North America desk has seen a firm risk-ontone to begin the new month. The dollar is significantly lower, most notably against Aussie (+1.85%), which saw a strong GDP reading of 1.2% vs market consensus of +0.90% . Also helping the Aussie was better than expected Chinese PMI data, 51.7 from last month's 51.2 reading, ahead of the 51.5 consensus. The Chinese data is helping the Aussie currency as continued evidence of a soft landing in the world's 2nd biggest economy will not drastically impact Australian commodity exports. Watching to see how things continue to setup heading out of the summer doldrums and into the typically volatile late September-November time period.
Following an extended vacation I spent quite a long time doing some macro research this morning to get myself back into the groove. After being away from the trading desk for such a long period of time you are sure to lose your feel and rhythm of the market. The only way to get yourself back into battle mode is to take a top-down approach beginning with macro themes, both technical and fundamental, and then moving down to the micro time trading time frames to get the intra-day flow of the market. It will take me a few days to do this. Plus, in accordance with my 2 day rule, I will not trade the first two days back from an extended vacation. So let's get into it.
On the largest time frame, I am bullish of dollars. But drilling down to the daily time frames we need to consider two significantly different paths for the USD before the longer-term uptrend re-emerges. The first calls the entire summer-pullback in the USD all of purple wave .II, and we are in fact rallying in purple wave .III. If this is the case, the currently dollar weakness should hold 81.80 support level.
The alternate USDX daily count says the summer dollar sell off wave just an a-wave within a larger purple .II-wave. If this cont is correct, dollar weakness &40;Euro strength) should be seen until the Index reaches minor support zone #1 of 80.00-79.00, and more likely major support zone # 2 at 78.25-77.25.
Watching in here for now, but eyeing possible EURUSD long entries in accordance with this count. Back as things develop.
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