All three of these currency pairs--the euro/U.S. dollar (EUR/USD), Aussie dollar/U.S. dollar (AUD/USD) and the British pound/U.S. dollar (GBP/USD) -- currency look great and are easy to count. Looking first at the GBP/USD, we see a five-wave drop in play down from 1.3213 area which is a trait of a bearish impulse, and which suggest where the intra-day trend can be going.
The Aussie/Japanese yen (AUD/JPY) currency pair’s price action over the last five months provides a picture-perfect case study of rangebound trading opportunities. Like many so-called “risk assets,” the pair peaked in January of this year before trending low through February and March. In March, the pair put in a high around 84.50 and 80.50, keeping the established downtrend intact.
Notwithstanding President Trump’s daily twitter condemnations (trade partners and the Federal Reserve drew his ire this morning), traders have started to look ahead to next week’s trade. The marquee economic events impacting next week’s FX market will likely be Australia’s Q2 CPI reading in Wednesday’s Asian session and Thursday’s ECB meeting.
The euro flattened out early gains as the Pound dropped a penny on Brexit uncertainty at 8:30 am CT. While the pressure bled into the Euro, we do find this move a bit more technical than fundamental. The paring also occurred when ECB President Mario Draghi began speaking; he was upbeat on the economy and the positive effects of quantitative easing.
The mixed-bag U.S. jobs report on Friday caused the dollar to weaken further, allowing the likes of the euro/U.S. dollar and the Aussie dollar/U.S. dollar currency pairs to push higher, while buck-denominated gold also got a boost. The U.S. dollar/Canadian dollar currency pair, meanwhile was hit with a double whammy as it not only fell on the back of the NFP report but the Canadian dollar also got a boost from the stronger Canadian employment figures.
Another day, another round of trade war tweets drawing the attention of traders. To extend the trade war analogy, this morning’s causality was due to friendly fire. In a series of tweets this morning, U.S. President Trump criticized the iconic American manufacturer Harley Davidson, which has shifted some of its production overseas as a result of increased duties.
Friday’s “risk-on” rally, triggered in part by those strong US employment figures, followed through on Monday as Asian shares and U.S. index futures rose. Although Europe was also higher at the open, some of the major indices such as the German DAX gave up their earlier gains as investors considered the impact of U.S. import tariffs on metals and how this may impact European companies and their profits.
The week ahead is a big one for the Aussie dollar and it starts off quickly with Retail Sales among other economic data points Sunday night at 8:30 p.m. Central. Taking the cake is the Reserve Bank of Australia’s monetary policy meeting at 11:30 p.m. Central Monday night. Though rates are expected to stay unchanged, the RBA’s tone has stood firmly that the next move in rates is likely higher than lower.