AUD/USD: 0.7010EUR/USD: 1.1170While global stocks have had a decent relief rally today, the dollar is once again rather mixed while waiting on the important data due today, when the global manufacturing figures will be released, and then tomorrow when the US Jobs/NFP numbers will be the focus. Australia, Japan, and more importantly, China will lead off the swathe of manufacturing data ahead of the EU and then, later on the US ISM will be released for what looks likely to be a pretty busy session. Also of note, in Asia, Japan will release the monthly Tankan while Australia gets the TD Inflation number. Swiss Retail Sales are due, while from the US comes the weekly Jobless Claims and Construction Spending. Expect the volatility to continue/increase, so keep stops in place.
As we thought it might do yesterday, the Aud has spent a largely uninspiring session of choppy trade, close to 0.7000 while waiting on the important data from China, today, and the US, tomorrow.
The Aud will be pretty much reliant on the Chinese data for direction today, and possibly for some time to come if it comes in way below expectation. The official NBS Mfg PMI prediction is for a reading of 49.6, while the Caixin manufacturing figure is slated to come in at 47.2. Before that, the domestic AIG Mfg PMI is due. Last month’s reading was 51.7.
Currently at 0.7015, the initial points to watch are at 0.7035/40 which has pretty much capped the topside at the last few attempts. A break of 0.7045 (200 HMA) would see an advance on towards Fibo resistance at 0.7065 (38.2% of 0.7279/0.6938/200 HMA). Further targets would be at last Thursday’s session high of 0.7089, 0.7100 and the next Fibo level at 0.7108(50%).
Weak China figures will see a quick run lower, and once back below 0.7000, we might expect another test of the 0.6980 session low, below which could revisit 0.6950 and then the 0.6936, 29 Sept low. Under here would open up 0.6900, below which there is little support until the April 2009 low at 0.6855. Anywhere down here looks unlikely to be seen in the coming session but beneath 0.6855 would then suggest a run 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.
The charts are mixed, suggesting further choppy trade, and it may be that we need to wait until tomorrow’s local Retail Sales and the US NFP before we see any directional move.
Economic data highlights will include:
AIG Performance of Mfg Index, TD Inflation, China Official Mfg/Non-Mfg PMIs, Caixin China Flash Manufacturing/Services PMIs, China National Day.
Jim LanglandsFX Charts
