Daily Technical Outlook

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USDCAD Ascending Channel (August 08, 2016)

USDCAD is still trending higher, moving inside the ascending channel on its 4-hour time frame. Price just bounced off support and could be due for another test of resistance once it moves past the mid-channel area of interest.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the moving averages line up with the bottom of the channel, adding to its strength as a support area. However, stochastic is already in the overbought zone, which suggests that buying pressure could weaken.

A selloff could find support at the channel support at the 1.3050-1.3100 levels while a continuation of the climb past the 1.3200 mark could take price up to the 1.3375-1.3400 levels. A break below the channel support, however, could indicate a reversal from the uptrend.

Jobs data from Canada came in weaker than expected on Friday, as the economy lost 31.2K jobs in July versus the projected 10.2K gain. This was also worse than the previous 0.7K drop in employment for June. The unemployment rate climbed from 6.8% to 6.9% as expected.

Meanwhile, the US NFP report beat expectations with a 255K gain in hiring for July versus the projected 180K gain. Apart from that, the previous reading was upgraded from 287K to 292K. However, the unemployment rate held steady at 4.9% versus the projected 4.8% figure.

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There are no major reports out of the US today while Canada has the building permits report only. Crude oil prices could continue to influence Loonie price action while the US dollar could take its cue from market sentiment.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURAUD Descending Trend Line (Aug 09. 2016)

EURAUD has been trending lower on its 1-hour time frame, moving below a descending trend line connecting its latest highs. Price is currently testing this resistance area, which lines up with the 61.8% Fibonacci retracement level on the latest swing high and low.

In addition, the 61.8% Fib and trend line coincides with a former support area, which might now hold as resistance. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which confirms that the downtrend could carry on, likely taking EURAUD to the lows at 1.4450 or lower.

Stochastic is still heading up, which suggests that buyers could be in control of price action and could push for a higher pullback. Once the oscillator crosses below the overbought zone, sellers could take the upper hand.

Earlier today, the Australian NAB business confidence index showed a decline from 5 to 4 to show weaker optimism. Meanwhile, Chinese inflation reports beat expectations, renewing support for the Australian dollar. The CPI fell from 1.9% to 1.8% versus the projected fall to 1.7% while the PPI showed a 1.7% year-over-year drop compared to the estimated 2.0% decline and the previous 2.6% fall.

The only release from the euro zone today is the German trade balance, which is expected to widen from 22.2 billion EUR to 23.2 billion EUR. Other medium-tier reports due from the euro zone this week are the French industrial production, Italian trade balance, and final CPI readings from France and Germany.

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Event risks for AUD trades include the RBNZ statement and the release of China's industrial production and retail sales reports later on in the week. A return in risk aversion could mean AUD weakness while stronger than expected data could spur gains for the currency.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPUSD Support Turned Resistance (Aug 10, 2016)

GBPUSD is pulling up from its recent slide and looks ready to test the nearby resistance levels. Applying the Fib tool on the latest swing high and low on the 1-hour chart shows that the 38.2% retracement level lines up with a broken support zone around the 1.3100 major psychological mark, which might now hold as resistance.

This is also close to the 100 SMA, which can hold as a dynamic inflection point. In addition, the 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. The gap between the moving averages is widening, which reflects strengthening bearish pressure. If any of the Fib levels keep gains in check, GBPUSD could resume its drop to the previous lows near 1.2950.

Stochastic is already in the overbought area so buyers are feeling exhausted and may allow sellers to take over. However, the oscillator hasn't crossed down yet so a higher pullback to the 50% Fib near the 200 SMA could still be possible.

Yesterday, BOE official McCafferty revealed in an op-ed piece that the central bank might need to cut interest rates further if economic activity worsens. To top it off, the UK trade balance missed expectations and showed a wider trade deficit of 12.4 billion GBP in June, likely putting a dent on overall economic growth.

As for the US dollar, data came in mostly better than expected, with productivity and unit labor costs outpacing estimates. However, traders seem to be booking profits after the labor market didn't seem as strong as the July NFP report suggested.

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For today, US JOLTS job openings data is up for release. There are no reports up for release from the UK, which suggests that market sentiment could be a bigger driver of price action for today.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USDCAD Reversal Pattern (Aug 11, 2016)

USDCAD seems to be tired from its uptrend, as a reversal pattern can be seen on its 4-hour time frame. Price is forming a head and shoulders formation and is gearing up to test the neckline at the 1.3000 major psychological level. A break below this su25pport area could send the pair down by around 200-250 pips, which is roughly the same height as the chart pattern.

Still, the 100 SMA is above the longer-term 200 SMA so the path of least resistance could be to the upside. In addition, the 200 SMA is currently holding as a dynamic support level. At the same time, stochastic is heading up from the overbought region, which means that buyers are taking control of price action. In that case, USDCAD could make its way up to the previous highs from 1.3200-1.3235.

The US dollar seems to be shrugging off positive economic data so far this week, as traders are looking for stronger improvements after the NFP printed a very upbeat reading. The US economy has shown better than expected figures for non-farm productivity, unit labor costs, and JOLTS job openings but the dollar has been mostly weaker.

Traders are likely pricing in expectations of weaker US retail sales data for Friday, with analysts expecting to see a 0.4% gain in the headline figure and a 0.2% uptick for the core figure. This would be slower compared to the previous month's gains in consumer spending.

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As for the Loonie, crude oil prices have been weaker again yet the oil-related currency has chalked up some gains. The EIA report showed a buildup of 1.1 million barrels in stockpiles versus the estimated draw of 1.3 million barrels while US oil rig counts have risen for the sixth consecutive week. Only Canada's NHPI is up for release today while the US has initial jobless claims and import prices data lined up.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURAUD Short-Term Range (Aug 12, 2016)

EURAUD has been trading sideways recently, moving inside a range between support at the 1.4450 minor psychological level and resistance at the 1.4525 area. Price seems to be on its way to test the top of the range from here.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This suggests that the range resistance could hold and push price back to the bottom once more. Stochastic is also heading lower after briefly reaching the overbought area, signaling that sellers are taking control of price action.

A strong move past the range support or resistance could start a longer-term trend for EURAUD. The range is approximately 75 pips tall so the resulting breakout could be roughly the same size.

Earlier today, China printed weaker than expected figures, likely dampening demand for Australia's raw material commodity products later on. Industrial production was down from 6.2% to 6.0% year-over-year in July while fixed asset investment fell from 9.0% to 8.1% year-to-date. Retail sales also slowed from 10.6% to 10.2% year-over-year in July.

Preliminary GDP readings from the top euro zone economies and the entire region are up for release today. Germany is set to print a 0.3% growth figure, slower than the previous 0.7% expansion, while the euro zone flash GDP could hold steady at 0.3%.

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Euro zone industrial production data and final CPI readings from Germany are also lined up. Euro zone industrial production could recover 0.6% from the previous 1.2% slide while no revisions are expected for the German final CPI reading.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURNZD Descending Channel (Aug 15, 2016)

EURNZD has been trending lower, moving inside a descending channel on its 4-hour time frame. Price is currently testing the channel resistance and might be due for a bounce or a break.

The 100 SMA is above the longer-term 200 SMA, suggesting that the path of least resistance might be to the upside. However, these moving averages are currently holding as near-term resistance and might allow price to head back to the channel support at 1.5200.

Stochastic is indicating overbought conditions, which also suggests that a selloff might take place. The oscillator has yet to turn lower and move down from the overbought area before showing that sellers are taking control of price action.

There are no major reports lined up from the euro zone today as most banks are closed for the holiday. As for New Zealand, the Global Dairy Trade auction and release of the quarterly PPI and jobs figures are lined up for Wednesday's Asian trading session.

Analysts are expecting to see much weaker jobs growth for New Zealand in Q2, but the unemployment rate is expected to fall from 5.7% to 5.3% for the period. Producer prices could post another round of declines, fueling speculations of another interest rate cut from the RBNZ soon.

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On Thursday, the ECB will release the minutes of its latest policy meeting and probably include some clues on their next easing plans. Final CPI readings are also due from the region then and downgrades could spur expectations of additional stimulus in the next ECB meeting.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUDUSD Ascending Channel (Aug 16, 2016)

AUDUSD has been trending higher, moving inside an ascending channel on its 4-hour chart. Price just bounced off the channel resistance around the .7750 minor psychological mark and could be due for a test of support near .7550.

Using the Fib tool on the latest swing high and low shows that the 61.8% Fibonacci retracement level lines up with the .7550 minor psychological mark and channel support, which could make it a strong floor. This is also near the area of interest at the .7600 level, which previously held as resistance.

The 100 SMA is above the 200 SMA so the uptrend is likely to carry on, with the moving averages lining up with the Fibs and adding to their strength as potential support. Meanwhile, stochastic is already on the move up, suggesting that buyers are already taking control of price action.

The RBA is set to release the minutes of its August monetary policy meeting in today's Asian session, shedding more light on why they decided to lower interest rates by 0.25% this month. In addition, market watchers are on the lookout for clues about future easing moves, which could stem from a weaker inflation and growth outlook.

Other catalysts from Australia include the release of the July employment report on Thursday. Analysts are expecting to see an increase of 10.2K in hiring, higher than the previous 7.9K gain and enough to keep the unemployment rate unchanged at 5.8%. Stronger than expected data could allow the Aussie to regain ground.

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As for the dollar, the FOMC minutes could be a strong catalyst for price action since traders are looking for more clues on whether the Fed can hike rates again before the end of the year, probably in their September or December meetings. Cautious rhetoric could spur weaker expectations of tightening, which might be bearish for the Greenback.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPUSD Retracement Setup (Aug 17, 2016)

Cable made a strong rally in yesterday's London session, creating a retracement opportunity from its recent slide. Applying the Fib tool on the latest swing high and low shows that the 38.2% to 50% levels span an area of interest from 1.3050 to 1.3100, which previously held as support.

In addition, the 50% Fibonacci retracement level coincides with the moving averages, which could add to its strength as resistance. The 100 SMA is below the 200 SMA, confirming that the path of least resistance is still to the downside.

Stochastic is already in the overbought area, hinting that buyers may be getting exhausted, but the oscillator hasn't turned down from this area to indicate a return in selling pressure just yet. Also, the gap between the moving averages is narrowing so an upward crossover and longer-term rally may be possible.

UK CPI came in much better than expected, with the headline reading up from 0.5% to 0.6% instead of holding steady and the core CPI at 1.3% as expected. Underlying inflation data such as producer input prices, RPI and HPI all beat expectations, suggesting stronger price pressures in the coming months.

Meanwhile, talk of Fed rate hikes from a couple of US central bank officials boosted the dollar across the board during the US session but failed to stop Cable's rally. According to Dudley and Lockhart, the US economy is on track towards reaching 2% inflation and that at least one rate hike might be possible before the end of the year.

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Event risks for today include the UK jobs release and FOMC minutes. The July claimant count could show an increase of 5.2K in joblessness while the unemployment rate could stay unchanged at 4.9%. The average earnings index is slated to improve from 2.3% to 2.5%. As for the FOMC minutes, any talk of possible tightening from other committee members could still yield gains for the dollar.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPAUD Downtrend Pullback (Aug 18, 2016)

GBPAUD has been trending lower on its 4-hour chart, moving below a descending trend line connecting the latest highs of price action. Price is starting to pull up from its recent dive and applying the Fib tool on the swing high and low reveals that the 61.8% retracement level coincides with the trend line.

The moving averages are also close to this falling resistance level, adding to its strength when it comes to keeping gains in check. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside.

Also, stochastic is starting to head south from the overbought area to indicate that selling pressure is building up. A bit of bearish divergence can be seen since stochastic made higher highs while price made lower highs. Sellers could take GBPAUD back to the swing lows around 1.6750.

Jobs data from the UK came in mixed, as the number of claimants fell by 8.6K instead of rising by 5.2K while the average earnings index fell short of the estimated rise to 2.5% and landed at 2.4% only. Prior to this, the CPI readings were mostly stronger than expected, with the headline figure up from 0.5% to 0.6%.

UK retail sales is still up for release today and strong consumer spending data could be reported since hiring was upbeat. Analysts are expecting to see a 0.1% rebound in retail sales after sliding by 0.9% in the previous month.

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Before that, Australia is still set to print its employment change report and might show a 10.2K gain in hiring, stronger than the earlier 7.9K rise and enough to keep the jobless rate steady at 5.8%. Weaker than expected data could bring GBPAUD to the trend line while upbeat results could allow the 38.2% Fib to hold as resistance already.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURAUD Reversal Pattern (Aug 19, 2016)

EURAUD has been declining on its 4-hour chart but a reversal pattern has formed, signaling a potential uptrend. Price has failed in its last two attempts to break below the 1.4500 major psychological support, creating a double bottom formation with the neckline around 1.4900.

The pair is on its way to test this resistance area and a break higher could confirm the longer-term uptrend, which might last by 400 pips or the same height as the chart formation. If this neckline keeps gains in check, though, EURAUD could head back to support at the 1.4500 mark.

The 100 SMA is still below the longer-term 200 SMA so the path of least resistance is to the downside. However, the gap between the moving averages is narrowing so an upward crossover might be in the cards. Stochastic is in the overbought zone but has yet to turn lower to indicate a return in selling pressure.

Economic data from Australia has been stronger than expected, as the July jobs report showed a 26.2K gain in hiring versus the projected 10.2K increase. Aside from that, the previous reading was upgraded from 7.9K to 10.8K while the jobless rate fell from 5.8% to 5.7%.

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Euro zone data has been mixed, with the final CPI readings in line with expectations and ZEW economic sentiment indicators showing improvements. There are no major reports from both the euro zone and Australia today, which suggests that market sentiment could play a huge factor in price action.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURUSD Uptrend Correction (Aug 22, 2016)

EURUSD is on an uptrend on its 4-hour time frame, moving above an ascending trend line and getting ready to test support. The Fib tool applied on the latest swing high and low shows that the 61.8% retracement level lines up with the trend line and an area of interest at 1.1200.

The 100 SMA is above the 200 SMA so the path of least resistance could be to the upside. Also, this short-term SMA is near the rising trend line, adding to its strength as potential support.

However, stochastic is still on the move down, which suggests that sellers might still be in control of price action. Once the oscillator reaches the oversold region, buyers could reestablish their long positions.

Event risks for this week include the euro zone flash PMI releases from the region's top economies tomorrow. Improvements could reassure traders that the region isn't so worse off following the Brexit vote, reviving confidence that the ECB might be able to refrain from doling out additional stimulus.

As for the US dollar, durable goods orders data are due midweek ahead of the Jackson Hole Symposium. Expectations for Fed head Yellen's speech could drive price action of dollar pairs, including EURUSD.

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Last week, the FOMC minutes revealed that policymakers still generally preferred to be prudent in waiting for more data before adjusting policy. However, a number of Fed officials expressed their hawkish sentiments, keeping expectations live for a September or December hike.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USDCAD Breakdown Retracement (Aug 23, 2016)

USDCAD was previously trading inside an ascending channel pattern before breaking lower to signal a reversal. Price hit a low of 1.2762 before pulling up and indicating that a retracement to the broken support area could be in order.

Applying the Fib tool on the latest swing high and low shows that the 61.8% level is closest to the broken channel support around the 1.3000-1.3050 area. This is also close to the moving averages, which have just shown a downward crossover to show that selling pressure is strengthening.

Stochastic is already indicating overbought conditions and is starting to turn lower, which also confirms that sellers are taking control of price action. If any of the Fib levels keep gains in check, price could head back to the previous lows near 1.2750 or much lower as the downtrend resumes.

Crude oil prices have been weaker on Monday as traders probably booked profits off last week's rallies. In addition, the September futures contracts are expiring and are set to be replaced by the October contracts which have opened lower.

Data from Canada was better than expected as it showed a 0.7% gain in wholesale sales versus the estimated 0.5% uptick. However, this was much weaker than the previous 1.9% gain. Also, traders were already able to see the retail sales figures for the same month and the results were much weaker than expected.

Only medium-tier reports are due from the US today as traders are paying more attention to Fed rhetoric ahead of the Jackson Hole Symposium. So far signals have been mixed since the FOMC minutes seemed cautious while a few speeches from Fed officials recently showed hawkishness. The US dollar could find direction once Fed Chairperson Yellen gives her speech.

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US crude oil inventories are up for release on Wednesday and another draw in stockpiles could revive crude oil gains. Durable goods orders data are lined up for Thursday and the US preliminary GDP reading is due on Friday.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURGBP Pullback to Channel Support (Aug 24, 2016)

EURGBP has been moving in an ascending channel visible on its longer-term time frames and is just testing the resistance. Price seems to be making a correction from the uptrend at this point and applying the Fib tool on the latest swing high and low shows that the 61.8% Fib lines up with the channel support at the .8500 major psychological level.

Price is also drawing support from the 100 SMA dynamic inflection point for now. This short-term moving average is above the longer-term 200 SMA so the path of least resistance is to the upside and the rally could resume later on. Also, the gap between the moving averages is widening, which means bullish momentum is strengthening.

Stochastic is already indicating oversold conditions, which means that sellers might need to take a break and let buyers take over. More buying pressure could be seen once this oscillator climbs back above the oversold area. In that case, EURGBP could climb back up to the previous highs around .8725.

Economic data from the euro zone was mostly weaker than expected yesterday. French flash manufacturing PMI fell from 48.6 to 48.5 but services PMI was up from 50.5 to 52.0. German flash manufacturing PMI fell from 53.8 to 53.6 while services PMI dropped from 54.4 to 53.3.

As for the UK, the CBI industrial order expectations index dipped from -4 to -5, better than the projected fall to -9 but still indicative of a faster pace of contraction. BBA mortgage approvals data is due today and a decline from 40.1K to 38.5 is eyed.

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German final GDP is due today and a small downgrade from 0.4% to 0.3% is expected. Later on in the week, the UK will also released a revised version of its Q2 GDP, although no changes from the initially reported 0.6% growth figure is expected.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUDUSD Descending Channel (Aug 25, 2016)

AUDUSD has been trending lower on its 1-hour time frame, moving inside a descending channel formation. Price is trading around the middle, though, still deciding whether to test the resistance at .7625 or support at .7550.

The 100 SMA is below the 200 SMA so the path of least resistance is to the downside and the selloff is likely to carry on. In addition, the 200 SMA lines up with the top of the channel, adding to its strength as resistance. The gap between the moving averages seems to be widening as well so bearish pressure is strengthening.

Stochastic is heading south so AUDUSD could follow suit. However, once the oscillator reaches the oversold area and turns higher, buyers could try to prop the pair back up.

Economic data from Australia came in weaker than expected yesterday, as construction work done sank 3.7% in the second quarter of the year versus the estimated 1.9% slide. On top of that, gold prices have been weaker, weighing on the correlated Aussie as well.

As for the US dollar, data from the US economy has also been weaker than expected but this seems to be supporting the safe-haven currency. Apart from that, expectations of hawkish remarks from Fed head Yellen in her Jackson Hole testimony are also allowing the dollar to stay afloat.

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In terms of economic data, the US preliminary GDP reading is up for release on Friday and a small downgrade from 1.2% to 1.1% is eyed. Also due then is the revised UoM consumer sentiment index, which could be upgraded from 90.4 to 90.6. US durable goods orders, flash services PMI, and initial jobless claims are lined up today.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURUSD Uptrend Pullback (August 26, 2016)

EURUSD has been trending higher on its 4-hour chart, moving inside an ascending channel pattern and currently testing resistance. If the ceiling holds, EURUSD could pull back to the channel support at the 1.1150 minor psychological level.

Applying the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the support and 200 SMA dynamic inflection point. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside and the rally could continue.

The pair could also draw support from the 50% Fibonacci retracement level since this lines up with a broken resistance level. Also it is around the 100 SMA dynamic inflection point. Stochastic is already making its way up, which suggests that buyers are starting to regain control of price action.

The main event risk for this setup is Fed Chairperson Yellen's testimony in the Jackson Hole Symposium later today. An upbeat assessment of the US economy and hawkish remarks could keep Fed rate hike expectations in play for September and December, allowing the US dollar to post strong gains.

On the other hand, a cautious outlook could force the dollar to retreat on lower rate hike odds. Many are expecting Yellen to keep things balanced and refrain from stoking additional volatility in the financial markets.

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In terms of data, medium-tier US reports such as the durable goods orders and initial jobless claims came in better than expected yesterday. Germany's Ifo business climate was weaker than expected at 106.2, down from the earlier 108.3 figure and worse than the estimated 108.5 reading. Germany's GfK consumer climate index is due today.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUDUSD Channel Breakdown (Aug 29, 2016)

AUDUSD was moving inside an ascending channel on its 4-hour time frame before price made a break below support to indicate that the uptrend is over. A long red candle closed below the .7600 major psychological support, possibly putting price on track towards the next floor at .7500 then .7400.

The 100 SMA is still above the 200 SMA, though, so the path of least resistance is to the upside. However, AUDUSD already closed below the 200 SMA so a downward crossover may be seen soon, indicating that sellers are taking control of price action.

Stochastic is pointing down, also showing that bearish pressure is in play. This indicator is already nearing the oversold zone so a bit of profit-taking might happen, likely causing a pullback to the broken channel support at .7600 before resuming its slide.

Fed Chairperson Yellen's testimony during the Jackson Hole Symposium was the main catalyst for the dollar rally, as she gave hawkish remarks and confirmed that a rate hike might still be in play before the end of this year. These upbeat remarks were echoed by Fed official Fischer, leading market watchers to price in a possible hike by December this year.

Event risks for this trade this week include the NFP report, as stronger than expected jobs figures could underscore the stronger chances of a Fed rate hike soon. On the other hand, weaker than expected results could bring doubts about tightening once more, forcing the dollar to return its recent gains. With that, the leading jobs indicators such as the ADP report and the ISM PMI readings could also spur strong moves for the dollar.

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As for the Aussie, the retail sales report is due this week, along with PMI readings from China. Indications of a slowdown could put more weight on the Aussie, especially since traders are already turning their attention to weaker property figures from China.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUDUSD Short-Term Channel (Aug 30, 2016)

AUDUSD recently broke below the bottom of a longer-term ascending channel visible on its daily and 4-hour chart. On the shorter-term time frames, it can be seen that the pair is moving inside a descending channel formation and is bouncing off support.

The pair could be ready to test the channel resistance around the .7600 to .7650 area, which lines up with the Fib levels. Also, the 100 SMA lines up with the 50% Fib while the 200 SMA lines up with the 61.8% Fib, which is closer to the channel resistance.

The shorter-term MA is below the longer-term MA so the path of least resistance is to the downside and the selloff could resume at some point. Stochastic is already moving south so price could follow suit as sellers stay on top of price action. If any of the Fibs hold as resistance, AUDUSD could resume its drop to the previous lows at .7522 or lower.

In her Jackson Hole Symposium testimony, Fed Chairperson Yellen confirmed that the case for another rate hike has been stronger in the recent months. This has led to a strong dollar rally last week before profit-taking spurred a bounce earlier this week.

For now, traders are looking for more fundamental confirmation and the recent batch of core PCE price index, and personal spending and income data have merely met expectations. Dollar bulls will be watching the leading jobs indicators due this week to have more clues on how the top-tier US NFP report for release on Friday might turn out.

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As for Australia, building permits data came in stronger than expected earlier today but the bigger movers could be the Australian retail sales and Chinese PMI readings due on Thursday. Signs of a property slowdown in China could weigh on trade activity and iron ore prices, which are correlated to the Aussie.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USDCAD Countertrend Setup (Aug 31, 2016)

USDCAD is still moving inside an ascending channel on its daily and 4-hour time frame, but price is nearing the top of the formation so a selloff might be due. This resistance is located around the 1.3250 to 1.3300 psychological levels, which might keep gains in check.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, price has already broken above the 200 SMA, signaling a surge in upside momentum and a potential upward crossover for the moving averages.

Stochastic is already indicating overbought conditions, which means that buyers are exhausted and might let sellers take over soon. In that case, USDCAD could head back to the channel support at the 1.2850 to 1.2900 psychological support levels.

Economic data from Canada came in mixed, as the current account deficit widened on weaker export activity. This led market watchers to price in weaker GDP data for today. A monthly growth figure of 0.4% is eyed. Meanwhile, leading inflation indicators came in mixed, with the RMPI posting a sharper than expected decline and the IPPI showing a small uptick.

As for the US, the CB consumer confidence index beat expectations with a rise from 96.7 to 101.1 in August, hinting at stronger consumer spending down the line. The ADP non-farm employment change, Chicago PMI, and pending home sales are lined up for today.

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The ADP report could show a 174K increase in hiring for August, slower than the earlier 179K gain, but a higher than expected read could mean an upside NFP surprise and stronger dollar gains. The Chicago PMI is expected to dip from 55.8 to 54.1 while pending home sales could show a 0.7% gain.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPUSD Head and Shoulders Forming (Sep 1, 2016)

GBPUSD might be tired from its climb as price seems to be forming a head and shoulders pattern on its 1-hour time frame. The pair has yet to complete the right shoulder if the short-term Fib levels keep gains in check.

In particular, price could find resistance at the 1.3200 major psychological level, which has served as an area of interest in the past. For now, price is already hitting resistance around the 38.2% Fibonacci retracement level that lines up with the 200 SMA dynamic inflection point.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. Also, stochastic is nearing the overbought zone, which means that sellers could take control of price action soon. If so, GBPUSD could head back to the lows at 1.3050, which is the neckline of the head and shoulders pattern.

Data from the US came in mixed yesterday but traders still seem hopeful that Fed rate hike expectations could stay in play. The ADP report printed a 177K increase in hiring for August, higher than the projected 174K figure. The July figure was upgraded to show a 194K increase from the initially reported 179K gain. Meanwhile, the Chicago PMI showed a sharper than expected drop to 51.5 to show a slowdown in industry growth.

Event risks for today include the UK manufacturing PMI release. Analysts are expecting to see a rise from 48.2 to 49.1 to indicate a slower pace of industry contraction. Stronger than expected data could assure traders that the UK economy is able to stay afloat even after the Brexit vote.

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As for the US, initial jobless claims and the ISM manufacturing PMI are up for release. A drop from 52.6 to 52.0 is expected for the PMI but traders are likely to pay closer attention to the jobs component to see if it would hint at a stronger NFP reading or not. Analysts are expecting to see a 186K increase in the NFP report for August, lower than the earlier 255K gain.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USDCAD Potential Retracement (Sep 2, 2016)

USDCAD has been on a strong rally but seems to be encountering resistance near the 1.3150 minor psychological level, opening the opportunity for a pullback. Applying the Fib tool on the latest swing low and high on the 1-hour time frame shows that the 61.8% Fib lines up with a former resistance level ner the 1.2950 minor psychological level.

Meanwhile, the 50% Fib coincides with the 200 SMA dynamic support and the 23.6% Fib lines up with the 100 SMA, all serving as potential correction levels. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If any of the Fib levels keep losses in check, USDCAD could resume its climb to the previous highs or beyond.

Stochastic still seems to be heading lower but is already near the oversold region, which suggests that selling pressure could fade soon and allow buyers to take over. However, if sellers keep pushing price lower, USDCAD could make its way to the next support around 1.2800.

Economic data from the US came in weaker than expected yesterday, as the ISM manufacturing PMI tumbled from 52.6 to 49.4, reflecting industry contraction. Analysts had been expecting to see a drop to 52.0. The employment component featured a sharper contraction, leading some to predict that the NFP figure will miss expectations.

An increase of 180K in hiring is expected for August, lower than the earlier 255K gain, although revisions to previous data can still be made. Keep in mind that the ADP report printed a stronger than expected 177K gain for the same month while the previous reading was upgraded to 194K.

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As for Canada, its current account balance turned out much weaker than expected due to slower export activity. The trade balance is due today and a deficit of 3.2 billion CAD is eyed, smaller than the earlier 3.6 billion CAD deficit. Quarterly labor productivity data is also due from Canada and a 0.2% uptick is eyed.

By Kate Curtis from Trader's Way