Market Beat: Aussie and Kiwi Tumble as the Dollar Rises Again

July 20, 2016

The Australian Dollar and the New Zealand Dollar provided the biggest moves on the downside on Tuesday following the RBA Meeting Minutes.

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Market Beat: Aussie and Kiwi Tumble as the Dollar Rises Again

This article is originally referred from Daily FXGlobe

The Australian Dollar and the New Zealand Dollar provided the biggest moves on the downside on Tuesday following the RBA Meeting Minutes, while the Japanese Yen continued its decline as well in early trading. The Great British Pound also fell yesterday and it’s down again slightly this morning as well, despite a number of positive surprises in economic numbers, as traders are still worried about the possible consequences of the Brexit-vote.

The U.S. Dollar bounced back compared its major peers yesterday, after the correction of Monday, and that provided a headwind for risk-on currencies and commodities. Oil fell slightly after a positive morning session, while precious metals were mixed with a small loss for silver and minor advance for gold. Commodity currencies were all lower on Tuesday as the Canadian Dollar also fell compared to the USD, like the Aussie and the Kiwi.

EUR/GBP (current price: 0.8406)

Yearly British CPI came in at a 0.5%, higher than expected, and the HPI also beat the consensus estimate with a reading of 8.1%. The data was supportive of the Pound, but investors probably still gave a bigger weight to the downward pressures from the possible monetary easing by the Bank of England later on this year. The pair got up to the 0.84 support/resistance level yesterday, as it still trades in a short-term uptrend, although strong resistance still lies ahead at 0.85 and around 0.86.

Our assessment: The cross respected the rising short-term trend line in recent days, and the 0.8110 support is also below the current rate, with the 200-day MA looming just below 0.77.

EUR/GBP still holding on to its break-out on the Daily Chart, Created by FxGlobe MT4

EUR/GBP still holding on to its break-out on the Daily Chart, Created by FxGlobe MT4

EUR/JPY (current price: 116.85)

The Yen lost ground compared to the common currency as well last week, but the pair rebounded lower since hitting a high on Friday, as the Euro also showed weakness. The pair trades right at the lower boundary of its prior trend channel following an almost 800-pip rally, and the 115.50 level still provides support below the current rate. The German and the Eurozone ZEW Economic Sentiment indices both came in lower than expected, as the Brexit weighed heavily on the confidence of consumers in recent weeks.

Our assessment: EUR/JPY is in a short-term consolidation pattern after a strong rally, with resistance at 118.75 and the declining 200-day MA still at 126.

EURJPY in a choppy consolidation on the Daily Chart, Created by FxGlobe MT4

EUR/JPY in a choppy consolidation on the Daily Chart, Created by FxGlobe MT4

AUD/USD (current price: 0.7492)

The Australian Dollar has been hit hard yesterday following the release of the minutes from the RBA’s Monetary Policy Meeting. The currency got back below the crucial 0.75 level compared to the USD, but the strong 0.7410 level still supports the pair just below the current rate. If the dovish stance of the RBA changes interest rate expectations significantly, the cross might be in for a re-test of the 200-day Ma that is found currently at 0.73.

Our assessment: AUD/USD turned lower for the second time from around the 0.765 level, but the long-term uptrend remains intact for now, with multiple support levels still helping the pair.

AUDUSD following a strongly bearish session on the Daily Chart, Created by FxGlobe MT4

AUD/USD following a strongly bearish session on the Daily Chart, Created by FxGlobe MT4

WTI Crude Oil (current price: $45.64)                     

Oil continued to drift lower after a stronger morning session, as the resistance zone between $46.50 and $47.50 together with the declining short-term trend-line still provide plenty of overhead supply at the current rate. Support is at $44 and near the 200-day MA at $41.25, while the fundamental picture is still mixed. U.S. inventories have been declining recently, and production remained subdued despite the strong rally since February, but global demand is still weak and the Chinese economic slowdown is still a possible threat.

Our assessment: Oil is trading close to the prior of this correction around $45, and a possible new leg lower could mean the re-test of the $44 support, although the momentum indicators are already back to neutral territory.

Oil still in a short-term correction on the Daily Chart, Created by FxGlobe MT4

Oil still in a short-term correction on the Daily Chart, Created by FxGlobe MT4

Economic Releases

The Pound will probably be in focus today as the British Employment Report is scheduled to come out later on this morning, although the release is mostly based on pre-Brexit data, giving it slightly less significance in the current environment. The German PPI, the Eurozone Consumer Confidence Index, and the Eurozone Current Account Balance will also be published during the morning session, while U.S. Crude Oil Inventories will highlight the afternoon session. The Australian NAB quarterly Business Confidence will be released late in the evening as well.

Original Source: Daily FXGlobe

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