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AUD/USD March Outlook Hinges on RBA Forward-Guidance, 4Q GDP Report

AUD/USD March Outlook Hinges on RBA Forward-Guidance, 4Q GDP Report

2015-03-02 17:35:00
David Song, Strategist
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Talking Points:

- AUD/USD Retail Crowd Turns Net-Long Ahead of RBA Interest Rate Decision.

- USD/CAD Continuation Pattern Remains in Focus Going Into BoC Policy Meeting.

- USDOLLAR Breaks Resistance- Topside Targets Remain on Radar Despite Mixed U.S. Data.

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AUD/USD

AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the rate cut from the People’s Bank of China (PBoC), AUD/USD struggles to hold its ground ahead of the Reserve Bank of Australia (RBA) meeting amid bets for another rate cut.
  • According to a Bloomberg News survey, 18 of the 29 economists polled forecast a 25bp rate cut, while overnight index swaps (OIS) show market participants are pricing a 59% chance for a further reduction .
  • Seeing increased volatility in the DailyFX Speculative Sentiment Index (SSI) as retail crowd turns net-long AUD/USD coming into March, with the ratio currently holding at +1.04.

USD/CAD

USD/CAD Daily Chart
  • USD/CAD may face a larger rebound going into the Bank of Canada’s (BoC) March 4 policy meeting as the pair preserves the continuation pattern & retains the near-term bearish RSI momentum; need a break of the triangle/wedge formation to favor fresh 2015 highs.
  • In light of recent comments from BoC Governor Stephen Poloz, the forward-guidance for monetary policy looks poised to heavily impact the Canadian dollar as it seems as though the central bank will keep the benchmark interest rate at 0.75% .
  • Waiting for a break/close above 1.2630 (23.6% expansion) or below 1.2345 (38.2% retracement) to dictate the near-term bias.

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Read More:

Price & Time: GBP/USD Mixed Signals

Australian Dollar Spec Short Position is Largest Since January 2014

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11855.42

11857.55

11826.05

0.26

58.92%

AUD/USD March Outlook Hinges on RBA Forward-Guidance, 4Q GDP ReportUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the slew of mixed data, outlook for Dow Jones-FXCM U.S. Dollar as it breaks above near-term resistance around 11,826 (61.8% expansion), while the RSI breakout continues to take shape.
  • May see waning expectations for a strong Non-Farm Payrolls (NFP) report as the ISM Manufacturing employment component continues to expand at a slower pace.
  • Will continue to favor the approach to ‘buy dips’ in the USDOLLAR especially on a close above 11,826, with the next region of interest coming in around 11,901 (78.6% expansion).

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Release

GMT

Expected

Actual

Personal Income (JAN)

13:30

0.4%

0.3%

Personal Spending (JAN)

13:30

-0.1%

-0.2%

Personal Consumption Expenditure Deflator (MoM) (JAN)

13:30

-0.5%

-0.5%

Personal Consumption Expenditure Deflator (YoY) (JAN)

13:30

0.2%

0.2%

Personal Consumption Expenditure Core (MoM) (JAN)

13:30

0.1%

0.1%

Personal Consumption Expenditure Core (MoM) (JAN)

13:30

1.3%

1.3%

Markit Purchasing Manager Index Manufacturing (FEB F)

14:45

54.3

52.9

ISM Manufacturing (FEB)

15:00

53.0

52.9

ISM Prices Paid (FEB)

15:00

37.5

35.0

Construction Spending (MoM) (JAN)

15:00

0.3%

-1.1%

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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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