Dollar Losing Ground against Most Majors

The U.S. Dollar is losing ground against most major currencies this morning as traders adjust positions following last week’s shift in sentiment out of higher yielding assets and this week’s slew of key economic reports and central bank meetings.

The U.S. Dollar is losing ground against most major currencies this morning as traders adjust positions following last week’s shift in sentiment out of higher yielding assets and this week’s slew of key economic reports and central bank meetings.

The most important economic report this week is the U.S. Non-Farm Payrolls and Unemployment Rate Report. This report will reveal the pulse of the economy. Last week’s GDP Report came out better than expected but investors want to see if the expanding economy produced jobs or at least slowed down the rate of job losses.

This week the Australian Central Bank meets on November 3. This is followed by the U.S. Federal Reserve on November 4. The Bank of England and the European Central Bank will round out the week with meetings on November 5.

The Reserve Bank of Australia is expected to announce another 25 basis point interest rate hike. Last week’s weak Australian inflation number took a 50 basis point hike off the table. This triggered a liquidation break in the Aussie Dollar. The U.S. Fed is expected to leave its benchmark interest rate at near historically low levels. The language in its statement is expected to reflect changes in the economy and perhaps outline an exit strategy. The Bank of England is expected to leave interest rates unchanged. Speculators are split on whether the BoE will increase or expand its quantitative easing program. Finally, the European Central Bank is expected to leave its benchmark interest rate at 1% and talk about the need for central banks to continue to apply financial stimulus until the global economy is on solid ground. The ECB is worried about increasing unemployment and falling exports. At the last meeting it highlighted the possibility of a rough recovery in its statement.

This morning the EUR USD is holding above a technical retracement level at 1.4703. Regaining 1.4771 will be a sign of strength. The current chart formation suggests a possible rally to 1.4873 to 1.4918.

The GBP USD is trading weaker but remains rangebound between 1.6691 to 1.6250. This creates a retracement zone at 1.6470 to 1.6522. Up trending support is at 1.6266. Down trending resistance at 1.6471 and 1.6571. Downside pressure appears to be building ahead of this week’s Bank of England meeting.

Higher equity, gold and crude oil prices are helping to boost the Canadian Dollar. Last night the USD CAD hit a retracement angle at 1.0866 and broke sharply. A weaker Dollar today could trigger a retracement to 1.0685 over the near-term.

The USD JPY is trading lower but mounting a strong comeback from the overnight low. The developing pattern suggests a possible retracement to 90.75 over the near-term.

The AUD USD is coming back after a weaker opening. Short-covering ahead of tomorrow’s Reserve Bank of Australia meeting could trigger a rally to .9169 over the next two days.

The NZD USD is picking up strength after overnight selling pressure. The short-term chart pattern indicates a possible retracement to .7358 to .7423 over the short-run. Gann angle resistance at .7315 could limit gains until this price is overcome by buyers.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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