AUD/USD: 0.8150
EUR/USD: 1.1775
The currency markets were hectic today, with the World Bank 2015 growth outlook, the European Court of Justice's green-light decision for the ECB to go ahead with QE, the weak US retail sales and another big move in the oil market, all providing room for some decent volatility. Most currency pairs have ended up roughly where they started and the focus will now turn to a fair bit of secondary EZ/US data, headed by the US PPI. Before then, the Australian Jobs data is due, with a soft reading likely to increase the speculation of an RBA rate cut, keeping the Aud uner pressure.
After getting beaten up in Asia yesterday, in falling to 0.8067 on the back of the big sell-off in copper prices, which in turn was not helped by the World Bank downgrading the 2015 global growth forecast to 3.0% from 3.4%, the Aud made a partial recovery to around 0.8100 heading into Europe. Things improved further for the Aud after the poor US Retail Sales, allowing a quick spike up to 0.8180 and after some choppy trade the Aud has settled the late US session at around 0.8145.
Today's focus will be on the local jobs data where the headline unemployment rate is expected to remain unchanged at 6.3%, while jobs created are supposed to be about flat, following on from the November rise of 42K.
The longer term trend though, suggests that unemployment is still rising and a poor reading today, raising speculation of a potential RBA rate cut at the February meeting, will see the pressure return to the downside, where minor support at 0.8125 and 0.8100 would again be severely tested. The session low at 0.8067 would be the next target ahead of the recent low of 0.8032, below which further downside momentum would look to carry the Aud beneath 0.8000 and on towards the important Fibo level at 0.7944 (61.8% of 0.6006/1.1080). Below there, then we are headed to the July 2009 low at 0.7700 and then possibly to the RBA’s stated target at 0.7500.
On the topside, 0.8180 and then 0.8200 will be the immediate hurdles. Above 0.8200 would head back towards 0.8230 and yesterday’s session high at around 0.8250. Above there looks unlikely today, but if wrong would head towards recent minor highs at 0.8273 and 0.8298, with the next Fibo resistance not seen until 0.8321 (38.2% of 0.8795/0.8033).
Direction today will all depend on the data, but with the increasing consensus from the banks that we are going to get 1 and maybe 2 rate cuts from the RBA in the next 6 months, it is hard to see too much upside progress for the Aud apart from the odd short term squeeze.
Economic data highlights will include:
Unemployment.
Jim Langlands
FX Charts
