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USD Struggles Amid Lackluster Data- Gold Short Trigger on Tap?

USD Struggles Amid Lackluster Data- Gold Short Trigger on Tap?

David Song, Strategist

Talking Points:

- USDOLLAR Struggles as Mixed Data Continues to Drag on Interest Rate Expectations.

- Gold September Rebound Continues to Unravel; Waiting on RSI Trigger.

- NZD/USD Marks Another Failed Attempt to Break 0.6400 Resistance-Zone.

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12056.7712088.1212050.04-0.1275.42%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar struggles to retain the overnight advance amid the ongoing batch of mixed data prints coming out of the economy; may raise the bar for a 2015 rate hike as the Fed remains ‘data dependent.’
  • Even though New York President William Dudley argues that the Federal Open Market Committee (FOMC) remains on course to normalize monetary policy, may continue to see a 9-1 split at the October 28 interest rate decision should the fundamental developments highlight a slower recovery.
  • Break of the opening monthly range continues to favor a bullish outlook for the USDOLLAR, with the next region of interest coming in around 12,162 (April high) to 12,176 (78.6% expansion).

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XAU/USD

Gold Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • With Gold prices failing to close above $1154 (61.8% retracement) to $1155 (61.8% retracement), the previous metal may continue to give back the advance from earlier this month as it appears to be carving a lower-high on a long-term series; waiting for a break of the bullish momentum in the Relative Strength Index (RSI) for conviction/confirmation.
  • May see global investors continue to treat Gold as a commodity rather than a currency as weak energy prices continue to dampen the outlook for inflation, while the Federal Reserve keeps the 2015 liftoff on the table.
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd has flipped back to net-long XAU/USD going into the end of September, with the ratio approaching recent extremes as it advances to +1.28, but market participation continues to unwind as open interest stands 18.5% below its monthly average.

Read More:

Price & Time: Key Timing Week For Gold

Gold Rallies Into Critical Resistance Ahead Fed, NFP

NZD/USD

NZD/USD Daily Chart
  • Will continue to favor opportunities to sell-bounces in NZD/USD amid the string of failed attempts to close above near-term resistance around 0.6400 (38.2% retracement); may see the range-bound price action give way as risk appetite continues to deteriorate.
  • With the Reserve Bank of New Zealand (RBNZ) keeping the door open to implement additional rate cuts, disappointing developments coming out of China may further dampen the appeal of the kiwi.
  • Will continue to favor the downside targets, with the next region of interest coming in around 0.6160 (161.8% expansion) to 0.6210 (161.8% expansion).

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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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