AUD/USD: 0.7770EUR/USD: 1.1315A good NFP and a strong upward revision in the numbers for December saw the dollar make some good ground against most of its major counterparts, with the move undermining the recent rally on commodities, where both Gold and Silver took a dive. Equity markets fell 0.3%, while WTI maintained its recent gains. This week is going to see a fair mix of data, but with much of it secondary in nature and a week of general consolidation would not really surprise. Today kicks off with the German Current Account, Trade Balance and the EU Sentix Investor Confidence Survey. RBA Governor Glen Stevens will be speaking and will most likely try and talk the Aud$ lower once more. Later in the week, the points of focus will be on the China CPI (Tues), US Retail Sales (Wed) and the provisional EU GDP data (Fri).
As below, the Aud$ has opened lower in early interbank trade, at 0.7765, following the sharp decline in Chinese imports following the weekend release of the January trade balance.
An early NY stop-loss run saw the Aud reach a high for the Aud of 0.7876 on Friday before a sharp reversal back below 0.7800 after the good number was backed up by an upward revision for December, but closed at a relatively healthy 0.7800.
The Chinese weekend release of January trade balance showed a much better than expected surplus of +$60.03bn (vs. expected $48.90bn). On the face of it this should be supportive for the Aud, but the huge drop in imports for the month, particularly coal imports, is not going to be viewed as a positive and may actually push the Aud a bit lower on Monday.
Today’s main event, apart from the Liberal Party vote, will be on the RBA Governor, who will be speaking and may well use the opportunity to once again talk the Aud lower.
Technically, given the fact that the Aud closed pretty much where it opened on Friday, there is little real change. The indicators are mixed and it could be that we spend a few more sessions not too far removed from current levels, while the dailies unwind their oversold condition.
A squeeze higher will find sellers at the 200 HMA at 0.7815 and 0.7825 (daily Tenkan) and then again at the sticky 0.7850/55 level and at Friday’s high of 0.7876. Beyond there, which I don’t really see for a few days - if at all, - we could be in for a run towards 0.7895 (23.6% of 0.8794/0.7625) and then to the neckline of the potential SHS formation that we pointed out on Friday, currently at 0.7915 and a potential target of around 0.8120. This is a long way off and probably unlikely. Any rally back above 0.8000 should be viewed as a sell opportunity, but again may not occur in a hurry, if at all.
The downside, which is more likely to come under pressure after the weekend Chinese data, will find buyers at around 0.7770 and then at 0.0.7720/30. Below here would suggest a move back below 0.7700 and possibly towards the trend lows at around 0.7625, although this will take some time.
Further out, on am eventual break of the current trend lows, we are looking at the RBA’s stated target at 0.7500, beneath which there is little real support for the Aud until the next major Fibo supports to be seen on the monthly chart (below) at 0.7204 and then at 0.7183 (76.4% of 0.6006/1.1082 and 61.8% of 0.4773/1.1082). If/when seen, this area should be extremely strong support.
Economic data highlights will include:
M: RBA Stevens’ speech, ANZ Job Ads
T: NAB Business Confidence, Conditions, China CPI, PPI
W: WBC Consumer Confidence, Home Loans, Investment Lending, China New Loans
T: Consumer Inflation Expectation, Employment data, RBA Stevens speech
Jim LanglandsFX Charts www.fxchartsdaily.com
