Aussie Dollar Marching Towards 0.80
Axi | Jul 19, 2017 10:43
Originally published by AxiTrader h2 Markets Overview:/h2
- Equities: Nikkei (-0.63 %), Hang Seng (-0.14 %), CSI 300 (-0.83 %), KOSPI (-0.02 %), S&P/ASX 200 (-1.15 %)
- Commodities: WTI Crude $46.08 (+0.13 %), Brent Crude $48.50 (+0.17 %), Natural Gas $3.04 (+0.53 %), Gold $1237.28 (+0.26%), Copper $272.65 (+0.09 %)
The US dollar and equity markets came under pressure following news that US President Trump’s healthcare reform has no chances to pass in its current reform. With that, the probability that Trump will be able to get his economic reforms passed have decreased as well. Big expectations about his economic plan were one reason why the dollar surged last November.
Asian stock markets came under pressure. The Nikkei fell 0.60 percent, while China’s CSI 300 lost around 0.80 percent. Australia’s ASX 200 declined more than one percent on the day, and is approaching major support at 5600. A break below that level would pave the way for a retracement to at least 5520.
European shares are likely to open lower as well. The DAX is still struggling with resistance above 12.600. Short-term, support at 12.520 is key. Should it fail to hold, a retracement back to 12.300 points is likely.
DAX - H4-Chart
Meanwhile, the FTSE 100 was once again rejected at 7370 resistance and fell back to 7320. Expect solid support at 7295, followed by the major support area between 7230-35.
In FX, the greenback was sold across the board, while the Australian dollar benefited from a more hawkish RBA. The central bank noted that "the strength of recent labour market data had removed some of the downside risk in the bank's forecast of wage growth" and that "a reduction in risk aversion/increase in potential growth rate could see the neutral real interest rate rise again".
AUD/USD jumped from 0.7780 to 0.7905 overnight. The technical outlook is positive, and there is little resistance until 0.80.
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AUD/NZD is looking strong as well. Following the clear break above the 200 DMA and resistance at 1.0650, a rally towards 1.10 seems possible.
The New Zealand dollar came under pressure in the early APAC session after NZ inflation data disappointed. However, the broad US dollar selling supported the currency later in the session, and NZD/USD bounced from 0.7260 back to 0.7345. Heavy resistance can be expected ahead of the 0.74 level, but the outlook remains positive from a fundamental and technical perspective.
EUR/USD broke above 1.15 overnight, and there is no major resistance now until 1.1620. Volatility will likely decrease ahead of the ECB meeting as traders wait for Draghi’s comments, but the charts suggest further gains are ahead.
Looking ahead, the focus today will be on UK inflation data. For the year-on-year figure, the market is expecting to see 2.9 %, unexpected from the previous print.
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