Global markets are reeling this morning after the US president trumped his previously announced tariffs on $50bn worth of Chinese imports with the threat of another $200bn worth should the Chinese retaliate with penalties of their own on his initial tariffs. The heightened fear of a full-blown trade war has slammed into equities and EM currencies with the usual safe-haven assets – gold, bonds and the Swiss franc – gaining.
Article / 18 July 2016 at 14:52 GMT

FX Board: AUD rally on the rocks, USD pokes stronger

Head of FX Strategy / Saxo Bank
  • FX markets consolidate from Friday's chaotic close after news of Turkish coup bid
  • Post-Brexit GBPUSD forms upside-down head and shoulders with 1.3500 neckline
  • Look for enormous JPY bounce from post-Brexit lows to fade ahead of BoJ
  • Friday's AUDUSD reversal from local new highs looks like bearish signal

Aussie dollars
 The Australian dollar's rally was no winner of beauty pageants. Photo: iStock

By John J Hardy

Few developments in FX today as currencies have spent much of the day consolidating after a chaotic close on Friday when news of the Turkish coup attempt hit the wires just before the market close. Some of the technical developments, however, like the bearish reversals in JPY crosses and in a number of currencies against the US dollar, were largely in place ahead of this move, though the failed Turkish coup exaggerated both the closing levels and some of the bounce in Monday's Asian session. (Please see the Notes of Interest in the attached FX Board PDF and the chart comments below.)

GBPUSD 4-hour

The consoliation in GBPUSD since the Brexit vote has created an upside-down head-and-shoulders formation with a neckline at the important 1.3500 level, which also represents the old lows from the global financial crisis in early 2009. This neckline needs to stay in place to keep the focus lower,and bears are encouraged by Friday's tactical reversal and what would look like the completion of an even smaller-scaled head 
Create your own charts with SaxoTraderGO click here to learn more
Source: SaxoTraderGO  

GBPJPY in bearish reversal

GBPJPY reversed late Friday in line with the reversal in most other JPY pairs and after a small attempt at an extension through the earlier highs. This is a classic bearish reversal setup, but we'll need today's highs to stay intact over the next couple of sessions to keep the reversal relevant as we possibly look for the enormous bounce from the post-Brexit lows to fade ahead of the Bank of Japan's meeting late next week.
Source: SaxoTraderGO

AUDUSD rally fizzles

The AUDUSD rally was never going to win any beauty pageants, and Friday's reversal from local new highs looks like a bearish signal. We'll be watching for follow-through lower, though it will take some doing to get a full, clear return of the bear as there are layers of range to work through, but a start would be an acceleration in downside momentum and a takeout of the rising trendline.
Source: SaxoTraderGO

— Edited by John Acher

John J Hardy is head of FX strategy at Saxo Bank

Download document

FX Board for Monday, July 18, 2016


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail