Trading Setups / Chart in Focus:
The Australian dollar strengthened against the greenback today after finding support off the key level through 1.0410 area again today. We can see that bullish pin bar setups have formed showing rejection of this support both today and yesterday, indicating that the recent rotation lower may have run its course. If we can get some traction off these pin bars, we may see this market push higher from current levels for a re-test of the near-term resistance at 1.0610 area. However, if price rotates lower and breaks down past 1.0400 support, we would expect a larger move to the downside.
The USDJPY definitely had movement today, although it was very volatile after the Bank of Japan announced new measures to help weaken the yen against the other majors. However, after briefly surging up past the 78.90 resistance we mentioned in yesterday’s commentary, the market reversed sharply and actually created a huge false-break of that key level and then continued to sell-off into the New York close on widespread yen strength.
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In the currency markets today, the U.S. dollar lost ground to the euro and the other major currencies on the back of positive U.S. economic data which worked to boost stocks and riskier assets.
The Japanese yen lost ground to the other majors early in today’s trading but then reversed losses and strengthened into the New York close, in spite of the Bank of Japan easing its monetary policy.
The Australian dollar gained on the U.S. dollar today on the back of renewed risk appetite.
In the U.S. markets today, stocks gained ground as investors resumed buying into the recent rally on the back of stronger-than-expected U.S. home sales data.
The Dow added 13.32 points, or 0.10 percent, the S&P 500 gained 1.73 points, or 0.12 percent, and the Nasdaq added 4.82 points, or 0.15 percent.
Upcoming important economic announcements (New York time): 09/20/2012
3:30am EST: Euro-zone – German Flash Manufacturing PMI
4:30am EST: Britain – Retail Sales m/m
Tentative: Euro-zone – Spanish 10-y Bond Auction
8:30am EST: United States – Unemployment Claims
10:00am EST: United States – Philly Fed Manufacturing Index
2:00pm EST: Britain – BOE Gov King Speaks