Thunder in the Land Down Under

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Thunder in the Land Down Under

The Land Down Under and its oceanic buddy had worse than expected employment data, though Australia seems to be winning the battle of bad employment.

From the city that loves to trade, New York City,  this is how to  make money as a  bunch of currency pairs dance the week away on the forex dance floor.


Let’s start today with Mr. Aussie who seems to have rebounded from his 7-month high of 0.95 against Ms. USA.  

The AUD/USD pair finally showed some moves and broke below the Ichimoku cloud on dismal Australian jobs report and seems to be heading south towards the key Fibonacci retracement levels.

Our next targets are set at 0.9181 and 0.9081, though a break above 0.95 would change our outlook back to bullish with 0.9750 as an alternative target.

 EUR/USD still teasing the 50% Fibonacci level after making us some fancy pips as they reached our previous targets 1.345 and 1.33.

We’re still waiting to see if the pair is strong enough to break below the 50% Fibo level which would open doors for more down moves towards 1.31.A break above 1.37, could call for further upside with 1.4 & 1.4245 as targets.

As for GBP/USD, after a period of consolidation around a 5-year high at the 1.7 level, which also made the Invest Diva followers some delicious pips, the Pound-dollar pair finally cleared their complicated status and broke below the Ichimoku cloud.

So I’m thinking we are going to see drops below 1.68 towards 1.65 in extension.

Now if the pair suddenly decides to go nuts and break back above the Ichimoku and 1.71 level, that would open doors for more gains towards 1.74 and 1.79.

USD/JPY keeps playing with our hearts as it bounces up and down within the narrow rage between 101 and 103.

There was a hammer candlestick formation above th Ichimoku cloud on Friday though so fingers crossed, the pair may have got tired of their boring moves and we could finally see some up moves towards our long-term target at 105.

A quick look at precious metals and commodities:

Crude oil fell below 96.90 last week activating drop pressure for short-term traders.

Gold managed to rebound above 1300 over tension in Ukraine, Iraq, Gaza and Israel, while short-run projection still sees trading zone between 1290 – 1325.

Long term traders. Don’t sweat the small losses and look at the big picture. Short term traders, invest responsibly.

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Fundamentals Summary

Equity markets in Europe continued as their Asian counterparts left off yesterday, all up above at least 1%. The move was a continuation of the mild ‘relief rally’ theme as Russia spoke about stopping military exercises at the Ukrainian border.

The sigh of relief may be a little premature, as there is some small concern that Putin could now send ‘aid’ to Ukraine as a cover against getting boots on the ground in the country, though he has been warned against doing this by just about everyone in europe with ‘president’ in their job title. Despite the warnings, there are reports this morning that a large convoy containing humanitarian aid has left Moscow, though the Red Cross might be in a position to take over the aid delivery and keep everyone happy.

While markets see tensions lifting, senior European officials look to be digging in for the long game and are apparently courting South American countries in a bid to stop them bridging the trade gaps with Russia that the sanctions will bring.

The risk rally actually took the Dollar with it yesterday, as traders moved out of the safe haven Yen trade and back into the Dollar, so the Greenback continued to strengthen gradually, putting it very much on the front foot, despite interesting comments from the Federal Reserve’s second in command that the continued slower than expected growth in the United States might just be the new normal.

Something that most of the US won’t be happy to see is a long range weather report that says the polar vortex could make a return to the north east of the country as early as September. The news certainly won’t be welcome by the Fed, who squarely blamed the last one on the abysmal performance of the economy during Q1, however investors are probably eagerly awaiting another factor that might stall any hint of an interest rate rise.

British Pound hasn’t helped itself against the Dollar overnight, as like for like food prices made for disappointing reading in the marketplace. Food prices actual fell by 0.3% compared to June, as supermarkets continue to war over prices and have the luxury of strong crop yields to keep their own purchase prices down. The fall means that less pressure is likely to be felt by the Bank of England and investors may start to adjust their expectations of what Mark Carney has to say intomorrow’s inflation report.

Overnight news flow away from Ukraine and Iraq has been very limited. We saw a couple of downgrades from S&P, who have demoted a couple of Austrian regions as another reasonably strong European economy appears to be coming under pressure to sustain a post GFC turnaround.

Upcoming Today

On the wires today, we’ll hear more on Germany in the form of ZEW data. Italy will post their inflation numbers, as will Portugal. We’ll be interested to read Ireland consumer confidence figures to see how the cracks forming in Europe are affecting their mood. This afternoon we see the US monthly budget statement as the only possible market mover, but those that are at their desks are more interested in geo-politics than government spending at the moment.