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As reported by the Australian Bureau of Statistics, wage growth in Australia in the first quarter of 2018 was +2.1% (in annual terms). The Reserve Bank of Australia pays much attention to this indicator when deciding on the interest rate. Low wage growth rates cast doubt on the Reserve Bank of Australia’s optimistic forecasts to accelerate economic growth. According to economists, for the steady growth of the Australian economy, it is necessary that salaries increase at least 3% in annual terms.
Gold prices on Tuesday fell to a lowest level this year, as data on the US economy led to the strengthening of the dollar. A stronger dollar makes commodities, such as gold, more expensive for global buyers. At the same time, the increase in bond yields makes the metal less attractive for some investors. The dollar strengthening factor seems to have outweighed other circumstances, including the foreign trade tensions between the PRC and the US, the US withdrawal from the deal on the Iranian nuclear program and the escalation of tensions in the Middle East.
EURUSD rallied today after a hawkish words from Governor Francois Villeroy. Mr. Villeroy reaffirmed that the ECB is moving towards taper in September, but more importantly noted that a rate hike is a matter of “quarters not years”. The pair closed the day at 1.1931 after climbing as high as 1.1995. Fundamentally this market has now topped and it is moving lower. The downtrend is supported by speculative bearish sentiment.
the U.S. dollar fell on Thursday against a basket of currencies, holding below its 2018 peak, as a smaller-than-expected increase in consumer prices reduced bets that inflation is accelerating, which could push the Federal Reserve to hike interest rates faster. DXY, similarly to EURUSD formed an engulfing candle which is a sign of a reversal to the downside, at least in the short term. It is too early to say if this market is reversing yet.
The price is currently at key zone that could determine whether price will build a larger bearish correction or continue the bullish trend. Price would need to break above the previous top at 110 to confirm the uptrend. My bias is to the downside and I’m waiting for a break of 20 days moving average to take short positions. If the price breaks above the recent high at 110.00, bearish outlook will be invalidated.
Cable traded water today. The pair sits right on the 200 moving average. At this stage it’s a big up or big down. Given speculative positions are still bullish, I would like to see GBPUSD rebounding from the current levels. It is all in the hands of BOE and Thursday’s statement. No strategy for now but upside would be preferable ion my opinion.
AUDUSD rebounded from 0.75 level and the price formed a strong bullish engulfing candle on daily charts. I expect the price to start to creep up from here. The first close above 20 moving average will be a sign to buy Aussie back with targets at 0.8150 resistance
EURUSD kept going down and it closed the trading session at 1.1955, lowest since January. The downtrend is likely to continue even lower but before EURUSD is capable of another leg down. Now investors’ attention will be focused on the publication on Friday of official data from the US labor market, which is still in good shape, and the pace of hiring remains high. The number of jobs this year increased by an average of 202,000 monthly, and unemployment in March was 4.1%. The April report of the US Department of Labor on employment will be published on Friday at 12:30 (GMT).
The euro, which has been under pressure by weaker-than-expected economic data and growing doubts about when the European Central Bank will normalize its monetary policy. EURUSD decline with no retracements and closed the day at 1.1991, near the support at 1.1950. More downside is likely, but I expect the price to pause at 1.1950
The Aussie was under pressure ever since the day started, as data coming from the country at the beginning of the day posted outcomes below their previous figures. March HIA New Home Sales fell 2.0% monthly basis, well below the previous -0.7%. Also, the TD Securities inflation monthly reading resulted at 0.5%, better than the previous 0.1%, although the yearly number decreased to 2.0% from the previous 2.1%. The pair is approaching a major low/support at 0.7500. It will prove to be an important level to watch
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