistance: 0.9500 (38.2 retracement) to 0.9515 (1.618 expansion)
  • Interim Support: 0.9290 Pivot to 0.9270 (100.0 expansion)

Three of the four components rallied against the greenback, led by the Japanese Yen, while the Australian dollar bucked the trend as market sentiment waned.

Indeed, the near-term outlook for the AUDUSD is looking increasingly bearish as a downward trend appears to be taking shape, and the pair may face a more pronounced decline next week should the Reserve Bank of Australia (RBA) interest rate decision heighten bets for another rate cut.

As a result, we will keep a close eye on the downside targets, and we may see the RBA make further attempts to talk down its local currency to further assist in the rebalancing of the real economy.

--- 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, please follow this link.

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