FX MARKET WATCH
quieted in the face of the return of the Q1 curse of disappointing GDP and little progress on wages. Meanwhile, the market is looking past the rate hike widely expected in May toward another hike before the end of the year (now about a 50% chance is priced into the OIS curve).
A break of the $1.3980 warns that the March run at new highs has faltered. While the immediate r e c o g n it io n could spur a move toward $1.3915, the $1.3700- $1.3750 area may hold the key to the medium- term technical outlook. On the upside, above the $1.4350 post- referendum high, the is $1.4520, which equates to the 50% retracement of the decline since the 2014 high near $1.72.
CANADIAN DOLLAR
The US dollar recovered smartly against the Canadian dollar after sliding in January. The Canadian dollar’s 2.4% loss made it the worst performing currency in Q1. The greenback really recovered in February and consolidated in
12 FX TRADER MAGAZINE April - June 2018
March and finished only slightly higher.
A potential head and shoulders pattern may be being traced. The neckline is drawn near CAD1.28, and the left shoulder topped out
trending lower since peaking in late January near $0.8135. It recorded the low for the year on March 29 near $0.7645. The risk extends toward $0.7500, but the MACDs and Slow Stochastics suggest a low may be close. There have been
a couple
of two-three cent corrective bounces within the downtrend. A bounce of that magnitude would bring the Aussie toward the mid-March highs near $0.7920.
In a broader view, the Australian dollar has been tracing
near CAD1.30. The head was formed when the US dollar rose to CAD1.3125 just after the Ides of March. A break of the neckline would suggest a measuring objective near CAD1.2475. In addition to the recent highs, the US dollar may face more important resistance near the trendline drawn off the 2016 and 2017 highs.
It is
found near CAD1.3215 at the end of next week, falling almost 15 ticks a week.
AUSTRALIAN DOLLAR The Australian dollar has been
out a larger range since the end of Q2 17. That larger range also sees $0.7500 as the marker of the lower end. The upper end of the range is around $0.8125. The Aussie was turned back from there in late January. However, note that since then short-term US interest rates have risen above Australia, undermining one leg, while lower metals prices weaken another.
CRUDE OIL
Light sweet crude for May delivery made a new high near $66.55 at the
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