Talking Points:
– NZD/USD Weighted by Weak Dairy Auction- 0.6700 to Offer New Support?
– USD/CAD Holds Range Ahead of BoC Meeting- CPI Report on Radar.
– USDOLLAR Holds Narrow Range- Outlook Remains Mired by Mixed Data.
For more updates, sign up for David’s e-mail distribution list.
NZD/USD
Chart – Created Using FXCM Marketscope 2.0
NZD/USD under pressure as the Global Dairy Trade auction showed a 3.1% decline in the GDT Price Index accompanied by a 4.6% contraction in Whole Milk Powder prices; will watch former resistance around 0.6690 (161.8% expansion) to 0.6700 (100% expansion) for new support.
Even though the Relative Strength Index (RSI) retains the bullish formation from back in July, the failure to hold above 70 may spur a larger NZD/USD correction ahead of the Reserve Bank of New Zealand (RBNZ) October 28 interest rate decision as the central bank keeps the door open to further embark on its easing cycle.
DailyFX Speculative Sentiment Index (SSI)shows retail crowd has turned net-short NZD/USD on October 6, with the ratio sitting a recent extremes (-1.19) as 46% of traders are long.
USD/CAD
With the Bank of Canada (BoC) widely expected to keep the benchmark interest rate on hold at 0.50%, more of the same from Governor Poloz and Co. may continue to foster range-bound prices in USD/CAD as it largely consolidates between 1.2860 (78.6% retracement) to 1.3080 (61.8% expansion).
However, an upward revision in the BoC’s economic forecast accompanied by a more hawkish outlook for monetary policy may boost the appeal the loonie and spur a larger correction in the exchange rate.
Key former resistance around 1.2790 (50% retracement) to 1.2800 (38.2% expansion) remains on the radar as the RSI preserves the bearish formation from back in July.
Join DailyFX on Demand for Real-Time SSI Updates Across the Majors!
Read More:
Price & Time: Do Or Die This Week For USD/CAD?
Canadian Dollar Falls as Liberals Unseat PM Harper to Win Election
USDOLLAR(Ticker: USDollar):
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
11927.92
11933.93
11905.82
-0.02
61.33%
Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar pares the decline from the overnight trade despite the ongoing mixed batch of data coming out of the economy; may see the Federal Open Market Committee (FOMC) endorse a wait-and-see approach at the October 28 interest rate decision should the data prints continue to fall short of expectations.
Will keep a close eye on the Fibonacci overlap around 11,951 (38.2% expansion) to 11,965 (23.6% retracement) stands on the radar, with a break & close back above the region opening up the September high (12,104).
However, a near-term topping process in the USDOLLAR may spur a more meaningful decline into 11,826 (61.8% expansion) to 11,843 (38.2% retracement).
Join DailyFX on Demand for Real-Time SSI Updates!
— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
To be added to David’s e-mail distribution list, please follow this link.
Trade Alongsidethe DailyFX Team on DailyFX on Demand
New to FX? Watch this Video
Source: Daily fx