Trumps USD Ripple Effect on AUD and NZD

EURAUD, 4H                

President Trumps first State of the Union speech to both houses of the US congress had an authoritative and almost conciliatory tone.  The rhetoric and details were short but the repeated the promise of both personal and corporate tax cuts, the repeal of Presidents Obama’s healthcare act and huge investment in infrastructure. The speech plus the more hawkish comments from three members of the FED helped the USD recover significantly overnight. USDJPY was the largest mover from below 112.00 the pair trade over 150 pips to the north at 113.56, EURUSD touched 1.0630 yesterday and now trades down at 1.0540 and cable having spiked to 1.2470 yesterday in month end volatility now trades a whole point lower at 1.2370.

The move in the USD and good news from Australia also saw profit taking in 2017’s best performing currency the AUD.  Final quarter GDP growth in Australia beat expectations at 1.1% thanks to the rise in commodity prices and growing domestic demand driven by business investment and consumer spending.  The 4 hour EURAUD chart generated a short position from the 08:00 candle at 1.3774 target is 30 pips at the 14 period ATR 1.3744.  The pair have broken through the 10, 20 and 50 EMA, rejected a pivot high at 1.3826 and the RSI and MACD have both turned negative.  The parabolic SAR remains positive and the Bollinger bands remain sloping positively although the pair is now in the lower half. A break of the recent high would be needed to turn the pair positive again. The higher time frame daily chart remains negative.

Also another ripple effect currency is the NZD which is also looking to rollover short term, similar short positions were taken also at 08:00 – NZDCAD from 0.9509 for a 35 pip target at which at time of writing has spiked to target and a LONG position on GBPNZD at 1.7323, target 60 pips at 1.7383 which has also spiked to target. The Daily candle short position on NZDUSD from February 9 also hit target earlier today for a total net gain of 195 pips.


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Stuart Cowell

Senior Market Analyst


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