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AUD/USD Retail Crowd Remains Net-Long at Key Support

AUD/USD Retail Crowd Remains Net-Long at Key Support

David Song, Strategist

Talking Points:

- AUD/USD Sits at Key Support- Retail Crowd Remains Net-Long.

- USD/CAD Preserves Near-Term Range Despite Strong Canada Building Permits, Housing Starts.

- USDOLLAR Outlook Hinges on NFP Report- IMF Favors Fed Rate Hike in 2016.

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AUD/USD

AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • AUD/USD continues to hold above key support around 0.7570 (50% expansion) to 0.7590 (100% expansion); still waiting for a close below the region to raise the risk for fresh 2015 lows in the exchange rate.
  • Despite the expansion in China’s Trade Balance, the 18.1% decline in imports may become a growing concern for the Reserve Bank of Australia (RBA) amid ongoing weakness in non-mining business investments.
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long AUD/USD since May 15, with the ratio still holding near extremes as it currently stands at +2.60.

USD/CAD

USD/CAD Daily Chart
  • Will keep a close eye on the near-term range in USD/CAD as the better-than-expected data prints coming out of Canada fails to spur a break of support around 1.2360 (38.2% retracement) to 1.2380 (50% retracement).
  • Seems as though we need a more material shift in the Bank of Canada’s (BoC) forward-guidance for monetary policy to favor a bullish outlook for the loonie as Governor Stephen Poloz continues to endorse a wait-and-see approach.
  • The failed break of the monthly opening range may lead to a further consolidation in the exchange rate; need a break/close above 1.2540-50 (23.6% retracement) to favor a resumption of the long-term bullish trend.

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11954.3212004.0711948.56-0.3079.37%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar continues to give back the advance following the 280K expansion in U.S. Non-Farm Payrolls (NFP); remains at risk for a further consolidation ahead of the Fed’s June 17 interest rate decision following the failed test of 12,049 (78.6% retracement).
  • Uptick in Labor Participation paired with stronger wage growth raises the scope for Fed liftoff in September, but will keep a close eye on the U.S. Advance Retail Sales report amid the ongoing weakness in private-sector consumption.
  • Need a break/close above 12,049 (78.6% retracement) to favor a further advance, with near-term support coming in around 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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