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AUD/USD Clears Short-Term Range, Eyes March High Ahead of RBA Minutes
DailyFX.com -
Talking Points:
- AUD/USD Eyes March High Ahead of Reserve Bank of Australia (RBA) Minutes.
- USD/CAD Correction to Accelerate on Strong Canada Retail Sales, Sticky Consumer Price Index (CPI).
- USDOLLAR Threatens Bullish Formation as Weak Data Drags on Interest Rate Expectations.
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AUD/USD
Chart - Created Using FXCM Marketscope 2.0
Break of near-term range opens the door for a move at the March high (0.7937) as long as the Relative Strength Index (RSI) retains the bullish momentum, with key support holding around 0.7570 (50% expansion) to 0.7590 (100% expansion).
Despite the strong Australia Employment report, the Reserve Bank of Australia (RBA) meeting minutes may reinforce a bearish outlook for AUD/USD as Governor Glenn Stevens keeps the door open to further reduce the benchmark interest rate.
DailyFX Speculative Sentiment Index (SSI) shows the retail crowd has flipped net-short AUD/USD ahead of the weekend, with the ratio slipping to -1.26 amid a 22.5% jump in short positions.
USD/CAD
May see a more aggressive decline in USD/CAD should the bearish RSI momentum gather pace, with the oscillator dipping into oversold territory.
The upbeat tone laid out by Bank of Canada (BoC) Governor Stephen Poloz suggests that the central bank could be nearing the end of its easing cycle; a 0.5% rebound in Canada Retail Sales paired with a sticky reading for the Consumer Price Index (CPI) may heighten the appeal of the loonie as it dampens bets for additional monetary support.
Failure to hold above 1.2220 (50% retracement) raises the risk for a move back towards 1.2080 (61.8% retracement) to 1.2110 (61.8% retracement).
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Read More:
Price & Time: High Volume Liquidation in USD/CAD
US Dollar Likely to Trade Lower versus Canadian Dollar, Euro
USDOLLAR(Ticker: USDollar):
Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
DJ-FXCM Dollar Index | 11991.73 | 12047.2 | 11982.06 | -0.39 | 93.07% |
Chart - Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar looks poised for a larger correction as it struggles to retain the ascending channel formation carried over from the previous year, while the RSI retains the bearish momentum.
Series of dismal data prints coming out of the U.S. economy should continue to sap the bullish sentiment surrounding the greenback as it limits the Federal Reserve’s scope to raise the benchmark interest rate in mid-2015; U.S. CPI may set the tone for the week ahead as market participants anticipate to see sticky price growth in March.
Break of the April low (11,951) is likely to generate a further decline, with the key downside region of interest coming in around 11,869 (23.6% expansion) to 11,901 (78.6% expansion).Join DailyFX on Demand for Real-Time SSI Updates!
Release | GMT | Expected | Actual |
Housing Starts (MAR) | 12:30 | 1040K | 926K |
Housing Starts (MoM) (MAR) | 12:30 | 15.9% | 2.0% |
Building Permits (MAR) | 12:30 | 1081K | 1092K |
Building Permits (MoM) (MAR) | 12:30 | -1.9% | -5.7% |
Initial Jobless Claims (APR 11) | 12:30 | 280K | 294K |
Continuing Claims (APR 4) | 12:30 | 2323K | 2268K |
Philadelphia Fed Business Survey (APR) | 14:00 | 6.0 | |
Fed’s Dennis Lockhart Speaks on U.S. Economy | 17:00 | ||
Fed’s Loretta Mester Speaks on U.S. Economy | 17:10 | ||
Fed’s Eric Rosengren Speaks on U.S. Economy | 17:30 | ||
Fed’s Stanley Fischer Speaks on U.S. Economy | 19:00 |
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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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