Talking Points:
– AUD/USD Retail Crowd Turns Net-Long Ahead of RBA Interest Rate Decision.
– USD/CAD Continuation Pattern Remains in Focus Going Into BoC Policy Meeting.
– USDOLLAR Breaks Resistance- Topside Targets Remain on Radar Despite Mixed U.S. Data.
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AUD/USD
Chart – Created Using FXCM Marketscope 2.0
Despite the rate cut from the People’s Bank of China (PBoC), AUD/USD struggles to hold its ground ahead of the Reserve Bank of Australia (RBA) meeting amid bets for another rate cut.
According to a Bloomberg News survey, 18 of the 29 economists polled forecast a 25bp rate cut, while overnight index swaps (OIS) show market participants are pricing a 59% chance for a further reduction .
Seeing increased volatility in the DailyFX Speculative Sentiment Index (SSI) as retail crowd turns net-long AUD/USD coming into March, with the ratio currently holding at +1.04.
USD/CAD
USD/CAD may face a larger rebound going into the Bank of Canada’s (BoC) March 4 policy meeting as the pair preserves the continuation pattern & retains the near-term bearish RSI momentum; need a break of the triangle/wedge formation to favor fresh 2015 highs.
In light of recent comments from BoC Governor Stephen Poloz, the forward-guidance for monetary policy looks poised to heavily impact the Canadian dollar as it seems as though the central bank will keep the benchmark interest rate at 0.75% .
Waiting for a break/close above 1.2630 (23.6% expansion) or below 1.2345 (38.2% retracement) to dictate the near-term bias.
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Read More:
Price & Time: GBP/USD Mixed Signals
Australian Dollar Spec Short Position is Largest Since January 2014
USDOLLAR(Ticker: USDollar):
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
11855.42
11857.55
11826.05
0.26
58.92%
Chart – Created Using FXCM Marketscope 2.0
Despite the slew of mixed data, outlook for Dow Jones-FXCM U.S. Dollar as it breaks above near-term resistance around 11,826 (61.8% expansion), while the RSI breakout continues to take shape.
May see waning expectations for a strong Non-Farm Payrolls (NFP) report as the ISM Manufacturing employment component continues to expand at a slower pace.
Will continue to favor the approach to ‘buy dips’ in the USDOLLAR especially on a close above 11,826, with the next region of interest coming in around 11,901 (78.6% expansion).
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Release
GMT
Expected
Actual
Personal Income (JAN)
13:30
0.4%
0.3%
Personal Spending (JAN)
13:30
-0.1%
-0.2%
Personal Consumption Expenditure Deflator (MoM) (JAN)
13:30
-0.5%
-0.5%
Personal Consumption Expenditure Deflator (YoY) (JAN)
13:30
0.2%
0.2%
Personal Consumption Expenditure Core (MoM) (JAN)
13:30
0.1%
0.1%
Personal Consumption Expenditure Core (MoM) (JAN)
13:30
1.3%
1.3%
Markit Purchasing Manager Index Manufacturing (FEB F)
14:45
54.3
52.9
ISM Manufacturing (FEB)
15:00
53.0
52.9
ISM Prices Paid (FEB)
15:00
37.5
35.0
Construction Spending (MoM) (JAN)
15:00
0.3%
-1.1%
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— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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Source: Daily fx