AUD/USD: 0.7940EUR/USD: 1.1200Friday's US Jobs/NFP data was mixed, resulting in some volatile trade but with little overall direction in the currency markets. Equities liked the outcome, in heading higher on the view that the Fed are unlikely to be raising rates any time soon. China released their CPI and PPI data over the weekend, both of which were soft and has seen the PBOC react quickly by cutting the benchmark lending rate by 0.25% to 5.1%. This week is going to be busy, starting today with the Eurogroup meeting at which Greece will again be the top of the agenda, while the BOE has its first post-election meeting, although no change to monetary policy is expected. Asia leads off with the NZ House Price Index & Australian NAB Business Confidence/Conditions, which come ahead of the China New Loans data.
It was a busy week for the Aud, finishing higher week on week at 0.7925, but roughly in the middle of the recent volatile range, after having recovered from the selloff following the RBA’s SoMP and some choppy trade after the release of Friday’s NFP. Interestingly the CFTC figures show that the positioning on the Aud has gone from short 27,400 contracts to long 626 contracts over the course of the week. Quite a turnaround.
The weekend release of the China CPI/PPI saw the results come in below expectations (CPI: April; 1.5% yy (exp 1.6%), -0.2%mm (exp 0.0%) and PPI -4.6%yy (exp -4.4%) and although the PBOC have quickly countered the soft data by cutting the benchmark lending rate by 0.25% to 5.1%. (Depo rates from 2.5% to 2.25%).
Today will again be busy, starting with the NAB Business Conditions/Confidence figures, which will be released ahead of the China New Loans data.
Technically I suspect we are in for more choppy trade, possibly using the current level around 0.7930 as a pivot, (where the 100/200 HMA’s have converged), but possibly with a downside bias on the back of the soft China data..
The topside will see good sellers at 0.7950 and at Friday's 0.7966 high, and then again on the approach to 0.8000, although I don't think we get there today. If wrong, back above 0.8000 would head back towards last week's 0.8030 high and the previous week’s 0.8074 high, which will provide strong resistance.
Back below 0.7900, the downside will see bids at last Friday’s low at 0.7862 which is backed up by the 100 DMA at 0.7850 and the 100 Month MA at 0.7810 (also the 50% pivot of 0.75320.8079). Below this would open up the chance for a return to last week's 0.7785 spike low, seen following the RBA rate cut, and then to 0.7738 (61.8% of 0.7532/0.8079) but which seems unlikely for a while.
With the charts looking rather mixed, I don’t think there will be too much of a directional move this week and overall would expect something like 0.7825/0.8025 to cover it. Following the weekend release of the China data, if today's data NAB figure is on the soft side, it would suggest that it will be the downside that could come under some pressure, possibly for a look towards 0.7850.
Economic data highlights will include:
M: China CPI, PPI, NAB Business Conditions/Confidence, China New Loans
T: Home Loans
W: China Industrial Production, Retail Sales, Urban Investment.
Jim LanglandsFX Charts www.fxchartsdaily.com
