Despite the wide miss in last week’s jobs report (NFP; 173K v exp 220K), the positive revision of the previous 2 months readings and the lowering of the headline unemployment rate to 5.1%, the lowest since 2008, did nothing to alleviate the uncertainty over whether the Fed will raise interest rates later this month. Choppy but possibly directionless conditions therefore look set to lie ahead, with only some secondary US data due this week and with a US holiday today. The lead for the markets will therefore mostly lie elsewhere, with the highlights being central bank meetings for the BOE and RBNZ (both Thursday), the EU GDP (Tuesday), China Trade Balance (Tues), CPI/PPI and Australian Unemployment (Thur). Today kicks off with the EU Sentix Investor Confidence Survey and German Industrial Production. Australia gets the ANZ Job Ads.
AUDUSD traded in heavy fashion all day on Friday by breaking well under 0.7000 and finishing on its lows at just above 0.6900 and seemingly headed quite a bit lower over the course of time. Its fate was not helped on Friday by heavy copper and iron ore prices, which will most likely continue to apply downward pressure in coming days. The China Trade balance is due tomorrow and the CPI, PPI, New Loans on Thursday, and any further softening in the overall outlook will ensure that the Aud continues to lower levels. On top of that, the domestic employment data is due out Thursday and will ensure a lively session. (Expect +5K, 6.2%, PR65%). Today sees the ANZ Job Ads.
Technically, once we see a break below 0.6900 there is little support until the April 2009 low at 0.6855, beneath which would then suggest a sharper decline towards 0.6773 (June 2004 low). A break of this would then open a black hole, in terms of support, until we reach the major Fibo support at around 0.6250 (76.4% of 0.4773/1.1082), which ties in with the lows seen in Feb 2009. Below this, we are then looking at our long term objective of the last 12 months at 0.6000, where the Head/Shoulder objective lies.
The topside will find offers queuing up at 0.6950 and at 0.6970. A revisit of 0.7000 seems unlikely today, although as I said on Friday, the 4 hour charts are becoming increasingly oversold and at some stage a bounce would seem to be on the cards. If and when 0.7000 is seen again, further gains could take it on towards 0.7033, the spike low of 24 August and then to 0.7060 and to 0.7100 although this seems well beyond the horizon now. If the FOMC leave rates on hold next week then the US$ will come under some pressure of its own and could bring about a decent bounce in the Aud.
Economic data highlights will include:
M: ANZ Job Ads
T: NAB Business Conditions/Confidence, China Trade Balance
W: WBC Consumer Confidence, Investment Home Lending
T: China New Loans, CPI, PPI, Australian Unemployment
F.
Jim LanglandsFX Charts
