AUD Tumbles Following Interest Rate Cut

The AUD took heavy losses vs. its main currency rivals during yesterday’s trading session, falling a bigger than expected cut in Australian interest rates. The AUD/USD fell over 100 pips following the news, reaching as low as 1.0304 during early morning trading. The aussie also fell close to 100 pips against the JPY and 145 pips against the euro. Turning to today, traders will want to focus on the UK Construction PMI at 8:30 GMT, followed by the US ADP Non-Farm Employment Change at 12:15 GMT. Any positive news could help both the British pound and US dollar reverse their current bearish trends.

Forex Market Trends

Daily Trend down down up up up down
Weekly Trend down down up up down up
Resistance 1.3307 1.6301 81.16 0.9193 1.0451 0.8234
1.3255 1.6255 80.85 0.9153 1.0405 0.8209
1.3223 1.6227 80.65 0.9128 1.0376 0.8192
Support 1.3171 1.6181 80.34 0.9088 1.0329 0.8155
1.3139 1.6154 80.14 0.9063 1.0300 0.8121
1.3088 1.6109 79.83 0.9023 1.0254 0.8100

Economic News

USD – US Manufacturing PMI Gives USD Boost

After taking losses against most of its main currency rivals throughout the overnight and morning sessions yesterday, the USD was able to stage a mild recovery following a better than expected US ISM Manufacturing PMI. The news resulted in a spike of over 30 pips for the USD/JPY, bringing the pair back above the psychologically significant 80.00 level. Against the Swiss franc, the dollar was able to move up over 50 pips reaching as high as 0.9087.

Turning to today, all eyes will likely be on the US ADP Non-Farm Employment Change figure, scheduled to be released at 12:15 GMT. The ADP figure is considered an accurate predictor of Friday’s all important Non-Farm Payrolls figure, and consistently leads to market volatility. At the moment, analysts are forecasting today’s news to come in at 178K, well below last month’s figure. If true, the dollar may reverse the gains it made yesterday. That being said, the ADP figure has proven notoriously difficult to predict. If today’s news comes in above analyst forecasts, the dollar may be able to extend yesterday’s bullish momentum going into the second half of the week.

EUR – EUR Stays Range Bound During Slow Trading Day

While most European markets were closed yesterday due to the May Day holiday, the euro saw mild gains as poor news out of the US and UK continued to drive market sentiment. The EUR/USD was up around 30 pips during mid-day trading, reaching as high as 1.3275 before staging a downward correction following positive US news. The pair eventually stabilized at 1.3220. The common-currency saw similar gains against the Japanese yen. The EUR/JPY traded as high as 106.02 before correcting itself and stabilizing at 105.80.

Turning to today, euro traders will want to pay attention to the German Unemployment Change figure at 07:55 GMT. As the strongest euro-zone economy, German indicators tend to have a significant impact on the EUR. With analysts predicting the figure to come in worse than last month’s, the euro may take some losses during mid-day trading today. Additionally, the European Unemployment Rate, scheduled to be announced at 09:00 GMT is forecasted to go up to 10.9%. If true the euro could turn bearish against safe haven currencies like the USD and JPY.

Gold – Gold Reverses Gains Following Positive US News

The price of gold steadily went up in value during the first part of the European session yesterday, as poor global data caused investors to shift their funds to the precious metal. That trend abruptly changed, following a better than expected US ISM Manufacturing PMI which resulted in increased demand for the US dollar. Gold fell over 600 pips following the news before stabilizing around $1662 an ounce during afternoon trading.

Turning to today, gold traders will want to pay attention to the US ADP Non-Farm Payrolls figure, scheduled to be released at 12:15 GMT. With analysts predicting today’s news to come in below last month’s, gold may rebound during the afternoon session. That being said, should the US indicator come in above expectations, gold may see further downward movement today.

Crude Oil – US Manufacturing Data Signals Increase in Oil Demand

A better than expected US ISM Manufacturing PMI signaled an increase in demand for crude oil in the world’s largest oil consuming country yesterday, and resulted in a significant boost in prices. Following the news, crude oil shot up over $1.50 a barrel, reaching as high as $106.29 during the afternoon session.

Whether or not oil can maintain its current bullish trend is largely dependent on US news scheduled to be released later today. Should the ADP Non-Farm Employment Change figure exceed expectations, it may convince investors that the US economic recovery is continuing, despite several setbacks in recent weeks. Investors could take any positive news as a sign of increased demand for oil, which could help the commodity extend its gains.

Technical News

The Williams Percent Rang e on the daily chart has crossed over into overbought territory, indicating that downward movement could occur in the near future. Additionally, a bearish cross has formed close to the 80 level on the same chart’s Slow Stochastic. Going short may be the wise choice for this pair, ahead of a possible downward correction.
In a sign that a downward correction could occur in the near future, the Relative Strength Index has crossed into overbought territory. This theory is supported by the weekly chart’s Williams Percent Range, which is currently well above the -20 level. Going short may be the wise choice for this pair.
The daily chart’s Williams Percent Range has crossed over into oversold territory, indicating that this pair could see upward movement in the near future. Additionally, the weekly chart’s Slow Stochastic seems to be close to forming a bullish cross. Traders will want to keep an eye on the Slow Stochastic. Should the cross form, opening long positions may be the wise choice.
The daily chart’s Williams Percent Range has dropped into oversold territory indicating that upward movement could occur in the near future. That being said, most other long term technical indicators show this pair range trading. Taking a wait and see approach may be the best choice for this pair.

The Wild Card

Crude Oil
A bearish cross has formed on the daily chart’s Slow Stochastic, indicating that downward movement could occur in the near future. In addition, the Relative Strength Index (RSI) on the same chart is approaching the overbought region. Forex traders will want to keep an eye on the RSI. If it crosses above 70, it may be a good time to open short positions.

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