Talking Points:
- AUD/USD Struggles Following Record Trade Deficit; Retail FX Crowd Remains Net-Long.
- USD/CAD Narrow Range in Focus Ahead of Canada Employment Report.
- USDOLLAR Outlook Hinges on NFP Report- IMF Favors Fed Rate Hike in 2016.
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Chart - Created Using FXCM Marketscope 2.0
- Lack of momentum to push back above former support around 0.7820 (38.2% retracement) risks a further decline in AUD/USD as the dismal data prints coming out of the Australian economy raises the Reserve Bank of Australia’s (RBA) scope to further embark on its easing cycle.
- Will keep a close eye on key support around 0.7570 (50% expansion) to 0.7590 (100% expansion), but a closing price below the Fibonacci overlap may open the door for fresh 2015 lows in the exchange following the failed run at the January high (0.8294).
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long AUD/USD, but seeing the ratio approach extremes as the ratio climbs to +2.38.
USD/CAD
- Canadian dollar may face increased volatility over the next 24-hours of trade as the Canadian Employment report is expected to show a 10.0K rebound in job growth, while the Organization of the Petroleum Exporting Countries (OPEC) holds its semi-annual meeting on June 5.
- Ongoing series of positive developments coming out of the economy may encourage the Bank of Canada (BoC) to adopt a more upbeat tone, but seems as though the bar remains high to further normalize monetary policy as Governor Stephen Poloz endorses a wait-and-see approach.
- Need a break/close above 1.2545 (23.6% retracement) or below 1.2370 (38.2% retracement) to favor a more directional bias for USD/CAD.
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Price & Time: USD/JPY - Pause or Paws?
USDOLLAR Flirts with Breakdown- Shorts Favored Sub 11960 Ahead of NFPs
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11924.71 | 11931.47 | 11863.05 | 0.26 | 96.96% |
Chart - Created Using FXCM Marketscope 2.0
- Despite the rebound in the Dow Jones-FXCM U.S. Dollar, the technical outlook highlights the risk for a further decline as it continues to carve a series of lower highs & lows after failing to retain the bullish formation carried over from the previous month.
- Market forecast currently calls for a 225K rise in U.S. Non-Farm Payrolls (NFP), but will keep a close eye on Average Hourly Earnings especially as the Fed struggles to spur price growth, while the International Monetary Fund (IMF) argues for a rate hike in the first-half of 2016.
- Failure to push back above 11,898 (50% retracement) to 11,901 (78.6% expansion) continues to put 11,826 (61.8% expansion) to 11,843 (38.2 retracement) on the radar.
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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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