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The Australian dollar finds resistance as retail sales come in weaker

The economic calendar is light of market-moving Tier-1 scheduled releases. With a mixed forex heatmap, there is a lack of risk-on/off direction so it could be a choppy day today.

Market Brief

Retail Trade data out of Australia in the overnight session showed that monthly and quarterly estimates of turnover and volumes for retail businesses, including store and online sales had fallen. The August 2021 seasonally adjusted estimates came in at -1.7% month-on-month & -0.7% compared with August 2020. Due to COVID-19 disruptions, there will be a more comprehensive release in the first week of October.

Following on from the data release the Antipodean pairs have remained relatively strong but are likely to fall during the London session if the US dollar keeps rising. The heat map shows that the AUDJPY is one of the strongest currency pairs currently and relative to its peers, with the ActivTrader sentiment indicator acting as a contrarian indication for direction as 73% of traders are shorting the pair.

The AUDJPY did find resistance at the daily 200 ema but I am expecting an eventual rise above the recent swing high for a test of previous support which is now likely to act as a firm resistance.

The Gfk consumer confidence survey from Germany has turned positive with the October forecast improving by 1.4 points monthly to come in at 0.3 points.

The EURUSD appears to be traveling lower within an Andrew’s Pitchfork channel, with the double bottom and 1.1600 looking like good targets for anyone in a short trade.

Once again, the ActivTrader sentiment indicator is proving to be very contrarian as 74% of retail traders on the platform are holding on to too long positions in the EURUSD. The possible turn will come when they flip to neutral or more bearish.

The risk markets will be all over the place this week as today is once again full of Federal Reserve members talking and giving a variety of speeches. Last night 2 Fed officials who were caught making millions from trading assets that had a link to Fed Reserve purchases have now had to step down, with one sighting health issues from added stress. The Fed has a chance to reshape and put into place better protocols and I doubt this will be too negative for the central bank.

The S&P500 has broken down through a rising trend line, recently gone back up to retest that line, and appears to be heading lower now it has found resistance. I would be short the pattern for now but will be looking for a resumption of the long trend when we have the infrastructure bill, debt ceiling, etc. passed and signed off. 4225 and the daily 200 ema looks like the most obvious levels to trade down to.


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