Market Overview

Long On USD/CAD, GBP/USD Enjoys Relief

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GROWTHACES.COM Trading Positions:

USD/JPY: long at 104.90, target 107.50, stop-loss 105.90 (stop-loss moved from 105.30 previously)

USD/CAD: long at 1.0940, target 1.1050, stop-loss 1.0890.

 

AUD/USD: Bears not convinced after employment report.

(no trading position on the AUD/USD currently)

  • Australian employment surged by 121k in August, the biggest rise in at least three decades and far beyond forecasts. The unemployment rate fell to 6.1%, beating forecasts of 6.3%.
  • Most of the gains came in part-time jobs which surged 106.7k, while more people went looking for work as the participation rate jumped to a 16-month peak of 65.2%.
  • The Reserve Bank of Australia is aware of the volatility in the data and would want to see a consistent run of better jobs numbers before concluding that the labour market had really turned the corner. The RBA Governor Glenn Stevens recently argued that cutting rates further to try to lower unemployment would not be sensible as it would also add fuel to an already hot housing market.
  • Leading indicators of labour demand have also been pointing to a pick up, with ANZ's survey of job advertisements rising for a third straight month in August.
  • The AUD hit a five-month low of 0.9113 on Wednesday and jumped as far as 0.9218 after the release. The AUD/USD fell during European session by nearly a cent from the levels post jobs data. The level of 0.9155 is now the nearest resistance level. GrowthAces.com stands on the sidelines on the AUD/USD now.

Significant technical analysis' levels:

Resistance: 0.9218 (low Sep 10), 0.9288 (high Sep 9), 0.9338 (50-dma)

Support: 0.9048 (low Mar 24), 0.9033 (low Mar 21), 0.9000 (psychological level)

 

USD/CAD: Long for 1.1050

(we are long at 1.0940 with the target of 1.1050)

  • A stronger manufacturing sector boosted Canada's industrial capacity use to 82.7% in the second quarter of 2014, the highest level for seven years.
  • The manufacturing sector operated at 82.0% of capacity, up 1.0 pp. from the first quarter. The transportation equipment manufacturing industry rose 3.9 pp. to a record high 93.7%. The electric power generation, transmission and distribution's industry capacity use went down by 2.8 pp. to 85.7%. The rate for the oil and gas extraction industry edged up by 0.2 pp. to 88.0%.The rate for the oil and gas extraction industry edged up by 0.2 percentage points to 88.0 percent.
  • Despite quite poor macroeconomic calendar in the American session yesterday (only Canadian Q2 capacity utilization and US wholesale sales) we had strong movement on the USD/CAD. The USD/CAD ended the session at 1.0935.
  • We used the dip to go long at 1.0940. The target of GrowthAces.com for the USD/CAD is 1.1050 and stop-loss at 1.0890. The loonie is depreciating in the European session. The USD/CAD broke above 1.1000.

Significant technical analysis' levels:

Resistance: 1.1032 (high Sep 9), 1.1053 (high Apr 23), 1.1078 (high Mar 28)

Support: 1.0934 (low Sep 10), 1.0923 (30-dma), 1.0918 (10-dma)

 

GBP/USD pulled away from 10-month low after Survation poll.

(no trading position on the GBP/USD currently)

  • The poll, carried out by Survation for the Daily Record newspaper, showed 47% intending to vote "Yes" while 53% intend to vote against. The figures excluded 10% of people who were undecided. In the past few days, the GBP has come under sustained pressure after polls suggested that the pro-independence camp was gaining momentum. The numbers were the same as a prior Survation poll for the Scottish Daily Mail published on August 29.
  • The GBP tripped stops above 1.6231 (Wednesday high) and rose to an European high of 1.6265. The GBP/USD bears are targeting the level of 1.6003 (50% of 1.4814-1.7192). In the opinion of GrowthAces.com bears should be cautious as we see a risk for corrective action (or even change of the trend) in the short-term. The nearest resistance is at 1.6270. We remain flat on the GBP/USD.

 

Significant technical analysis' levels:

Resistance: 1.6270 (high Sep 8), 1.6279 (38.2% of 1.6645-1.6052), 1.6340 (high Sep 5)

Support: 1.6052 (low Sep 10), 1.6003 (50% of 1.4814-1.7192), 1.5988 (low Nov 14, 2013)

NZD/USD: Rates on hold, as widely expected.

(short-term outlook is bearish, bears target 0.8050)

  • New Zealand's central bank held its benchmark interest rate at 3.5%, as expected, and said it expected to stay on the sidelines for a while amid slower growth and soft inflation pressures before resuming rate rises.
  • Still, the RBNZ expects dairy prices to recover, and is predicting economic growth around 3.2% in the year ending March 2015. The central bank cut its inflation views through early 2016, due to subdued wage increases and the dampening effect of a stronger currency. The central bank is the opinion that current levels of the NZD/USD are unjustified despite its retreat from a post-float high touched in July.
  • The bank said in the statement: "We expect some further policy tightening will be necessary to keep future average inflation near the 2% target mid-point and ensure that the economic expansion can be sustained."
  • In the opinion of GrowthAces.com the next rate hike is likely in March next year. We expect benchmark interest rate at the end of 2015 at the level of 4.25%.
  • The NZD/USD slumped after the RBNZ decision. The dovish tone of the RBNZ and breaking below the level of 0.8200 opened the door to a test of 0.8050 (the year's low) renewed downward pressure on the NZD/USD. In our opinion the short-term outlook is bearish.

Significant technical analysis' levels:

Resistance: 0.8267 (high Sep 10), 0.8286 (high Sep 9), 0.8329 (high Sep 8)

Support: 0.8052 (low Feb 4), 0.8009 (low Sep 10, 2013), 0.8000 (psychological level)

 

GrowthAces.com is an independent macroeconomic research consultancy for traders. We offer you daily forex analysis with forex trading signals. The service covers forex forecasts and signals for following currencies: EUR, USD, GBP, JPY, CAD, CHF, AUD, NZD as well as emerging markets. Our subscribers should expect to receive: forex trading strategies, latest price changes, support and resistance levels, buy and sell forex signals and early heads-up about the potential fx trading opportunities. GrowthAces.com offers also daily macroeconomic fundamental analysis that enables you to see fundamental changes on forex market. We provide in-depth analysis of economic indicators resulting from knowledge, experience, advanced statistics and cutting-edge quantitative tools.

We encourage you to subscribe to our daily forex newsletter on http://growthaces.com to get daily analysis for forex traders. We intend that our consultancy should help you make better decisions. At GrowthAces.com we give our best to you - always greatest quality, usefulness and profitability.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

 

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