Daily Market Report: EURUSD, GBPUSD, USDJPY, USDCAD, AUDUSD
Euro underperforms ahead of tomorrow’s ECB meeting where easing expectations remain high.
EURUSD: Euro underperforms ahead of tomorrow’s ECB meeting where easing expectations remain high
US data was light yesterday with both Richmond’s index and housing data disappointing, and there’s more housing data today out of the US as well as preliminary PMI figures for the eurozone that’ll be closely watched following last month’s contraction in manufacturing, a serious hit for the bloc’s manufacturing powerhouse, Germany. However, whatever volatility the euro may experience today is likely to pale into comparison to tomorrow’s ECB announcement, with the euro falling ahead of the event and turning more technical indicators red. If the technical overview shifts to a bear trend, the catalyst will be fundamental on anticipated ECB easing. In terms of sentiment, institutional traders have been the beneficiaries of the recent moves given their (slight) majority short bias, while retail shorts taking profit has pushed heavy long bias 2% higher to 72%.
GBPUSD: Boris Johnson elected next UK Prime Minister, focus turns to Brexit
With a new PM emerging in the UK, the focus with regards to the pound has shifted towards Brexit to see whether a deal can be sealed prior to the October deadline, or risk a no-deal Brexit occurring and the fallout from such a scenario. Thus far, while the pound hasn’t necessarily underperformed compared to most of the remaining FX majors yesterday, it couldn’t best the top-performing greenback. The net result is a price drop for the pair, and keeping its bear trend technical overview intact, though lacking momentum and stalling at the lows and as a result preventing sell breakout strategies from seeing better follow through. Long retail bias dropped when the pound retraced back up late last week, but with the price dropping fresh shorts are closing out and leaving longs holding on at a heavy long 76% bias.
USDJPY: US dollar tops the performance charts with its price just below its 50-day moving average
With the greenback outperforming, it was a clean finish higher for this pair’s price that has taken it above all its main short-term moving averages. Up next is the 50-day MA, the first of its main long-term moving averages that it has thus far failed to remain above, and is giving its consolidatory outlook a touch of long-term negative technical bias (the same holds true for the weekly chart). It’s manufacturing PMI figure this morning continued to show contraction at 49.6 and a notch below expectations, and a string of PMIs from other regions will give an overview of the mood with regards to manufacturing and services. Retail bias remains unchanged here, a common theme for the safe haven pair.
USDCAD: CAD outperforms against the FX majors on rising oil prices, can’t best the US dollar
API’s massive deficit yesterday and geopolitical tensions that have failed to subside took energy prices higher, and aided CAD’s energy underlying in the process after the clear disconnect on Monday between the two. However, the Canadian dollar was the second-best performer amongst the FX majors, with the greenback taking the top performance award, and pushing this pair’s price further higher as its bear trend technical overview continues to stall and its bear trend line is on the verge of breaking. In terms of sentiment, retail bias has shifted from a previous slight majority long 51% to a now majority short 55% as longs take profit and shorts get initiated at the short-term resistance level.
AUDUSD: Dropping this morning as US dollar continues to strengthen
Australian PMI figures continued to show expansion but dropped slightly on last month’s (only slightly) expansionary 52+ figures. And a brief look at iron ore’s chart – a key Australian export – and its price has been dropping heavily. As the US dollar outperforms, commodity currencies have been getting hit, with the kiwi lagging the most and the aussie not that far off. The schedule is clear in terms of Australian data for the rest of the day, but tomorrow morning’s RBA Lowe speech will be on inflation. From a technical overview standpoint, the recent price moves have no doubt been bearish, and the consolidatory outlook remains intact with the bulk of its indicators neutral. What (slight) positive technical bias this pair enjoyed is being eroded quickly with the lower end of its short-term bull trend channel on the verge of being broken. Retail bias meanwhile, has risen 6% to a majority long 58% with more shorts being enticed into closing out.
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