Morning View: USD Skidding Behind the Wheel

April 29, 2015

Morning View:

“In global markets where everything is connected, no matter which way it moves, the USD is always in charge.”

That is something that you need to remember in today’s market environment. Write it on a post-it note and sticky it to your wall above your trading screens. You are going to need to be looking at it again and again.

Aussie above 80c:
AUD/USD moved back above 80c overnight as last night’s Consumer Confidence data continued the recent trend of poor readings out of the US and missed expectations with a print of 95.2 vs the expectation for it to climb to 102.6.

AUD/USD Daily:
auwed1
Click on chart to see a larger view.

This Aussie Dollar move is sure to put pressure on the RBA to cut again, as the last cut’s effects on dollar depreciation has now all been wiped out. During Stevens’ speech in New York last week, he hinted that Australian monetary policy is fighting a losing battle when external forces such as a bout of USD weakness on the back of a FOMC rate raising delay is at play. To me, this means that he may be more hesitant to waste his bullets on a cut that the market expects.

The move can be seen across all risk pairs (including GBP which has big data misses of it’s own), quite simply showing that it’s all about the USD. The market seems to be anticipating further weak economic data out of the US tonight, followed by a FOMC statement pushing back the expected rate hike to the end of the year.

USDX Daily:
usdxwed2
Click on chart to see a larger view.

I thought this chart was interesting because of the way price hasn’t been able to regain any broken support levels after they have been broken. The perfect trend, and something you don’t want to be fighting against in your trading if you don’t have to. The market got way too long USD and is well and truly correcting.

I have been fighting against the move looking for EUR/USD weakness and take a look at this in the Chart of the Day section below.

———-

On the Calendar Today:
Japan is off in observance of Shōwa Day – The birthday of the Emperor Hirohito. It encourages public reflection on the turbulent 63 years of Hirohito’s reign. For the rest of us in Asia, we have Business Confidence data out of New Zealand.

Just continue to expect the unexpected as we await the FOMC Statement later in the US session.

Wednesday:
JPY Bank Holiday
NZD ANZ Business Confidence

USD Advance GDP
USD FOMC Statement
USD Federal Funds Rate

———-

Chart of the Day:
We continue our look at the Euro.

EUR/USD Daily:
euwed1
Click on chart to see a larger view.

In yesterday’s Chart of the Day, we took a look at the EUR/USD price butting up against resistance. The play for me was to short as the market was showing short term signs of slowing momentum as we head into a zone where sellers would look to enter the market. But after the US Consumer Confidence missed expectation big time, this play was obviously wrong and the trend line resistance was blown away.

These types of setups allow you to take what I like to call ‘good losses’. Sure you are wrong, but the risk:reward was on your side when you entered the trade and the fact the level that broke was there, allowed you to manage your risk.

While the pair is still below the marked resistance zone, it is still just a minor correction in a major downtrend, but USD weakness now has everyone’s attention.

Follow or mention @VantageFX on Twitter as we look to analyse this EUR/USD move a little deeper over the coming sessions leading into FOMC.

Dane Williams – @VantageFX

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