Greg’s Weekly Analysis W/C 9th October 2017

Fundamentals: The aussie weakened further due to the USD strength but also due to its own as Australian retail sales declined and we had comment out of the central banks’ committee members that a rate cut on the Australian economy is still not ruled out despite investor eyeing for hawkish signs from the RBA. If the USD strengthens next week there’s no doubt the pair will fall however if the dollar sees a momentarily weakness then risk on the aussie will be visible.

Technicals: As expected the aussie declined and almost touched on the predicted 0.7700 price level. This price action broadly completes our thesis and trade that we ran from the top of the range. There’s 2 possibilities we can consider for next week, the first is that price will further decline to retest the 0.7700 and the second is that price reverses from these low levels for a short period.

Fundamentals: The ECB already showed that they will take their time with unwinding QE and this could be seen through the low volatility. The main driver of the price action was the dollar and if nothing new will hit the euro from its central bank then the USD will receive the spotlight throughout next week.

Technicals: As predicted the euro sold off although with low volatility. Price hit the 1.1700 support level and rejected at the last of day of the trading week. Next week we could see a short term technical rally form, if higher lows and higher highs are formed we can take advantage of intra-day buys.

Fundamentals: The pounds weakness can be attributed to 2 reasons, the obvious one remains the strength of the dollar but the more surprising one is that market participants did not like the speech made by PM Theresa May regarding the UK and Brexit as well as growth going ahead. Many argue that her message was good and the same as previously however the way she delivered it did not strike confidence with many calling for her resignation.

Technicals: The pound massively declined and even fell through the anticipated support price. Selling the pair for now is not a good approach until price doesn’t form a lower high on the daily, however if it starts rallying to form a lower high we can take advantage by buying into the retracement once support confirms.

Fundamentals: The BoC had 2 rate hikes and the latest message we could hear from the policy makers is that a too strong currency wouldn’t help growth going forward. Since then the USD rallied as well as the Canadian currency weakened. Fed rate high probability now stands at 87% for December but much of the hawkishness is yet to be priced in.

Technicals: The Canadian pair started showing resistance from the 1.2500 price level and even formed candle patterns on the daily suggesting a decline and downside reversal, however just before intra-days confirmed price shot up and erased the possibility of a fall by forming a new daily high. Next week if the daily highs maintain buying the pair is feasible but if intra-day trend breaks we have to be cautious to switch our bias and be flexible.

Fundamentals: With new Zealand dollar lagging behind world economies and taking cues from the FED like other G10 countries, the US and its FED will be the driver of the pair until the RBNZ decides to take any action towards tightening monetary policy.

Technicals: Just like the aussie as a commodity currency the new Zealand fell for new lows on multiple time frames, there’s no indication that the trend is reversing to the upside but if intra-day higher lows form day trades can be feasible.

Fundamentals: With Fed rate hike expectations increased and NFP numbers disappointing due to transitory effects from the Hurricanes that swept through the US nation, the dollar might temporarily decline and act out its weakness just to find value and attract more buyers into the year end. The BoJ still maintains its QE and dovish monetary stance which means that once a pullback to value occurs on the pair and reverses to the upside the trend might be alive for months to come even going into the new year.

Technicals: The yen pair has been having a hard time since it broke above the 112.00 price level, the best proof that price action presented was the last day of the week when price rejected the 113.00 and sold off more than 80 pips. Next week if we have breakouts to the downside on intra-day we’ll be able to sell the pair anticipating a pullback before the return to the upside.

The FTSE has been rallying for the 2nd week and price now is above the 7500 price level. If price decelerates around the 7550 and confirms we can sell the index for a limited target, ultimately if the 7400 level holds going long is on the table.

No pullback on the DAX to give us a high probability entry and with price being at the 11300 high, buying is risky as price is extended and profit taking could occur out of the blue. Selling into the pullback is feasible upon confirmation.

The Dow is back at its all time high and reached 22800 level, any pullback to value in form of a higher low on the daily will be a good enough signal to buy the index.

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