The dollar headed higher today after the US data generally came in, generally in line with expectations, keeping hopes alive of a December rate hike from the Fed. The other big mover was Oil, with WTI rising by 4%, pushing the energy sector higher and underpinning the US stock indices, which all posted solid gains. Today will again be busy, leading off in Asia with the NZ Unemployment and the Australian Retail Sales and Trade Balance. We also get the global Services PMIs, leading off with Australia and China (Caixin) ahead of the European and the US numbers. The ADP Jobs data will also be in focus ahead of Friday’s NFP.
Much of the day’s trading range of 0.7111/0.7218 took place immediately following the RBA decision to leave rates on hold, although the high did not come in early Europe. While the RBA acknowledged the improved economic outlook, the Statement also went on to say that while the Aud is adjusting to the significant declines in key commodity prices, monetary policy needs to remain accommodative and that there is scope for further easing if needed, which has stopped the Aud running away to the topside.
The focus for the coming session will be on the local Retail Sales (exp 0.4% mm Sept), the Trade Balance (exp -2.8 bio Sept) and also on the Services data, both domestically and also from the Caixin Chinese number.
From a technical perspective, the 4 hour charts remain constructive and if the Retail Sales rise above expectations we could see a run to beyond the session high and on towards 0.7265/70, and possibly towards 0.7295/0.7300 (23 Oct high:0.7296/ descending trend resistance).
Bids will be seen at 0.7175 (200 HMA) and then at 0.7150 (minor). Below here the 100 HMA (0.7130) and yesterday’s spike low at 0.7111 will see buyers although it looks unlikely to head down here today.
Further out, if/when the Aud heads back below 0.7100 then 0.7080 and 0.7065 (29 Oct low) would be supportive. Below here, look for further support at 0.7040 (76.4% of 0.6936/0.7381), at 0.7012 (76.4% of 0.6900/0.7381) and then at 0.7000. Further out, rising trend support sits at 0.6990, a break of which will return to 0.6936 (29 Sept low) and to 0.6900 (4 Sept low).
As before, a range of 0.7000/0.7300 heading into December would not really surprise. With the Aud now trading back above the daily cloud top and daily Kijun (0.7175/85) it may be that we see a bit of a squeeze to the topside but much will depend on today's data.
Note that both RBA Governor, Stevens and deputy Governor, Lowe will be speaking early tomorrow morning (AET), as will Janet Yellen in testifying to Congress.
Economic data highlights will include:
AIG Performance of Services Index, Retail Sales, Trade Balance, Caixin Services PMI.
Jim LanglandsFX Charts
