USA! USA! – The US Dollar still showing its top form

November 11, 2014

The FX market was calm on Monday during the Asian and European session. The USD was still in retreat which had started since last Friday – yet on a fairly limited scale. The major pairs rebounded to critical levels and speculators will have less enthusiasm in shorting the Dollar as the US economy is undoubtedly currently stronger than other advanced economies. Traders finally chose another direction and the Dollar strengthened across the board after the US trading hours started.

As mentioned in previous morning wraps, the area around 0.8650-0.8680 was an important support level for Aussie/Dollar and now is an almost unbreakable resistance after the pair fell below that level. The movement confirmed this level’s effectiveness and was a great entry for technical traders and ‘turtles’. It was also suppressed by a MA60 in the H4 chart (which is equivalent to the 10-day moving average).

The Dollar Yen found strong support at 114.06 – the 38.2% retracement level of its last round of rally. Recently, MarketWatch shared a story on how the purchasing program of 80 trillion Yen was decided. It highlights Governor Kuroda’s determination to end the deflation once there is a sign of decreasing inflation. Bulls of Dollar/Yen should have more confidence in their trades.

And back to gold now. After a great rebound last Friday, the gold price fell from an area near $1180 per ounce where the former bottoms lied for the last 18 months. It fell back to $1150 this morning. The $1160 level cannot provide enough support to the price, showing that gold may go back to its continuous fall of $1000 or even lower.

The Asian stock markets closed at a mix. The Nikkei Stock Average lost 0.59% to 16780. The Shanghai Composite surged 2.3% to 2478 upon officials declaring the Shanghai-Hong Kong exchange link will start as of next week. One thing that needs to be realized is that the Chinese market has bounced by over 20% from a year low, declaring the eventual return of the bull market. The ASX 200 slid 0.45% to 5524. In the European stock markets, the UK FTSE was up by 0.50%, the German DAX gained 0.47% and the French CAC Index rose 0.64%. The US market kept refreshing the historical highs. The S&P 500 rose 0.24% to 2036. The Dow advanced 0.23% to 17602, while the Nasdaq Composite Index gained 0.41% to 4652.

On the data front, no real pressing data matters. Some may take note of the Australian NAB Business Confidence which will be released at 11:30 AEDST.

Have a great trading day!

Anthony

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