Talking Points:
- AUD/USD Rebound Vulnerable to Dismal China CPI.
- USD/CAD Holds Above Former Resistance Despite Strong Canada Employment.
- USDOLLAR Threatens Bullish RSI Momentum as NFP Report Disappoints.
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AUD/USD
Chart - Created Using FXCM Marketscope 2.0
- Long-term outlook for AUD/USD remains bearish as the Relative Strength Index (RSI) preserves the bearish momentum from earlier this year; will watch former support around 0.8670 (100% expansion) to 0.8710 (78.6% retracement) for new resistance, especially as the Reserve Bank of Australia (RBA) continues to embark on verbal intervention.
- Market participants see China’s Consumer Price Index (CPI) holding at an annualized 1.6% in October, but a dismal print may generate fresh-lows in AUD/USD amid the weakening outlook for global growth.
- Nevertheless, retail-crowd remains long AUD/USD since August, with the DailyFX Speculative Sentiment Index (SSI) currently standing at +1.82.
USD/CAD
- Looks as though USD/CAD will continue to mark a string of failed attempts to close above 1.1430 (161.8% expansion) as Canada Employment expands another 43.1K in October following the 74.1K expansion the month prior.
- Despite the better-than-expected print, may see Bank of Canada (BoC) continue to endorse a neutral policy stance as Governor Stephen Poloz remains in no rush to further normalize monetary policy.
- With that said, USD/CAD may face a larger pullback in the days ahead, but will look for a higher-low as the long-term bullish structures remain in play.
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Dollar Strength Seemingly Unscathed by Mixed Nonfarm Payrolls
USDOLLAR(Ticker: USDollar):
|
Index |
Last |
High |
Low |
Daily Change (%) |
Daily Range (% of ATR) |
|
DJ-FXCM Dollar Index |
11253.82 |
11302.86 |
11248.68 |
-0.34 |
83.79% |
Chart - Created Using FXCM Marketscope 2.0
- The near-term advance in the Dow Jones-FXCM U.S. Dollar Index appears to be getting exhausted as the Non-Farm Payrolls (NFP) report shows smaller-than-expected uptick in employment, while wage growth larger remains subdued.
- The lack of heightening price pressures may further delay the Fed’s normalization cycle, especially as the 2015 rotation schedule for the Federal Open Market Committee (FOMC) entails more central bank doves.
- After taking a near-term retracement from the October low, the first downside region of interest will be 11,211 (23.6% retracement) to 11,216 (38.2% expansion) as the RSI struggles to retain the bullish momentum carried over from the previous month.
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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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