U.S. Personal Spendings remained flat, USD pairs diverge

The U.S. Dollar sold off on Friday heavily upon the news that personal spendings remained flat for the month of August, down from an upwards revision of 0.4%.

Since personal spendings accounts for approximately 70% of all economic activity in the United States, this poses as a deflationary risk and would postpone any attempts to increase rates once again.

screenshot-at-oct-01-22-15-20

This doesn’t change my outlook much especially from last week. My technical levels are still holding up with a few more pairs to add to my watchlist.

screenshot-at-oct-01-22-17-39
NZDUSD 30-Minutes

I mentioned leaning bearish last week regarding the NZDUSD pair. After re-defining a few intra-day entry levels, I still remain bearish looking at the two possible entry opportunities at the current 0.729~ mark as well as the 0.731~ mark.

Taking a look at just the last few bars, the market successfully filled all bid orders and ask volume is not diminishing. However, this pair has been ranging for pretty much all of last week and increases the possibility of a breakout in each direction. The main economic release this week is the New Zealand Q3 Business Confidence indicator, which is expected to set the market sentiment for the week ahead.

screenshot-at-oct-01-22-26-32
AUDUSD 1-Day

Given the disappointing personal spendings, I expect the U.S. Dollar to experience a bearish weak again especially against the Australian Dollar. There’s a few things going on in this chart that I think it’s important to point out.

First is the resistance zone at the 0.77~ mark. Notice how back in earlier September price reached the zone and sold off all the way down to 0.745~? This time around it hasn’t generated nearly as much sell orders. In fact, I dare say none at all as ask orders were quick to be filled before the bids streamed in.

My comment of “support holding” marks the first retrace to usually a very bullish move. Price tends to move away from an origin before retracing back quick to test it before really shooting off. Here’s an example of all the patterns I indicated just a few days earlier:

screenshot-at-oct-01-22-52-09

This pattern is very prominent and will typically generate a very favorable pay-off if it does hold up. Looking at the recent 4-hour chart, we can clearly see this level held up quite well.

screenshot-at-oct-01-22-54-08
AUDUSD 4-Hour

Of course, this should be taken with a grain of salt. Two factors affect the reliability of this pattern. The first deals with the position close-outs before Friday’s market close. The second is the fundamental factor surrounding the less than expected personal spendings.

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