AUD, AUD/USD, USD, Fed, ECB, EUR/USD, USD/JPY, Crude Oil – Talking Points
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How to trade AUD/USD
The Australian dollar tried to rally on the back of strong retail sales numbers, but the rally was short-lived.
Retail sales came in today at 0.7% m/m for May, notably above expectations of 0.1% and 0.0% previously. AUD/USD lost 0.6620 before reversing.
The US dollar is also looking to reassert itself after Fed Chair Jerome Powell’s remarks yesterday that “while policy is restrictive, it may not be restrictive enough and it hasn’t been restrictive long enough”.
The comments were made in Portugal yesterday, and the ECB’s Christine Lagarde and BoE’s Andrew Bailey share a similar hawkish stance. He is in contrast to Kazuo Ueda of the Bank of Japan and he has said he will maintain a very loose policy.
In the aftermath of the Portugal meeting, USD/JPY rose again to 7-month highs today above 144.50 while EUR/USD fell back below 1.0900.
Crude Oil has so far stabilized on Thursday after bouncing off recent lows. Data from the US Energy Information Agency (EIA) revealed that inventories fell by 9.603 million barrels in the week ending June 23. This was much larger than the estimate for a decrease of 1.757 million barrels.
Treasury yields are up 1 or 2 basis points across the curve, and gold is still falling below $1,920.
Most stock indices in the Asia-Pacific region were more or less flat but Hong Kong’s Hang Seng Index (HSI) is in the red.
After the Swedish Riksbank policy announcement, the US will see GDP data. EU leaders will meet in Brussels later today.
The full economic calendar can be viewed here.
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Range trading basics
Technical analysis of the Australian dollar / US dollar
The argument for more range trading for the AUD/USD would lie in grouping all the daily simple moving averages (SMA).
The 10-, 21-, 34-, 55-, 100-, 200-, and 260-day moving averages are all between 0.6668 and 0.6730.
Nearby resistance could be at 0.6710 breakout point ahead of potential resistance area in the 0.6800-0.6820 area.
Moreover, resistance could be at the previous peaks 0.7011 and 0.7030 before the block zone in the area 0.0.7137 – 0.7157.
Support could be at 0.6574 and 0.6565 breakout points or late May low at 0.6458.
Moreover, support might lie at the previous low at 0.6387 and the nearby Fibonacci level at 0.6381. The last is 78.6% Fibonacci for the move from the low of 0.6170 to the high of 0.7158.
– By Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @tweet on Twitter