Support on AUD/USD still looks solid

Can you grade one level of support relative to another? Is a pause at a specific price point more important today than the same support level a month ago or 6 months ago? I think that there are ways to estimate one support level as more important than another. A good example is what is going on right now on the AUD/USD. Clearly we are at a long term support level having been here before in December and January during the last disruption in oil prices. However, what else is true is that we are at a level of extreme price movement based on a reading from the CCI or commodity channel index.

I use technical indicators like the CCI to grade support and resistance levels. When support coincides with a historically low level on the CCI where the market has reversed significantly before, I take note. That is the situation now. Support in the price action on the AUD/USD is occuring at the same time that we are clearing an extreme reading on the CCI. I have found that this is a good indicator that a continued trend is at risk and a bounce may occur.

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USD Declination In Assian Session

Forex Market Overview 22 August 2008


The Usd continued to decline in the Asian session as worries over the US financial markets and surging crude prices weighed on the Dollar sentiment. The EurUsd climbed to the 1.4900 levels, before retracing slightly to 1.4876, while the UsdJpy declined and is now trading at 108.90. Crude rose across the board, with wti moving up $5.00, above $120.00bll. With concerns of a production cut swirling around the September 9th OPEC's meeting and Wednesday’s inventories lower than expected still lingering, crude has picked up a bullish tone. And given the high level of the Usd this commodity will be the prime driver in currency pricing today. In addition, 5-year swap spreads are now hoving around 100bp, the widest level since the Bear Stern disaster and before that you would have to go to 2001 and the equity market collapse to find spreads this wide. A gloomy sign if ever was one. Outside Bernanke’s scheduled speech in Wyoming (given the uncertainty surrounding the financial market, traders will be on a heightened state of alert) the market will be without any real events or data releases, so traders should be particularly aware of price-action in other assets classes.

Daily Forex Pivot Point
AUDUSD
R 3: 0.8846
R 2: 0.8797
R 1: 0.8757
CURRENT: 0.8735
S 1: 0.8626
S 2: 0.8593
S 3: 0.8503

EURJPY
R 3: 163.88
R 2: 163.10
R 1: 162.39
CURRENT: 162.07
S 1: 160.88
S 2: 160.14
S 3: 158.61

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4201
CURRENT: 1.4082
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

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Forex Market Overview

Forex Market Overview 27 June 2008

Usd was slightly stronger in the Asian session after yesterday surging oil prices and worries over growth punished the greenback. EurUsd pulled back from 1.5763 to 1.5724 while GbpUsd followed as 1.9897 to 1.9857. However, the easing of pressure goes against the bearish feel the Usd attracted over recent days and we expect further dollar weakness. US stock markets took a massive dive while crude push to it highest levels ever. Asian stock markets followed the US lower and European equities futures are pointing to a negative open.

Thursday was a red day for US equity markets, as it was for markets in Europe. The S&P500 was lower by nearly 3%, while the DJIA was off by just over 3%, and the NASDAQ by 3.3%. The S&P500 broke through the 1300 level, while crude was moving in the opposite direction crossing the $140 mark, before closing at a record of just under $140. US Economic news out on the day was decent, but was completely overlooked. The summer looks like it's going to be a long one...Oil prices shot up over $140 barrel after the head of OPEC stated that prices could hit $170 barrel this year. Goldman Sachs forecasted more write-downs for Citigroup and they also recommended selling auto shares, this news sent shivers through financial stocks.

Asian markets are unsurprisingly lower this morning, as the Nikkei declines 2.7%, the Hang Seng is down 1.8% and the MSCI A-P is lower by 2.4%. The region is set to return its worst H1 since 1992, as the credit crunch hits home.

In our view Japan's economic data was decidedly negative. Retail sales exceeded market expectations reaching 0.2% but has slowed since February's peak and when you carve out fuel consumption was -0.1% yoy. Household survey's showed real spending was down -3.2% vs. -2.1% exp and Auto sales slowed to 0.2%. In our mind just more evidence that Japan is facing significant headwind on both the domestic & international front and we expect Jpy to suffer.

In the European session markets will be watching EC Economic Sentiment Indicator. This indicator has recently been optimistic regarding economic activity in the euro zone but should fall further today. With the euro at elevated levels and global demand soft industrial confidence should also weaken. However with markets trading off commodity prices and stock markets we don't expect a soft figure will have significant effect on EurUsd strength. In addition, since we are expecting the ECB to hike and NFP to shed over 100k jobs 1.6000 doesn't seem impossible.

Daily Forex Pivot Point
AUDUSD
R 3: 0.9655
R 2: 0.9648
R 1: 0.9604
CURRENT: 0.9582
S 1: 0.9490
S 2: 0.9448
S 3: 0.9405

EURJPY
R 3: 171.00
R 2: 170.00
R 1: 169.15
CURRENT: 168.17
S 1: 166.77
S 2: 166.00
S 3: 165.51

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3730
CURRENT: 1.3645
S 1: 1.3635
S 2: 1.3580
S 3: 1.3554

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