USD sensitivity ahead of retail sales
Weakness and unease continue to linger through the financial markets as most Asian equities have ventured back into red territory. The Shanghai Composite Index failed to appreciate on Tuesday’s trading sessions as the weak data from China pressured any solid move to the upside. On the other hand, European equities have had a positive day with the FTSE100 balancing around the 6083 mark. The pressures from the uncertainty over when the US Federal Reserve will begin raising interest rates have resulted in the American equities closing negatively in Monday’s session. It is likely that the jittery attitude market participants have inherited from the uncertainty over the Fed’s decision may translate into further losses in the New York session.
Optimism still exists within the German economy, as the German ZEW Economic Sentiment which was released in the European session printed at 12.1. This was below the expectations of 18.3 and resulted in the EUR being exposed to minor weakness before clawing back the losses against the USD. It is apparent that the USD is in a heightened state of sensitivity due to the looming FOMC statement this Thursday, a retail sales figure this afternoon above expectations may have an accelerating effect and further inspire bullish momentum on the USD.
In the commodities currency division, the CAD has been of some interest as of late. Canada has entered a technical recession and the decline of oil prices has punished the Canadian economy which has translated to a weak CAD amongst its counterparts. With the possibility of the Fed hiking interest rates before the end of the year, there exists a monetary policy divergence between the BoC and the Fed. This may inspire further bullish momentum on the USDCAD which is already technically bullish on the daily timeframe. Support can be found at 1.3150 and resistance at 1.3350. A breakout above 1.3350 can be seen as a technical catalyst for the resumption of the move up.
The EURNZD is technically bullish on the daily timeframe. Prices are above the daily 20 SMA and the MACD trades to the upside. A breakout above the 1.8000 resistance may open a path to the next relevant resistance at 1.8600. A move back below 1.7350 invalidates this bearish outlook.
The AUDNZD currently trades within a wide range. Prices are above the daily 20 SMA and the MACD has crossed to the upside. A breakout above the 1.1300 resistance may open a path to the next relevant resistance at 1.14300.
Gold remains bearish. The breakdown of the
light support at 1110.0 may provide a light resistance which should aid for a further decline back down to the next relevant support at 1080.0. A move back above the 1125.50 invalidates this daily bearish outlook.