Can the Chinese And Australian Data Misses Turn The Risk Rally Around?

Despite the slow data-light trading conditions during the London session, highlights being Canadian Core Retail Sales printing a better than expected 1.2% vs 0.1% forecast, there were some very interesting technical developments. The USD% index sold off and finally retested strong trend-line support in the NY afternoon. This pushed AUDUSD up to meet Weekly R1 resistance, 0.9300 and the Volume Weighted Moving Average from the peak of the rally ending 3rd June. The GBP% index now sits at a 61.8% Fib retracement from the 17th of June high. The EUR% Index sits at a 76.4% Fib retracement from 19th of June High.

Tonight’s main risk events, Australian CPI and Chinese HSBC Flash Manufacturing PMI both printed worse than forecast results with Australian CPI coming in at 0.4% vs 0.5% causing a quick spike lower before whipsawing higher to 0.93175 before the HSBC Manufacturing PMI for China posted a print of 47.7 vs 48.6 forecast and lower than the previous reading of 48.2.

USD% Index

Further weakness today with numerous retests of recent support, which held up well until a risk rally finally broke through, exposing strong trend-line support. I am bullish USD% given the weaker than expected Australian and Chinese data. This may also align with the possibility of poor European manufacturing PMIs on Wednesday, which would push the USD% index to higher resistance levels.

USD% Index Resistance: EURUSD 1.3195, 1.3138, 1.3075
USD% Index Support: EURUSD 1.3222, 1.3233, 1.3280, 1.3300

EUR% Index

EUR% index remained within a bullish channel following a test of trend-line support, rallying up to minor trend-line resistance and a 76.4% Fib retracement. Risk off sentiment resulting from poor Chinese and Australian data may cause a long awaited sell-off in the European currencies verses the dollar, although traders may wish to wait until after the French and German PMI data before closing longs. I am bearish EUR%.

EUR% Index Resistance: EURUSD 1.3235, 1.3316
EUR% Index Support: EURUSD 1.3150, 1.3030

EURAUD Trade Positioning

I technically favour AUD over Euro and as such am short EURAUD from 1.42984 with stops at 1.4382. I have already hit my first profit target, therefore this trade can hit stops without loss overall.

JPY% Index

A retest of the recently broken bearish trend-line allowed for a quick JPY rally today, posting a bullish daily pin bar candle on the JPY% Index. I expect this bullish sentiment to continue due to safe-haven flows resulting from a possible risk-off sentiment, however this sentiment could easily turn bullish if European data on Wednesday morning impresses. I am bullish JPY%.

JPY% Index Resistance: USDJPY 98.75, 98.00
JPY% Index Support: USDJPY 100.11, 10.45, 101.00

GBP% Index

The GBP% index rallied slightly today although ended up largely flat on the day after a dollar sell-off failed to push the index through 76.8% Fib resistance. As such the currency may overbought and could see some selling pressure in the next few days. I am bearish GBP%.

GBP% Index Resistance: GBPUSD 1.5450, 1.5500
GBP% Index Support: GBPUSD 1.5300, 1.5250

EURGBP Trade Positioning

I remain short EURGBP from 0.8612 with stop above recent high at 0.8712

AUD% Index

With two critical data releases falling short, the Australian Dollar may have posted a medium term top, although everything is reliant on follow through of the move lower, which is currently being hampered by persistant USD% Index resistance. A break of this would change the sentiment to risk-off causing the AUD% index to further sell off to test lower support levels.

AUD% Index Resistance: AUDUSD 0.9330, 0.9444
AUD% Index Support: AUDUSD 0.9240, 0.9150, 0.9050, 0.9000, 0.8967

AUDUSD Trade Positioning

I have entered short AUDUSD from 0.92974 and 0.93158 with the whole trade set to break-even at 1.9312.

CHF% index

Following a break of bullish trend-line support, the Swiss Franc quickly found buyers again, rallying back to test the recently broken trend-line and posting a bullish daily pin bar, although significantly the high for the day was lower than the high from Monday. USDCHF failed to convincingly break through the 200DMA indicating that support here is strong. The poor data from China and Australia has caused a slight sell off in the CHF% index, which I expect to continue in the short to medium term, although this view will rely on the European manufacturing data early on Wednesday. I am bearish CHF%.