AUD/USD: Market Pared Back The Prospects Of Further Easing
Growth Aces | May 05, 2015 05:57AM ET
GROWTHACES.COM Forex Trading Strategies
Taken Positions
EUR/USD: long at 1.1150, target 1.1350, stop-loss 1.1040, risk factor **
USD/CHF: short at 0.9400, target 0.9200, stop-loss 0.9500, risk factor ***
USD/CAD: short at 1.2110, target 1.1930, stop-loss 1.2205, risk factor ***
AUD/USD: long at 0.7870, target 0.8230, stop-loss 0.7790, risk factor ***
NZD/USD: long at 0.7560, target 0.7800, stop-loss 0.7450, risk factor ***
EUR/GBP: long at 0.7320, target 0.7590, stop-loss 0.7220, risk factor **
AUD/JPY: long at 93.80, target 97.00, stop-loss 92.80, risk factor ***
Pending Orders
GBP/USD: buy at 1.5060, if filled - target 1.5540, stop-loss 1.4940, risk factor **
EUR/JPY: buy at 133.00, if filled – target 135.60, stop-loss 131.90, risk factor **
EUR/CAD: buy at 1.3380, if filled – target 1.3730, stop-loss 1.3280, risk factor **
GBP/JPY: buy at 180.60, if filled – target 184.90, stop-loss 179.45, risk factor **
CHF/JPY: buy at 127.65, if filled – target 130.40, stop-loss 126.35, risk factor ***
AUD/NZD: buy at 1.0380, if filled – target 1.0530, stop-loss 1.0320, risk factor ***
EUR/USD Close To Key Support Level Of 1.1051
(long under threat)
- Chicago Fed President Charles Evans (dovish, voting this year) said the Federal Reserve should hold off on raising short-term interest rates until early next year. He said that while the subdued job gains in March were likely transitory, unemployment at 5.5% is still about a half a percentage point higher than it ought to be. He said that inflation has been running below the Fed's 2% target for years, and is likely to take until 2018 before it returns to that target. He added, however, that rate hikes could begin this year without harming the recovery.
- ECB governing council member Christian Noyer warned that diverging Eurozone and U.S. monetary policies could present a risk of instability for financial markets. with more reforms. Noyer, who is also governor of the French central bank, said in an annual letter to French President Francois Hollande that low oil prices and a weak EUR should add half a percentage point to French growth in both 2015 and 2016.
- The USD recovered a footing against a range of major currencies. The EUR/USD is falling for a third session in a row, which is not a big surprise - after strong rises in the second half of April, we see some profit taking on USD-selling positions now.
- Our long EUR/USD position is under threat, the rate is close to a very important support level – daily high on March 26 at 1.1051. Breaking below this level may trigger stronger falls. However, the medium-term outlook is still bullish and if the stop-loss level is reached we will be hunting for lower levels to get long again.
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Significant technical analysis' levels:
Resistance: 1.1224 (high May 4), 1.1269 (100-dma), 1.1290 (high May 1)
Support: 1.1051 (high Mar 26), 1.1000 (psychological level), 1.0960 (low Apr 29)
GBP/USD: Construction Industry Slowed Sharply, Eyes On Services Now
(buy at 1.5060)
- Construction PMI fell to 54.2 last month, its lowest level in 22 months and down from 57.8 in March. Residential building activity was by far the best performing broad area of construction output during April, although even in this category the pace of expansion slipped to a 22-month low. Meanwhile, growth of commercial construction work was the least marked since August 2013 and civil engineering activity decreased for the first time in four months.
- Looking ahead, business confidence regarding the 12-month outlook dipped from the nine-year high seen in March, but remained stronger than its long-run average. Robust job creation was maintained across the construction sector in April, although the rate of staff hiring was still less marked than the average seen in 2014 as a whole.
- Last-week data showed that Britain's overall economic growth slowed sharply in the first three months of this year. PMI manufacturing fell to 54.2 last month, its lowest level in 22 months and down from 57.8 in March. A survey of Britain's dominant services sector, due to be published on Wednesday, will give an idea of the scale of the slowdown at the start of the second quarter of 2015.
- The GBP/USD fell to 1.5088 after the data’s release. Tomorrow’s PMI services data could be important for the GBP/USD. Investors will switch their focus to parliamentary election then.
- Ahead of Britain's parliamentary election on Thursday, Prime Minister David Cameron's Conservatives and the opposition Labour Party are tied at 33%, according to a YouGov opinion poll. The election is expected to be the tightest in decades. Opinion polls have consistently shown that neither of the two main parties is likely to win an overall majority in the 650-seat Parliament.
- We do not change our trading strategy and keep our buy order at 1.5060.
Significant technical analysis' levels:
Resistance: 1.5154 (100-dma), 1.5174 (high May 4), 1.5397 (hourly high May 1)
Support: 1.5088 (session low May 5), 1.5033 (50% of 1.4567-1.5498), 1.5000 (psychological level)
AUD/USD: Market Pared Back The Prospects Of Further Easing
(stay long)
- Australia's central bank cut its cash rate a quarter point to an all-time low of 2.0%, in line with market expectations and against our forecast. RBA Governor Glenn Stevens said: “The Board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand.” He added: “The available information suggests improved trends in household demand over the past six months and stronger growth in employment.”
- The RBA statement announcing the rate cut noted some improvement in the economy while omitting a mention of any need for further action.
- The AUD/USD initially dropped after the RBA decision, but the dip was short-lived. The market pared back the prospects of rates going under 2%, short-term yields climbed and the AUD/USD more than reversed the drop.
- The central bank will release a quarterly review of the economy and policy on Friday.
- Australia's trade deficit amounted to AUD 1.322 bn in March vs. the median forecast for AUD 1.0 bn deficit.
- Our AUD/USD long survived despite the RBA cut rates against our expectations. A long lower wick was formed on the chart and the pair broke above 10-dma at 0.7856. Technical situation is encouraging for our long position now.
Significant technical analysis' levels:
Resistance: 0.7917 (session high May 5), 0.7938 (hourly high Apr 30), 8000 (psychological level)
Support: 0.7796 (session low May 5), 0.7792 (low Apr 27), 0.7765 (21-dma)
Source: Growth Aces Forex Trading Strategies
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