Relatively quiet data week this week but we do have some key speakers to look forward to in the form of Carney and Bernanke on Wednesday and the RBA overnight tonight.
Currently, although our Order Book systems have been looking for the turn for a while and flirted with US Dollar longs briefly in some crosses, they have reverted to US Dollar shorts today but it remains extremely tight for the switch.
The challenge with the Poor NFP number is essentially the taper or not taper talk for September, if the market believes there will be no taper then we are likely to see further US Dollar weakness, if the market believes there will be a taper then we are likely to see US Dollar strength.
At the moment poor employment data including the employment component in the ISM Non-Manufacturing Index today looks really weak that, coupled with strong UK and European data, is putting pressure on the Dollar. The issue here is that the markets are easily swayed in light holiday volume by any comments that might lead opinion in one way or another; although Central Bank heads are likely to try and keep things calm in August the odd slip or inappropriate choice of words can have a big impact, especially when Order Books are at extremes.
RTAS Order Book systems switching closed shorts after the NFP number and are now long again, however with the Order Book at extremes this will remain tight longs which could switch pretty rapidly. We wouldn’t be surprised to see a final push and test of the 1.3330 mark in EURUSD before it makes up its mind on the next key move.
The daily chart shows the current conundrum in this pair with strong support below and strong resistance above. If we do break higher though, given the extremes in the Order Book, it may be difficult for this pair to really move past the 1.3400 level.
RTAS Order Book systems still holding long this pair with Retail Traders again selling GBPUSD today. It has now retraced all of the rather bizarre and weak moves on light volumes from last week and sits just below the key 1.5400 level. Order Book remains extremely tight with little movement, we suspect this pair could be gearing up for a move lower.
Daily chart finally found some support at the 1.5100 level and pushed higher on the weak NFP number. 1.5400 level is now critical, a break above this could see us test the 200 day SMA around 1.5550.
RTAS Order Book system currently long on AUDUSD at the 0.8900 level but has been trading this pair on a shorter term basis given the extremes in the Order Book and the relative chop. The RBA rate decision over night will be critical, if they don’t cut rates this pair could push back above 0.9000 while if they do we could continue our move towards the 0.8500 level.
Daily chart seems to be showing some interim support ahead of the RBA rate decision but this pair does continue to look weak. We still suspect it is carving out a bottom but still has room to the downside before we could see a retracement. RBAs comments overnight will be key as recently they have talked down the pair, if they move from this stance we could start to see a recovery.
Order Book systems holding short this pair although now have reverted to extreme levels we could see the turn in this pair and the system start to look for long trades, potentially one final push lower to the 0.9215 mark could be on the cards.
Daily chart looking relatively weak today but with strong support expected below, if we do push lower we would expect it to struggle breaking the 0.9200 / 0.9150 mark.
The RTAS Order Book system still holding longs in this pair, although the RBA decision overnight could be key. Essentially this pair acts as a pseudo hedge between AUDUSD and EURUSD and has worked out well recently. Order Book has been at extremes for a while and is ready for a turn with our Order Book Systems heading back towards shorts, challenge with this pair is whether the shorts suggest a big or small correctional move. If we get the turn lower in EURUSD and the correctional bounce in AUDUSD this pair could move lower very rapidly.
Further resistance on the daily chart at the nice round 1.5000 figure, if we push lower we would expect support around the 1.4600 mark then the key 1.4500 / 1.4450 levels.