AUD/USD: 0.7025EUR/USD: 1.1185The dollar has finished mostly unchanged against its major counterparts after the global manufacturing data generally disappointed somewhat, coming ahead of today’s US jobs data. The US ISM manufacturing data disappointed, halting any further dollar advance, and if today’s NFP is a weak number we can probably expect it to spike lower as the chances of an October rate hike diminish rapidly. US equities had a volatile session, but equally, ended up roughly in the middle of their range. Expect the volatility to continue. The major interest in Asia will come from the Australian Retail Sales, but being a China/HK national holiday and with Melbourne also out, liquidity will be thinner than usual.
Yesterday's slightly better than expected Chinese manufacturing data underpinned the Aud, in helping it rise to an Asian high of 0.7066 and then on to a session high of 0.7084 in early Europe. That was as good as it got, with the Aud seeing a steady reversal since then, gaining pace after the soft US data that has led to a general move to risk aversion, led by a decline from the day’s high in US stocks.
Today’s US Jobs data will provoke plenty of volatility so a nimble stance will be required. A poor result could see the Aud shoot quickly higher as the chance of an October US rate hike, diminish. On the other hand, a good number will send the Aud back below 0.7000, for a chance of revisiting the recent trend lows at 0.6900 and possibly lower. Ahead of all that though, the domestic August Retail Sales will be released, with a general expectation of a rebound from July’s -0.1% to a more solid 0.4% mm.
Currently sitting at 0.7025, sitting on the 200 HMA and pretty much unchanged from this time yesterday, the initial points to watch are at 0.7035/40 would see an advance on towards Fibo resistance at 0.7065 (38.2% of 0.7279/0.6938) and then to the session high, which pretty much ties in with last Thursday’s session high of 0.7089. Above here would see decent offers at around 0.7100 (0.7108: 50% pivot of 0.7279/0.6938) but a break of which would head towards 0.7145 (61.8%), which is the next Fibo resistance although it may take a rather poor NFP reading for this to appear on the horizon.
To the downside, back below 0.7000 we might expect another test of 0.6980, 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 remain mixed, suggesting further choppy trade may be eventual outcome. he dailies point mildly higher though, which could come to fruition if it looks as though the Fed are going to need to hold off before raising rates.
Monday is a Australian holiday. Next update Tuesday.
Economic data highlights will include:
Retail Sales, China National Day
Jim LanglandsFX Charts
