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Commentary

Currencies

FX Board: USD trying to spread its wings

Commentary — John J Hardy Date — October 6, 2016

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—Dollar Index

The US dollar picked up the pace again today after an early dip, with a new low for the cycle in GBPUSD coming alongside a rise in dollar/yen. To confirm the greenback's potential, we'll need to see the currency firmer on the other side of tomorrow's jobs report.

  • USD follows late-Wednesday dip with rally today
  • Greenback gains ground against commodity dollars
  • Tomorrow's nonfarm payrolls key for USD, Fed
Key developments in FX today


  • The greenback picked up the rally impulse again today after a very modest dip in places late yesterday and early today, with new local highs etched in USDJPY, while NZDUSD poked to new lows and EURUSD tiled back lower, even if still within the recent tight range.
  • A modest rally attempt in sterling was quickly wiped away with a fresh bout of selling, as GBPUSD set new lows for the cycle and EURGBP new highs.
  • The commodity dollars were all lower against the greenback today, CAD interestingly so, given the fresh highs in oil prices and a very strong Aug. Building Permits number.
  • Gold tumbled to new lows and was not far from the next interesting round figure and Fibo (the 38.2% of the entire rally from the $1,050/oz area lows to $1,375/oz area highs) near $1,250/oz.
  • Silver has also tumbled well below the key 18.00 area support and could be headed to a test of $16.50/oz, the 61.8% Fibo of the rally sequence from the multi-year low below $14.00/oz to the $21.00-plus high at $16.50/oz.


EURUSD

EURUSD is one of the lowest beta pairs to the market moves, as the interest in a potential European Central Bank taper keeps the euro bid while strong US data has done the same for the dollar.


Nonetheless, something has to give way here soon, with the downside technical case a bit more clearcut given the many tests of the 200-day moving average.


Perhaps tomorrow's important US data will offer a clue either way.


eurusd


USDJPY

The USDJPY rally has taken out the Ichimoku cloud for the first time in nearly a year and this could lead to the establishing of a new range toward 105-107.50, provided tomorrow's US jobs report doesn't trigger a trainwreck in fresh USD long positions as rising US yields are likely an important coincident indicator for further upside here.


usdjpy

AUDUSD

AUDUSD softening again today, but with so much treacherous two-way traffic recently, it's tough to accept the locally bearish signals unless the pair develops more pronounced downside momentum and perhaps cuts through the last Fibo's in the 0.7550/00 zone.


Note the 200-day moving average slowly ascending toward the recent low near 0.7445.


audusd

USDCAD

USDCAD keeps springing back despite high oil prices; a test of the 1.3250/75 zone in the coming sessions is not likely to hold a fourth time and is the key trigger for bullish hopes back toward 1.3750 or higher.


USDCAD

XAUUSD

At the moment $1,250/oz is the next focus and we nearly got there today. Below that, not much in the way of support until $1,172-ish, the 61.8% Fibo of the $1,050 to $1375-plus rally sequence.


xauusd


XAGUSD

Silver has taken out the vitally important $18.00/oz area and this could mean a dive all the way to $16.50/oz if the USD remains bid and precious metals out of favour.


xagusd

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