A lot of noise Down Under
The Dollars from the antipodes made news over last couple of days. Well, they seem to be getting attention almost every day, but this time it was a little different. Both of the Australian Dollar and the New Zealand Dollar went through some pains, and, at least officially, for apparently unrelated reasons. The Aussie got punished upon the release of CPI numbers for the second quarter. Reaction was immediate, with the AUD falling rather sharply. It has since recovered against some currencies, but remains very sensitive to the slightest bad news. And, frankly, the CPI news release is typically nowhere near as important as rates or employment numbers, yet markets paid attention.
Speaking of interest rates, the Reserve Bank of New Zealand had its policy meeting about 20 hours later. Largely as expected, the board raised its benchmark Official Cash Rate by 0.25% to 3.00%. No surprises there, but the Kiwi fell on the news in a strong move. It has not recovered yet and, as a matter of fact, it is still falling. Positive news- negative response. This could be a beginning of a larger sell off in the NZD, or, for that matter, even all commodity currencies.
This hourly chart of the AUD-NZD pair shows how these two events played out. First the AUD dropped and latter rallied on NZD weakness. Most of other crosses of these currencies were similar, but their interplay is very interesting. I did not trade it then, trying to avoid trading news releases, but have a longer term position now, using daily chart. Never mind the details, there are enough of other trades to discuss here.
Now that the AUD lost some ground, not so much against NZD but other currencies, it could continue lower. On the hourly chart of AUD-JPY the price just dipped under the low of 77.70 and is bouncing right now. I’d like to sell it on the next run at support (IF it happens). The sell order is positioned at 77.60, with a 100 pips objective.
Few posts ago the EUR-CAD was covered. This pair was in fairly wide consolidation zone, which was expected to eventually give way, with a bias to the upside. However, just as mentioned there, some smaller range-bound opportunities were possible. Here is the one I found, using hourly chart. It produced ȓ pips. Nothing grand, but a decent little trade. Now it is time for a breakout, with a larger objective.
Original analysis were made using 4H chart and that’s how it looks now. The resistance was breached earlier in a day, producing entry at 1.3517, with a target of 150 pips. Currently, the price is right back at about the entry level, very typical after breakout. Since this is an intermediate term chart, it could easily take few days for the objective to be reached, but if the position shows decent profit, it will be closed before the weekend, even if short of target.
Mike K.
http://www.fxmadness.com/
