AUD/USD: 0.7445EUR/USD: 1.1005US Retail Sales disappointed badly, although most of the major pairs currently remain close to yesterday’s session opening levels. Sterling was the star of the day, following some mildly hawkish comments from Carney, taking it sharply higher, further propelled by the release of the soft US data. Keeping Greece out of the headlines, today’s big story was the Iran nuclear deal and which might have more of an effect on the oil price, once sanctions are lifted. Although it was a choppy session for WTI, it has so far remained within its recent range, and above 50.00pb. Today’s action will kick off in Asia, with the release of the Australian WBC Consumer Confidence, to be followed by the China GDP, Industrial Production, Retail Sales, Urban Investment and NBS Press Conference. The BOJ Meets today – no change expected. The EU calendar is pretty empty, with everyone focusing on Athens/Brussels, although the UK Jobs data is due. Later in the day we get the US Industrial Production, Capacity Utilisation, PPI and a speech from Janet Yellen ahead of her testimony to Congress, tomorrow.
The positive NAB Business Conditions/Confidence helped to lift the Aud off its 0.7386 low in Asia yesterday, pushing it back to around 0.7430, where it pretty much sat, until the weak US Retail Sales allowed a quick spike/reverse to/from a high 0. 0.7478.
It is going to be a busy session for data for the Aud today starting with the domestic WBC Consumer Confidence and then followed closely by plenty from China, headed by the GDP (exp 6.9%yy, Q2 1.7% qq). Also of note will be the Industrial Production (exp 6% yy June), Retail Sales (10.2% yy June) and Urban Investment (11.2% yy June).
Technically there is little change from this time yesterday. As we expected yesterday, the 0.7372 support held (low; 0.7387) and should we see 0.7400 again today, which the indicators suggest may be doubtful, 0.7370/85 will again see strong bids. As we keep reiterating, below 0.7370, there is then little to hold the Aud up until we reach 0.7200, which could appear on the horizon very quickly. Before then, there is some Fibo extension support at 0.7288 (100% of 0.8162/0.7598) from 0.7848(Blue Fibo structure on chart).
The topside will find offers at the 0.7470/75 area (200 HMA), a break of which would then head towards 0.7495/0.7500, which should be strong resistance. A break of 0.7500, would see a run towards 0.7532 (6 July high), 0.7555 (23.5% of 0.7848/0.7372) and then on towards 0.7600.
The charts are mixed, so wait for the Chinese data. Medium term, there is no change in view, looking to sell rallies for an eventual break of 0.7370. Probably not today though, in what could be another session similar to yesterday.
Economic data highlights will include:
WBC Consumer Confidence, China GDP, Industrial Production, Retail Sales, Urban Investment, NBS Press Conference.
Jim LanglandsFX Charts www.fxchartsdaily.com
