Daily Report: Dollar Pull Back Continues, Aussie Lifted by Capex

Dollar continues to pull back from recent rally as it lacked stimulus for further rise. The dollar index is now at around 82.3 level after surging to as high as 82.72 earlier this week. The greenback is mildly softer against European majors and yen but remains in tight range so far. Though, clearer weakness is seen against commodity currencies. USD/CAD’s break of 1.08959 support confirmed near term topping and we’d likely see deeper correction. AUD/USD also extended the rebound form 0.9236 and is possibly heading back towards 0.9504 resistance. Nonetheless, NZD/USD lags behind and is trading below 0.8429 near term resistance and maintains near term bearish outlook.

Australian dollar is lifted by investment data released today. Private capital expenditure rose 1.1% in Q2 versus expectation of -0.8% fall. Some analysts noted that the data showed that adjustment in non-mining sectors could be slower than originally expected. But overall, there is no change in the general consensus that RBA will keep rates unchanged for the rest of the year.

The economic calendar is a rather busy today. Eurozone will release confidence indicators which are expected to show further deterioration in August. Eurozone M3 is expected to be unchanged at 1.5% yoy in July. German will release CPI and unemployment. From US, Q2 GDP revision will be released and is expected to be revised slightly down to 3.9%. US will also release jobless claims and pending home sales.

The recovery in Aussie helps pushed GBP/AUD through 1.7735 support which confirmed resumption of whole decline from 1.9185. Near term outlook is bearish for 61.8% projection of 1.9185 to 1.7735 from 1.8374 at 1.7478 next. Overall, it’s viewed as a correction as the whole medium term up trend from 1.4380 and should target 38.2% retracement of 1.4380 to 1.9185 at 1.7349 and below.

Daily Pivots: (S1) 1.0810; (P) 1.0882; (R1) 1.0937; More

USD/CAD dives to as low as 1.0828 so far and the break of 1.0859 confirmed short term topping at 1.0997, on bearish divergence condition in 4 hours MACD. Intraday bias is mildly on the downside and deeper pull back could be seen to 1.0793 support. But such decline is viewed as a correction only. Thus, we’d expect support from 61.8% retracement of 1.0620 to 1.0997 at 1.0764 and bring rebound. On the upside, above 1.0908 minor resistance will turn bias back to the upside for retesting 1.0997 first.

In the bigger picture, there is no clear sign that the whole up trend from 0.9633 and 0.9406 is reversing. We’ll stay medium term bullish as long as 1.0608 support holds (61.8% retracement of 1.0181 to 1.1278 at 1.0600). Rise from 0.9406 is viewed as the third leg of the pattern from 0.9056 (2007 low) and is still expected to extend to 61.8% retracement of 1.3063 to 0.9406 at 1.1666 in medium term after completing the correction from 1.1278. However, sustained break of 1.0608 will argue that the medium term trend has reversed and will turn outlook bearish.

USD/CAD 4 Hours Chart

USD/CAD Daily Chart

GMT
Ccy
Events
Actual
Consensus
Previous
Revised
1:30
AUD
Private Capital Expenditure Q2
1.10%
-0.80%
-4.20%

7:55
EUR
German Unemployment Change Aug

-6K

8:00
EUR
Eurozone M3 Y/Y Jul

1.50%
1.50%

9:00
EUR
Eurozone Economic Confidence Aug

101.5
102.2

9:00
EUR
Eurozone Industrial Confidence Aug

-4.5
-3.8

9:00
EUR
Eurozone Consumer Confidence Aug F

-10
-8.4

9:00
EUR
Eurozone Services Confidence Aug

3.5
3.6

9:00
EUR
Eurozone Business Climate Indicator Aug

0.1
0.17

10:00
GBP
CBI Reported Sales Aug

25
21

12:00
EUR
German CPI M/M Aug P

0.00%
0.30%

12:00
EUR
German CPI Y/Y Aug P

0.80%
0.80%

12:30
USD
GDP (Annualized) Q2 S

3.90%
4.00%

12:30
USD
GDP Price Index Q2 S

2.00%
2.00%

12:30
USD
Initial Jobless Claims (AUG 23)

299K
298K

14:00
USD
Pending Home Sales M/M Jul

0.60%
-1.10%

14:30
USD
Natural Gas Storage

79B
88B

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