Talking Points:
- Gold Searches for Support as Post-Fed Rally Continues to Unravel.
- AUD/USD Risks Further Losses on Weakening Outlook For China.
- USDOLLAR Topside Targets in Focus as Bullish Pattern Takes Shape.
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XAU/USD
Chart - Created Using FXCM Marketscope 2.0
- Following the failed attempt to test the monthly opening range ($1148), gold prices remains at a risk for a further decline as the downward from earlier this year remains intact; looking for a break of the bullish formation on the Relative Strength Index (RSI) to favor a move back towards near-term support around $1102 (78.6% expansion) to $1103 (23.6% retracement).
- May see market participants continue to treat the precious metal as a currency rather than an alternative to fiat-currencies amid rising interest rate expectations in the U.S. along with the disinflationary environment across the major industrialized economies.
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long XAU/USD since late-August, with the ratio approaching recent extremes as it climbs to +1.19 as 54% of traders are long.
AUD/USD
- AUD/USD stands at risk of resuming the long-term bearish trend amid the lack of momentum to close back above former support around 0.7220 (23.6% expansion) to 0.7240 (100% expansion).
- Even though China’s Purchasing Managers Index (PMI) is expected to show a slower rate of contraction in manufacturing, a dismal print may further dampen the appeal of the Australian dollar as fears of slower growth may put increased pressure on the Reserve Bank of Australia (RBA) to further embark on its easing cycle.
- With the recent string of lower highs & lows, a close below 0.7080 (38.2% expansion) to 0.7090 (78.6% retracement) may open up the next downside region of interest coming in around 0.6950 (161.8% expansion) to 0.6970 (50% expansion).
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 12033.68 | 12041.58 | 11980.76 | 0.34 | 118.92% |
Chart - Created Using FXCM Marketscope 2.0
- The post-Fed rebound remains favored as the Dow Jones-FXCM U.S. Dollar carves a string of higher highs & lows during the last full-week of September; may see a continuation of the long-term trend as the central bank stays on course to normalize monetary policy in 2015.
- Beyond the key data prints coming out of the U.S. economy, will keep a close eye on the Fed rhetoric on tap this week as Chair Janet Yellen, Atlanta Fed President Dennis Lockhart, St. Louis President James Bullard and Kansas City Fed President Esther Georgeare schedule to speak later this week; may see the dollar resilience continue should the officials endorse a rate hike later this year.
- USDOLLAR may have carved a higher-low in the longer-term sequence amid the sharp rebound, with the next topside region of interest coming in around 12,049 (78.6% retracement).
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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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