Never miss a story from David Song

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Song

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Talking Points:

- AUD/USD Preserves Near-Term Bullish Formation Ahead of RBA Rate-Decision.

- USDOLLAR Extends Losses as 2Q GDP Report Disappoints.

Avoid the pitfalls of trading by steering clear of classic mistakes. Review these principles in the "Traits of Successful Traders" series.

AUD/USD

AUD/USD Daily Chart

Chart - Created by David Song

  • Even though AUD/USD largely preserves the upward trend carried over from the end of May, the near-term outlook remains clouded amid the divergence in the Relative Strength Index (RSI); need a break of the bearish formation in the oscillator to favor a larger advance in the exchange rate.
  • Nevertheless, the Reserve Bank of Australia’s (RBA) interest rate decision on August 2 may produce near-term headwinds for the Aussie should Governor Glenn Stevens and Co. further embark on the easing cycle; according to a Bloomberg News survey, 20 of the 25 economists polled forecast the central bank to reduce the official cash rate to a fresh record-low of 1.50% from the current 1.75%.
  • A bullish RSI trigger accompanied by a break/closing price above the Fibonacci overlap around 0.7580 (50% retracement) to 0.7600 (23.6% retracement) may open up the topside targets, with the next region of interest coming in around 0.7650 (78.6% retracement) to 0.7676 (July high).
DailyFX SSI
  • The DailyFX Speculative Sentiment Index (SSI) shows a bit of back and forth in retail positioning going into the end of the month, with the FX crowd flipping net-short AUD/USD earlier this morning.
  • The ratio currently sits at -1.01 as 50% of traders are long, with long positions 12.9% lower from the previous week, while open interest stands 2.4% below the monthly average.

Why and how do we use the SSI in trading? View our video and download the free indicator here

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

US Dollar Index

11954.88

12049.49

11954.88

-0.83

175.95%

Focus Shifts to AUD/USD Amid Bets for RBA Rate-CutUSDOLLAR Daily Chart

Chart - Created by David Song

  • The USDOLLAR extends the decline from earlier this week as the advance 2Q Gross Domestic Product (GDP) report falls short of market expectations; even though the greenback fails to break the July low (11,953), the reserve currency stands at risk of facing additional headwinds as the weaker-than-expected recovery undermines the Federal Reserve’s scope to further normalize monetary policy in 2016.
  • Even though the Federal Open Market Committee (FOMC) keeps the door open to raise the benchmark interest rate at the next quarterly policy meeting in September, central bank officials may continue to endorse a wait-and-see approach ahead of the U.S. Presidential election in November amid the uncertainty surrounding the fiscal outlook.
  • A break/close below 11,951 (38.2% expansion) to 11,965 (23.6% retracement) may open up the next downside target around 11,898 (50% retracement) to 11,914 (38.2% retracement).
DailyFX Calendar

Click Here for the DailyFX Calendar

Get our top trading opportunities of 2016 HERE

Read More:

S&P 500: Sharply Unchanged, Consolidating or Topping?

COT-British Pound Ownership Profile Warns of a Bottom

Post-Brexit NZDUSD Support Vulnerable to Weak NZ Trade Balance

USD/JPY July Recovery at Risk on Wait-and-See FOMC/BoJ Policy

--- Written by David Song, Currency Analyst

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

To be added to David's e-mail distribution list, please follow this link.