Fridays Trades

marketsforu

AUDUSD – sell limit at 0.7500 

 

Stop loss: 0.7700

 

Take profit: 0.7200

 

Justification:

 

since all our short AUD and NZD trades against the US dollar and the British pound have been closed (a vast majority of them on take profits) we would be looking to restore some of our short exposure here because we believe a fundamental situation supports a continuation of current trends. Looking at the AUDUSD the pair rebounded somewhat just after it dipped to a multiyear low on the Chinese devaluation. One of the reasons behind a rebound were comments from the RBA which seems to be OK with a current state of monetary policy and the AU rate alike. However, because in our view the worst in China is still ahead of us, outlook for iron ore prices (key for Australian exports) and the Australian economy is far from rosy. Therefore we would be looking to sell at a 0.75 resistance targeting fresh lows.     

 

 

 

Gold – sell limit at 1140

 

Stop loss: 1170 

 

Take profit: 1085

 

Justification:

 

gold prices rebounded recently following a havoc that occurred after the Chinese devaluated the CNY. That was a much needed correction following a steep decline that took place in July. However, we do not see many reasons for a trend on this market to be reversed. First, notice that a dive in July originated in China and a lingering deterioration in this economy may only lead to a lower, not higher, demand for the commodity. Not to mention that after a devaluation gold became more expensive for the Chinese consumers. Secondly, the data from the US economy has been decent as of late and may herald a hike in September. So just as we are moderately positive on the US dollar, we would expect this factor to keep hurting gold prices. A strong zone between 1135 and 1140 that used to be a support in the past may now act as a resistance and a test of it would be a good opportunity to go short again in our view.