The antipodean currencies have been strong all day after the RBA was Hawkish in their near-future plans, whereas the US dollar has remained range-bound. The economic data has been light with tomorrow being the first real test for the markets with ADP figures due.
The AUDUSD and NZDUSD have kept their relative strength against the other pairs all day today following on from the RBA minutes that came out in the overnight session. The RBA says they are likely to keep to the tapering schedule which is due to start in September with further reductions of the monthly asset purchases from November.
It was not all good for the commodity pairs as the Canadian dollar has ended the London session the weakest following on from Canadian Factory Activity Growth data.
The IHS Markit Canada Manufacturing PMI dropped to 56.2 in July from 56.5 in the previous month. The drop is the 5th consecutive month down from March’s high print as virus-related restrictions still cause problems, though they are easing.
The AUDUSD is trading within a rising channel with prices being capped currently by the daily 20 ema. The low volume month whilst head traders are away from the desks is showing prices across many assets being supported or held back by the moving averages on a daily time frame.
The US dollar index (DXY) is currently trading within Friday’s price action range. With the 200 and 50 daily ema’s acting as a dynamic support. Yesterday we had PMI’s which were negative for the USA’s economic outlook. Today we had a much better reading for the US Factory Orders coming in at 1.5% and above the 1.0% that had been predicted by analysts. What was even more bullish for the US economy is that the previous month was revised higher to 2.3%. The fact that the US dollar refuses to trade outside of a range means we’re unlikely to get any serious trending moves until something like ADP tomorrow or an announcement from the Senate or President Biden about the next round of stimulus.
The GBPUSD is having a better day of it today with the daily 50 ema acting as a floor for price.
On a lower time frame, the US Nasdaq is trading within a very defined wedge, which combined with the run-up in the narrow rising channel could now all be classed as a Bull Pennant pattern. This would be a great breakout trade with a 500-point target to the upside.
Whereas my idea for a short in the USDCAD from late last week has only just got to my original level for looking for a short. Price has now run up into the balance area after finding support around the daily 200 ema.
Oil is clinging to the daily 50 ema but any further downside will be bad news for my USDCAD short idea, especially while the DXY is stuck in a tight range.