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Article / 06 September 2016 at 14:25 GMT

FX Board: USD on the ropes after another ugly data point

Head of FX Strategy / Saxo Bank
  • Ugly ISM non-manufacturing miss craters USD
  • Aussie rally fails to take out key Fibo level
  • USDJPY looking at entering Ichimoku cloud
Michigan Central Station, Detroit
Ghost town: A soft US ISM non-maufacturing release today has 
returned the greenback to a realm of doubt. Photo: iStock

By John J Hardy

Key developments in FX today

  • Another relatively lacklustre day in FX land, as daily trading ranges continue to wilt. 
  • The pound sterling remained firm, as EURGBP looked at new local lows and GBPUSD poked into the last shreds of the range since topping out around 1.3375 in early August. 
  • The most liquid G3 currencies were weakest, while the smaller currencies were generally firm.
  • Precious metals were quite strongly bid, with gold higher through a key pivot area around $1,330/oz.
  • A soft ISM non-manufacturing release is pressuring USD as EURUSD enters the key 1.1200/50 pivot zone again and AUDUSD is up against an important Fibonacci retracement level following last night's Reserve Bank of Australia statement and the soft US print.

USDJPY peeking into the cloud

USDJPY and other major JPY crosses have been having a look at the key Ichimoku cloud levels recently,. For USDJPY, those levels may drop in coming days, which would mean an entrance into the cloud and focus on the top of the cloud if the pair can rally from here. 

First support looks like 102.50.


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Source: Saxo Bank 

AUDUSD at key level

AUDUSD spurted higher in the wake of the RBA statement overnight; at first it was turned back at the 61.8% Fibo retracement of the selloff, but after the weak US data it is being challenged again as an upside pivot area that could see the pair challenging the descending trend/consolidation line back from the 0.7800-plus highs.

Source: Saxo Bank  

Gold squeezed back through resistance near $1,330/oz, which was an important level on the way down and remains the key bear/bull line for the moment. Bulls will prefer a swift follow up rally to keep the focus on the $1,375 area top and beyond.

Source: Saxo Bank  

— Edited by Michael McKenna

John J Hardy is head of FX strategy at Saxo Bank 
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FX Board for Tuesday, September 6, 2016


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