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Dean's Daily FX Update – 30 August 2017
In the Zone
- AUDUSD
- NZDUSD
- ALSI
Noteworthy News
- There is an increasing number of refineries that are closing at the moment, this could have an impact on oil as increased supply will decrease the price. I suspect that this will correct itself in the near future as aid relief gets to Houston.
Recap
The dollar sell off continued early yesterday but by end of day all the major pairs had squared positions as the dollar surged during the New York session. The major catalyst was that concerns about North Korea started to lesson as President Trumps comments that, “all options are on the table,” eased fears that the US were past the point of reason. The UN were also loud in their response condemning the North Koreans – it has taken then long enough to make a comment.
We highlighted opportunities to “fade” the market and there is no better example than the EURUSD yesterday. The initial move lifted the pair to around 1.2050 which was a major swing level stretching back to 2012, this is where the market started finding resistance and the reversal was quick and sharp as the pair traded back below the 1.2000 level fairly quickly. The fact that the pair could not close the day above this resistance despite the massive momentum should be of concern, I expect the sellers to start building orders around 1.2000.
The biggest gift was in the USDJPY, the pair initially trading to new swing lows at 108.20 before the pair rebounded all the way to end the day higher. The depth of the reversal was well above 100 pips, the pair is trading at “make or break,” levels this morning and I suspect that 110.20 could be the level to watch. A break targets 111.60 while a rejection then targets 108.80 again so this is one to watch.
Oil prices continued to fall in the wake of Hurricane Harvey and Trump continued to criticize the NAFTA agreement and this was the catalyst that moved the USDCAD. This pair felt the full wrath of the greenback as the pair tested the 200 hour MA at 1.2550, this level was met with a chorus of willing sellers and I suspect that this is the level to watch again today.
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
14:15 USD ADP Non-Farm Employment Change
Consensus: 185K
Effect: Actual higher than expected is good for the USD
14:30 USD Prelim GDP
Consensus: 2.7%
Effect: Actual higher than expected is good for the USD
16:30 USD Crude Oil Inventories
Consensus: -1.8M
Effect: No consistent effect on the USD
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