Another eventful week, the dollar started the week on the front foot but started losing a little bit of lustre as the week wore on. The market went into a bit of a lull on Friday as we eagerly waited for the NFP report, the report was solid coming in better than expected, the initial response was the dollar to weaken but it was not long before the market come to its senses and started trading at a decent level. Late Friday evening saw the release of the Fed Minutes and the initial response was dollar positive, keep in mind that Fed Chair Yellen testifies both on Wednesday and Thursday afternoon and the basis of this will be around this report – it could bode well for the greenback this week.
The USDCAD was the runaway winner this week as the CAD continued its march stronger against the dollar, there was better employment data out of Canada but the market is clearly pricing in a hike on Wednesday – I wonder how much of this is priced in? The USDCAD dipped below the 1.3000 support zone and the move accelerated for much of the week, immediate targets include 1.2820 and 1.2750. To answer my earlier question, I believe that a hike is now fully priced in and that Wednesday will materialize into a “buy the rumour, sell the fact,” trade.
For a second consecutive week, the EURUSD found major resistance at 1.1440 a step too high to breach. It did rotate lower to a low of 1.1311 and it is clear that buyers are leaning against 1.1300. The sellers are willing to build offers at 1.1410 for now, but to wrestle back the initiative I suspect that price will have to close below 1.1280.
It is no secret that I am keeping a beady eye on the USDJPY as I believe that this pair is the key that will unlock the rest of the majors – more through the cross pair as we see the market buy the JPY. It has been a bit of a tear recently and to keep this bull run going, the buyers will need to close above 114.60 and then it will target 115.50. What will be concerning for the bulls is that we have seen multiple failures in the last couple of weeks, the first level to watch on the way down is 113.45 and this will be a key level to watch to see how buyers react.
We experienced the RBA buck the recent trend and reiterate their dovish stance and the AUDUSD fell by over 100 pips. The pair is back up testing the old key level of 0.7600 again, the real issue is that the pair will have to trade though major support at 0.7580 to gain any momentum. The NZDUSD in the same sort of boat as the AUD and I suspect that both these pairs could start coming under some pressure soon.