Two trades to watch: FTSE, AUD/USD

FTSE in focus after weaker than forecast retail sales. AUD/USD breaks below key support.

Charts (5)

FTSE in focus after weak retail sales

The FTSE is looking to a softer start after a mixed session on Wall Street. The Fed shift continues to work its way through the market. The US Dollar trades at a 2 month high, however base commodities are recovering from recent weakness which could support the FTSE  

UK retail sales disappoint falling -1.4% MoM in May, down from 9.2% in April and well below the 1.6% increase forecast.  

YoY retail sales rose 24.6% in May, below the 29% expected. 

FTSE trading guide

Where next for the FTSE? 

The FTSE is looking to extend losses from the previous session on the open. However, it so far remains within the ascending channel that it has been trading across the past month. It also trades above its 50 & 200 EMA on the 4 hour chart. The RSI is neutral at 50 providing few clues.  

Whilst the FTSE holds 7125 the confluence of the 50 EMA, the lower band of the ascending channel and horizontal support, the view is still bullish. Resistance can be seen at 7170 yesterday’s high ahead of a move towards 7221.  

A breach below 7125 support could see sellers look towards 7050 the 200 EMA. 

 

AUD/USD breaches key technical level 

The Fed’s hawkish shift in tone continues to boost the US Dollar, pressurizing the AUD/USD. 

Australian jobs growth picked up by 115.2k and unemployment dropped to 5.1% its lowest level since February 2020. This ongoing improvement in the economy could see the RBA adopt a more hawkish tone going forwards.  

For now the RBA Governor insists that its premature to consider tapering bond purchases. 

The Aussie has brushed off news by Westpac that it expects the RBA to raise the Official Cash Rate (OCR) in early 2023. 

Australian Dollar explained

Where next for AUD/USD? 

AUD/USD is extending its selloff, falling through its 200 day moving average and hitting 0.7510 its lowest level since December and the descending trend line support.  

The RSI points southwards in bearish territory and is supportive of further losses whilst it remains out of oversold territory. 

Immediate support can be seen at 0.7460 the multi-month descending trendline. A breakthrough here could open the door to 0.74. 

On the flipside, 0.7650 brings resistance. A breach of this level could negate the current down trend. A move over 0.7725 the 50 sma could see the bulls gain momentum. 

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.