FX Breakout Monitor: Commodity dollars breaking down

Today’s FX Breakout monitor

Page 1: USDCAD is higher after having broken out yesterday – key BoC meeting today determines whether break holds. AUDUSD also mulling a break today to the downside, as is AUDNZD (once again!). AUD and CAD weakness also showing up in the crosses.

Page 2: TRY the only EM currency to string together a series of new lows versus the USD in recent days – some heavy carry in that pair to lean against, but a bigger move today in the wake of the Turkish central bank’s rate decision. Gold is mulling new lows here and note the bigger break level a bit lower discussed in the chart below.

Chart: AUDUSD

We are looking at fresh 19-day lows today, but the bigger key is the cycle low close just below 0.7000 and whether the broader US picture continues to support the downside view here.

Chart: XAUUSD (spot gold)

Some fresh 19-day lows over the last couple of session on a rather brutal move lower – the bigger level looks like the $1,275 area and the actual 49-day low comes in around there as well – stay tuned – a strong US jobs report and a fresh treasury sell-off combined with USD strength the most potent possible combination for USD downside.

REFERENCE: FX Breakout Monitor overview explanations

The following is a left-to-right, column by column explanation of the FX Breakout Monitor tables.

Trend: a measure of whether the currency pair is trending up, down or sideways based on an algorithm that looks for persistent directional price action. A currency can register a breakout before it looks like it is trending if markets are choppy.

ATR: Average True Range or the average daily trading range. Our calculation of this indicator uses a 50-day exponential moving average to smooth development. The shading indicates whether, relative to the prior 1,000 trading days, the current ATR is exceptionally high (deep orange), somewhat elevated (lighter orange), normal (no shading), quiet (light blue) or exceptionally quiet (deeper blue).

High Closes / Low Closes: These columns show the highest and lowest prior 19- and 49-day daily closing levels.  

Breakouts: The right-most several columns columns indicate whether a breakout to the upside or downside has unfolded today (coloured “X”) or on any of the previous six trading days. This graphic indication offers an easy way to see whether the breakout is the first in a series or is a continuation from a prior break. For the “Today” columns for 19-day and 49-day breakouts, if there is no break, the distance from the current “Quote” to the break level is shown in ATR, and coloured yellow if getting close to registering a breakout.

NOTE: although the Today column may show a breakout in action, the daily close is the key level that is the final arbiter on whether the breakout is registered for subsequent days.