AUD/USD: 0.7970EUR/USD: 1.1340Soft data once again did it for the US$ today, sending it lower against all the major counterparts. This time it has been the below-par ADP jobs report, which comes ahead of tomorrow’s US Jobs/NFP release and which has seen traders winding back their expectations of a result (exp 213K) that is likely to see the Fed hiking rates any time soon. The main event today will be the UK election, which looks as though it is going to end in deadlock – a hung parliament will not be good news for Cable or the FTSE. Asia get the Australian Employment data and later on, the German Factory Orders and US Jobless Claims will be released, but it will be Sterling that steals the show today/tomorrow, at least ahead of the US Jobs/NFP release.
The Aud headed to 0.8030 yesterday, assisted by further general dollar weakness after the soft US jobs data, and helped along earlier in the day by the news that the Iron Ore price is now at the highest since March, reaching $60pt.
Today sees the local Employment data (exp 6.2%, +5K, PR 64.8%), lower than last month’s strong number, although some analysts seem to think the number will be another strong one, which would see the Aud back towards 0.8000.
Tomorrow sees the quarterly Statement on Monetary Policy, which will set out the RBA’s assessment of current economic conditions along with the outlook for Australian inflation and output growth. Given the upswing in the Aud since Tuesday’s rate cut, which seems to be based on the assumption that the easing cycle has finished, this will give a far more comprehensive understanding of their vision of the economic climate over the months ahead and will likely have a material effect on the direction of the Aud
As for today, 0.8000 and 0.8030 will provide the initial resistances. I doubt that we head above here but it may be that the Aud wants to head back to last week’s 0.8074 high.
The downside will see bids at 0.7950 and then at 0.7920 and at 0.7905 (200 HMA), a break of which would head back to 0.7890 (100 HMA). Below there, 0.7850 and 0.7830 will see bids ahead of 0.7800 and Tuesday’s spike low of 0.7785.
Wait for the data and go with the flow.
Economic data highlights will include:
AIG Construction PMI, Unemployment
Jim LanglandsFX Charts www.fxchartsdaily.com
