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Dollar Corrects Lower, S&P 500 Chart Setup Warns of Downturn
GOLD TECHNICAL ANALYSIS – Prices broke lower as expected after putting in a Bearish Engulfing candlestick pattern below resistance at the top of a rising channel set from late June. Sellers are now challenging the 14.6% Fibonacci expansion at 1301.68, with a break below that exposing the 23.6% level at 1273.98. Channel bottom support-turned-resistance is now at 1335.00.
2013-08-05 01:30 GMT (or 03:30 MQ MT5 time) | [AUD - Retail Sales]
If actual > forecast = good for currency (for AUD in our case)
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Australia Retail Sales Flat In June
The total value of retail sales in Australia was unchanged in June compared to the previous month, the Australian Bureau of Statistics said on Monday, coming in at A$21.818 billion.
That was shy of expectations for a seasonally adjusted increase of 0.4 percent on month following the upwardly revised 0.2 percent increase in May (originally 0.1 percent).
By category, gains for sales in food services (0.9 percent), household goods (0.3 percent) and food (0.1 percent) were offset by losses in other retailing (-1.1 percent) and clothing, footwear and personal accessory (-0.2 percent). Department store sales were flat.
Over the longer term, food retailing remains the strongest contributor to growth (up 0.2 percent in trend terms), the bureau said.
By region, gains in turnover in Victoria (0.1 percent), the Australian Capital Territory (1.3 percent), South Australia (0.3 percent) and Queensland (0.1 percent) were offset by falls in Western Australia (-0.4 percent), the Northern Territory (-0.4 percent) and Tasmania (-0.1 percent). New South Wales (0.0 percent) was relatively unchanged.
Over the longer term, New South Wales remains the strongest contributor to growth (up 0.2 percent in trend terms), the bureau said.
Through the year, Australian retail turnover rose 1.1 percent in June 2013, seasonally adjusted, compared to June 2012.
For the second quarter of 2013, retail sales ex inflation also were flat on quarter - beating forecasts for a 0.1 percent decline after climbing a downwardly revised 2.0 percent in the previous three months (originally 2.2 percent).
Also on Monday: • The inflation forecast for July from TD Securities suggested an increase of 0.5 percent on month and 2.7 percent on year. That followed the flat monthly reading and the 2.4 percent gain in June.
• The Performance of Services Index from AiG came in with a score of 39.4 for June, sinking further into contraction after showing 41.5 in the previous month.
• Upon the release of the data, the Australian dollar declined against other major currencies, trading near 0.8861 against the greenback, 87.78 against the yen, 1.4968 against the euro and 1.1433 against the kiwi.
Gold prices shrugged off modest gains in European trade to weaken slightly heading into the New York open. Very short-term the Comex December gold futures contract is vulnerable to modest slippage following Friday's bearish candlestick formation. The gold market has been in a modest sideways to lower drift in recent days and the bulls have lost control of momentum.
Taking a look at the daily chart, seen in Figure 1 below, Friday's action etched a type of "hanging man" formation on the daily candlestick chart. See point A. That is traditionally viewed as a warning signal that an uptrend has become vulnerable. In order to confirm the bearish potential of the hanging man, a bearish close would be required on Monday.
2013-08-05 14:00 GMT (or 16:00 MQ MT5 time) | [USD - ISM Non-Manufacturing PMI]
If actual > forecast = good for currency (for USD in our case)
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U.S. Service Sector Expands At Faster Than Expected Rate In July :
Activity in the U.S. service sector grew at a faster rate in the month of July, according to a report released by the Institute for Supply Management on Monday, with the index of activity in the sector rising by much more than economists had anticipated.
The ISM said its non-manufacturing index jumped to 56.0 in July from 52.2 in June, with a reading above 50 indicating growth in the service sector. Economists had been expecting the index to show a more modest increase to a reading of 53.0.
With the bigger than expected increase, the non-manufacturing index rose to its highest level since a matching reading in February.
"According to the NMI, 16 non-manufacturing industries reported growth in July," said Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee. "Respondents' comments are mostly positive about business conditions and the overall economy."
The improvement by the headline index was partly due to a notable increase by the business activity index, which surged up to 60.4 in July from 51.7 in June.
The new orders index also showed a substantial increase for the month, climbing to 57.7 in July from 50.8 in the previous month.
The report also showed that the prices index jumped to 60.1 in July from 52.5 in June, indicating that prices increased at a significantly faster rate.
Meanwhile, the employment index dipped to 53.2 in July from 54.7 in June, suggesting a modest slowdown in the pace of job growth in the service sector.
Last Thursday, the ISM released a separate report showing that its index of activity in the manufacturing sector jumped to a two-year high in July.
The ISM said its purchasing managers index surged up 55.4 in July from 50.9 in June, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to climb to a reading of 53.1.
With the much bigger than expected increase, the ISM's manufacturing index rose to its highest level since reaching 55.8 in June of 2011.
James Knightley, senior economist at ING, said, "Taking the two ISM series together it paints a relatively upbeat growth picture, but we remain concerned over a lack of agreement on the fiscal situation."
"This has the potential to drag on and given what happened in 2011 we suspect that the Fed will err on the side of caution rather than go headlong into a September taper whatever happens," he added.
2013-08-06 01:30 GMT (or 03:30 MQ MT5 time) | [AUD - Trade Balance]
If actual > forecast = good for currency (for AUD in our case)
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Australia June Trade Surplus A$602 Million :
Australia posted a seasonally adjusted merchandise trade surplus of A$602 million in June, the Australian Bureau of Statistics said on Tuesday - jumping 19 percent compared to the previous month.
2013-08-06 03:30 GMT (or 03:30 MQ MT5 time) | [AUD - Cash Rate]
If actual > forecast = good for currency (for AUD in our case)
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According to the peevious post ... how to trade AUD Interest Rate (Cash Rate)? read something from dailyfx :
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AUDUSD- Trading the Reserve Bank of Australia (RBA) Meeting
Why Is This Event Important:
The Reserve Bank of Australia (RBA) is widely expected to push the benchmark interest rate to a fresh record-low of 2.50%, but the policy statement accompanying the rate decision may heavily influence the Australian dollar as market participants weigh the outlook for monetary policy.
How To Trade This Event Risk
Trading the given event risk instills a bearish outlook for the higher-yielding currency as the RBA is expected to push the benchmark interest rate to a fresh record-low, but a less-dovish statement accompanying the rate decision could pave the way for a long Australian dollar trade as market participants see an end to the easing cycle. Therefore, if Governor Stevens strikes an improved outlook for the $1T economy and talks down bets for lower borrowings costs, we will need to see a green, five-minute candle following the announcement to set us up for a long entry on two-lots of AUDUSD. Should the reaction favor buying the aussie-dollar, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will generate our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in an effort to protect our profits.
Impact that the RBA Interest Rate Decision has had on AUD during the last meeting :
(1 Hour post event )
(End of Day post event)
The S&P 500 is Plagued with Divergences
The SPX option chain is telling us that this monstrous move is unlikely to be able to hold through the end of the year based on current implied volatility levels. Clearly these levels will adapt to market conditions as they change every day during normal market hours, but at this point they are not providing a strong indication of significantly higher prices before year end.
As shown below, the money flow indicator has failed to break to new highs as of today (Monday) which thus far fails to confirm the recent move to new highs in the S&P 500 Index (SPX).
The chart above does not require much explanation. The last time we witnessed a major divergence was in the autumn of 2011 which culminated into a nasty correction.
How Will the BoE’s Forward-Guidance Influence the GBPUSD?
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Trading the News: Bank of England Inflation Report
The Bank of England quarterly inflation report is likely to heavily impact the British Pound as the central bank is set to announce it updated assessment of the U.K. economy.
What’s Expected:
Time of release: 08/07/2013 09:30 GMT, 5:30 EDT
Primary Pair Impact: GBPUSD
Expected: --
Previous: --
DailyFX Forecast: --
Why Is This Event Important:
As the BoE pledges to adopt a ‘mixed strategy’ for monetary policy, there’s speculation that the central bank will introduce forward-guidance for monetary policy, and the fresh stance may shift the near-term outlook for the GBPUSD should the central bank introduce more non-standard measures to encourage a stronger recovery.
If actual > forecast = good for currency (for CAD in our case)
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Canada: Ivey PMI falls into contraction in July
Canada's Ivey Purchasing Managers' Index dropped to 45.7 in July from 56.6 in June, according to data released by the Richard Ivey School of Business.
Ivey Purchasing Managers' Index s.a. also contracted, declining to 48.4 from 55.3, against forecasts of a rise to 57.