Category: Forex

Coverage of all major currencies and the US Dollar Index.

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Commodities drag Aussie Dollar and Loonie lower

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Falling commodity prices have started a primary down-trend on both the Australian and Canadian dollar. The Aussie rallied off support at its target of $0.94, but respect of the (secondary) declining trendline would warn of further losses.

AUDUSD

* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94

The Loonie also bounced of $0.94 and is testing the first line of resistance at $0.9650. Respect would again warn of further losses.

CADUSD

* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94

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Dollar Index reaches target

The strong advance on the US Dollar Index continues. Now that the index has reached its current target of 79, expect retracement to test the new support level at 76. Respect of support would confirm the primary up-trend and offer a target of 84* for the next advance. A trough above zero on 63-day Momentum would strengthen the signal.

US Dollar Index

* Target calculation: 80 + ( 80 – 76 ) = 84

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Commodities point to weaker Aussie and Canadian Dollar

CRB Commodities Index is testing support at 300 and the lower border of its trend channel. 63-day Twiggs Momentum holding below zero indicates a strong primary down-trend. Breakout below the trend channel would warn of a sharp decline, with a target of 260*. Respect is less likely, but would indicate a rally to test the upper trend channel.

CRB Commodities Index

* Target calculation: 300 – ( 340 – 300 ) = 260

Canada’s Loonie and the Aussie Dollar are both closely linked to commodity prices. A fall in the CRB index would lead to similar falls in the two currencies. CAD breakout below $0.9650 would signal a test of $0.94*.

CADUSD

* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94

Both currencies commenced a primary down-trend when they broke parity. An Aussie Dollar breakout below $0.97 would offer an identical target of $0.94*.

AUDUSD

* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94

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Dollar rise as euro falls

The euro is testing short-term support against the greenback at $1.35/1.34. 63-Day Momentum (declining below zero) reminds we are in a primary down-trend. Failure of support would signal a decline to $1.30*.

EURUSD

* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30

The dollar has benefited from safe haven demand, commencing a primary advance as the euro falls. 63-Day Twiggs Momentum crossed to above zero, confirming the primary up-trend. Further retracement to test the new support level at 76.00 is likely, but respect would demonstrate strong buying support.

US Dollar Index

* Target calculation: 76 + ( 76 – 73 ) = 79

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Aussie Dollar breaks parity as commodities fall

The CRB Commodities Index gapped down to its lower trend channel in response to turmoil in Europe and the resulting stronger dollar.

CRB Commodities Index

The Aussie followed its Canadian counterpart below parity, confirming a primary down-trend with an initial target of $0.94*.

AUDUSD

* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94

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Loonie turns, will Aussie follow?

Canada’s Loonie broke parity against the greenback, confirming a primary down-trend and offering an initial target of $0.94*.

CADUSD

* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94

The Canadian and Aussie Dollars have tracked each other closely over the last year and it seems inevitable that the Aussie will follow the Loonie below parity.

CADUSD and AUDUSD

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Aussie Dollar heads south as commodities weaken

The CRB Commodities Index is trending downwards in a broad trend channel after a failed rally to test resistance at 350. Expect a test of the long-term rising trendline at 300. The 63-day Twiggs Momentum peak below zero confirms a primary down-trend.

CRB Commodities Index

The Australian Dollar broke support at $1.02, signaling a primary down-trend, before testing medium-term support at parity. Failure of support — and breach of the rising trendline — would confirm the down-trend and offer a target of $0.94*.

AUDUSD

* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94

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Dollar surges as Fed nixes QE3

The US Dollar Index surged after the latest FOMC statement avoided any mention of additional purchases of Treasuries or mortgage-backed securities (MBS). Though they did leave the door ajar with their concluding paragraph:

………The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate.

The index respected the new support level at 76.00, confirming a primary advance to 79* — the start of a primary up-trend. 63-Day Twiggs Momentum crossed to above zero, further strengthening the primary trend signal; a large trough that respects the zero line would provide final confirmation.

US Dollar Index $DXY

* Target calculation: 76 + ( 76 – 73 ) = 79

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The Next Selling Wave Is About to Begin | Toby Connor | Safehaven.com

As the stock market moves down into the next daily cycle low and the selling pressure intensifies, this should drive the dollar index much higher. It remains to be seen if gold can reverse this pattern of weakness in the face of dollar strength, especially since the dollar will almost certainly be rallying violently during the intense selling pressure that is coming in the stock market.

via The Next Selling Wave Is About to Begin | Toby Connor | Safehaven.com.

 

When the dollar strengthens, gold normally falls. Except in times of high uncertainty (like the present), when demand for gold as a safe haven overcomes downward pressure from a stronger dollar. Buying gold at current prices is a bet that either Greece will default — a pretty safe bet — or that the Fed is again forced to use its printing press (not quite as certain).

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