Login Open account
Hong Kong S.A.R
By using our website you agree to our use of cookies in accordance with our cookie policy.
Okay
FX Breakout Monitor: AUDNZD tries again to the upside FX Breakout Monitor: AUDNZD tries again to the upside FX Breakout Monitor: AUDNZD tries again to the upside

FX Breakout Monitor: AUDNZD tries again to the upside

Forex 4 minutes to read
John Hardy

Head of FX Strategy

Summary:  Sterling, AUDZND, EURCHF and GBPCHF in focus today.

For a PDF copy of this edition, click here.

Momentum remains strong for the moment in sterling crosses as Corbyn keeps door open to idea of a second referendum. In the new developments department, we are eyeing whether AUDNZD is set to extend higher after making a go at a break today.

Today’s developments were mostly extensions of prior breaks – particularly in the case of sterling pairs. But as we flagged yesterday, the technical setup for AUDNZD is compelling and indeed, we have a bit of follow through today as we watch whether the pair closes above the break level of 1.0620. 

Today’s FX Breakout monitor

Page 1: Sterling continues to bull higher on the latest developments and registers new highs versus USD and EUR (EURGBP lower). EURCHF is an interesting one – having a look at a break higher again after the prior tease higher failed to yield to a trending move – we suspect GBPCHF is the chief driver of flows (see Page 2).

Elsewhere, note AUDNZD is currently trading above the 19-day high close and the setup is technically interesting as we discussed yesterday and repeat today in the chart discussion below. 
 
FX Breakouts
Source: Saxo Bank
Page 2: GBPCHF broke higher last Friday and has extended aggressively through this week’s Brexit developments, piling on quite a bit more today as Labour leader Jeremy Corbyn declared he is open to the idea of a second referendum, a shift in his prior stance and thought to be more sterling-positive on the potential for a Brexit reversal. Otherwise, we’re not terribly inspired by the new NOKSEK highs if EURNOK doesn’t continue to push lower. We also note that gold is perched right at the highs for the cycle, as discussed with a chart below.
FX Breakouts
Source: Saxo Bank
Chart: AUDNZD

As we indicated yesterday, the setup here is rather compelling for bulls, given the clear pivot level provided by the prior high off the long slide. In the longer-term background, we also note that the attempts through 1.0500 were rejected recently, and on the fundamental side, the market has aggressively lowered Reserve Bank of New Zealand expectations relative to those for the Reserve Bank of Australia over the last week and more. The next zone of interest higher is the heavily trafficked 1.0800-50 region.
AUDNZD
Source: Saxo Bank
Chart: XAUUSD (spot gold)

An interesting chart here, both because we are near the highs for the cycle and because the consolidation phase unfolded with almost no volatility. Is this a sign of pent-p energy or merely a link to China’s move to keep a floor under its currency for now? Our ATR reading is near the very lowest it has registered over the last 1,000 trading days.
XAUUSD
Source: Saxo Bank
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.

Outrageous Predictions 2023: The War Economy

  • Billionaire coalition creates trillion-dollar Manhattan Project for energy

    The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
    Read article

  • French President Macron resigns

    The political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
    Read article

  • Gold rockets to USD 3,000 as central banks fail on inflation mandate

    As markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
    Read article

  • EU Army forces EU down path to full union

    With continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
    Read article

  • A country agrees to ban all meat production by 2030

    In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
    Read article

  • UK holds UnBrexit referendum

    Following a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
    Read article

  • Widespread price controls are introduced to cap official inflation

    History tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
    Read article

  • OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve asset

    Sanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
    Read article

  • USDJPY fixed to the USD at 200 as Japan overhauls financial system

    Following the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
    Read article

  • Tax haven ban kills private equity

    With the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.
    Read article
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R
Products & pricing
Platforms
Accounts & service
General
Other
Legal

Losses can exceed deposits on margin products. Please ensure you understand the risks.

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged foreign exchange trading); Type 4 Regulated Activity (Advising on securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.