FX Breakout Monitor: SEK and gold making waves as majors dither

Today’s FX Breakout monitor

Page 1: Prospects seem moribund for the immediate term in most FX pairs – still awaiting whether EURUSD makes a more concerted effort lower after the recent break signal.

Page 2: Gold continues to poke to new highs for the cycle, though without much impulsivity – still it is making a statement relative to the deadbeat majors here – see more below. The other prominent mover is SEK, with prominent new lows today in reaction to the weak Swedish CPI data. And all quiet on the CNY front allows USDTHB to look at a new low as well – while USDZAR looks the other way as South Africa credit spreads have recently pulled back wider.

Chart: USDSEK

The Swedish krona was in for a drubbing today on a weak CPI release that took the currency to new lows across the board. Note that the horizontal line near 9.40 here is the highest daily close back in late 2016 (and before that since 2002). Important to watch whether the move holds into today’s close for a sense of whether the krona is in for a new bout of trending weaker. 

Chart: XAUUSD

Impressive that gold continues to make a statement by poking to new highs for the cycle, but less than impressive that it is doing so with an Average True Range close to the very lowest registered over the last several years. The most prominent chart points higher are the range highs from $1,366/oz up to $1,375/oz, the highest levels since 2014.

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.