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AUD Breaks Out on RBA- NZD Outlook Hinges on Job/Wage Growth

AUD Breaks Out on RBA- NZD Outlook Hinges on Job/Wage Growth

David Song, Strategist

Talking Points:

- AUD/USD Fails to Preserve Bearish Momentum as RBA Softens Verbal Intervention.

- NZD/USD Range at Risk in Dismal New Zealand Employment Report.

- USDOLLAR Continues to Look for Direction- ADP Employment, ISM Non-Manufacturing in Focus.

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AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • AUD/USD breaks out of the near-term range as the Reserve Bank of Australia (RBA) preserves its current policy & softens the verbal intervention on the local currency; looks poised for a larger rebound as the Relative Strength Index fails to maintain the bearish momentum from May.
  • With Australia Employment expected to increase another 10.0K in July, another positive development may spur a larger rebound into key former support around 0.7570 (50% expansion) to 0.7590 (38.2% retracement).
  • The DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long AUD/USD since May 15, with the ratio coming off of recent extremes to sit at +1.26 as 56% of traders are long.


NZD/USD Daily Chart
  • NZD/USD may continue to track sideways over the near-term after failing to preserve the descending channel from April; need a close above near-term resistance around 0.6690 (161.8% expansion) to 0.6710 (78.6% expansion) to favor a more meaningful recovery.
  • New Zealand’s Employment report is expected to show a 0.5% in the second-quarter after expanding 0.7% in the first three-months of 2015, but the wage growth figures may largely impact the market reaction especially as the Reserve Bank of New Zealand (RBNZ) retains a dovish outlook for monetary policy.
  • Nevertheless, as the long-term outlook remains bearish for NZD/USD, we will keep a close eye on the downside targets around 0.6370 (50% retracement) to 0.6400 (61.8% retracement).

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Read More:

Price & Time: EUR/USD - Where the Rubber Meets the Road? Step"?

The Weekly Volume Report: USD/CAD Turnover Supports Broader Trend

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11992.5012045.9711987.82-0.35112.20%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Ongoing failed attempts to close above near-term resistance around 12,049 (78.6% retracement) may spur a larger correction in the Dow Jones-FXCM U.S. Dollar especially as the RSI struggles to retain the bullish momentum.
  • Will keep a close eye on the ADP Employment report along with the ISM Non-Manufacturing survey to better-gauge market expectations surrounding Non-Farm Payrolls (NFP).
  • As the greenback comes off of near-term resistance, we will look for initial support around 11,951 (38.2% expansion) to 11,965 (23.6% retracement).

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--- Written by David Song, Currency Analyst

To contact David, e-mail Follow me on Twitter at @DavidJSong.

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