Talking Points:
– USD/JPY at Risk for Larger Pullback as RSI Divergence Takes Shape.
– AUD/USD Holds 2014 Low (0.8659) Even as Australia Retail Sales Disappoints.
– USDOLLAR Weighed by Weak ISM Manufacturing; RSI Remains Capped.
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USD/JPY
Despite the fresh 2014 high (110.08) in USD/JPY, the divergence in the Relative Strength Index (RSI) raises the risk for a larger correction should the oscillator fail to preserve the bullish momentum.
Series of failed attempts to close above 109.60-70 (100% expansion) may also provide additional confirmation/conviction for a further decline in the exchange rate.
Even though the DailyFX Speculative Sentiment Index (SSI) continues to show net-short dollar positioning, the ratio for USD/JPY has narrowed as it currently sits at -1.19.
AUD/USD
AUD/USD may face a bottoming process ahead of the Reserve Bank of Australia’s (RBA) October 7 meeting as it holds the January low (0.8659) & continues to close above the 0.8700 handle.
Would like to see the RSI come back from oversold territory & breakout of the bearish momentum to adopt a more bullish outlook for AUD/USD.
Australia’s economic docket may generate a more meaningful rebound over the next 24-hours as the trade deficit is expected to narrow to AU$800M from AU$1359M in July.
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Read More:
Price & Time: Greenback Still Shines
Scalping the AUDCHF Reversal- 8360 Resistance in Focus
USDOLLAR(Ticker: USDollar):
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
11064.99
11083.37
11034.68
0.16
93.31%
Chart – Created Using FXCM Marketscope 2.0
Despite the 213K rise in the ADP Employment report, the Dow Jones-FXCM U.S. Dollar Index falls back from a fresh monthly high (11,083) as ISM Manufacturing disappoints, with the employment component narrowing to 54.6 58.1 in August.
Despite the series of higher-highs & lows in price, the RSI may highlight a more meaningful correction in the greenback should the oscillator remain capped around the 83 region.
Will continue to watch 11,120 (1.618% expansion) to 11,138 (61.8% expansion) ahead of the highly anticipated Non-Farm Payrolls (NFP) report, which currently shows expectations for a 217K rise.
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Release
GMT
Expected
Actual
MBA Mortgage Applications (SEP 26)
11:00
—
-0.2%
ADP Employment Change (SEP)
12:15
205K
213K
Markit US Manufacturing PMI (SEP F)
13:45
57.9
56.6
ISM Manufacturing (SEP)
14:00
58.5
56.6
ISM Prices Paid (SEP)
14:00
57.0
59.5
Construction Spending (MoM) (AUG)
14:00
0.5%
-0.8%
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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