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FX Daily Hotline 
8 October 2014     By C Dichio, Analyst

Chart of the day: A$ retests Sept high v NZ$

 

The prior rally from oversold (note the low level of the RSI recently) by the Australian Dollar versus New Zealand Dollar had halted by previous resistance at the early-September high (NZ$1.1296).  The reaction from that barrier has been shallow, with support arriving at NZ$1.1120, and the rate is heading back to last month's high.  We will consider re-purchasing the Aussie upon a breakout (above NZ$1.1296), as the large base built up earlier in the year would appear to be capable of sustaining further gains towards the NZ$1.1600 region.

 

Daily Comment:

 

Currencies eased against the Japanese Yen on Tuesday.  The New Zealand Dollar appears on the 'Losers' list with -0.5% after the session.  The chart shows the small recovery from oversold faltering beneath the multi-month top formation, with resistance developing near former support along Y86.  We will continue to monitor the Kiwi/Yen pairing with a view to selling at some point, as the rate could fall towards the February floor at Y81.43.  We would point out the support point before that, at Y84.008, plotted earlier that month.

Having become overbought in mid-September, the Swiss Franc set about retracing its rally against Japan's currency.  Now, last month's low, at Y112.579, is under scrutiny again.  Should it yield, there is further support nearby from the floor area around Y112.  This dates back to early February and could turn out to be the lower boundary of a sizeable top formation.

A 'Dead' MA Crossover has been plotted on the graph of the NZ$ v Swissie.  This is mainly in recognition of earlier weakness by the NZ unit.  The chart displays the Kiwi launching a recovery late last month, after the previous decline had become oversold.  The counter move is struggling now, though a more forceful down move would be needed in order to confirm resistance in the SF0.7550 region.

Elsewhere, the US Dollar was trading over W1075 a short time ago against the South Korean Won.  In spite of the overbought RSI indicator, the Greenback is continuing to rally through supply, heading from the year's earlier highs at W1089.71 and before that at W1082.9.  One would expect to see some hesitation near those barriers.

 

 

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
BRLGBPBrazilian Real/Pound Sterling0.2591+1.1%
AUDCADAustralian Dollar/Canadian Dollar0.9854+1.0%
LACILatin America Dollar Index88.83+0.8%
AUDNZDAustralian Dollar/New Zealand Dollar1.1256+0.7%
EURMXNEuro/Mexican Peso17.072+0.7%
Top 5 Losses.
SymbolStockClose% Change
BRLUS$/Brazilian Real2.3966-1.2%
CADJPYCanadian Dollar/Japanese Yen96.669-1.1%
NZDJPYNew Zealand Dollar/Japanese Yen84.615-0.8%
AUDBRLAustralian Dollar/Brazilian Real2.113-0.7%
JPYUS$/Japanese Yen108.03-0.7%
    
The FX Model Portfolio
Date Stock Code Type Open Price Current Price % P&L Stop Comment
4 Sep 2014 Euro/South African Rand EURZAR Short 13.8896 14.1716 -2.03% 14.4
  • We watch to sell NZ$ v Yen and buy A$ v NZ$ (Chart of the Day).

 

Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
DXYUS Dollar IndexPauses the overbought rally.85.672-0.3% 83.864/85.4588.708/86.746
EUREuro/US DollarPauses the oversold decline towards the mid-2012 base.1.2669+0.1% 1.2242/1.2466/1.25011.2995/1.2699
GBPUSDBritish Pound/US DollarPauses the oversold downtrend.1.6096+0.1% 1.5855/1.5944?1.6644/1.6416
CADUS$/Canadian DollarOverbought uptrend finds resistance at the early-2014 high.1.1175+0.4% 1.0887/1.10721.1725/1.1279
JPYUS$/Japanese YenRetreats from the overbought 'Peak' KDR of 1 Oct; near the mid-2008 ceiling. Potential top.108.03-0.7% 106.81110.66/110.09
ZARUS$/South African RandOverbought advance pauses by the early-2014 peak.11.1862-0.2% 10.8711/11.16611.8723/11.3909
KRWSouth Korean Won per 1 US DollarHolds the overbought rally within supply towards this year's earlier highs.1066.1-0.3% 1031.35/1038.41089.71/1082.9
CHFUS$/Swiss FrancOverbought advance towards the mid-2013 peaks loses momentum.0.9568-0.2% 0.9126/0.93010.9839/0.9751
EURGBPEuro/Pounds SterlingOversold decline reverses, finding support near the 2012 low (0.7755).0.7871+0.0% 0.7694/0.77550.8066/0.7889?
EURJPYEuro/Japanese YenRenews the correction from overbought, towrds the early-Sept floor near 136.136.86-0.6% 135.78141.23/137.88
EURCHFEuro/Swiss FrancBreaks Sept resistance; near the 50-day MA, leaving a small base area.1.2122-0.0% 1.203/1.20451.2178
GBPJPYGBP/Japanese YenCorrects from overbought. Probes potential support at the highs of the broad trading band starting near 175.173.879-0.6% 169.35/172.994197.453/180.715
GBPCHFGBP/Swiss FrancOverbought rally pauses. Dips under the July high (1.5434). Potential 'bull trap'.1.5401-0.1% 1.4766/1.49691.5692/1.5536
CHFJPYSfr/Japanese YenExtends the correction from overbought. Tests the Sept low (112.579).112.897-0.5% 112.116/112.579117.864/117.01
AUDJPYAustralian Dollar/Japanese YenCountermands the 'Trough' KDR of 30 Sept. Reasserts the s-t fall to retest 200-day MA.95.256-0.1% 94.537/95.12598.684/97.929
AUDNZDAustralian Dollar/New Zealand DollarReasserts the rally from the multi-month base. Points back to the early-Sept high.1.1256+0.7% 1.0624/1.09191.1313/1.1296
AUDAustralian Dollar/US DollarOversold decline from the m-t top pauses. Potentially basing.0.8766-0.6% 0.8316/0.86430.9112


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