Saxo Team of Analysts - HK
Saxo Capital Market HK Ltd
Key FX Developments today
The market has shrugged off mild attempts at a USD rally after last Friday's US jobs numbers, with USDJPY looking heavy, GBPUSD storming back from Friday's weakness, and EURUSD back above 1.1400 after a polite test of the local support zone again. Whether key USD range supports hold or break, especially for EURUSD and USDJPY, is the focus for the week, while the commodity currencies face a key test around momentum divergence setups and the RBA cash rate announcement tonight in Asia. (see AUDUSD chart below.)
USDJPY
This pair is trading heavily again as neither the USD nor US rates got a boost from Friday's solid jobs report. A test of the range lows looks inevitable here, though every directional move recently has been quickly frustrated, so we may need momentum to pick up in risk aversion to see anything more than a gentle test below the range like the one after the Federal Open Market Committee meeting. A bigger structural area lower if risk aversion does pick up is the 106.50 area.
AUDUSD
We've noted the AUDUSD and USDCAD momentum divergence, though these setups only get more interesting on the follow-through that has so far been lacking. Tonight's Reserve Bank of Australia meeting should be the deciding factor, with weakness possibly testing the 0.7500 area or even the ultimate support line down below 0.7400 eventually. A failure of the downside to get traction amid a broadly weaker USD and complacent RBA could suddenly see us running up to the trend resistance.
- The author(s) and Saxo Capital Markets HK Limited are not responsible for and not liable to any loss arising from any investment based on any recommendation, forecast or any other information contained herein. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Capital Markets that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially in leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Investors should carefully consider their financial situation and consult their professional advisors as to the suitability of their situation prior to making any investments.
- Risk warning: Leveraged investments in foreign exchange or derivatives carry a high degree of risk and may result in significant gains or losses. You should carefully consider your financial situation and consult your independent financial advisors as to the suitability of your situation prior to making any investments.
Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract) and Type 3 Regulated Activity (Leveraged foreign exchange trading) licenses (CE No. AVD061) issued by the Securities and Futures Commission of Hong Kong.
Recommended Content
Editors’ Picks
GBP/USD remains on the defensive below 1.2450 ahead of UK Retail Sales data
GBP/USD remains on the defensive near 1.2430 during the early Asian session on Friday. The downtick of the major pair is backed by the stronger US Dollar as the strong US economic data and hawkish remarks from the Fed officials have triggered the speculation that the US central bank will delay interest rate cuts to September.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold: Middle East war fears spark fresh XAU/USD rally, will it sustain?
Gold price is trading close to $2,400 early Friday, reversing from a fresh five-day high reached at $2,418 earlier in the Asian session. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Israel vs. Iran: Fear of escalation grips risk markets
Recent reports of an Israeli aerial bombardment targeting a key nuclear facility in central Isfahan have sparked a significant shift out of risk assets and into safe-haven investments.