Talking Points:
- AUD/USD October Advance Vulnerable to Slowing China GDP; Retail Crowd Remains Net-Long.
- USD/CAD Decline Stalls Ahead of Key Former- Resistance; BoC Meeting in Focus.
- USDOLLAR Rebounds From Fresh Monthly Low on Sticky CPI- Outlook Mired by Bearish Formation.
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Chart - Created Using FXCM Marketscope 2.0
- Near-term advance in AUD/USD may continue to unwind in the week ahead as China’s 3Q Gross Domestic Product (GDP) report is expected to show Australia’s largest trading partner growing an annualized 6.8% following the 7.0% expansion during the three-months through June.
- A slowdown in China accompanied by a dovish Reserve Bank of Australia (RBA) Minutes may open up the downside targets as the Fibonacci overlap around 0.7380 (50% retracement) to 0.7390 (78.6% expansion) offers near-term resistance; will keep a close eye on the Relative Strength Index (RSI) as a break of the bullish momentum may highlight a resumption of the long-term bearish trend.
- Despite the decline, DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long USD/JPY since June 8, but the ratio is approaching recent extremes as it climbs to +2.81, with 74% of traders long.
USD/CAD
- With the Bank of Canada (BoC) on tap next week, a more upbeat tone from Governor Stephen Poloz and Co. may trigger a larger correction in USD/CAD as the pair continues to search for support; will keep a close eye on around the 1.2800 handle (38.2% expansion) as it largely capped prices earlier this year.
- Even though the RSI fails to push into oversold territory, the bearish formation continues to favor the downside targets especially as the pair struggles to push back above former support zones.
- Despite the bullish inside-day formation, ongoing closes below 1.2930 (61.8% expansion) to 1.2950 (38.2% retracement) keeps the risk tilted to the downside for USD/CAD.
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Read More:
Price & Time: USD/CAD Back At Key Pivot Area
Dollar Dive Deepens as Rate Hike Bets Move Further Out
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11916.34 | 11932.91 | 11890.49 | 0.20 | 88.85% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar mounts a larger rebound from the monthly low (11,854) following the larger-than-expected rebound in the U. of Michigan Confidence survey; may keep the Fed on course to deliver a 2015 rate-hike as Chair Janet Yellen remains upbeat on the economy.
- The light economic docket for the week ahead will put increased focus on the central bank rhetoric as Fed Governor Lael Brainard, Richmond Fed Jeffrey Lacker, New York Fed President William Dudley, Fed Governor Jerome Powell along with Chair Yellen on tap for the days ahead.
- Failure to hold above the September low (11,865) keeps the door open for a further decline, and we will keep a close eye on the Fibonacci overlap around 11,898 (50% retracement) to 11,901 (78.6% expansion) for near-term resistance following the failed attempt to push back above the key zone earlier this week.
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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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